Foreign Currency Transacting
Overview
BOSEnterprise enables users to conduct Foreign Currency transactions. It offers a robust framework for Forex Accounting, enabling accurate management of transactions with international customers, suppliers, and banks. This framework ensures precise conversion and reflection of foreign currency transactions in financial statements, streamlining operations and eliminating manual errors. This document offers a concise guide on leveraging the module for efficient foreign currency accounting, including setup and transaction management across different business activities.
Managing foreign currency transactions encompasses several key elements:
It involves addressing the implications of Forex Gain/Loss
The allocation of funds in both local and foreign Currencies.
Accounting practices necessitate the conversion of foreign transactions into the local Currency for standardised reporting.
Insights into the impact of Forex Gain/Loss are crucial for informed decision-making in the face of Currency fluctuations.
Table of Contents
Key Concepts
To conduct foreign currency transactions in BOSEnterprise, the following is required:
Additional Transactions Types
All Transactions linked to the Bank must be in Bank Currency
All Transactions linked to the Customer or Supplier must be in the Customer or Supplier Currency or Local Currency.
Additional Accounting Settings to convert back to the local currency
Use of a fluctuation Rate of Exchange (RoE)
Multi-currency - For more information on General Settings for Multi-Currency, click here.
Transactions Types & Settings
Transactions Required
Transaction Settings (All Customer / Supplier Transactions)
Accounting
Currencies = Company and Local (Edit RoE)
Accounts & Settings
Account/s Required
Navigation: Main Menu > Setup > Accounting > Accounts.
Forex Gain/Loss Account (Expense or Other Income)
Bank Category
Navigation: Main Menu > Setup > Accounting > Accounts.
All Bank Accounts should be linked to the relevant Currency (ex. Bank - Local (Currency = Local); Bank - USD (Currency = USD))
Customers / Suppliers
Navigation: Main Menu > Office> Customers / Suppliers > Accounts tab.
VAT Type = Standard / Exempt
Currency = Select the Currency to transact in
Items and Pricing
Navigation: Main Menu > Items > Items
Costing & Pricing
Supplier Prices
Multiple Supplier Prices can be added in different Currencies. Set the CUR field to the Currency that the Item was purchased in.
Additional fields (hidden by default)
RoE Override = Enabled when RoE should not auto-update
RoE X = Rate of Exchange
Pricing
Multiple Prices can be added in different Currencies. Set the CUR field to the Currency the Item is costed and sold in.
Use the Cost Adj % field to factor in Landed Costs and Cost fluctuations (ex. 15%)
Creating a Transaction
Default Transaction Currency = As per Customer / Supplier currency selected.
Items can be added to the Transaction in various Currencies.
The RoE and Currency can be managed on a Transaction basis. See the Currency and Rate fields in the footer.
Additional Fields (hidden by default)
Total CUR
Total CUR (inc)
Ledger
Navigation: Main Menu > Accounting > Ledger.
The Detailed Ledger can be viewed in Local and Foreign Currencies.
Select the Customer / Supplier account > select a Currency from the CUR dropdown to see various views.
Allocating Receipts and Payments
Scenario 1 - Recommended
This guide is applicable if a Bank Account is created for each Currency transacted in.
Once a Customer Receipt (CR) is allocated, a left-over value is unallocated. Record the Forex Gain or Loss. In the Outstanding section > click on Menu > Record Forex Exchange Gain / Loss.
Scenario 2 - Accrual required
This guide is applicable if the Customer is invoiced in Forex, but the Customer pays into a Local Currency Bank Account.
Requirements:
New Account = Accrual - Forex
Category = Current Liabilities
New Transaction Type = Forex Receipts
Accounts Setup
Dr Bank; Cr Forex Accrual
Transaction Setup
Items & Inventory
Item Type = Default Item
Accounting
Accounting = Enabled
Currencies = Local Only
VAT Type (Default) = No VAT
Steps - Receivables
Create a Forex Receipts transaction (Dr Bank; Cr Forex Accrual)
Once the Customer pays, create a Customer Receipt (Dr Accrual - Forex; Cr Receivables) and allocate it to the Customer Invoice. A left-over value will stay unallocated. Record the Forex Gain or Loss. In the Outstanding section > click on Menu > Record Forex Exchange Gain / Loss.
Create a General Journal (GJ) to clear the accrual account (Cr Accrual - Forex; Dr Forex Gain/Loss).
Steps - Payables
Create a Forex Receipts transaction (Dr Forex Accrual; Cr Bank)
Once the Supplier is paid, create a Supplier Payment (Dr Payables; Cr Accrual - Forex) and allocate it to the Supplier Invoice. A left-over value will stay unallocated. Record the Forex Gain or Loss. In the Outstanding section > click on Menu > Record Forex Exchange Gain / Loss.
Create a General Journal (GJ) to clear the accrual account (Cr Forex Gain/Loss; Dr Accrual - Forex).
Fixing Accounts that have mixed currency transactions
Old Period
Close and Zero Account - Last day of the old period
Close-off Forex account - Contra Accruals
Close-off Local account - Contra Accruals
New Period
Create a new Account with an Opening Balance (day 1 of the new period)
Change all transactions post-changeover to link to the new Account.
Related Topic
BOS Server - RoE Updates
The history of the RoE can be viewed in QuickEasy by navigating to the Main Menu > Setup > Settings > General Setting = Currencies > Click Edit (Value column) > History tab.