Whether you’re a small distributor, manufacturer, or an importer/exporter, the challenges of buying and selling in different currencies are the same.
With increased globalization and cross border commerce it is vital that your business can process transactions in multiple currencies. Whether you’re a small distributor, manufacturer, or an importer/exporter, the challenges of buying and selling in different currencies are the same – fluctuating costs of inventory, tracking volatile exchange rates, and reporting the gains and losses from currency transactions. These challenges only become greater when your accounting software is not making these complicated transactions for you.
With a full multi-currency module, in your accounting and inventory software, you will be able to keep the General Ledger in your local currency, generate purchase orders in the vendor’s currency, and send invoices in your customer’s currency. Transactions throughout the system are translated from currencies and exchange rates that you can define and update. You will also gain the flexibility to use different buy and sell rates, create selected reports to view in local or foreign currencies, and track exchange rate history.
Key Benefits of Foreign Currency Conversion:
- Streamline the management of multiple currencies, exchange rates, and currency fluctuations
- Maintain a clear view of your company finances by automatically posting realized gains and losses when payments are received or issued
- Simplify invoicing by locking in a specific exchange rate while sales orders and purchase orders are issued and processed
- Organize your records by printing reports about your currency codes, tables, and exchange rates
Other advantages to using multiple currencies:
Creating and Paying Customer and Vendor Invoices in Multiple Currencies
Using default currencies for customers and vendors helps ensure that transactions entered will be converted to your home currency without manual calculations or additional entries. For example, customer orders will be created in the customer’s currency, and once converted to a sale, the system will calculate the transaction in the applicable currency. When a customer payment is received, the rate of the sale is compared to the rate at the time of payment, calculating the currency gain/loss on the transaction.
Landed Cost Tracking
Tracking landed cost of an item calculates the true cost of an item with the exchange rate included. Having an accounting software that supports landed cost means it calculates any costs associated with the inventory purchases – including freight, duty, and brokerage.
Selecting the right software vendor with experience in complex currency transactions and who understand your industry is also important. Knowledge of the specific multi-currency configuration requirements is just as important as the calculations themselves.