Foreign Currency Drafts with Contingent Liability

You remit drafts to the bank so that it can collect funds from the customer's bank. If you request an advance from a bank before the actual due date of the draft, some countries require that you recognize a contingent liability.

Before you remit a foreign currency draft with contingent liability, run the Draft Remittance program (R03B672). Set the processing options under the G/L Remittance form as follows:

• AAI for Draft GL Account. Set to 2 (contingent) to create journal entries for a contingent liability.

• Exchange Rate Override. Enter an override exchange rate, if applicable.

  If you leave this field blank, the system retrieves the exchange rate from the F0015 table.

If you remit drafts in more than one currency, the system prints a report with an * in the Due Date Total and Customer Total columns. When you approve and post the remittance batch, the system creates journal entries for foreign currency gains and losses.

Unlike domestic currency drafts with contingent liability, the system records gains and losses during the draft remittance process for foreign currency drafts with contingent liability. (For foreign currency drafts without contingent liability, the system records gains and losses during the collection process.)