Coming from a Dynamics GP background I initially found the exchange rate setup in Dynamics 365 Business Central a little confusing. In Dynamics GP you set an exchange rate, and then configure whether you wish the system to divide or multiple the foreign currency amount by that rate, to get the local currency amount, and that’s it.
However, in Dynamics 365 Business Central things are a little different. In this post I’ll walk through the key fields in the Currency Exchange Rates page to explain how you can set Exchange Rates in Dynamics 365 Business Central.
** This post only goes through setting Exchange Rates for Documents. It doesn’t touch on the Exchange Adjustment side of things.
To access the “Currency Exchange Rate” page you must first go to the “Currencies” page, highlight the currency in question, and then drill down on the “Exchange Rate”. Alternatively from the “Currencies” page you can highlight the currency and click “Process > Exch. Rates” as per below.
This should then open the “Currency Exchange Rates” window which is shown below:
As I mentioned previously this window looks a little confusing to me? It appears there’s more than one place to enter a rate for the same currency? There’s also no option to specify if you wish to divide or multiply the currency at a given rate? (which is something I’m used to). So where do you enter the rate exactly?
Making sense of it all
I’ve found the key fields in this window are the “Exchange Rate Amount” and the “Relational Exch. Rate Amount”.
The “Exchange Rate Amount” is the rate to use for the “Currency Code” selected on the line, and the “Relational Exch. Rate Amount” relates to the rate to use for the “Relational Currency Code”. (generally its left blank so its the local currency – see further below for an example where this isn’t the case)
This can be further explained in the image below
Therefore using the Currency Exchange Rates window shown above, as we have 1.0 in the Relational Exch. Rate Amount (GBP) and 1.3 in the Exchange Rate Amount (EUR) this means 1.3 Euros is equal to 1 GBP. (The “Exchange Rate Amount” is acting as the exchange rate)
Hence entering a transaction for €200.00 would equate to £153.85 (i.e. 200 / 1.3 = 153.85)
I could also flip this by entering 1.0 in the “Exchange Rate Amount” and 0.76923 in the “Relational Exch. Rate Amount” as per below:
This now means the “Relational Exch. Rate Amount” is acting as the Exchange Rate.
In this example €1 (Exchange Rate Amount) is equal to £0.76923 (Relational Exch. Rate Amount). Therefore entering a transaction for €200.00 would also equate to £153.85 (i.e. 200 * 0.76923)
Both would work exactly the same its just a slightly different configuration.
** I would tend to use the divide method as the rates make more sense in this scenario.
Bonus – Adding a Relational Currency Code
I’ve never come across a situation where the “Relational Currency Code” is anything other than blank (i.e. the local currency) however now we know how the relationships work let’s test this out.
I’ve therefore changed the Currency Exchange Rates page for EUR to include USD as the Relational Currency Code as per below
And the USD rate is below:
Therefore if I were to raise a €200 Invoice the GBP will be calculated as follows:
Step 1 Euros to USD :- €200 / 1.3 = $153.8462
Step 2 USD to GBP :- $153.8462 / 1.39 = £110.68
To confirm I added an Invoice in Business Central and below is the statistics page confirming our calculations
Although confusing at first (at least to me) understanding how the Exchange Rates are picked up and used is fairly straight forward. Its also flexible offering various options for how to calculate exchange rates.
Thanks for reading!