Accounts Payable - Calculate and Post PO Currency Fluctuation Gain/Loss

Overview

The Accounts Payable module has the ability to calculate exchange rate differences between the Purchase Order receipt and an AP PO related invoice.

The following pre-requisites need to be met in order to recognize Purchase Order currency fluctuation between the PO receipt and AP invoice:

  1. The AP invoice currency must match with the PO currency.

  2. The Allow Cross Currency Transaction checkbox in the System Options screen must be checked.

  3. The PO Currency Fluctuation Gain/Loss account must be defined in the AP Control File screen.

  4. The Exchange Rates table must be maintained in the System Data > Global Tables > Banking > Exchange Rates screen.

Process

The following is a step-by-step process for how to calculate and post a PO currency fluctuation gain/loss for a single receipt.

  1. Create a Purchase Order with different PO currency.

    • Company: CCC

    • Company Currency: USD

    • Vendor Currency: USD

    • PO Currency: CAD

    • PO Reference Date: 1st January 2023

    When the PO is posted, the commitment is posted to the job in USD using the exchange rate defined in the Exchange Rates screen.

    PO Line Item Commitment (CAD) Exchange Rate Commitment (USD)
    1 5,000.00 0.84596223 4,229.81
    2 3,000.00 0.84596223 2,537.89
    3 2,000.00 0.84596223 1,691.92
    Total 10,000.00   8,459.62

  2. Enter the Purchase Order receipt (to receive the entire PO).

    Note The received date is February 1st, 2023.

    The General Ledger and Job Costing posting routine uses the exchange rate from the 1st of Feb 2023 for conversion into USD.

    PO Line Items Received Qty Received Amt (CAD) Exchange Rate Received Amt (USD)
    1 500.00 5,000.00 0.85678908 4,283.95
    2 1,000.00 3,000.00 0.85678908 2,570.37
    3 1,000.00 2,000.00 0.85678908 1,713.58

  3. Enter and post the AP invoice against the received PO quantity.

    Note The AP invoice currency must be updated to match the PO currency. The highlighted field in the following screenshot shows that the currency can be updated on the Defaults tab of the Enter Voucher screen. For the given example, since the PO currency is CAD, the AP invoice currency is updated to CAD, but the AP invoice cash account is in USD. Users will be allowed to use such combination when the Allow Cross Currency Transaction checkbox is checked in System Options.

    The AP invoice posting routing will calculate the exchange rate difference to the PO Currency Fluctuation Gain/Loss account defined in the AP Control File.