Multi-Currency

Multicurrency Overview

Vision Multicurrency allows your firm to transact business in any number of global currencies, while maintaining core financial records in a single, functional currency.

With Deltek Vision, Multicurrency allows your firm to process transactions in any currency. Specifically, you can record vendor invoices, client invoices, and employee expenses and process both payments and receipts in any currency. You can also manage a project in one currency while billing the client in another currency.

Transactions are automatically associated with the exchange rate in effect on the date the transaction occurs. Exchange rates are stored internally by day to facilitate these associations. You can also override the exchange rate for an individual transaction.

Multicurrency Summary

The core features of the Multicurrency module include:

  • The ability to process transactions in any currency, including the ability to:

1. Record vendor invoices in any currency.
2. Generate client invoices in any currency.
3. Process payments and receipts in any currency.
4. Process employee expense reports containing expense items in different currencies.

  • The option to manage a project in one currency and bill for the project in a different currency.
  • Pre-configured currency settings — including the currency symbol and number of decimal places — for all ISO-recognized currencies.
  • Exchange rates that are stored by day, so that a transaction can be associated with the exchange rate that was in effect on the date the transaction occurred.
  • The ability to override the exchange rate for an individual transaction.
  • Support for inverse exchange rates and triangulation.
  • Integration with the Vision Multicompany feature, which supports the management of multiple legal entities in a single Vision database. Each entity can have its own functional currency.
  • Flexible multicurrency reporting features, including:

1. The ability to generate reports in any currency.
2. Currency revaluation, to restate foreign currency balances as exchange rates fluctuate.
3. When used with the Vision Multicompany module:

  • Consolidated financial reporting for multiple companies using multiple currencies.
  • The option to generate consolidated financial statements using the accounting standards specific to your  Country, including Generally Accepted Accounting Principles (GAAP) and International Accounting Standards  (IAS).   Using Unlimited  Processing Transactions Vision automatically calculates and post any gains and losses when you settle the transactions. In other words, if you issue a payment or receive a payment it does that automatically. This is kind of like Cash Basis, where the cash (in this case the gain or loss) is recognized when you issue payments (process payments) or receive cash (cash receipts).

Running the Gains & Losses Process

When you run the Gains/Losses and Revaluations process, Vision calculates and post currency exchange gains and losses, but ONLY for the following:

  • Unpaid accounts payable vouchers in a foreign currency
  • Unpaid client invoices in a foreign currency
  • Foreign-denominated general ledger account balances
  • Unrealized Gains and Losses

An unrealized currency exchange gain is an expected increase in cash resulting from a change in currency exchange rates.

An unrealized currency exchange loss is an expected decrease in cash resulting from a change in currency exchange rates.

Example: Your Company’s functional currency is United States dollars. You bill a client in euros when the exchange rate is 1.5 dollars to the euro. At the end of the accounting period, you have not yet received payment. The exchange rate is now 1.6 dollars to the euro. When you revalue the unpaid balance based on the new exchange rate, the result is an unrealized gain. The change in the exchange rate results in a potential increase in cash for your company, but you have not yet actually received that cash.

Realized Gains and Losses

A realized currency exchange gain is an actual increase in cash resulting from a change in currency exchange rates.

A realized currency exchange loss is an actual decrease in cash resulting from a change in currency exchange rates.

Example: Your Company’s functional currency is United States dollars. You bill a client in euros when the exchange rate is 1.5 United States dollars to the euro. When you post the cash receipt, the exchange rate is 1.6 dollars to the euro. The result is a realized gain. The change in the exchange rate results in an actual increase in cash for your company.

Revenue Generation and Multicurrency

If you use Multicurrency, you must perform the following additional steps to set up and use Revenue Generation:

Before you process Revenue Generation for one or more projects, you must specify the exchange date on the Revenue Generation form. The exchange date identifies the exchange rate that Vision is to use from the Daily Exchange Rate table.

If you want to run Revenue Generation during the accounting period, Deltek recommends that you select today’s date or the closest date available as your currency exchange date. If you do this, you must use the exchange rate for that date for all currencies in which you run Revenue Generation for that date.

Revenue Generation:

Each of the standard revenue methods calculates a project’s revenue in the billing currency.

