Revision [1039]

This is an old revision of MulticompanyBankaccounts made by PhilDaintree on 2008-01-12 21:23:05.

 

Multi-Currency Bank Accounts


or Foreign Currency Accounts (FCAs)

As at 13th Jan 2008 we don't have these.

We have bank accounts where we can enter FX payments and receipts - with the conversion back into functional (home/reporting) currency. The bank trans table records the FX amount and the exchange rate back into functional currency.

If we would want to be able to pay and receive other currencies into the FCA, to fully record FX bank transactions in another currency then we also need to record the exchange rate of the bank account currency to functional currency eg.

The functional currency of USD - and we have an FCA in AUD - we want to be able to make payments in CHF from the AUD account and recieve CAD into the AUD account as well as making AUD payments and receipts.

1 USD = 1.12 AUD

When you enter a CHF (swiss franc) payment from the AUD (Aussie Dollar) FCA (Foreign Currency Account) you would need to enter the rate to purchase CHF in AUD - 1AUD = 0.98 CHF - this would be the rate that you would need to enter the bank payment at. The system would then use the USD- AUD rate which we need some new way or recording and the AUD-CHF rate (as currently entered on payment entry) to determine the USD-CHF rate 1CHF = 1/0.984 AUD = 1/0.984 / 1.12 USD = 0.907 USD - this is the rate that the system would need to use to record the GL impacts of payments.

Obviously it would be much simpler to record payments in just two currencies the functional currency and the currency of the payment... but we lose flexibility there are times when we would wish to be able to pay a supplier using funds in an FCA in a currency other than the currency of the account. I think it would be a mistake to hack something simple up that only covers the simple case. So it is potentially a little bit tricky to build this in - and will cause confusion for folks doing data entry if we are not careful.

Requirements

The Bank Accounts table needs to record the base currecny for the bank account - currently all bank accounts are in the functional currency so a new field needs to flag the base currency of the account.

The Bank Trans table needs to record the conversion rate between the bank base currency and the functional currency.
The Bank Trans table needs to record the closing balance in its base currency after the transaction is processed. (alternatively we could have a field in Bank Accounts that retains the current balance in bank account base currency.)

We need a facility to be able to revalue an FCA after entering the current exchange rates for the FCA - this facility would create GL entries in functional currency to revalue the account in functional currency and write off the difference to exchange gains/losses. The Bank Accounts table would need an additional field to allow this GL account to be specified.

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