In todays’ world many companies transact with customers and vendors in other countries. NetSuite is designed to manage this process. The first thing you need to do is activate multiple currencies by going to Setup/Company/Enable Features and go to the International section of the company tab.
NetSuite also offers a feature to download night exchange rates – currently available from Xignite and HSBC. The selection for the provider is found in Accounting Preferences. Go to Setup/Accounting/Accounting Preferences and at the bottom of the General Tab there is the drop down for the exchange rate integration.
Once this is completed, you will need to update vendors and customers with the foreign currency that you will be transacting in. You can update the primary currency but you cannot remove the currency from the currency list after creating transactions with that entity. To update the currency entity record, go to the financial tab/currencies and there is a drop down listing the currencies.
If you have a bank account that only accepts foreign currency, you will need to create a new general ledger account and mark the account with the respective foreign currency. This will limit the bank transactions to only work in that designated currency. If the bank account is in the subsidiary’s base currency, you can accept both base currency and any other foreign currency that is active in the system.
Items can be priced in the foreign currency. If you do not set the price for them in the foreign currency, NetSuite will take the base price times the exchange rate to derive the foreign currency price.
NetSuite Multi-Currency Feature
When you enable the Multi-Currency feature, NetSuite will add the following accounts to your environment after you have created a transaction in a foreign currency.
- Realized Gain/Loss – this account is used during payment applications
- Unrealized Gain/Loss – this account is used during month end open balance revaluation
- Unrealized Matching Gain/Loss – this account is used when depositing funds and is shown on the g/l impact of the transaction
- Rounding Gain/Loss – the account is used when the gain or loss from a payment is applied to the source document and there is a difference between the two amounts due to rounding.
NetSuite automatically calculates and posts exchange rate gain or loss when users apply a payment or credit memo to an invoice. Gain or loss amounts are posted if the exchange rate has changed between the initial transaction (invoice) and the current transaction (payment or credit memo). The gain or loss resulting from changes to the exchange rate posts by default to the Realized Gain/Loss account.
Revaluation for transactions that remain open and balances in foreign currency accounts is a separate process. The process is run at the end of the period as part of the period close checklist.
You can define rules to specify which accounts the different types of foreign currency variances post to. If your NetSuite account has no variance posting rules, NetSuite posts the gains and losses from fluctuations in foreign exchange rates to the default system-generated accounts described above.
NetSuite Multiple Currencies and More From MIBAR
Contact us at MIBAR for more details about leveraging multiple currencies in NetSuite.
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