When you process Revenue Generation, Vision determines whether or not additional revenue has accrued as a result of expressing the revenue in the project’s billing currency. If it has, Vision translates this incremental amount into the equivalent amount in the project’s functional currency, and posts the resulting amount to the General Ledger.

A project’s revenue method formula often includes data that affects the project’s billable amount. Any amount needed to reconcile the revenue amount with the project’s billable amount is expressed as work in progress (WIP), or Unbilled Services. This reconciliation amount is in the project’s billing currency.

As part of the Revenue Generation process, Vision recalculates the unbilled balance in the project’s functional currency and compares the amount to the unbilled balance in the billing currency (the currency in which revenue is being calculated) as of the exchange date specified on the Revenue Generation form. During this process, Vision resolves any difference between these balances amounts that results from exchange rate fluctuation.

You can also select the option to calculate revenue separately in billing, project and functional currencies. The option is available only when you create a user-defined revenue method.

Accounts Payable and Multicurrency

The following Multicurrency considerations affect your use of Vision Accounts Payable.

Currency Types

Multicurrency has the ability to store transactions and other data in multiple currencies, and to use this stored information to fulfill different business needs. You cannot change a currency after related data has been posted. For example, you cannot change the project currency after you have posted expense charges against that project.

Functional Currency

This is the main currency of the in which a firm operates. Normally, this is the currency in which cash is generated and expended by the company. For example, a company located in France would normally use the euro as its functional currency. Amounts on the General Ledger reports display using your company’s functional currency.

Reports can be generated with multiple currencies. Alternatively, for some General Ledger, project, and CRM reports, you can select a single presentation currency so that all amounts are expressed in a single currency. For example, you can generate a Project Summary report that includes projects managed in multiple currencies, but report all financial data in euros on the report.

Transaction Currency

As with other expense entry applications, a voucher can use any transaction currency. The transaction currency of the voucher does not need to be the same as the currency of the vendor’s invoice.

When you create a voucher, you must specify a bank code. The bank code determines the currency in which the check or electronic funds payment is made to the vendor.

To translate the voucher’s total amount (transaction currency) into the payment amount (payment currency), Vision uses the voucher date as the exchange date for locating the most recent preceding date’s exchange rate in the Daily Exchange Rates table.

You cannot modify the payment amount, but you can override it on the Currency Override dialog box.

Project Currency

The currency in which you manage a project may be different from the functional currency of the project’s home company. For each project, you define the project currency at the top level of its work breakdown structure (WBS) and the project currency applies to any and all lower levels (that is, phases or tasks) of the project’s WBS. When labor or expense charges are made to a project, the charges are recorded in the project currency, as well as all other appropriate currencies.

You use the project currency for all project management purposes, including project reporting and project planning. Use the Project Currency option on the General tab of the Project Info Center.

Billing Currency

The currency you use to generate invoices and billing reports for a specific project and all its phases and tasks. For each project, you define the billing currency at the top level of its work breakdown structure (WBS) and the billing currency applies to any and all lower levels (that is, phases or tasks) of the project’s WBS.

Note: Project and billing currencies do not need to be the same. This allows you to plan and manage a project in one currency and invoice the client in another currency. Use the Billing Currency option on the General tab of the Project Info Center.

Payment Currency

The currency in which you make payments may be different from the transaction currency of the original receivable or payable. The way you set the payment currency varies, depending on the transaction type. Typically, the payment currency is the currency specified for an account that is subsequently referenced by a bank code.

For example, on an accounts payable voucher, the bank code determines the currency in which the check or electronic funds payment is made to the vendor. You specify currencies for accounts on the General tab of the Chart of Accounts Info Center. You specify accounts for bank codes on the Bank Codes tab of Bank Codes Configuration.

Presentation Currency

You use a presentation currency to generate a report with all amounts expressed in a single currency.

For example, if you are generating a Project Summary report that includes projects managed in multiple currencies, but you want all project financial data to appear in euros on the report, you would select euros as the presentation currency.

You can specify a presentation currency on General Ledger reports, certain Project reports, and some of the CRM reports (such as the Opportunity List report).

