8 ways accounting software can make multicurrency transactions easy

More than ever, companies are sourcing materials and products from different countries in order to remain cost effective and competitive. With the correct functionality, you can reduce the stumbling blocks and manual processes when it comes to generating sales and purchase orders in different currencies.

Multicurrency transactions can incur foreign exchange gains or losses. How do you account for these with your accounts package? Are they posted correctly and if not, how much time does it take to manually reconcile this information?

This article offers advice on what should you be looking out for in your accounting software and how it can make dealing with multicurrency transactions easier to deal with.

1. Function across different currencies

You can have an invoice logged in one currency and paid in another. This allows you to spread funds across currencies as required.

2. Set the rate at time of posting

You can set the exchange rate either at system level or operator entry. The system rate can be changed as often as the business requires or the market changes.

But if the operator knows at the time of entering a transaction what the exchange rate is then they can enter this to be accurate.

3. Log bank charges at the receipt entry

To keep administration to a minimum, you can enter receipts plus the associated charges at the same time. This will automatically pick up the correct nominal at the time of the posting.

4. The ability to set expiry dates for exchange rates, such as period rates

The system allows you to set up multiple exchange rates with different expiry date. This can help if you are posting retrospective transactions.

5. Maintain different nominal codes per currency for gains and losses visibility

You can have a different exchange gain/loss nominal account to track the postings per currency. This will allow you to drill into the cost of trading in different currencies.

6. No manual reconciliation across currencies

As the system is posting in real time, you will have all the information up to date for reconciling. No additional postings will be required.

7. Revalue your bank and sales and purchase ledgers

At any point in time you can revalue the ledgers. This will allow your system to react to any significant fluctuation in the markets and not wait until quarter or year end to discover any discrepancies. It will only make postings to cater for any full or part-allocated items.

8. Report in both base and foreign currency

The database holds the information in the base currency and where applicable in a foreign currency. This allows you to report in either currency.

When it comes to multicurrency, it can hit a wide area of your business and most people can handle the day-to-day transactions but now with rising costs, we may need to view it at a more micro level.

Editor’s note: This post was originally published in December 2013 and has been updated for accuracy and relevance.