Managing Foreign Currency Exchange Gains & Losses
in SAP Business One
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Managing Foreign Currency Exchange Gains Losses In SAP Business One
The below example shows how SAP Business One works in managing foregin currency gains and losses.
Step 1: Hong Kong Bike received an AR Invoice of US$ 100 with the exchange rate of 65 on 30th August 2016.
Step 2: The financial posting of this transaction is shown as below in a journal entry.
Step 3: On 31st August the Accounts Receivable is revalued. At this time the exchange rate has moved.
For the purpose of simplicity, the below example is for one customer and one invoice only. The system will display the following information for the user to ACCEPT and POST.
SAP Business One offers the option to auto reverse the transaction on a specific day of the user’s choice. In the above example, the reverse date is chosen as 1st September.
Step 4: On 1st September, when the user logs in to SAP, the reverse transaction that are scheduled to be carried out that day will be shown.
Once the user executes the transaction, the following financial entry is created by the system.
Step 5: On 1st September, the payment is received from the customer. At this time, the exchange rate has moved to 67.
At this time, the following financial entry is created by the system.
At this point, the Hong Kong Bike Company customer’s ledger shows an Accounts Receivable of US$ 100 until the payment is received, after which the ledger will reflect zero. The net gain is Rs. 200 due to the exchange rate fluctuation.
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