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Multicurrency on Customer Ledger Card

Overview

In a global economy, the ability to trade with foreign companies in their native currency is becoming ever more important.  So we have introduced the facility to deal with customers, suppliers and banks in different currencies to your business's main accounting currency ('Base Currency').

You may choose to specify your own customised conversion rates, or use the daily rates provided to Surf Accounts by Yahoo Finance.

Foreign currency transactions will be automatically converted to your base currency, keeping your core accounts correct while dealing with your global partners. 

Multicurrency on Customer Ledger Card

Customer’s having a different currency compare to business currency (base currency) both the currencies will appear in the customer ledger card in separate column. If the conversion rate is defined it will be auto calculated. In case if the conversion rate is not defined on the transaction date then conversion rate will be considered to be 1.

For illustration please see below

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In the above mentioned customer the customer currency is ‘Euro’ and the business currency is ‘GBP’. So there are two separate columns for both the currencies.

Example of Conversion of Currency:

Example 1:  

In sales invoice 389 the conversion rate is defined. Accordingly the conversion rate as is applied, so the amount ‘Euro’ and the ‘GBP’ amount remains the same in both the columns.

Example 2:

In sales invoice 394 no conversion rate is set so conversion rate will be set as 1. No the GBP amount (Customer Currency) and your business currency (Euro) amount remains the same.

For further illustration see the below mentioned figure:

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Introduction of Loss and Gain on Account

Since invoices and their payments may be on different dates, with different conversion rates, this may lead to currency gains or currency losses on the customer (or supplier) account.

Gain and Loss Calculation methodology:

Here the currency of the business is GBP and Business Currency is Euro. Look at the following screen shot for illustration.

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Calculation methodology of Gain and Loss on the account:

  1. Customer’s Foreign Currency : X  (GBP)
  1. Business Currency of the business : Y (EURO)
  2. Total  Business Currency = Net + VAT = Gross (GBP)  * Conversion Rate (Transaction Date) =  Total Business Currency (Euro )
  1. Gain or Loss on the Account = Gross of the Business currency –  Gross Foreign Currency * Conversion Rate of to date

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Posting of Gain or Loss on account

If your business is company type the posting will be in under the account (nominal) group of 377. If your business is any other format apart from company you need to create the Profit / Loss on Exchange under the Account Group Administrative Expenses and Account Type will be Profit & Loss.   

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