Cross Currency Receipts (Oracle Receivables Help)


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Cross Currency Receipts

When your customer remits payment for an invoice, debit memo, or chargeback, the receipt is usually in the same currency as the transaction. However, there may be times when your customer remits payment in a currency that is different than the currency of the open debit item. For these occasions, Receivables lets you create cross currency receipt applications to let you fully or partially process the payment.

For example, you create Invoice 101 in Canadian dollars (CND) but your customer sends a receipt in Deutsche marks (DEM) as payment. Using the remittance information provided by your customer, you can either fully or partially apply this receipt to Invoice 101. Receivables automatically calculates the open balance on the invoice (if any) and the foreign exchange gain or loss (FXGL) for this application.

You can apply receipts to transactions using any currency defined in Oracle General Ledger.

Calculating the Foreign Currency Exchange Gain or Loss

Because of fluctuating exchange rates between currencies, cross currency applications must be evaluated to determine their effect within Receivables and the corresponding accounting entries created in your general ledger. With each cross currency application, you can incur either a foreign exchange gain or loss (FXGL).

When you apply a receipt to a transaction that is in a different currency, Receivables first determines the transaction and the receipt amounts in your functional currency. Receivables then compares these amounts to determine the foreign exchange gain or loss for this application. If the result is positive, you will incur a foreign currency exchange gain for this application; if the result is negative, you will incur a foreign exchange loss.

Note: As with same currency receipt applications, Receivables accounts for your FXGL using the Realized Gains and Realized Losses accounts that you defined in the System Options window.

Receivables calculates the FXGL using the following formula:

Receipt Amount * (as of the receipt date) - Invoice Amount * (as of the invoice date) = Foreign Exchange Gain or <Loss> *

* Receivables calculates this amount in your functional currency.

Using the fields in the Applications window, this formula can be also represented as shown below:

Allocated Receipt Amount Base - Amount Applied Base = FXGL

See: Applying Cross Currency Receipts - Examples.

Euro Validation

In accordance with the laws of the European Monetary Union, as of January 1, 1999 fixed-rate currencies will be considered a monetary unit of the Euro currency. Receivables supports currencies that are fixed-rate denominations of the Euro.

Because the monetary units of the Euro have fixed, predefined exchange rates, the Applications window can enter some default values when you create applications for Euro-denominated transactions.

For example, currencies within Country A and Country B are Euro-denominated and are defined as such in the general ledger. You issue an invoice in currency A, then later apply a receipt to that invoice in currency B. Because the rate for these countries is fixed, you only need to enter either the Amount Applied or the Allocated Receipt Amount in the Applications window. When you do this, Receivables automatically calculates and displays a default value for the other amount.

This example supports the following situations in which your customer provides either:

the amount of this receipt to apply to the transaction (for example: 'Apply 50 dollars of this receipt to Invoice 101')

an amount to reduce the open balance (for example: 'Use this receipt to close 25 dollars of Invoice 102')

Note: When you are applying a Euro-denominated receipt to a Euro-denominated transaction, you cannot update the fixed exchange rate. You can only update an exchange rate in Oracle General Ledger.

Viewing Discounts on a Cross Currency Receipt Application

When you apply a receipt to multiple transactions that are in different currencies, Receivables does not display the total discount amount in the Receipts window (Application Summary alternative region). This is because Receivables always calculates discounts in the currency of the transaction. Since there are multiple transactions with multiple currencies involved in this type of application, the total discount cannot be expressed in a single currency. Therefore, you can only view the discount for each application separately in the Applications window.

To do this, perform the following:

query the receipt in the Receipts window

choose the Applications button

scroll to display the Discounts field (if this field does not appear in the window, choose Show Field, then Discounts from the Folder menu)

Accounting Entries in Multiple Currencies

When you enter a receipt or a transaction that is not in your functional currency, Receivables requires that you enter the applicable exchange rate in the Exchange Rates pop up window. This lets Receivables account for amounts in both your functional currency and the currency of the transaction.

For more information, see: Foreign Currency Transactions.

Customer Remittance Information

When applying cross currency receipts, your customer needs to provide you with the following remittance information:

to which invoice(s) this receipt should be applied

if the receipt is a partial payment, how much of each invoice is to be settled (this is the 'Amount Applied' field in the Applications window)

how much of the receipt should be allocated to this transaction (this is the 'Allocated Receipt Amount' field in the Applications window)