1. Using Receivables Credit to Cash
  2. How Foreign Currency Transactions Are Processed

How Foreign Currency Transactions Are Processed

When you enter a receipt or transaction that isn't in the ledger currency, use the available window to enter conversion rate information. This information is used to convert the foreign currency receipt or transaction amounts to the ledger currency.

Settings That Affect Foreign Currency Conversion

You can use personalization to display the Inverse Conversion Rate field. The Inverse Conversion Rate field determines the calculation of the ledger currency amount.

Enter conversion rate information:

  • Conversion Date: The date that applies to the conversion rate for the foreign currency.

  • Conversion Type:

    • Corporate: Used to standardize rates for a company. This is generally a standard market rate determined by senior financial management for use throughout the enterprise.

    • Spot: Used to perform conversion based on the rate on a specific date. The rate applies to the immediate delivery of a currency.

    • User: Used when you enter a foreign currency for a receipt and you haven't defined a daily conversion rate for the foreign currency. If you select this conversion type, you must enter the conversion rate.

    Note: If you select a conversion type of Corporate or Spot, Receivables verifies that a rate exists for the date that you enter, and you can't update the conversion rate. Receivables doesn't validate rates for the User conversion type.

  • Conversion Rate: The conversion rate to use. You can have multiple currency conversion rates for the same date. If not, the conversion type that you entered provides the default rate. You define your non-user conversion rates in the Daily Rates window. If you entered a conversion type other than User, Receivables verifies that a rate exists for the conversion date that you entered.

How the Ledger Currency Amount Is Calculated

The ledger currency amount is calculated in this way:

  • If the Inverse Conversion Rate field isn't displayed, the ledger currency amount is calculated as: Ledger Currency = Foreign Currency * Rate.

  • If the Inverse Conversion Rate field is displayed, the ledger currency amount is calculated as: Ledger Currency = Foreign Currency / Rate.

You can change the conversion type, rate date, and conversion rate of a foreign currency receipt, even after it's transferred to general ledger.

You can't adjust the conversion rate of a foreign currency transaction on a completed invoice. You can alternatively incomplete the invoice, adjust the conversion rate, then complete the invoice again. If you can't incomplete the invoice, either because the invoice is paid, posted, printed, or has had a receipt applied against it, you must reverse the transaction (delete it, credit it, or change the transaction type to one that has the Open Receivable and Post to GL options set to No), then recreate the transaction at the new rate.

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