Currency Calculations

The system performs several calculations when it works with multicurrency transactions.

Conversion

Conversion is the exchange of one currency for another. In PeopleSoft Receivables, this refers to expressing the value of foreign currency transactions in terms of the base currency. Conversion occurs in many places in your PeopleSoft Receivables system.

When you receive items from a billing system, you can supply an entry amount in a foreign currency. The system uses an exchange rate to convert the entry amount to the business unit base currency amount. When you apply payments in one currency to items in a different currency, the system performs currency conversion as necessary to enable payment application. During the revaluation of your current receivables balance, the process revalues open items based on business unit base currency.

Exchange Rate

An exchange rate is the value of one currency expressed in terms of another. Actual exchange rates vary based on the currency rate type that you use. There are several recognized currency rate types, including spot (immediate), current, negotiated (discount and premium forward rates), average, and historical rates. The system supports any number of exchange rates.

Unrealized Gains and Losses

An unrealized gain or loss represents the difference between the amount you would receive in your base currency if your outstanding foreign currency accounts receivable balance were paid now, and the amount you would have received if payment was made when the items were created. If the exchange rate is more favorable now than when the items were created, you have an unrealized gain. If the exchange rate is less favorable now, you have an unrealized loss.

Realized Gains and Losses

A realized gain or loss represents the actual increase or decrease, due to exchange rate fluctuations, in the amount of money received in the base currency. The system determines realized gain or loss at payment time and when you offset items on the maintenance worksheet or by running the Automatic Maintenance Application Engine process (AR_AUTOMNT).