You can specify as the presentation currency any currency enabled for use by your enterprise.

On the report options dialog, you specify the Presentation Currency options, and then select the date Vision uses to calculate currency exchange rates for the report.

GL Accounts and Banks

Each account set up for use as a bank account (in Bank Codes Configuration) must have a currency. You can also specify a currency for other accounts if the balance of the account should be maintained in a currency other than the company’s functional currency (an account for a loan from a foreign bank, for example).

Reporting

The Vision Multicurrency feature lets you generate reports targeted at the special business needs of a multicurrency enterprise. For example:

  • An Income Statement for a London company, with all amounts shown in British pounds, the company’s functional currency.
  • An Aged Accounts Receivable report that includes all invoices that have a transaction currency of the Euro, to view currency exposure.
  • An Aged Accounts Receivable report for the Asian region, which includes all invoices that are payable in various currencies, such as Japanese yen, Chinese yuan, or Hong Kong dollars.
  • An Aged Accounts Receivable report with a presentation currency of Canadian dollars, used to report on invoices for a client for whom you do work in Canada, the US and Mexico.
  • A Project Summary report for all active hospital projects, managed in any currency. The currency options available depend on the type of report. For example, the default currency for general ledger reports is the functional currency, but you can also choose to generate general ledger reports using a specific presentation currency. Certain reports let you show multiple currencies on a single report. All are reports that contain line item detail.
  • Employee Expense Reports that contain line items in different currencies.
  • Billing Backup reports that contain line items in different currencies.
  • Transaction and posting lists for data entry files that contain transactions in different currencies.

Daily Exchange Rates Overview

The Daily Exchange Rates application allows you to set up exchange rates from one currency to another currency for a specific date. You specify: The “from” currency and “to” currency are the dates to which the exchange rate applies. The exchange rate allows up to six decimal places.

If Vision cannot find an exchange rate for a specific date (you have not set one up), Vision looks at the period exchange rate table for the date within the specified range of dates.

Translation Methods

You specify a “translation method” for an account range or an account, and this method applies to all translations to that account. The choices for translation method are: Daily Exchange Rate (default) Period End Exchange Rate, Period Average Exchange Rate or the Historical Exchange Rate.

XE.com Exchange Rate Data Feed Services

The XE.com Currency Exchange Rate Service is an online exchange rate data feed service, which you can incorporate into Vision’s Daily Exchange Rates feature. If your firm wishes to use this service, you need to contact XE.com directly. See XE.com Currency Exchange Rate Service Overview for related information.

Exchange Rates Overview

When you post a transaction, Vision checks to see if the various currency types (transaction, functional, billing, and project) are the same. If the transaction currency is the same as the project or billing currency, when a transaction is posted the transaction amount is assigned directly to the project or billing amount. However, if the currencies differ, Vision automatically calculates exchanges between the transaction currency and the functional currency of the project charged by the transaction.

Daily Exchange Rates

By default, Vision uses the daily exchange rate in effect on the date that you enter for the transaction. You can override an exchange rate for any transaction.

Gains and Losses from Currency Exchange: General Information

Firms that conduct business in more than one currency can have financial gains or losses due to changes in currency exchange rates. Such gains and losses commonly result from transactions conducted in a currency other than the principal company’s functional currency or when revaluation of general ledger account balances in a currency other than the company’s functional currency.

Currency Exchange Gain or Loss

A currency exchange gain occurs when the settlement of a transaction or the revaluation of an account balance results in an expected or actual increase in cash flow into your company.

A currency exchange loss occurs when the settlement of a transaction or the revaluation of an account balance results in an expected or actual decrease in cash flow into your company. Such gains and losses can be either realized or unrealized.

Generally Accepted Accounting Practices and Currency Gains and Losses

Compliance with generally accepted accounting practices in the United States requires you to include realized currency exchange gains and losses in net income. For unrealized gains and losses, you have the option either to include them in, or exclude them from, net income.

Businesses located outside of the United States sometimes operate under different standards of accounting practice. They may have different guidelines for determining realized and unrealized gains and losses and for including such gains and losses in net income. Vision provides the flexibility to handle currency exchange gains and losses in accordance with whatever generally accepted accounting practices your company operates under.

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