Beyond boundaries : Multicurrency

Dollars, Euros or your home currency. These shouldn't be the boundaries of your business. That's why nowadays businesses are into multi currency. But the hectic work comes when solving the problems in exchange rates, rounding, revaluations and end of year closings.

Based on your business, you will have to interact with different geographical locations where they use different currencies. For instance, when you buy and sell goods and services, when dealing with overseas checking accounts and foreign assets & liabilities. When you are dealing with multiple currencies, it is vital to stay in touch with the exchange rates. The reports on unrealized and realized gains and losses based on the projected and actual exchange rates can be useful for future decision making.

Multi currency is a choice that you are making. If your business completely run on local suppliers and distributors, then multi currency accounting is out of your todo list. But for the companies that has suppliers, distributors, customers or branches in the places where different currencies are used, you need to focus on this.

Another important section to monitor when using multi currency is the fluctuation of exchange rates. Although you make no change for the foreign currency transactions, its value is changing with the fluctuations of exchange rates. For example if the dollar is valued at a higher level, the sales you've already made will cost you more. However, on the contrary, the purchases you made will give you a benefit.

When transacting with foreign currency there are several methods or rather concepts such as conversion, revaluation, translation and re-measurement. Conversion is converting the foreign currency to base currency at the time of the transaction entry. Revaluation takes place at the end of the period. The foreign currency account balances are re-valuated according to the exchange rates at the end of the period. Translation is mainly applies when reporting in foreign currencies. This also happens at the end of the period. The base currency trial balances are converted into foreign currency based on the exchange rate. Re-measurement is specially for the situations where the base currency is an inflationary currency. And each and every transaction in the base currency is remeasured in the foreign currency at the day's exchange rate.

Handling multi currency in transactions manually results in hectic work loads. The accounting apps which have the capability of handling accounting along with multicurrency, will be very useful for the businesses who connect with the regions with different monetary values. ZoomBA cloud is one such application which provides a hassle free accounting solution for Small businesses. Being based on the cloud, apart from providing high accessibility it facilitates with number of features.

Multicurrency is supported in ZoomBA cloud Accounting app. Further currency conversion can be done automatically or manually. You can define the foreign currencies with this system. In addition, the control of updating the exchanges automatically or manually is also in your hand. As the first step you have to add currencies.

1. Go to Banking and General Ledger.
2. Click Currencies under Maintenance.
3. There you can add, edit or delete currencies.

The next step is adding the relevant foreign currency to the customer.

1. Go to My Customer in Simple Mode or Add and Manage Customers in Sales (Advanced Mode).
2. Assign the relevant currency for the customer.

Similarly you can add currencies to Suppliers from Purchases menu. And assign the relevant currency for them.

Further you can enter the exchange rates manually.

1. Go to Banking and General Ledger.
2. Click Exchange Rates under Maintenance.
3. Select the desired currency from the drop down list. You can get the latest exchange rates by clicking Get button. And click Add New to assign the exchange rate to the currency.

 

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