24 Processing Alternate Currency Payments

This chapter contains these topics:

• Section 24.1, "Alternate Currency Payment Records,"

• Section 24.2, "Creating Automatic Payments in an Alternate Currency,"

• Section 24.3, "Creating Manual Payments in an Alternate Currency,"

• Section 24.4, "How Alternate Currency Payment Amounts Are Calculated."

Most of the alternate currency payment processing is based on the setup you do before you process payments.

Before you process payments in an alternate currency, you can review the vouchers in both the domestic and the 'as' if currency on Supplier Ledger Inquiry. The alternate currency amount you view on Supplier Ledger Inquiry may not be the exact amount of the payment due to rounding differences.

24.1 Alternate Currency Payment Records

Alternate currency payment amounts are stored in the A/P Matching Document table (F0413). The currency in this table will be different from the currency in the A/P Matching Document Detail table (F0414) because an alternate currency payment is involved. The historical exchange rate stored in the A/P Matching Document Detail table contains the exchange rate that is used to calculate from the foreign currency to the alternate currency.

Realized and alternate gains or losses are calculated at time of update and recorded in the F0414. The exchange rate on the realized gain or loss record will be the rate from the transaction currency to domestic. The exchange rate on the alternate gain or loss record will be the rate from the alternate currency to domestic currency.

24.2 Creating Automatic Payments in an Alternate Currency

Processing alternate currency automatic payments is similar to processing other automatic payments with differences noted for these tasks:

• Creating payment groups

• Writing payments

• Updating payment groups

24.2.1 Create Payment Groups (P04570)

Set the processing options for alternate currency processing as noted in Alternate Currency Payment Set Up. You may group voucher by currency code in addition to bank account if desired.

24.2.1.1 Error Messages

If an error occurs when you create payment groups, a message prints on the Create Payment Groups report. An error message prints, for example, if you try to write a Euro payment from a USD bank account. The error messages that are specific to alternate currency payments are:

• Alternate currency clearing account is invalid or is a monetary account

• Alternate currency clearing account company is not the same as the transaction company

• AAI for alternate gain or loss account is invalid

• Alternate currency gain or loss account company is not the same currency as transaction company

• The currency of the alternate payment did not match the currency of the bank account

24.2.2 Work with Payment Groups (P04257)

Set the processing option to display amounts in alternate currency when viewing payment groups (optional).

Write: Write payment per normal payment processing. An effective date for the exchange rate to be used can be set up or the system date will be used for the default.

When you write payments, the exchange rate on the date of payment is recorded as follows:

• The foreign to domestic currency rate is recorded as a standard gain or loss

• The alternate to domestic currency rate is recorded as an alternate gain or loss

24.2.2.1 Error Messages

If an error occurs when you write payments, a message appears after you enter the payment date. The error message that is specific to alternate currency payments is currency exchange rate not found. Confirm that all necessary exchange rates are set up in the Exchange Rates table (F0015).

Update: Update the payment group. Realized and alternate gains or losses are calculated at time of update and recorded in the F0414. The exchange rate on the realized gain or loss record will be the rate from the transaction currency to domestic. The exchange rate on the alternate gain or loss record will be the rate from the alternate currency to domestic.

If an error occurs when you update payment groups, a message prints on the Update Payments Error Report. The error messages that are specific to alternate currency payments are:

• Currency exchange rate not found

• Exchange rate cannot be changed between writing and updating payments

24.3 Creating Manual Payments in an Alternate Currency

To process alternate payments using Manual Payment with Voucher Match (P04102):

1. There are 2 processing options for Alternate Payment Processing in P04102. The first is to display the alternate currency code field and this must be set to a one. The second designates which exchange rate to display as the default, either alternate to foreign rate, or alternate to domestic rate. Regardless of what is set as the default, you can use Alternate Domestic/Foreign Alternate function (F6) to toggle between the two rates.

2. Populate the header information per normal payment processing, however you must enter a payment date. In the Currency Code field, designate the voucher (transaction) currency; in the Alternate Currency field, designate the payment currency. Press enter. This will display open vouchers in the voucher currency specified. Enter payment amount and amount applied to voucher in the voucher currency and press enter.

3. Once payment is entered, the system will calculate the alternate payment amount. You can view the alternate payment amount, and the exchange rates used by inquiring on the payment after entry. In the example below, the voucher was created for $1000 CAD to a USD company. The payment was in GBP. Note that the payment was applied in the original voucher amount of $1000 and the mode of 'F'. The system calculates the alternate amount of GBP 466.20 upon entry. This is what the transaction looks like after entry, when the alternate currency amount has been calculated:

   Figure 24-1 Payment With Voucher Match screen

   
   Description of "Figure 24-1 Payment With Voucher Match screen"
   
   

4. The system creates records in the F0413 and F0414 upon entry as described in Alternate Currency Payment Records, above.

24.4 How Alternate Currency Payment Amounts Are Calculated

The amount of the alternate currency payment is calculated as follows:

• Add the total amount of the vouchers in the supplier's currency.

• Use the exchange rate set up for the supplier's currency to the alternate currency to calculate the payment amount.

24.4.1 Example: Canadian Company Pays USD Voucher in JPY

This example illustrates a Canadian dollar (CAD) base currency company that issues a voucher currency in a foreign currency, U.S. dollars (USD). The payment currency is an alternate currency, Japanese yen (JPY). Because of the exchange rate conversions, there is the potential for two gains or losses: one between Canadian dollar (CAD) and USD and the other between CAD, JPY, and USD.

Description	Currency	Amount	Exchange Rate 1 January 2017	Exchange Rate 1 February 2017
Voucher (domestic currency)	CAD	200
Voucher (foreign currency)	USD	142.57	1 USD = 1.4028 CAD
Payment	JPY	18,570		1 USD = 1.4357 CAD 1 CAD = 90.72 JPY 1 USD = 130.25 JPY
Standard gain or loss	CAD	4.69
Alternate gain or loss	CAD	.01

24.4.2 Calculations

Calculation	Description
Foreign Currency Voucher (USD)	The voucher on 1 January 2017 is 142.57 USD.
Alternate Currency Payment (JPY) Calculation	The payment on 1 February 2017 is 18,570 JPY, which is calculated as follows: 142.57 USD x 130.25 = 18,570 JPY
Regular Gain or loss Calculation	The gain or loss created by the exchange rate fluctuations between the voucher currency and the domestic currency is calculated as follows: 200 CAD - (142.57 USD x 1.4357) CAD = 4.69 CAD
Alternate Currency Gain or loss Calculation	The alternate currency gain or loss is calculated and an alternate loss is recorded as follows: 204.69 - (18,570 JPY / 90.72 = 204.70 CAD) = - 0.01 CAD
Bank Account Entry	The bank account is credited as follows: 18,570 JPY (the amount of the payment) on the foreign side 204.70 CAD (the total of the pay items, including gains/losses) on the domestic side

Figure 24-2 T-Accounts Showing How Alternate Currency Payment Amounts Are Calculated

Description of "Figure 24-2 T-Accounts Showing How Alternate Currency Payment Amounts Are Calculated"

Figure 24-3 T-Accounts Showing the Gain/Loss in Alternate Currency Transaction Processing

Description of "Figure 24-3 T-Accounts Showing the Gain/Loss in Alternate Currency Transaction Processing"