Understanding Multicurrency Processing for Payments

This topic discusses:

  • Deposit and payment entry

  • Payment worksheets

  • Payment Predictor

  • Draft worksheets

Payments carry both the payment amount and the converted base amount. The system handles conversion automatically based on rate types, exchange rates, and the base currency of the business unit. You can apply payments to items in different currencies. When an item is paid, the system calculates realized gain or loss and generates accounting entries to reflect the gain or loss.

The deposit and payment status pages reflect the currency of the payment. Other pages that contain payment amounts show both currencies—payment and base.

You can perform deposit entry using either of these methods:

  • Limiting the deposit to only one currency.

  • Entering a currency code for each payment.

If the deposit currency and the business unit base currency are different, the system stores both amounts in the system.

When you apply a payment to items, the items do not have to have the same currency, and the payment does not need to have the same currency as the items.

Worksheet totals appear in the payment currency. The system converts the sum of the selected items to the payment currency to match the deposit and payment totals at the bottom of the worksheet. When an item is partially or completely paid off on the payment worksheet, the system calculates realized gain or loss and generates the adjusting accounting entries.

If a rounding difference exists when the system converts the amount, the Receivables Update process posts the leftover amount using the rounding account code that you assigned to the business unit on the Receivables Definition - Accounting Options 1 page.

Example

Suppose that you have an invoice that is 12,565.39 USD, and you receive a EUR payment that converts to 12,565.40 USD. The Receivables Update process would post the .01 USD difference to the rounding account.

Note: If the transaction involves a realized gain or loss, the rounding account is not updated.

When the system calculates a realized gain or loss amount for an item, it includes in the calculation any gain or loss amount that results from a difference in exchange rates.

The Payment Predictor Application Engine process (ARPREDCT) applies payments to items, including items that do not share a single currency. Also, the payment may be in a different currency from the currencies of the items. For VAT-related transactions, Oracle suggests that you route Payment Predictor results that contain remaining balance amounts to the payment worksheet.

Payment Predictor calculates the realized gain or loss on items for all applied payments, even when the entry currency for a payment differs from the item's base currency.

When you apply a draft to items, the items do not have to have the same currency, and the draft does not need to have the same currency as the items.

Worksheet totals display in the draft currency. The system converts the sum of the selected items to the draft currency to match the draft totals at the bottom of the worksheet.