Time Saving Tips Part 4: Setting Up Multi-Currency Transactions in Dynamics 365 for Finance and Operations

We hope you’ve been learning all kinds of time-saving tips for Microsoft Dynamics 365 for Finance and Operations in our article series  [Part 1: Pre-defined workspaces,  Part 2: Posting Profiles, and Part 3: Multi-Currency Transactions]. 

Today, we’re going to show you how to setup multi-currency transactions in Dynamics 365. Not only does the system support multi-currency, it does so in an automated way that results in faster transactions and more accurate data, making your organization more productive.

Companies that do business or aspire to do business in more than one country need an ERP system that supports multi-currency transactions. With Microsoft Dynamics 365 for Finance and Operations, not only are multi-currencies supported, but the system can be configured to make it seamless for the user. The user does not have to supply the correct exchange rate nor do any research to determine the correct rates. This is a huge time saver for global organizations dealing with multiple and constantly fluctuating exchange rates. Let’s take a look at how this is accomplished.

Setting Up Multi-Currency Transactions In Dynamics 365 for Finance and Operations
For a video demonstration, visit our YouTube channel. 

1. Configure the system to supply the exchange rate to use

The exchange rate used is determined by the currencies (the company accounting currency and the currency for a specific transaction) and the exchange rate type. All these can be set up globally but many can be changed at a lower level (i.e. account, customer/vendor, transaction). To quickly get the results you want, it’s important to configure the global settings correctly, as well as configure specific accounts and customers/vendors where appropriate.

First the global settings. The accounting currency is set in the General Ledger > Ledger. This cannot be changed. The global setting for exchange rate type is also set in the General Ledger > Ledger but this can be overwritten for specific accounts and currency revaluation processes. This is also where the accounts for currency revaluation are set.

The accounts for currency revaluation can also be configured by company and by currency at General ledger > Currencies > Currency Revaluation Accounts.

2. Once you have determined the standard exchange rate type (Default in this example), set up the rates to be used for all combinations of accounting currency and transaction currency.

Click on Exchange Rates to set up the specific rates for this exchange rate type.

3. In the above example, the exchange rates are by month and were manually entered. You can work with an exchange rate provider to have rates automatically updated on whatever schedule you request. A great new feature of Dynamics 365 is the out-of-the-box integration with the leading exchange rate provider OANDA. To utilize this integration, set up an account with OANDA or use a test account to evaluate the service for 30 days. Then go to General Ledger > Currency > Configure Exchange Rate Providers. Click on New and select Foreign Exchange Rates Powered > OANDA. Enter the API code from OANDA and follow the prompts in the process to configure.

4. You can also overwrite the global settings to specify a different default currency by main account such as below.

5. Lastly, if you have customers or vendors who normally do business with you in a currency other than your global accounting currency, you can set that up on the customer or vendor information. Dynamics 365 can automatically calculate and post the realized gain/loss on multi-currency transactions without the user having to do anything

When the Transaction Currency is not the Company Currency

Let’s walk through the process of a transaction where the transaction currency is not the company accounting currency. This is a free-text invoice in euros within a USD legal entity.

Note that the transaction is captured in Dynamics 365 with both the accounting currency (USD) and the transaction currency (EUR).

Now let’s look at what happens when the invoice is settled (i.e. paid). The payment is in euros. The Settlement window shows both currencies.

Because the exchange rate was different for the invoice date of February 1 than it was for the payment date of March 15, we would expect a small realized gain/loss on the transaction.

Run the month end job to revalue any monetary balances

Dynamics 365 also support month-end monetary balances. This can be run for accounts receivable, accounts payable and/or general ledger transactions. For each of these revaluations, you can perform a simulation and then do the actual revaluation. For all of these, the process is the same.

1. Go to the module > Periodic Tasks > Foreign Currency Revaluation.

2. Select the required dates, posting profiles, and method. You can also filter which customers, vendors and/or accounts to include and see the resulting voucher. The customer, vendor and/or account balance will be updated for the revaluation.

Whether it’s autofill for exchange rates, auto calculation for gains and losses, or auto revalue at month end, you can see how Dynamics 365 for Finance and Operations can readily handle multi-currency transactions. If you would like to know more information about how to support your multi-country business with an enterprise class ERP system, contact Western Computer today. As a Microsoft Gold Certified Partner with over 30 years of experience, we can help.

About the Author

Diann Spencer, Western Computer’s Dynamics AX Finance Consultant, has been involved in many successful implementations of Dynamics AX in small, midmarket, and large companies across a variety of industries. Diann has over a decade of financial experience and she is a Certified Public Accountant.