AR Invoices in Foreign Currencies: Process Activity

The following activity will walk you through the processing of an AR invoice in a foreign currency.

Story

Suppose that on January 30, 2024, SweetLife Fruits & Jams provided juicer installation services to the Mint Store customer, whose currency is the Canadian dollar (CAD), and issued an invoice in CAD.

Acting as a SweetLife accountant, you need to create the invoice in the system and apply a payment in the same foreign currency to this invoice. Before you perform these actions, you will make changes to the Mint Store customer’s settings so that invoice processing can be performed in line with the customer’s currency-related preferences.

Configuration Overview

In the U100 dataset, the following tasks have been performed for the purposes of this activity:

  • On the Enable/Disable Features (CS100000) form, the following features have been enabled:
    • Standard Financials, which provides the standard financial functionality
    • Multibranch Support, which supports multiple branches in your instance of MYOB Acumatica
    • Multicompany Support, which supports multiple companies within one tenant.
    • Multicurrency Accounting, which enables multicurrency operations in the system
  • On the Companies (CS101500) form, the SWEETLIFE company has been defined.
  • On the Branches (CS102000) form, the HEADOFFICE branch of the SWEETLIFE company has been created.
  • On the Chart of Accounts (GL202500) form, the 11000 (Accounts Receivable), 40000 (Sales Revenue), and 42010 (Realized Gain CAD) accounts have been created.
  • On the Customer Classes (AR201000) form, the INTLCA (Canadian Customers) customer class has been predefined.
  • On the Customers (AR303000) form, the MINTSTORE customer has been predefined.
  • On the Payment Methods (CA204000) form, the WIRE payment method for wire transfers has been created.

Process Overview

In this activity, you will update the customer’s currency-related settings on the Customers (AR303000) form to prepare the customer for multicurrency invoice processing, and update the settings of the payment method on the Payment Methods (CA204000) form. On the Invoices and Memos (AR301000) form, you will then create an invoice in CAD and override the rate manually for this particular invoice. You will then post the invoice and review the GL transaction generated by the system on the Journal Transactions (GL301000) form. To review the customer's balance, you will run the AR Balance by Customer MC (AR633000) report. Finally, on the Payments and Applications (AR302000) form, you will pay the invoice in the same currency (CAD).

System Preparation

Before you begin performing the steps of this activity, do the following:

  1. Launch the MYOB Acumatica website with the U100 dataset preloaded, and sign in as an accountant Anna Johnson by using the johnson username and the 123 password.
  2. In the info area, in the upper-right corner of the top pane of the MYOB Acumatica screen, make sure that the business date in your system is set to 1/30/2024. If a different date is displayed, click the Business Date menu button, and select 1/30/2024 from the calendar.
  3. On the Company and Branch Selection menu on the top pane of the MYOB Acumatica screen, make sure that the SweetLife Head Office and Wholesale Center branch is selected. If it is not selected, click the Company and Branch Selection menu button to view the list of branches that you have access to, and then click SweetLife Head Office and Wholesale Center.
  4. As a prerequisite activity, make sure that the multicurrency accounting functionality has been configured as described in Multicurrency Functionality: Implementation Activity and Configuration of Rate Types and Rates: To Configure Rates.
  5. As a prerequisite activity, make sure that you have configured an account as described in Multicurrency Cash Accounts: To Configure an Account.

Step 1: Updating the Customer’s Settings

To update the currency-related customer settings in preparation for multicurrency invoice processing, do the following:
  1. Open the Customers (AR303000) form.
  2. In the Customer ID box, select MINTSTORE.
  3. On the Financial tab (Financial Settings section), do the following:
    • In the Currency ID box, select CAD.

      This is the primary currency to be inserted in invoices and memos for this customer.

    • Notice that the Curr. Rate Type box is empty, which is the default value of this setting copied from the customer class.

      This setting specifies the currency rate type to be used for the customer. Because you are not specifying a Curr. Rate Type value for the customer, the system will use the SPOT rate, which is set as the default rate for accounts receivable on the Currency Management Preferences (CM101000) form.

    • Notice that the Enable Currency Override check box is cleared, which is the default state of this check box from the customer class.
      With this check box cleared, you cannot override the currency in the invoices and memos to this customer—that is, the setting in the Currency ID box specifies the only currency that can be used in documents for this customer.
      Tip: If in some situations you may need to issue invoices and memos to a customer in a currency other than the default one, you select this check box.
    • Select the Enable Rate Override check box.

      With this check box selected, you can override the rate type and exchange rate in documents created for this customer.

  4. On the Payment Methods tab, for the WIRE method, select the Is Default check box.
  5. On the form toolbar, click Save to save your changes.

Step 2: Reviewing the Payment Method Settings

To review the settings of the payment method for the foreign currency, do the following:

  1. Open the Payment Methods (CA204000) form.
  2. In the Payment Method ID box, select WIRE.
  3. On the Allowed Cash Accounts tab, make sure that 10215WH (Checking Account CAD) is listed, and the Use in AP and Use in AR check boxes are selected. You associated this payment method with the 10215WH cash account and selected these check boxes when you created the account in Multicurrency Cash Accounts: To Configure an Account.

Step 3: Creating and Releasing an Invoice

To create and release an invoice in the CAD currency, do the following:

  1. Open the Invoices and Memos (AR301000) form.
  2. On the form toolbar, click Add New Record, and in the Summary area, specify the following settings:
    • Type: Invoice
    • Customer: MINTSTORE
    • Currency: CAD (inserted automatically when you selected the customer)

      The CAD currency is selected in the invoice (and the document amounts are specified in CAD) because you specified this currency for the customer. The currency of the invoice cannot be overridden because the Enable Currency Override check box is cleared for the customer on the Financial tab of the Customers (AR303000) form.

