Multicurrency Netting Functionality

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.