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Payment Reconciliation Journal - apply bank statement lines in EUR to vendor open entries in USD

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Posted on by MS-03092100-0

Hello,

Scenario:

Company with LCY=EUR.

The bank account is setup as an EUR bank account (Currency field is empty).

I have several purchase invoices of vendors posted in USD in different posting dates, which means with different exchange rates.

The several purchase invoices were paid through the online bank in EUR. The Bank applies its exchange rate and pays in USD to the vendor.

Now I imported the bank statement lines in EUR into "Payment Reconciliation Journal" and I need to apply to the vendor open entries posted in USD.

Since the exchange rates applied by my bank are not exactly the same I have setup in my BC database, when I apply the bank statement lines to the open vendor entries, I got differences or the open entry remains with a remaining value that is not corret.

The only solution to solve this is to manipulate the exchange rate in BC to be equal to the exchange rate used by the bank. However this is not efficient, it's time consuming and prone to human errors, it impacts on the business activity because there are colleagues posting Purchase invoices in USD at same time, etc.

Does anyone have alternative ways to solve this?

Thanks

Maria

Categories:

Dynamics 365 Business Central

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Ramesh Kumar 3,542 on at

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Payment Reconciliation Journal - apply bank statement lines in EUR to vendor open entries in USD

Hi Maria,

It's advisable to explore how various ISV solutions handle similar scenarios. Many ISVs offer pre-built functionalities tailored to specific industries, which might align closely with your requirements.

Thanks

Ramesh

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Khushbu Rajvi. 15,059 Super User 2025 Season 1 on at

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Payment Reconciliation Journal - apply bank statement lines in EUR to vendor open entries in USD

Yes, Customization needed.
MS-03092100-0 16 on at

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Payment Reconciliation Journal - apply bank statement lines in EUR to vendor open entries in USD

Hi,

The issue here is that BC doesn't allow to edit Currency Factor in the Payment Reconciliation Journal, only in Payment Journal.

It would be great if this was possible.

I think I need to go for some custumization here :(

Thanks all for your inputs.

Maria
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Jainam M. Kothari 6,575 on at

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Payment Reconciliation Journal - apply bank statement lines in EUR to vendor open entries in USD

Hello,

To handle different exchange rates between your bank and Business Central, you can set up automatic exchange rate updates, use the currency adjustment feature, manually adjust amounts in the Payment Reconciliation Journal, or perform a revaluation of vendor ledger entries. These methods can help reduce manual effort and errors, ensuring accurate remaining balances without constantly manipulating exchange rates in Business Central.

https://learn.microsoft.com/en-us/dynamics365/business-central/payables-how-apply-purchase-transactions-manually

https://learn.microsoft.com/en-us/dynamics365/business-central/finance-how-update-currencies
Saif Ali Sabri 1,934 Super User 2025 Season 1 on at

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Payment Reconciliation Journal - apply bank statement lines in EUR to vendor open entries in USD

You're encountering a common issue in multi-currency payment reconciliation in Microsoft Dynamics 365 Business Central where the bank’s applied exchange rate differs from the rate used when the vendor invoice was posted. Adjusting the system exchange rate to match the bank each time is not sustainable and can cause inconsistencies across the system.

✅ Recommended Solution: Use "Payment Reconciliation Journal" with Realized Gain/Loss Handling
To handle this without manipulating system exchange rates, follow this approach:

1. Use the "Applies-to Doc. No." to Link to the Vendor Ledger Entry

In the Payment Reconciliation Journal, import the bank statement line in EUR.

In the "Applies-to Doc. No." field, select the appropriate USD invoice from the vendor ledger entries.

This will attempt to apply the payment to the vendor invoice, regardless of the currency mismatch.

2. Set "Amount (LCY)" and "Amount" Fields Manually

In the journal line:

Set Amount to the EUR amount from the bank.

Set Amount (LCY) to the EUR amount (since LCY = EUR).

The system will automatically compute the currency amount (USD) based on current exchange rate, which might not match what the bank used.

3. Adjust for Bank Exchange Rate via "Currency Factor" Field

Here’s the key step:

In the Currency Factor field, override the exchange rate to match what the bank used.

This tells BC: "I paid X EUR, and the vendor got Y USD" — so BC calculates realized currency gains/losses properly.

This avoids having to change the global exchange rate in the system and keeps it isolated to this specific transaction.

4. Let the System Post the Currency Gain/Loss Automatically

If there's a difference due to exchange rates, BC will post the difference to realized gain/loss accounts as configured in General Ledger Setup.

This way, the payment fully applies to the vendor invoice, and the difference is accounted for correctly.

🔁 Alternative (if using standard Payment Journal instead)
If you're not satisfied with the Payment Reconciliation Journal:

Use the Payment Journal instead.

Use the "Applies-to Doc. No.", override the "Currency Factor" to match the bank rate.

Post — BC will apply the payment and handle exchange differences automatically.

✅ Benefits of This Approach

No need to adjust system exchange rates.

No interference with other users or postings.

Accurate tracking of exchange rate differences.

Proper audit trail for currency gain/loss.

If your Payment Reconciliation Journal doesn't allow editing the Currency Factor, you might need to use the Payment Journal for these kinds of transactions instead — it's more flexible in this scenario.
Suggested answer

YUN ZHU 81,802 Super User 2025 Season 1 on at

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Payment Reconciliation Journal - apply bank statement lines in EUR to vendor open entries in USD

I think the standard cannot do it, except customization.
For example, you can make a function to enter the current exchange rate when importing, and then calculate based on the exchange rate you entered.

I hope other experts can give you better suggestions.

Thanks

ZHU