Foreign currencies
Introduction
In a globalised economy one is constantly confronted with foreign languages and foreign currencies. In this section we will look at foreign currencies and describe how currencies are processed in the CyberEnterprise business OS.
But first, some definitions of terms:
The local currency (or standard currency) is the currency that is set as the currency of the registered client, i.e. the currency in which the client prepares his balance sheet: All internal values (e.g. all bookings and accounts of the accounting system (financial, operational and asset accounting) or statistical values such as turnover or costs) are kept in this currency. Foreign currencies are all other currencies that can be used as desired within the CyberEnterprise business OS: In transaction data (e.g. in offers, orders, invoices, etc.) and also in master data (e.g. in supplier prices, sales prices, etc.).
The conversion between currencies is controlled via currency tables.
The currency covered is the currency in which currency or monetary amounts are recorded in the system. The output currency is the currency in which documents (e.g. quotations, order confirmation, invoice, credit note, etc.) are printed. In outgoing and incoming invoices or in other documents whose values must be converted into the internal local currency, the output currency is also referred to as the conversion currency, since it must be taken into account here not only for the preparation of the print, but also for the transfer to the internal accounting system (e.g. when creating open items in financial accounting).
In the following tables, € is the local currency and $ is any foreign currency.
Foreign currencies in sales
An offer/order or invoice/credit note can only be entered in one currency. The following table lists, among other things, the effect of a foreign currency on financial accounting and its open items (see also here)
| Case | Offer/contract | invoice/credit note | Account assignment always in local currency (Outgoing invoice book) | Financial accounting | OP | ||
|---|---|---|---|---|---|---|---|
| Currency covered | Output Currency (print currency) | Currency covered | Output Currency (conversion currency) | ||||
| A | € | € | € | € | € | € | € |
| B | € | $ | € | $ | € | € | $ |
| C | $ | $ | $ | $ | € | € | $ |
| D | $ | € | $ | € | € | € | € |
| Case | Description |
|---|---|
A | Continuous processing of all amounts in the local currency ("normal case") |
| B | In this case, the order and the invoice are recorded in the local currency. When looking at the documents in ClassiX, no difference to case A can be found except for the specification of an output currency not equal to the local currency paired with the corresponding conversion rate. However, the exchange rate is optional until the invoice is registered. If no rate has been specified at that time, the currently valid rate will be used in the invoice. The specification of the output currency and the exchange rate only plays a role in the first step when printing, as the amounts are processed and output in the output currency at the corresponding exchange rate. During initial account assignment and in the financial accounting, the system always accesses the values entered in local currency. In addition to the values in the local currency, the open items also carry the original foreign currency values |
| C | If an order with a fixed sum is entered in a currency other than the local currency, all entered amounts in ClassiX® are displayed in this foreign currency. This means that no conversion is required for output if the order is also to be output in this currency. For the time being, it is not necessary to enter the exchange rate at which the order or later the invoice was entered. However, the rate is set and frozen at the latest when the invoice is registered. In this case, the exchange rate is not important for printing but for the initial account assignment. This is done using the fixed exchange rate in the local currency. In addition to the values in the local currency, the open items also carry the original foreign currency values |
| D | For merchandise, it may make sense to enter an order in a foreign currency and issue it in the local currency. ................. |
In all cases, the currency details of the order can be overwritten in the invoice. For example, order type C can become an invoice of type B, if the user so specifies.
Manual account assignment of invoices with foreign currencies
(see also: Manual account assignment)
In case B, that is, if the invoice has been entered in the local currency but issued in a different currency, the issue currency and the exchange rate can be changed in the Manual Account Assignment window even after the invoice has been registered. If a different, possibly more up-to-date exchange rate has been agreed upon with the customer after registration but before posting in the financial accounting, this can still be maintained.
If the invoice was entered in a foreign currency, the conversion rate can be changed in the manual account assignment, but not the conversion currency.
Setting the output currency
While when registering an invoice, the conversion rate must always be set if a foreign currency is used (this rate can either be set manually or is set automatically (see also here)), this can be made more open during order/invoice processing. At least you have the options whether the exchange rate should be frozen or whether the current exchange rate, defined via the global currency table, should always be used for calculation. The setting, which should be used by default, can also be set via the options.
When the documents are output, the output currency and, if applicable, its exchange rate is transferred to the print template. However, the specifications can be changed here for printing.
When creating a follow-on document [Quotation -> New quotation version -> Order -> Invoice -> Credit note], the print currency and, if applicable, the exchange rate are automatically adopted.
Foreign currencies in sales prices
In the section Foreign currencies as output currency (print currency) in sales it was shown which problems occur when converting from the local currency to the output currency(calculation currency of the order -conversion-> customer). In this section, the influence of a foreign currency in the sales prices on the order calculation(sales prices -conversion-> calculation currency of the order) is discussed.
