10.12.9. Topic: Multi-Currency Basics

10.12.9.1. Foreign Currency Invoices
10.12.9.2. Setting New Exchange Rates
10.12.9.3. Receiving Cash in Foreign Currencies
10.12.9.4. General Ledger Transactions and Multi-currency

Note

The scenarios described in this section refer to Items and other data found in the xTuple ERP Demo Database. The Demo Database is available for download from the xTuple website. The demo databases have been pre-loaded with a default Currency of U.S. Dollars and the foreign Currencies British Pounds and Euros. The expiration date on these Currencies has been set well into the future. During the course of the following exercise, you will set up a new Exchange Rate for British Pounds to simulate the normal fluctuations that take place in the Currency markets on a daily basis.

To illustrate xTuple ERP's multi-currency integration, we will enter a Miscellaneous Invoice using a foreign Currency (in this case, British Pounds) and post it with today's date. We will then set up a new Exchange Rate having tomorrow's date. Next, we will enter a Cash Receipt and assign it tomorrow's date, as well. Finally, we will post the Cash Receipt and observe the resulting G/L transactions.

10.12.9.1. Foreign Currency Invoices

We will begin by entering a Miscellaneous Invoice, indicating as we go that the Customer does business in British Pounds. To begin entering the Invoice, follow these steps:

Pull down the A/R Module menu
Select the Invoices submenu
Choose the "List Unposted Invoices" option
Click the NEW button
Enter Customer Number "XTRM" in the "Customer #" field—or use the browse button to locate and select this Customer
Click the COPY TO SHIP-TO button
Move to the Line Items tab
Click the NEW button
On the new Invoice Item screen, select the "Miscellaneous" option
Enter the following values:
- Item: "Product Design Services"
- Description: "Design of new product concept and delivery of prototype"
- Sales Category: NORMAL-SALE
- Qty. Ordered: 1
- Qty. Billed: 1
- Net Unit Price: 10,000 (followed by the TAB key)

Note

The Customer in this scenario is billed in British Pounds. Notice how the Currency conversion takes place automatically after you enter the Net Unit Price—and then hit the TAB key.

New Invoice Line Item

Click the SAVE button to return to the Invoice screen
Click the SAVE button again to return to the Unposted Invoices screen
You may optionally print your Invoice
Right-click on the Invoice you just created
Select the "Post" option from the right-click menu
Click CLOSE exit the Unposted Invoices screen

10.12.9.2. Setting New Exchange Rates

Our next task is to simulate the effects of a fluctuating Exchange Rate. To do so, we will enter a new Exchange Rate for British Pounds that is effective as of tomorrow. To access the Currency Exchange Rates screen, follow these steps:

Pull down the System Module menu
Select the Master Information submenu
Choose the "Exchange Rates" option

First we will set the current Exchange Rate for British Pounds to expire as of today. This will ensure that any transactions posted after today will not use today's Exchange Rate. To expire today's Exchange Rate, follow these steps:

Open the Exchange Rates screen
Double-click on the Exchange Rate entry for "GBP"
Change the value in the "End Date" field to today's date

Currency Exchange Rate

Click the SAVE button

Now we will create a new Exchange Rate for British Pounds that is effective starting tomorrow. To create a new Exchange rate, follow these steps:

Open the Exchange Rates screen
Click the NEW button
Enter the following information:
- Currency: GBP
- Exchange Rate: 1.788
- Start Date: Enter tomorrow's date
- End Date: Enter 12/31/2008
Click the SAVE button
Return to the Exchange Rates screen
Verify you have a rate for British Pounds that expires on the current date, as well as a different rate that is effective starting tomorrow

Updated Currency Exchange Rates

Click the CLOSE button

10.12.9.3. Receiving Cash in Foreign Currencies

Now, let's suppose our Customer sends us a Check in British Pounds to cover the full Invoice amount. To simulate the normal time lag that occurs between the date when an Invoice is posted and the date when cash is received and applied, we will give this Cash Receipt a distribution date of tomorrow. Since we have just finished entering a new Exchange Rate with an effective date of tomorrow, the posting of the Cash Receipt will result in a Currency gain/loss being posted to the General Ledger. So let's get started.

To enter a Cash Receipt with a distribution date of tomorrow, follow these steps:

Pull down the A/R menu
Select the Cash Receipts submenu
Choose the "Cash Receipt Edit List" option
Click the NEW button
Enter the following information:
- Customer #: XTRM (followed by the TAB key)
- Amount Received: 10,000 (i.e., British Pounds)
- Check/Document#: 12011
- Post to: GBank-GBank
- Distribution Date: Enter tomorrow's date (e.g., +1)
Click on the APPLY TO BALANCE button

Note

Selecting the APPLY TO BALANCE button will distribute the 10,000 Cash Receipt to the Invoice you previously entered and posted. The Invoice information is displayed in the Open Items section of the Cash Receipt screen.

Cash Receipt Screen Application in Foreign Currency

Click the SAVE button on the Cash Receipt screen
Return to the Cash Receipts Edit List screen
Right-click on your Cash Receipt
Select the "Post" option from the right-click menu
Click the CLOSE button

Now let's look at the General Ledger postings that resulted from these transactions—and the impact that the fluctuating Exchange Rates had on them.

10.12.9.4. General Ledger Transactions and Multi-currency

We will need to open one of the G/L Module's displays to view our recent G/L transaction activity. To view recent G/L activity, follow these steps:

Pull down the G/L menu
Select the Displays submenu
Choose the "G/L Transactions" option
Enter the following information:
- Start Date: Enter today's date (i.e., 0)
- End Date: Enter tomorrow's date (i.e., +1)
Click the QUERY button

G/L Transactions Screen Showing Result of Multi-currency Transactions

Tip

You may want to adjust the width of the Account column so you can view the entire Account Name.

As you can see in the example, the Invoice (Doc. Type = "IN"), which was entered as 10,000 British Pounds, was converted to the base Currency at the then-prevailing Exchange Rate. Next, we changed the Exchange Rate to tomorrow's date and entered, applied, and posted a Cash Receipt for 10,000 British Pounds. The difference between the value in the base Currency when the Invoice was originally posted and the value in base Currency when the Cash Receipt was applied is reflected in the entry in the Currency gain/loss account. In our example, the Exchange Rate has worked against us, as the British Pound weakened relative to the base Currency.