Problem in Foreign Currency Exchange Settlement in Procure-to-Pay Cycle

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Posted on by EarlyLightRonald

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Case : USD AP Settled by HKD Payment & LC = HKD
				OC	OC Amt	Exchange Rate	Dr. (HKD)	Cr.(HKD)
1.1.201X	Purchase Invoice:	Dr	Sales Expense	USD	6,079.19	7.75480	47,142.90
		Cr	Other Payable	USD	6,079.19	7.75480		47,142.90

				OC	OC Amt	Exchange Rate	Dr. (HKD)	Cr.(HKD)
1.1.201X	Payment to Vendor by HKD:	Dr	Other Payable	HKD	47,142.90	1.00000	47,142.90
		Cr	BANK	HKD	47,142.90	1.00000		47,142.90
					=USD 6079.19

Problem:
Currecny Exchange & Exchange Diff is Missing!
At G/L Level , USD 6079.19 is still there although Dr/Cr Balance in Local Currency HKD is completely offset

I found no way to configure the system to generate correct Journal Entries in this way :

				OC	OC Amt	Exchange Rate	Dr. (HKD)	Cr.(HKD)
1.1.201X	Purchase Invoice:	Dr	Sales Expense	USD	6,079.19	7.75480	47,142.90
		Cr	Other Payable	USD	6,079.19	7.75480		47,142.90

30.6.201X	Payment to Vendor by HKD:	Dr	Other Payable	USD	6,079.19	7.75480	47,142.90
		Dr	Realized Ex. Loss	HKD	274.78200	1.00000	274.78
		Cr	BANK	HKD	47,417.68	1.00000		47,417.68

Anyone could help?

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André Arnaud de Cal... 301,035 Super User 2025 Season 2 on at

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Hi Ronald,

I don't understand the question. Please tell if the vendor transactions are settled or have a remaining amount or not.

At which field in AX are you looking where you find a difference? I do see the same HKD amount for the PO invoice and the payment.

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EarlyLightRonald 250 on at

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Hi Andre,

At APLevel, the vendor transaction in USD are settled but we are using HKD to pay this USD Invoice.

If we settled this in the same month using book rate, it would be fine.

However, the Exchange Rate from USD to HKD is no longer 7.75480 and 6 months later , we have 7.79.

So in the payment screen, if we choose HKD as the settlement currency, and the book rate is different , this should generate an exchange difference (HKD is the local currency).

In addition, at GL level, we should have the amount in USD completely offset.

You are right, the amount in HKD is offset but not the amount in USD.

That's why I have the correct entries that eliminate the both the outstanding Amount in USD and HKD at GL Level.

I find no way to have this correct entries generated by the system (AX 2009 SP1).

Any clues?

Thanks!

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Chandu Naresh 982 on at

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Please tell me which is your accounting currency.

Do you have a separate reporting currency

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Community Member on at

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Hi Ronald,

I think you have to check fiscal period and currency Exchange rates field in General Ledger < Set up < Currency Exchange Rate, then select Exchange rates type and check start date and end date.

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André Arnaud de Cal... 301,035 Super User 2025 Season 2 on at

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Hi Ronald,

In this case it is a bit cumbersome. When you mark the transactions for settlement, initially AX thinks it will be settled correctly. You need to alter the cross-rate field, but this will update the amounts incorrect. So you have to change the fields Amount to settle and Amount to settle in HKD to get the required exchange rate difference.

Note that there is no balance in AX per foreign currency on the ledger. If you require to have it, you need to post the payment in USD, not in HKD.

The balances are maintained in accounting currency and reporting currency only.

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Chandu Naresh 982 on at

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Hi Andre,

I want to correct your last statement asking ronald to make payment in USD (and not in HKD).

This is an ERP and not just an accounting package. users can make transactions in multiple currencies.

There is a genuine problem here, that needs to be resolved. but if we give a vague response, then it creates wrong image on AX as an ERP

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André Arnaud de Cal... 301,035 Super User 2025 Season 2 on at

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Hi Chandu,

Thanks for your comment. Appreciated. My comment was related to the balance per USD currency in the ledger where the home currency is HKD. There is no balance for the currency amounts, only the accounting currency and reporting currency. The statement was not related to the way they have paid the invoice now. Let me explain:

If you have used the settlements you will also notice managing the exchange rate on settlements itself is cumbersome. In this case the accounting currency is HKD, the invoice was received in USD. As he paid the invoice in HKD, he would like to manage an outstanding amount on the invoice. This is where the problem is; not in my reply.

Usually when there is an agreement to have an invoice in a certain currency the vendor expects to get paid in that currency, otherwise they could have agreed to have the invoice in HKD or maybe even another currency. So assuming the agreement was based on USD, usually you need to pay in USD. If you don't have an USD bank account it is common to pay from the local bank, so in this case HKD. In fact they had to pay the HKD amount related to the exchange rate from that moment, which seemed to be ignored. So now there might be a need to change it and pay the remaining amount.

So with this explanaition, you still think you want to correct my statement?

Can you also explain your statement about a genuine problem?

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EarlyLightRonald 250 on at

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Hi folks,

1. The company 's local currency or reporting currency is HKD

.

2. The Vendor wants us to pay in HKD with the latest exchange rate and the Puchase Invoice is in USD

.

3. We have reports to check the foreign currency balance, not just the local currency balance. This is our standard period-closing procedure:

.

AP Aging Report by Foreign Currency VS GL's Balance by Foreign Currency

.

That's why I need to have the USD balance at G/L level completely offset to reconcile with the balance on AP Aging report and we will do the exchange revaluation afterwards.

.

.

.

I have tried the Cross Rate application.

It seems to be the problem of "Cross Rate" and the corresponding HKD amount calculation.

When I enter a new cross-rate and the amount in HKD is calculated but the system does not generate any exchange difference.

.

The system doesn't think there is any exchange difference as the payment and the AP are of different currencies.

.

Dont know if I have test it correctly:

1. Mark the invoice for settlement (USD)

2. Change the payment currency from USD to HKD

3. Enter the correct Exchange rate or using book rate in the Cross Rate field

4. Save & Post

5. Wrong entries detected.

Thanks!!

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Chandu Naresh 982 on at

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Hi Ronald,

let us analyze your problem.

On 1.1.20XX the exchange rate is 1 USD = 7.7548 HKD

On 30.6.20XX the exchange rate is 1 USD = 7.7999 HKD (calculated based on the realized exchange loss mentioned above)

Please check the default exchange rate setup for 30.6.20XX.

You will get the expected journal entry in the ledger account, If you have set it up as 1 USD = 7.7999 HKD (or 7.8 HKD rounded off) on 30.6.20XX.

Hence, please update the exchange rates at General Ledger > Setup > Currencies > Currency exchange rates. Your problem is resolved

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Chandu Naresh 982 on at

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Hi Andre,

The Genuine problem he is facing is that the "Realized exchange loss" is not booked in the voucher (ledger level). Ronald wants to get this resolved.

In AX, the realized exchange gain/loss will be booked based on the exchange rates selected and when the payment is marked for settlement.

Asking the users to use only a single currency is not the solution.

Hope you understand and thanks.

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