Posting When You Use Multiple Currencies (Oracle Payables Help)


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Posting When You Use Multiple Currencies

Functional Rate

You must specify an exchange rate for each foreign currency invoice or payment so that Payables can fully distribute your transaction in both your entered (foreign) and functional currencies. When you post a foreign currency invoice or payment, Payables transfers both the entered amount and the calculated functional currency amount for the transaction.

If you do not specify an exchange rate for a foreign currency invoice, Approval places a No Rate hold on the invoice, which prevents payment or posting of the invoice. In addition, you cannot post foreign currency payments that do not have exchange rates.

Review the Posting Hold Report to see all foreign currency invoices and payments that do not have exchange rates. You can enter exchange rates manually, or submit AutoRate to automatically enter exchange rates for invoices and payments without exchange rates.

Realized Gain or Loss

You can have as many realized gain or loss accounts as you need. You can define default Gain or Loss Accounts for Payables and override them for each bank account you use. Payables automatically calculates a realized gain or loss if a payment has a different exchange rate than the foreign currency invoice it pays. Payables assigns the amount to the appropriate Gain or Loss Account you have defined for the bank account from which you created the payment. If you enable the Allow Cash Clearing Account Payables option, Payables automatically calculates a realized gain or loss when you post a foreign currency payment that you reconciled in Oracle Cash Management. Payables transfers accounting information for your realized gains and losses when you submit the Payables Transfer to General Ledger program.

Example

You install General Ledger and Payables and define US Dollars as the functional currency for your set of books. You select Accrual Basis as your accounting method.

You enter two invoices, both for 300 pounds (UKS) with a Corporate exchange rate, and approve the invoices. The Corporate exchange rate on the date you enter the invoices is 2:1. When you post the invoices, Payables transfers accounting information in both your foreign currency (300 UKS) and your functional currency ($150 US) for both invoices, and Journal Import creates one journal entry in your functional currency and one in UKS.

When you pay the first invoice, the exchange rate has decreased to 1.5:1, representing a loss in your functional currency of $50 US (300/1.5 - 150). When you pay the second invoice, the exchange rate has improved to 2.4:1, creating a gain of $25 US. When you post the payments, Payables transfers accounting information in both the foreign currency and your functional currency for both payments.

If you submit Journal Import, Journal Import creates one journal entry in your functional currency to record the invoice payments along with the realized gain and loss and one journal entry in UKS to record the payment.

Posting When You Use Multiple Currencies

Functional Rate

Realized Gain or Loss

See Also