Multi Currency Accounting
Transacting in two different currencies is known as Multi Currency Accounting.
Within BizCentric, you have the capability to record accounting entries using various currencies. For instance, if you possess a bank account denominated in a foreign currency, transactions can be conducted in that currency, with the system displaying the bank balance exclusively in that specific currency.
Foreign currency bank accounts may pertain to other branches within your company or may serve as accounts for foreign Customers/Suppliers.
1. Setup
1.1 Set currency in Chart of Accounts
To commence multi-currency accounting, start by indicating the accounting currency within the Account record. When creating an Account, you have the option to select the currency from the Chart of Accounts.
1.2 New account with different currency
You can additionally adjust or update the currency by accessing the specific Account records for existing Accounts.
1.3 Currency for Customer/Supplier
For Customers/Suppliers (Parties), you can also establish their billing currency within the party record. If the accounting currency of the party differs from the Company Currency, it is important to specify the Default Receivable/Payable Account in that respective currency.
1.4 After setup
After configuring the Currency in the necessary account(s) and specifying the relevant accounts in the Party record, you are prepared to conduct transactions with them. If the currency of the party’s account differs from the Company currency, the system will prevent transactions with that party.
To proceed, you must adjust the currency to match the party’s currency in the transaction (Sales or Purchase Order/Invoice). If the currency of the party’s account matches the company’s currency, transactions for that party can be conducted in any currency. However, the accounting entries (GL Entries) will consistently reflect the Party Account Currency.
Note: Ensure that the correct account with currency is set in the ‘Debit To’ field when making invoices/payments.
2. Exchange Rates
When managing multiple currencies, BizCentric provides the Currency Exchange page to facilitate exchange rate management, enabling you to save necessary exchange rate quotations. For further information, please refer to the Currency Exchange page.
When processing transactions involving foreign currencies, BizCentric retrieves exchange rates as follows:
- Firstly, from the Currency Exchange for any corresponding record (if created by a User).
- If unsuccessful, BizCentric attempts to retrieve the current market exchange rate from Frankfurter.
- If still unsuccessful, the exchange rate must be manually entered.
Exchange rates in the Currency Exchange master are retrieved based on whether ‘Allow Stale Exchange Rate’ is enabled in Accounts Settings.
3. Transactions
3.1 Sales Invoice
3.2 Purchase Invoice
Likewise, within a Purchase Invoice, accounting entries will be determined by the Supplier’s accounting currency. The Outstanding Amount and Advance Amount will also be displayed in the supplier’s accounting currency. Additionally, the Write Off Amount will now be entered in the transaction currency.
3.3 Journal Entry
Within a Journal Entry, transactions can be conducted using various currencies. Enabling multi-currency entries is facilitated by a checkbox labeled ‘Multi Currency’. Selection of this option allows for the selection of accounts with differing currencies.
Upon choosing a foreign currency account within the Accounts table, the system will display the Currency section and automatically retrieve the Account Currency and Exchange Rate. It is possible to adjust the Exchange Rate manually at a later stage. Debit and Credit amounts should be inputted in the Account Currency, following which the system will automatically calculate and display the equivalent amounts in the Company Currency.
4. Reports
4.1 General Ledger
In the General Ledger, when filtered by an Account where the Account Currency differs from the Company Currency, the system displays debit/credit amounts in the party currency.
4.2 Accounts Receivable/Payable
In Accounts Receivable/Payable report, the system shows all the amounts in Party/Account Currency.