Local currency: currency of the client
Calculation currency: The currency with which the order is calculated. (The currency specified by the net value of the order).
Output currency: The currency in which the order is output (printed) and which is transferred as a foreign currency together with a frozen rate in the financial accounting.
The problems to be considered include the following:
- The sales prices are kept in the local currency (€) of the parent company. However, the prices of the subsidiary are kept in $ and, if necessary, determined via a price calculation scheme. Due to fluctuating exchange rates, the conversion of the € prices into $ would result in different $ sales prices every day.
- The parent company wants to offer its articles abroad at fixed foreign currency prices. Here too, conversion at fluctuating exchange rates would cause problems.
- Fluctuating exchange rates are also the problem when considering the margin on an order and the order backlog. If an order was entered in a foreign currency, the exchange rate problem would result in a new order entry value being calculated daily in the local currency. And the margin would also fluctuate due to the difference between €-costs and $-revenues when viewed on a daily basis.
The following cases thus arise for the use of sales prices in the order in different currencies. For all the above cases, € is the local currency and a fixed conversion rate of $1.25 to €1.00 is defined in the valid SALESFX.
| Sales prices in € | Selling prices in $ | |
|---|---|---|
| Order recorded in € | No special features | Sales prices are converted to € via the currency table (SALESFX or locally). Ex: A sales price of $125 results in a price of €100 in the order. |
| Order entered in $ | The sales prices are converted into $ via the currency table (SALESFX or local). Ex: A sales price of 100€ results in a price of 125$ in the order. | The sales prices are transferred 1 to 1 into the order. However, a currency table (SALESFX or local) must have been created so that the conversion into the local currency is fixed. |
It can be defined in the client whether a currency table (SALESFX or local) must exist if the calculation currency of the order or the currency of a sales price in a foreign currency is used. If this option is set, an error message will be displayed if this is not the case. If the option is not set, the EUROFX table is used for conversion and the above-mentioned currency fluctuations occur.
Foreign currencies in purchasing
In purchasing, the documents most commonly used are purchase orders and purchase invoices, where foreign currencies play a role. However, there is a significant difference between this and sales. While in sales documents (quotations, orders, A/R invoices) - at least in most cases - the sales prices are recorded in the local currency and a foreign currency + exchange rate is "only" used for the output of prices in print, this is different in purchasing. Here the documents themselves (order, incoming invoice) are entered in a foreign currency: An incoming invoice which is received in $, for example, should of course also be entered in $. So if an incoming invoice is entered in a foreign currency, the corresponding exchange rate MUST be indicated. The reason for this can be found in the initial account assignment, which is always made in the local currency. If the exchange rate were not frozen, there would be differences between the account assignment and the gross value if the exchange rate in the currency table were to change.
An order or an incoming invoice/credit note can only be entered in one currency. The following table lists the effect of a foreign currency on financial accounting and its open items (see also here):
| Case | Incoming invoice / incoming credit note | Account assignment always in local currency (Invoice Receipt Book) | Financial accounting | OP |
|---|---|---|---|---|
| Currency covered | ||||
| A | € | € | € | € |
| B | $ | € | € | $ |
| Case | Description |
|---|---|
A | Continuous processing of all amounts in the local currency ("normal case") |
| B | If an incoming invoice/credit memo is entered in a currency other than the local currency, all amounts entered will be in that foreign currency. The specification of an exchange rate is important for the preliminary account assignment for transfer to financial accounting. In addition to the values in the local currency, the open items also carry the original foreign currency values |
Foreign currencies in financial accounting
In principle, the accounts of the financial accounting are managed in the local currency, which is fixed in the client. However, it is necessary to be able to process and post outgoing and incoming invoices, outgoing and incoming payments and foreign currency accounts in different foreign currencies.
A/R invoice documents and A/R credit memo documents are converted into the local currency at the time of registration (the time of automatic or later manual preassignment) (see Foreign Currencies in Sales), and the conversion rate is determined for A/P invoice documents and A/P credit memo documents when they are entered (see Foreign Currencies in Purchasing). The conversion rates already defined in the pre-defined documents are transferred to financial accounting.
The further processing of automatically imported bank statements in financial accounting is described in the section Foreign Currencies in Bank Statements, but first follows a description of the processing of foreign currencies in manual postings.
Foreign currencies for manual bookings
The debit or credit value of an entry can be entered in any foreign currency, as long as a conversion rate into the local currency is available. If a currency table is logged in, the exchange rate - as far as it is available in the currency table as exchange rate into the local currency - is automatically determined and the foreign currency amount is converted into an amount in local currency. This automatically determined amount can also be maintained manually by means of a special setting.
Foreign currencies in bank statements
When bank statements from bank accounts with foreign currency are taken over or bank postings with incoming or outgoing payments in foreign currency are made, an immediate conversion into the local currency is carried out as a preliminary step to posting in the financial accounting. If this conversion is to take place using the date of the bank statement, this must be stored in the client.
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