In FirstBIT ERP, businesses handle multiple currencies through two main types: the Accounting Currency (for recording and reporting transactions) and the National Currency (the local currency used for defining exchange rates).
You can select the national and accounting currencies via the Accounting > Entity > Accounting Parameters form. Since version 2.1.1.30, each entity can choose its accounting and national currencies individually.
Exchange rate gains or losses can be calculated in two ways:
- For Each Transaction and at Month-End: Calculations are done for every transaction and again at month-end.
- Only at Month-End: Calculations are done only at month-end, ignoring individual transactions.
Choose the method by selecting "Calculate Exchange Rate Differences on Month Closing Only" in Administration > Service Settings
Calculations with Option Enabled
Revaluation of GL Accounts in Foreign Currencies: GL accounts in foreign currencies (e.g., Cash, Receivables, Payables, and Staff Settlements) are revalued at month-end using the current exchange rates. For example, if a bank account has a balance of 23,000 EUR on June 30 with an exchange rate of 4.40 (101,200 Dirhams), and a subsequent deposit of 15,000 EUR on July 10 at 4.42 (66,300 Dirhams), the new balance becomes 167,500 Dirhams. By July 30, with an exchange rate of 4.45, the balance is revalued to 169,100 Dirhams, reflecting a 1,600 Dirham gain.
Payables and Receivables: Gains and losses for GL accounts in the Payables and Receivables sections are assessed at the document level:
- Revalue the document amount using the month-end exchange rate.
- Compare this revalued amount with the amount from the last revaluation date (either the transaction date or the previous month-end). A positive difference indicates a gain, while a negative difference indicates a loss.
- Realized gains and losses for settled transactions are calculated at month-end based on the exchange rate on the payment date.
Calculations with Option Not Enabled
Continuous Exchange Rate Differences Calculation: If the option to "Calculate Exchange Rate Differences on Month Closing Only" is not selected, exchange rate differences are calculated continuously throughout the period:
For each new foreign currency transaction, amounts are recorded in the accounting currency using the exchange rate on the transaction date. Although exchange rate differences are not calculated for documents like Invoices or Invoice Received, all related foreign currency transactions and GL account balances are revalued using the current exchange rate, and this date becomes the latest revaluation date.
For outgoing or incoming payments (e.g., Cash Receipts or Cash Payments), exchange rate differences are calculated if the rate on the payment date differs from the rate on the original transaction date. Additionally, all related transactions and GL account balances are revalued based on the payment date's exchange rate, making it the latest revaluation date for the adjusted transactions.