Processing Multicurrency Nets
This section provides an overview of the multicurrency netting functionality, and discusses how to process multicurrency nets.
PeopleSoft netting includes functionality to automatically adjust netted non-base currency accounting entries to ensure that the netting bank entries are in balance. This functionality requires that you setup certain pages and currency default values.
When you have established the necessary currency codes, no further input is required because the system automatically evaluates and adjusts the necessary netting accounting entries.
The adjustment functionality occurs during the Netting Close process (TR_NET_CLOSE), which the system calls from the Pay Cycle Selection process (AP_PAYSELECT). The Netting Close process analyzes if voucher and item accounting entries meet certain criteria. For example, if netting currency is greater than or less than the base currency. If the entries match the criteria, the Netting Close process adjusts them by updating the AR (PAYMENT_ITEM) and AP (PAYMENT_VCHR_XREF, VOUCHER, VOUCHER_LINE, DISTRIB_LINE) information prior to posting in AP and AR. Posting creates accounting entries, therefore, the netting adjustment occurs prior to posting to avoid the additional work of adjusting accounting entries.
Here is an example of the netting adjustment functionality when the net involves Japanese yen (JPY) and United States dollars (USD):
Netting Base Amount = 10000 JPY.
Netting Foreign Amount = 100 USD.
Rate = 100 JPY/USD.
Summarized receivables amount for netting = 100 USD (10001 JPY).
Summarized payables amount for netting = 100 USD (9999 JPY).
Given the above, the system calculates that:
The Netting Base Amount of 10000 JPY is less than the receivables amount of 10001 JPY, and subtracts 1 JPY from the receivables total.
The Netting Base Amount of 10000 JPY is greater than the payables amount of 9999 JPY, and adds 1 JPY to the payables total.
If you are netting bank accounts that are defined with different currencies, you must ensure that:
You have established an exchange rate between two different currency codes on the Market Rates page.
You have established as many valid currencies as needed by the specific netting bank account on the Netting Accounts - Valid Currencies (BANK_ACCT_CURR_SEC) page. For example, if you are netting between two accounts (one using JPY, one using USD) you must define both JPY and USD as valid currencies for both accounts.
To process multicurrency nets:
For the AP Voucher Entry confirm that:
You define the Curr (currency) field on the Invoice Information page with the convert into currency.
You define the Payment Currency field on the Invoice Information - Payments: Payment Options page with the convert into currency.
Approve the AP Voucher, but do not post it.
For the AR Item Entry confirm that:
You define the Control Currency field on the Group Control page with the convert into currency.
You define the Currency field on the Pending Item 1 page with the convert into currency.
Post the AR vouchers using the Group Control - Group Action page. (You can post AR vouchers as they are not evaluated by the Net Close process.)
Run the Receivables Update process (AR_UPDATE).
Create a manual net using the Manual Netting pages, being sure to define the Netting Currency field with the convert into currency. When you complete creating the manual net, click Submit.
Approve the multicurrency net using the Review Multiple Netting page.
Establish voucher payment selection criteria for the pay cycle using the Payment Selection Criteria page.
Process the pay cycle and create the payment using the Pay Cycle Manager page.
Post the voucher using the Payment Posting Request page.
Run the Receivables Update process (AR_UPDATE) again to close the receivables nets.
Review the resulting accounting entry and payment information on the following pages:
(AP) Voucher Accounting Entries
(AR) Group Control - Accounting Entries
Payment Control - Accounting Entries
Note: Remember that any AP vouchers that are posted before the Netting Close process runs do not encounter the rounding analysis of the netting adjustment process. Their associated accounting entries are not adjusted.