Multicurrency

Dynamics 365 Business Central – Walking through an Adjust Exchange Rates (revaluation) scenario in Business Central

Gavin WhittakerLeave a comment

Introduction

Recently I helped someone in the Business Central forum with a query on revaluing their bank accounts using the “Adjust Exchange Rate” batch job.

We went back and forth for a while, trying various things, however in the end it was resolved by providing a simple worked example of the whole process that the user could compare to their process.

Therefore I thought it might be useful to write this up for anyone else who may have similar issues and want to see the whole process in action. (and as a bonus I can also use it as a reference point in future 🙂 )

** For info the original forum post can be found here

The Scenario

In this scenario my local currency (LCY) is GBP and I have a EURO bank account with several transactions that I wish to revalue at month end using a rate of 1.5.

Step 1 – The initial transactions

To prepare for the revaluation I need some transactions on the EURO bank account. Therefore, I’ve posted the three entries below using different exchange rates.

The transactions total €600 with a LCY amount of £516.

Step 2 – Set the month end rate

Next, I set the month end rate of 1.5 in the Currency Exchange Rate page. This is the rate I want to revalue the bank account ledger entries at the end of month.

** For more info on how to set exchange rates, and what each field in this page means, I wrote this blog post.

Step 3 – Run the “Adjust Exchange Rate” batch job

Finally, I run the “Adjust Exchange Rate” batch job with a posting date of 30/11/22 and added a few additional filters to revalue the bank account ledger entries.

Step 4 – The Results

The system should create an adjustment of £116. This is because the bank account ledger entries total €600, which when revalued at the new rate of 1.5, equal an LCY amount of £400, and the current LCY amount is £516. Therefore an adjustment of £116 is required.

If we look at the General Ledger entries the Exchange Rate Adjustment has created, we can see this is exactly what has happened.

The system has also created a bank account ledger entry to record the exchange adjustment

Conclusion

The “Adjust Exchange Rate” batch job is an essential tool for companies that post transactions in foreign currencies and wish to revalue their customers, vendors and bank accounts.

However, one limitation to the routine is the inability to revalue an individual GL code, which some companies may find an issue, especially if migrating from Dynamics GP which has this functionality as standard. This is because only the LCY amount is held on the General Ledger Entries. (as well as the reporting currency which is something a little different)

Hopefully this functionality will be added in a later version of Business Central :).

Thanks for reading!

Dynamics 365 Business Central – Making sense of the Currency Exchange Rates Page when setting Exchange Rates

Gavin Whittaker3 Comments

Introduction

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.

Currency Setup

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

Conclusion

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!

Dynamics GP – Steps for adding a new Currency in Dynamics GP

Gavin WhittakerLeave a comment

Introduction

This article outlines the steps needed to create a new currency in Dynamics GP. The article assumes you have the relevant security permissions to access the various windows and also the system password if one is used.

Adding a new currency

First you need to add the currency via “Tools > Setup > System > Currency”

In this case I’m adding the Japanese Yen

After the currency has been added grant your Dynamics GP companies access to the new currency via “Tools > Setup > System > Multicurrency Access”

Once in the “Multicurrency Access Setup” window select the new currency and tick the relevant companies. (this requires all users are out of the system)

Next add the “Exchange Tables” via “Tools > Setup > System > Exchange Tables”

Once in the “Multicurrency Exchange Rate Table Setup” window create the Exchange Table ID and click “Rates” and add the exchange rates.

** You can review any existing exchange tables to confirm the settings used in your system. In my example I’m choosing “Divide” as the calculation method and “Exact Date” as the default rate. You may wish to use different settings on your system.

Next you need to go back to the Multicurrency Access Setup window and grant access to the Exchange Table ID we just created.

Once the currency and exchange table have been created, and access has been granted, we just need to assign the various rate types to the exchange table. We do this via “Tools > Setup > Financial > Rate Types”

In my example I only intend to have one exchange table so I’ve assigned all the rate types to the new exchange table.

** Please note you may only have one rate type in your system. My example is based on adding a new currency for use in the Fabrikam demo company which has three rate types.

Once this is all setup I can test adding a transaction and this all works fine. I’ve added a transaction for 204 Japanese Yen which equates to 2 US Dollars.

If Inventory Items are used in your system you may also need to assign the new currency to either all or some of your Items. This can be done individually via “Cards > Inventory > Item Currency” or en masse via “Tools > Utilities > Inventory > Price List Utilities”

Conclusion

As you can see there are quite a few steps involved in creating a new currency but hopefully if you follow the steps outlined above it will assist you in setting this up.

Thanks for reading!