Introduction
In the system you can set up multiple currencies against a single base currency. If you operate multiple entities, they can all have different base currencies. To manage these entities, you can set up a Group Consolidating Entity and use its base currency to consolidate all the entities.
If you want to use multiple currencies within an entity's account, set up a specific account for each base currency.
Raising Transactions against Foreign Currency Customers and Suppliers (Vendors)
Deal with non-base currency customers and suppliers (vendors) in their own currency or that of their bank. From your company’s perspective, these are foreign currency companies. The transaction will carry the exchange rate at that time, along with the calculated base currency amount.
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If you are backdating a transaction, it will carry the present day’s Exchange Rate by default. However, you can override this during transaction entry stage to provide a more accurate Exchange Rate for that point in time.
Settling Transactions against Foreign Currency Customers and Suppliers (Vendors)
When you receive payment for a transaction you raised, it will be in the currency of the supplier (vendor) or customer, or that of their bank. The transaction will carry the exchange rate at the time of the bank payment or lodgement, along with the calculated base currency amount. By this time, the exchange rate will probably not be the same as the original Invoice. When the two are allocated (fully or partially), a currency gain or loss will automatically be calculated and posted to Currency Gain/Loss in the General Ledger.
To more accurately reflect the state of your Balance Sheet, periodically revalue any unallocated items such as invoices, credit notes, and any advance payments. When this occurs, the system will automatically raise self-reversing journals to the Unrealised Gains/Loss Account.
See:
Foreign Currency Overview (8.0) - AIQ Academy
Add Edit Currency in a single Entity (8.1) - AIQ Academy
Foreign Exchange Revaluation Journals
How does Multi-Company Consolidation Work?
Maintaining Currencies and Rates in the Code Maintenance Table
The Code Maintenance table is where default exchange rates come from, but you can override them at transaction entry stage if necessary.
See:
How do I use Code Maintenance to Control the Behaviour of the System?
Only one base currency can be nominated. Exchange rates are expressed as 1 Unit of Base Currency = X Units of Foreign Currency. In periods of high Exchange Rate Volatility, revise, and update exchange rates frequently to provide the most accurate reflection of your Trading and Balance Sheet.
To Add New Currencies:
- Go to Setup > Codes Maintenance > Currencies.
- Click Add New Currency and select the appropriate Currency Code from the Code dropdown.
- Enter a Rate. All other fields will auto-fill.
- Click Save.
To Edit Currencies:
- Go to Setup > Codes Maintenance > Currencies.
- Click Edit against the relevant currency.
- Edit any details.
- Click Save.
To View Rate History:
- Click Edit against the relevant currency.
- In the Edit currency screen, click View Rate History.
Assigning Currencies to an Entity and its Customers and Suppliers
Step One: Set up an Entity's Base Currency
This is the base currency against which foreign exchange rates will be applied. If you have multiple entities, each entity must have a base currency.
See:
How do I Set Up a New Company or Corporate Entity?
- Go to Setup > Company Details & Settings.
- Under the Company Details tab, select the required currency from the Base Currency dropdown. Complete any other relevant details.
- Click Save.
Step Two: Set up Currency Code Defaults
These defaults will be inherited by your customers and suppliers but can be overridden.
See:
Reviewing Company Details & Settings and Defaults
- Go to Setup > Default Settings.
- Click Open next to Customer Defaults/Supplier Defaults/Vendor Defaults as relevant.
- Select the appropriate base currency from the Currency dropdown. Complete any other relevant details.
- Click Process.
Step Three: Assign Currency Codes to your Customers and Suppliers
When you set up a new Customer or Supplier (Vendor), their currency code defaults to what was set up in Step 2 above. However, you can select another from thoses set up via the Codes Maintenance screen (see previous section). This then becomes the default during transaction entry stage where it can also be overridden.
See:
Example:
This Customer Account has the US dollar set as their default Currency. The default currency along with its equivalent amount in your company’s currency will appear during transaction entry stage. At this point, you can still enter a different rate in the Exchange Rate field if necessary.
Managing Currencies at Group Level
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If a multi-entity company has a consolidation entity, exchange rates should be updated from the group level.
AccountsIQ lets you maintain currencies and exchange rates for all entities in your group in one place.
Prerequisite: Assign User Permissions
Users must have the following permission to manage currencies at a Group Level:
Prerequisite: Set up Group Level Permissions
- Open the Consolidation Manager.
