¤ Home » Ecommerce System » System Features » Business Sub-systems » Multi-currency


Conduct business in multiple countries and in multiple currencies

With the increasing globalization of business, trade and commerce are no longer restricted to national boundaries or a single currency. The international operations of a company could take any of these forms:

  1. Sales in a foreign currency.
  2. Purchases in a foreign currency.
  3. Maintaining bank accounts in a different country.
  4. Foreign currency investments.
  5. Sales and purchase of other assets/liabilities in a foreign currency.
  6. Other receipts such as dividends and interest in a foreign currency.
  7. Other payments such as dividends/interest in a foreign currency.
  8. Foreign exchange transactions such as swap options and arbitrage.

How BusinessAhead handles multiple currencies?

The multi-currency system in BusinessAhead supports multi-currency transactions in sales, purchase and general ledger.

Multicurrency in Sales

Multicurrency in Sales allows you to:

  • Maintain customer accounts in a foreign currency as well as the base currency.
  • Create sales quotes, orders and invoices in the customer's currency.
  • Accept customer payments in a currency that is different from the bank currency or the customer currency.

    Example: If you are located in the United States and you have a bank account in France, all deposits and issues from the bank will be in terms of French Francs. This is the bank currency.

  • Automatically compute foreign exchange gains or losses on receipts and payments.
  • Prepare account statements in any currency.

Multicurrency in Purchasing

Multicurrency in purchasing allows you to:

  • Maintain vendor balances in a foreign currency.
  • Create purchase quotes, orders and invoices in the vendor's currency.
  • Make vendor payments in a currency that is different from the bank currency or the vendor currency.
  • Automatically compute foreign exchange gains or losses on payments.
  • Prepare account statements in any currency.

Multicurrency in General Ledger

Multicurrency in general ledger allows you to:

  • Maintain ledger accounts in any currency.
  • Maintain bank accounts in any currency.
  • Record general journal entries where the accounts involved are of different currencies.
  • Prepare account statements in any currency.

Re-measurement of foreign currency Accounts

Re-measurement of foreign currency assets and liabilities is required at the end of the fiscal year when accounts are being closed, so that they are stated at their actual values in your final accounts.

Example: Your base currency is INR and you owe USD 5000 to a vendor, which you account at 1 USD = 40 INR. If on your balance sheet date, the rate is 1 USD = 42 INR, you owe the vendor Rs. 10,000 more. Hence, the vendor account has to be re-measured on the balance sheet date.

The multicurrency re-measurement utility calculates foreign currency customers, vendors and ledger accounts at the exchange rate on date of re-measurement and automatically accounts for the net foreign exchange gain or loss on re-measurement.

Re-measurement of foreign currency Assets and Liabilities

If your company has assets and liabilities that are denominated in foreign currencies, accounting regulations and guidelines of the principal accounting body in your country may require you to re-measure these assets and liabilities at the exchange rate prevailing on the Balance Sheet date.

BusinessAhead provides you with a utility to re-measure foreign currency balances of assets, liabilities, capital, customers and vendors.

Base Currency

All foreign currency transactions have to be accounted for in a base currency (also known as the home currency or functional currency) by converting the amount in foreign currency to the base currency value using the relevant exchange rate. The base currency is the currency of the country in which your company is headquartered and hence the currency that you will use for accounting purposes.

The BusinessAhead multi-currency system allows you to handle all foreign currency transactions that take place in the course of international trade and commerce.

When transactions are recorded in foreign currency, BusinessAhead pre-populates the applicable exchange rate (buy or sell) field in various sales, purchase, inventory and payroll documents and also in manual journal entry screen. The rate is picked up from an exchange rate chart defined by you and update by you periodically to take care of currency fluctuations.

Also, during processing of various sales, purchase and other documents, where amounts are involved, BusinessAhead automatically converts amounts in multiple currencies to your base currency. While carrying out such conversions, it will automatically pick up the applicable exchange rate from the exchange rate chart and apply the same. The exchange rate chart maintains both Buy Rate and Sell Rate for each foreign currency.