Update Currency Exchange Rates: easy automation

Last month, we elaborated in our blog on globalization and the role of customs within this trend. Besides the increasing pressure on border patrol, globalization also moves financial markets. Before, most companies only worked with their local currency. Nowadays, more and more companies are active in more than one country, or even in multiple continents. That is why it is important to be able to check or report your finances in more than one currency. But to convert numbers every time takes in too much time. Therefore, choose to automatically update your Currency Exchange Rates.

Set up an additional reporting currency

By default, your system is set up to use your local currency, possibly the Euro. But it does not have to end there. Namely, you can choose to use another currency with a current exchange rate in your general ledger. By designating a second currency as an additional reporting currency, 3PL Dynamics will automatically record amounts in both your local currency and the second currency. This goes for your general ledger entry and other entries, such as VAT entries. This way, you keep your accountancy up-to-date with your most used currency.

Adjusting Exchange Rates

Partly due to globalization, Exchange Rates continuously change. This leads to your additional currency-equivalents having to change along. If this does not happen, you are taking the risk to misinformation in your finances. Amounts that are converted from foreign currencies and are booked in your general ledger (in your local currency) are incorrect. And of course, that is the last thing you need. Let alone updating all the posts that were entered after the daily exchange rate.

That is why with the “Adjust Exchange Rates” batch job, you can manually adjust the exchange rates of posted customer, vendor and bank account entries. Besides, it can also update additional reporting currency amounts on general ledger entries. Or you can automatically adjust exchange rates by using a service. We will get into this matter later in this blog.

Effect on Customers and Vendors

For customer and vendor accounts, the batch job adjusts the currency by using the exchange rate that is valid on the posting date that is specified in the batch job. The batch job calculates the differences for the individual currency balances and posts the amounts to the general ledger account that is specified in the “Unrealized Gains Acc.” field or the “Unrealized Losses Acc.” field on the “Currencies” page. Balancing entries are automatically posted to the receivables/payables account in the general ledger.

The batch job processes all open customer ledger entries and vendor ledger entries. If there is an exchange rate difference for an entry, the batch job creates a new detailed customer or vendor ledger entry which reflects the adjusted amount on the customer or vendor ledger entry.

Dimensions on Customer and Vendor Ledger Entries

The adjustment entries are assigned the dimensions from the customer/vendor ledger entries, and the adjustments are posted per combination of dimension values.

Effect on Bank Accounts

Just as for Customer and Vendor accounts, the batch job adjusts for Bank accounts the currency by using the exchange rate that is valid on the posting date specified in the batch job. The batch job calculates the differences for each bank account that has a currency code and posts the amounts to the general ledger account that is specified in the “Realized Gains Acc.” field or the “Realized Losses Acc.” field on the “Currencies” page. Balancing entries are automatically posted to the general ledger bank accounts that are specified in the bank account posting groups. The batch job calculates one entry per currency per posting group.

Dimensions on Bank Account Entries

The adjustment entries for the bank account’s general ledger account and for the gain/loss account are assigned the bank account’s default dimensions.

Effect on General Ledger Accounts

If you post in an additional reporting currency, you can have the batch job create new general ledger entries for currency adjustments between your local currency and the additional reporting currency. The batch job calculates the differences for each general ledger entry and adjusts the general ledger entry depending on the contents of the Exchange Rate Adjustment field for each general ledger account.

Dimensions on General Ledger Account Entries

The adjustment entries are assigned to the default dimensions from the accounts they are posted to.

Keep your Currency Echange Rates up-to-date by using a service

By using an external service such as FloatRates, you can automatically update your Currency Exchange Rates. Find out how below.

Set up a Currency Exchange Rate service

1. Search for “Currency Exchange Rate Services” in your search bar and then choose the related link.
2. Choose the “New” action.
3. If necessary, fill in the fields on the “Currency Exchange Rate Service” page. Are you not sure if this is needed? Then hover over a field to read a short description.
4. Check the “Enabled” box to enable the service.

 

Update your Currency Exchange Rates through a service

1. Search for “Currencies” in the search bar and then choose the related link.
2. Choose the “Update Exchange Rates” action.

As easy as automation can be!

With this last action, you automatically update the value in the“Exchange Rate” field on the “Currencies” page with the latest currency exchange rate. And in no time you have successfully automated a manual action. Do you experience trouble to do so? Please contact us, we are happy to help.