Currency Conversion with accounting currency and reporting currency

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Posted on by Kuhn

I have a customer with a configuration in "General Ledger" "Ledger" in accounting currency "EUR" and reporting currency "EUR".

Now the customer has the following tranaction:

- credit card in USD

- incoming invoice in EUR

The conversion with the parralel currency as installed in Microsoft Dynamics 365 for Finance and Operations Version 8.1 (Oktober 2018) creates conversion amounts which I cannot understand. It seems that the clearing of the open items is based on USD and the conversion will be executed for the accounting currency and reporting currency so I have 2 conversion transactions. Worst of it is that the open items will not be settled completely!

Who can help? Microsoft has no solution.

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André Arnaud de Cal... 299,361 Super User 2025 Season 2 on at

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RE: Currency Conversion with accounting currency and reporting currency

Hi Kuhn,

It has no use to fill both currency fields with the same value. The reporting is only recommended when it is different from the accounting currency in my opinion.

I have seen some known issues on LCS issue search. Probably, you need to update to the latest version to get your issue solved. Note that version 8.1 is not supported by Microsoft anymore.

PS. Also moved your question to the Dynamics 365 Finance forum.

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Kuhn 60 on at

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RE: Currency Conversion with accounting currency and reporting currency

Hi André,

thanks for your answer.

I know about the functionality with accounting and reporting currency and would not have set up the configuration like that. It makes no sense for me. But another finance consultant did that and the customer has the problems with this affair.

The customer has version 10.0.08. In version 8.1 Microsoft changed the functionality about the accounting and reporting currency in their way of calculation and conversion.

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Ludwig Reinhard Microsoft Employee on at

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RE: Currency Conversion with accounting currency and reporting currency

Hello Kuhn,

Can you describe what you do when you 'clear the open items'?

Where are you doing that and how?

Also, can you let us know why you use EUR as the accounting and reporting currency?

Many thanks,

Ludwig

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Ann-Kathrin 35 on at

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RE: Currency Conversion with accounting currency and reporting currency

Hi Ludwig,

instead of Kuhn, I will try to provide the requested information:

The setup for accounting and reporting currency was done by another consultant during the implementation and not by our company. So we could not explain, why he or she set this up, but now couldn't change this anymore.

The scenario and preferences, the customer works with, are as followed:

- Exchange rates for USD and EUR are imported via batch every day from EZB, as long as there are exchange rates available.

- accounts for currency revaluation: legder accounts for realized gain / loss and unrealized gain / loss are setup correctly

- there are also ledger accounts for penny differences in reporting currency, accounting currency setup under "accounts for automatic transactions"

Scenario:

Vendor with two posted transactions:

1 invoice posted in - 295 USD, 1 invoice (you can see this as kind of credit note) in 263,66 EUR.

When trying to settle these two transactions via vendor > transactions > settle transactions

there is still a remaining balance. This difference should be automatically posted as currency / exchange rate difference, from our point of view..

(I hope, the images will upload properly..)

Thank you for your help.

Kind regards,
Ann-Kathrin Seidel

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André Arnaud de Cal... 299,361 Super User 2025 Season 2 on at

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RE: Currency Conversion with accounting currency and reporting currency

Hi Ann-Kathrin, Kuhn,

There is a difference in currencies used and also there is a remaining balance of 0,04. Do you have any settings on the AR parameters for over/under payments? Have also a look at the Settle remainder feature: docs.microsoft.com/.../settle-remainder

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Ann-Kathrin 35 on at

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RE: Currency Conversion with accounting currency and reporting currency

Hi André,

thank you for your answer.

I set up max. penny differences to 0,50 and max. overpayment or underpayment also to 0,50 in the accounts payable parameters, but the outcome was the same.

I will take a look at the settle remainder functionality and come back to you.

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Ludwig Reinhard Microsoft Employee on at

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RE: Currency Conversion with accounting currency and reporting currency

Hello Ann-Kathrin,

Can you share the EUR-USD exchange rates that were valid on 19 june and 1 Oct?

Did somebody overwrite the rates when posting the invoice or payment or were the default exchange rates from the exchange rate table used to post the transactions?

Best regards,

Ludwig

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Ann-Kathrin 35 on at

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RE: Currency Conversion with accounting currency and reporting currency

Hi Ludwig,

exchange rates were as followed:

19.06.2019:
0.8938946992044337 EUR for 1 USD

21.08.2019:
0.9028530155290719 EUR for 1 USD

21.10.2019:
0.8973438621679828 EUR for 1 USD

The exchange rates were not overwritten when posting one of these transactions.
As the vendor does have USD as default currency, the currency field was changed to EUR when generating the EUR payment (credit note).

Kind regards,
Ann-Kathrin

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Ann-Kathrin 35 on at

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RE: Currency Conversion with accounting currency and reporting currency

Hi everyone,

after several testings and calculations with the different exchange rates, I think, I understand, what the system is doing.. (still, corrections are welcome ;D )

the short answer: because of the many tests and calculations, I have done, I am nearly sure, that the system won't post the remaining balance in USD, because the system doesn't know, if it's an exchange rate loss/win or if it's just underpayment..

in long (attention: I saw, the amount differs from my first post in this thread, due to different exchange rates after the last import to the test system):
As origin amount, the system checks the USD amount (because it is a vendor with USD currency, after all..) and because of the different exchange rates for different dates, the USD difference with calculated exchange rate from 19.06.2019 is about 7,90 USD. I.e. the original invoice with 295 USD is 7,90 USD less balanced.

Invoice 1, 19.06.2019

295,- USD transaction currency,
263,70 EUR (accounting currency)

Invoice (credit note) 2: 01.10.2019

263,66 EUR transaction currency
263,66 EUR accounting currency

calculations while settling this transactions (settlement date, latest date):

263,66 Euro --> 287,10 USD (exchange rate from 01.10.2019)
295 USD - 287,10 USD = 7,90 USD open balance on Invoice 1

in addition:

287,10 USD --> 256,64 EUR (exchange rate from 19.06.)

---> this results in difference between Invoice 2 and EUR - settled amount: 256,64 EUR - 263,66 EUR= 7,02 EUR

Thank you again, for the suggestion with Settle Remainder. This is, I think, working fine, if the customer wants an automated posting of the remaining amount to a specific account without generating a general journal entry after the setllement..
So the 7,90 USD remaining balance was settled, too. In addition, there were also the remaining postings for exchange rate loss

These were our test postings so far..

Kind regards,
Ann-Kathrin

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Ludwig Reinhard Microsoft Employee on at

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RE: Currency Conversion with accounting currency and reporting currency

Good Morning Ann-Kathrin,

I made the following calculations, which explain the amounts that you see in the settlement screen that you shared further above.

What I cannot really follow up are the calculations that you made in your last post.

You mentioned that 263.66 EUR equals 287.10 USD with the exchange rate 1st oct 2019.

How did you calculate that?

If I take your exchange rate that was valid from 21 Aug till 21 Oct then I get a USD amount of 292.03.

Can you explain what exchange rate you used for making this conversion and why?

Many thanks,

Ludwig

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