- Under Consolidation Options, check Manage Currencies at Group Level. This allows daily Exchange Rates to be managed centrally so that the currency rates in the Consolidation Entity are propagated to the entities in the group.
- Click Save.
Maintaining Currencies and Exchange Rates at Group Level
There are three ways to access the Group Currency Rate table:
-
Consolidation Manager > Consolidation Exchange Rates tab > Maintain Transactional Exchange Rates for Group. View or update rates here.
- In the Consolidation Entity, go to Setup > Codes Maintenance > Currencies.
- In the Entity Listing grid, go to the Actions dropdown of the Consolidation Entity and select Update Exchange Rates Across Group.
How is the exchange rate of a currency calculated when a subsidiary has a different base currency to the top consolidation entity?
Example for JPY: The exchange rates set in the top consolidation entity determine the rates for subsidiaries.
Top Consolidation Entity Base Currency: USD
- EUR to USD = 0.987650.
- JPY to USD = 141.000
Sub-Consolidation Entity Base Currency: EUR
- USD to EUR = 1.012504 USD. This is calculated based off the USD to EUR rate from top consolidation entity.
- JPY to EUR = 142.763EUR. This is calculated using the formula USD to JPY * EUR to USD (141 * 1.012504).
Example: Effects of updating Exchange Rates at Group level
When you update an Exchange Rate in this Group Currency Table, such as Sterling to Euro (Sterling being the Consolidation Group Company Base Currency in this example), it will not just change the STG/EUR Rate in all Subsidiaries.
Exchange rates are interdependent so any subsequent change in the relationship between £ Sterling and € Euro will impact the $ Dollar to € Euro relationship. In this example:
- 1 £ Sterling = 1.25 € Euro
- 1 £ Sterling = 1.55 $ Dollar
- 1 $ Dollar = 0.80645 € Euro
Similar changes in the relationship between Sterling and the other Base Currencies will also cause modifications to ripple through other inter-currency relationships.
A Group Company Currency Table before and after exchange rate changes to the AUS Dollar:
Australian Subsidiary Company Currency Table before and after exchange rate change to the AUD Dollar in the consolidating company:
See:
Add Edit Currency in a single Entity (8.1) - AIQ Academy
Add Edit Currency at Group Level (9.1) - AIQ Academy
Using TransferMate to Update Exchange Rates Automatically
TransferMate lets you import the latest currency exchange rates. These become the default rates used during transaction entry but can still be overridden at this stage. TransferMate exchange rates can be updated as often as your company's Foreign Currency Policy requires.
To Update Exchange Rates at Group level:
- If you are maintaining currencies and exchange rates at the Group Level, either log into the consolidation entity or go to Actions > Update Exchange Rates Across Group.
- Go to Setup > Codes Maintenance > Currencies. The Currency table allows the following:
- Update the exchange rate for individual currencies to the current TransferMate rate by clicking Update To Latest Rate.
- Update all currency rates to the current TransferMate rates by clicking Update All to Latest Rates.
- Update Currency Rates manually by clicking Edit and editing the rate field for the currency in the field.
To Update Exchange Rates at Entity Level:
- Log into the relevant entity.
- Go to Setup > Codes Maintenance > Currencies.
- Click Update next to the relevant currency or Update All Rates.
See:
Add Edit Currency in a single Entity (8.1) - AIQ Academy
Add Edit Currency at Group Level (9.1) - AIQ Academy
Updating Exchange Rates during Foreign Currency Revaluation
At the end of each Financial Period, it is advisable to:
- Reconcile ledgers.
- Revalue the open Items to reflect the current Exchange Rates rather than historical ones.
Follow the instructions in Foreign Exchange Revaluation Journals. When you reach the Currency Period End Rate Management screen, add the following steps:
- Next to the currency, click Edit.
- Enter the new exchange rate.
- Click Update. The historical exchange rates carried on each transaction will not change. Instead, the new exchange rates will be compared to the historical exchange rates to calculate the Unrealized Gains or Losses Journals and their cancelling reversals.
- Repeat steps 1-3 for all other currencies.
Continue with the revaluation process as outlined in Foreign Exchange Revaluation Journals.
See:
Unrealised FX Gains Losses (8.4) - AIQ Academy
Unrealised FX Gains Losses for Groups (9.2) - AIQ Academy
Foreign Exchange Revaluation Journals