Understanding Alternate Currency Receipts

An alternate currency receipt is a receipt that is in a currency different from the domestic or foreign currency of the invoice to which it applies.

With alternate currency receipt processing, you can enter an invoice for a customer in one currency and receive payment in a currency that is different from the transaction currency of the invoice and the domestic currency of the company. This prevents you from having to void the original invoice and enter a new invoice that is in the same currency as the receipt.

For example, assume that you work for a U.S. company and you enter invoices in the currency of the customer's company. The customer's company forwards invoices to their parent company for payment. The parent company uses a different currency than the customer's company and your company. With alternate currency receipt processing, you can apply the receipt in whatever currency it is submitted.

When you enter an alternate currency receipt, the currency of the company for the bank account must be the same as the base (domestic) currency of the company on the receipt. For example, a U.S. company enters an alternate currency receipt in Canadian dollars and applies it to a foreign currency invoice in Japanese yen. The base currency of the company on the receipt is USD; therefore, the currency of the company for the bank account must also be USD. If the currency of the company for the bank account is different from the base currency of the company on the receipt, you receive an error message and cannot continue entering the receipt.

Entering receipts in an alternate currency is similar to entering domestic and foreign currency receipts. Most of the processing for alternate currency receipts is based on the setup that you do before you actually enter the receipts. You activate alternate currency receipt processing in a processing option in the Standard Receipt Entry program (P03B102) and specify the currency code of the alternate currency receipt when you enter the receipt.

The Standard Receipt Entry program converts the selected invoices to the alternate currency amount so that you can apply the alternate currency receipt. To convert the invoice amount, the program uses the exchange rate between the invoice currency and the alternate currency in the F0015 table based on the general ledger date or, if applicable, a spot rate entered on the receipt record.

In this example, the company base currency is USD. You can:

• Apply a EUR receipt to the domestic amount of invoice 225 (USD).

  Note: If an invoice is domestic-only and the receipt is not domestic, the receipt is considered an alternate currency receipt, not a foreign currency receipt.

• Apply a JPY receipt to the foreign amount of invoice 226 (CAD).

  In both cases the company base currency on the receipt is the same as the domestic currency of the invoices; therefore, the system enables you to apply receipts in an alternate currency.

The currencies for the invoices are:

• Invoice Number: 225

  Domestic currency of invoice: USD

  Foreign currency of invoice: None

  Alternate currency of receipt: EUR

• Invoice Number: 226

  Domestic currency of invoice: USD

  Foreign currency of invoice: CAD

  Domestic currency of receipt: JPY

The receipts, which are not in the foreign or domestic currency of the invoices, pay the domestic (USD) and foreign (CAD) currency amounts of the respective invoices.

A realized gain or loss might be calculated if the exchange rate changes between the time that the invoice was entered and the receipt is applied.