Working with Currencies

In this topic, we will discuss how to define currencies in the implementation process. We will explain the consequences of currency definition choices in your company on the financial accounting process. We will give examples of some currency issues in SAP Business One. Decisions about these definitions should always be made together with the client accountant.

Here are some key points to take away:

1. SAP Business One can handle accounting in two parallel currencies: the local currency (in which the company is legally required to keep its books) and the system currency.
2. When the system currency differs from the local currency, the system automatically calculates all postings in the local currency and manages an additional account balance in the system currency in real time.
3. Each business partner master data record and each G/L account need to have an account currency definition set to one of these three choices: local currency, a specific foreign currency or all currencies.
4. It is possible to set an item’s price in up to three currencies in a price list: the primary currency and two additional currencies.
5. When you choose a foreign customer in a sales document, the document currency is automatically set according to the BP currency. The unit price of the item is taken from the assigned price list in the appropriate additional currency if one is defined.  The automatic journal entry on the invoice converts the total amount in foreign currency into local currency and posts both values in parallel.
6. When you pay invoices in foreign currencies, the amount of the invoice and the payment are the same in the foreign currency.   Exchange rate differences can occur due to rate differences in the conversion to local currency. The system automatically posts any exchange rate difference to an exchange rate difference account.
7. The Exchange Rate Differences procedure allows you to clear the difference between the account balance in foreign currency and the account balance in the local currency to a certain date.
   1. A conversion deference journal entry:
   2. Balances the system currency Is performed in companies where the system currency is different from the local currency.
8. A conversion deference procedure balances the system currency to an exchange rate of a certain closing date.

You can also download the document here for your records.