Foreign Currency - Overview and Policy

Foreign Exchange

Foreign exchange rates are supported in JobBag. 

Summary of Process

1 Configure foreign currencies

2 Update a division's default currency if it is not the system currency

3 Set up and map system general ledger accounts for unrealised and realised foreign exchange gains and losses

4 Create and map general ledger accounts for unrealised forex.

Definition of Terms

Configuration Requirements

Currencies do not require Countries to be set up.

However, if you want a currency to be used for all clients/suppliers from a specific country, you will need to set up the country and link the country to the currency.

In order to ensure that proper taxation calculations are performed, it is important that you enter all clients and suppliers with a full address, which means you need to set up the countries where the clients/suppliers reside.

If you have a foreign currency bank account, you need to set this up in the currency that the account is operated in. At the end of each accounting period, the balance of the account will be adjusted to reflect the exchange rate to the system currency at the balance date.

All transactions are always recorded in the System currency, the divisional currency (which may be the same as the System currency), and the foreign currency.

The configuration depends on your organization. Two types are possible:

Type 1: Single Division company working in multiple currencies
You have one division and do business in multiple currencies e.g.invoice clients and receive funds in foreign currency, pay suppliers in a foreign currency, record payments and receipts in local and foreign currencies into bank accounts denominated in local and foreign currencies.

Type 2: Multiple Division company, each division operates in a foreign currency
You have set up additional divisions that operate their accounts in a foreign currency.

For example, you may be incorporated in Australia, yet deal with all European clients in € (Euros), and choose to have a division that records it’s transactions and does all financial reporting in € (Euros).

For another example, you may be incorporated in Australia, yet be registered for tax purposes in NZ as well. As a result, the NZ transactions must be in a division separate to the Australian operations and the divisional currency must be in NZ $.

You will:

• invoice clients in the divisional currency or another foreign currency
• pay suppliers in the divisional currency or another foreign currency
• have a bank account in the divisional currency or another foreign currency
• and prepare financial reports in the divisional currency or the system currency.

EXCHANGE RATE POLICY

Exchange rates are applied in the following way:

• Quotes and estimates are converted at the exchange rate applicable on the “date” of the quote - this is the rate used in the Sales Pipeline. When a quote is “accepted”, it is converted at the exchange rate applicable on the “date” of the quote.

When the “Quote” is accepted, the “Quote” data will appear in Traffic - in the system currency converted at the exchange rate applicable as at the date of the Quote

• Client Invoices and supplier invoices are converted at the exchange rate applicable as at the date of the transaction i.e. the date on the invoices - and this is the amount posted to the income/expense accounts and Accounts Receivable/Accounts Payable.
• When foreign currency payments or receipts are processed, the transaction is converted at the exchange rate applicable as at the date of the transaction, and the foreign exchange gain or loss is calculated against the system value of the invoices being paid. These are realized gains and losses.

Balance Sheet items that are recorded in a foreign currency are revalued to a nominated Exchange Rate Adjustment account each balance date, i.e. at the end of each accounting period and at the end of the financial year. These are unrealized gains and losses. These are reversed in the following period.

Job costing reports are available in the System currency or the Division currency.

System Currency Job Costing reports:
The exchange rate used will be the rate applicable as at the date of the report. All foreign currency transactions (quotes, budgeted costs) will be converted at the rate applicable on the date of the report.

Need more help?

Please contact support call 02 8115 8090 or email support@jobbag.com