Currency Parameters for Incentive Compensation

You can set the operating currency currency for each business unit, and also specify transaction and payment conversion rate types.

In the Setup and Maintenance work area, use the Manage Parameters task.

Offering: Sales
Functional Area: Incentives

Note: After you save the operating currency parameter setting for the business unit, you can't change it.

Operating Currency

Operating currency is the core, default currency for a business unit. You can report across business units only if they use the same currency. Generally, the application uses operating currency for these purposes:

To report across various transactions within a business unit

Examples: Cost of compensation across all incentive compensation plans and total incentive payments for the period of January
For all amount values in compensation plans in the Compensation Plans work area

Processing Currency

Processing currency is the core currency for credit, earnings, and payment transaction amounts. The application maintains participant subledger balances in the processing currency only. The processing currency is always the same as the operating currency.

Multicurrency Support

To support multicurrency processing, the source transaction amount and event date are used to populate all transactions with appropriate values for each relevant attribute:

Currency
Conversion rate
Amount attribute

Base, credit, earnings, and payment transaction amounts are stored in these currencies.

Transaction	Source Currency	Processing Currency	Operating Currency	Participant Home Currency
Base	Yes	No	Yes	No
Credit	Yes	Yes	Yes	Yes
Earnings	No	Yes	Yes	Yes
Payment	No	Yes	Yes	Yes

Currencies other than the processing currency are available for transaction traceability and reporting. For example, when you adjust the amount of a base transaction, that adjustment is shown in the source currency while credit and earning amounts are shown in the processing currency.

Conversion Rate Types

Create rate types such as Corporate, Daily, and Period Average, and define rates differently for each one of them to use in different scenarios. For example, you decide to use Daily rates to convert transaction and credit amounts, and Period Average rates to convert payment amounts. Use the Manage Incentive Currency Conversions task in the Setup and Maintenance work area to create company-defined rate types. Here are the conversion rate type parameters and the purpose of each.

Parameter	Purpose
Transaction Conversion Rate Type	Converts base transaction amounts during crediting, rollup, and calculation processing
Collection Conversion Rate Type	Converts transaction amounts during collection processing
Payment Conversion Rate Type in the Payment Parameters region	Converts payment transaction amounts during payment processing. Payments are always made in the participant's home currency. The Payment Conversion Date parameter determines whether the payment process uses the transaction date or the payment batch pay date to look up the corresponding currency rate to use.

Parameter

Purpose

Transaction Conversion Rate Type

Converts base transaction amounts during crediting, rollup, and calculation processing

Collection Conversion Rate Type

Converts transaction amounts during collection processing

Payment Conversion Rate Type in the Payment Parameters region

Converts payment transaction amounts during payment processing. Payments are always made in the participant's home currency.

The Payment Conversion Date parameter determines whether the payment process uses the transaction date or the payment batch pay date to look up the corresponding currency rate to use.