    • Date: 1/30/2024 (inserted automatically)

      If you were to override the date, the currency rate in the document changes, because the system uses the effective rate on the selected date.

    • Post Period: 01-2024
    • Description: Juicer installation
  3. On the Details tab, click Add Row, and in the added row, specify the following settings:
    • Transaction Descr.: Installation
    • Ext. Price: 300.01
  4. Add another row, and specify the following settings:
    • Transaction Descr.: Business travel
    • Ext. Price: 150.01
  5. In the Summary area, click the Exchange Rate box (right of the Currency box), and review the Rate Selection dialog box, which opens.

    The Curr. Rate Type ID (SPOT) is the default rate type determined by the AR Rate Type setting on the Currency Management Preferences (CM101000) form, because you haven't specified a rate type for the customer. The system uses the currency rate that became effective on 1/30/2024. You can override the rate type and rate in this document because the Enable Rate Override check box is selected for the customer on the Customers form.

    Tip: Any time you need to check which currency rate was effective on a particular date, on the Currency Rates (CM301000) form, you can select the needed date in the Effective Date box and review the Effective Currency Rates tab.
  6. Click OK to close the Rate Selection dialog box.
  7. In the Summary area, click the View Base button (right of the Currency box) to review the invoice amounts in the base currency (USD).

    For converting the invoice total and line amounts, the system uses the CAD-to-USD rate that was effective on the invoice date. The system computes the detail total and the line amounts in the base currency as follows:

    • $352.24 (Detail Total of the document) = Round (C$450.02 * 0.78271760)
    • $234.82 (Amount of the first line) = Round (C$300.01 * 0.78271760)
    • $117.42 (Amount of the second line) = Round (C$150.01 * 0.78271760)
    Tip: When you are reviewing the document in the base currency, you cannot modify the document amounts. To be able to modify invoice amounts, you would have to switch back to viewing the document currency of the invoice by clicking View Cury.
  8. Click View Cury to return to the document currency.
  9. Click the Exchange Rate box (right of the Currency box), and in the Rate Selection dialog box (which opens), enter 0.735 as the CAD-to-USD rate.
  10. Click OK to confirm the rate changes and close the dialog box.
  11. In the Summary area, click View Base, and review the invoice amounts in the base currency.

    The Detail Total in the base currency is $330.76, because the system recalculated the amount by using the exchange rate that you have specified manually (C$450.02 * 0.735). The system also recalculated the line amounts in the base currency by using the new rate; now they are $220.51 for the first line and $110.26 for the second line. This manually specified currency rate is used in this particular invoice only and does not override the effective currency rate of the SPOT type that is specified on the Currency Rates form.

  12. On the form toolbar, click Remove Hold.
  13. On the form toolbar, click Release to release the invoice.

Step 4: Reviewing the Generated GL Transaction

To review the GL transaction generated by the system, do the following:

  1. While you are still on the Invoices and Memos (AR301000) form, on the Financial tab, click the link in the Batch Nbr. box.
  2. On the Journal Transactions (GL301000) form, which opens, review the generated GL transaction in the document (CAD) and base (USD) currencies.

    When the invoice was released, the following actions were performed in the system:

    • The Accounts Receivable account of the customer (11000) was debited in the total invoice amount (C$450.02, which is $330.76 based on the document exchange rate).
    • The sales account of the customer (40000) was credited in the invoice amounts specified in the document lines ($220.51 = C$300.01 * 0.735 for the first line, and $110.26 = C$150.01 * 0.735 for the second line).
    • The rounding gain/loss account (83100) was debited in the amount of the rounding loss ($0.01 = $330.77 – $330.76), which is due to rounding operations. (You specified this account for CAD on the Currencies (CM202000) form while performing Multicurrency Functionality: Implementation Activity.) The rounding loss is caused by the difference between the document balance converted into the base currency ($330.77 = Round (C$450.02 * 0.735)) and the total of the line amounts converted into the base currency ($330.76 = Round (C$300.01 * 0.735) + Round (C$150.01 * 0.735)).

Step 5: Reviewing the Customer's Balance

To review the customer's balance, do the following:

  1. Open the AR Balance by Customer MC (AR633000) report form.
  2. On the Report Parameters tab, specify the following parameters:
    • Report Format: Open Documents

      This option means that the report will list all the documents that are open at the end of the selected period.

    • Company/Branch: HEADOFFICE (SweetLife Head Office and Wholesale Center)
    • Financial Period: 01-2024
    • Customer: MINTSTORE
    • Include Applications: Cleared
  3. On the form toolbar, click Run Report.
  4. Review the report, which displays the invoice that you have processed and have not yet paid.

    As the report shows, at the end of the period, the customer's outstanding balance is C$450.02, which is $330.76 in the base currency.

Step 6: Applying a Payment in the Same Foreign Currency to the Invoice

To create a payment and apply it to the invoice, do the following:

  1. Open the Payments and Applications (AR302000) form.
  2. On the form toolbar, click Add New Record, and in the Summary area, specify the following settings:
    • Type: Payment
    • Customer: MINTSTORE
    • Payment Method: WIRE (inserted automatically when you select the customer)
    • Cash Account: 10215WH
    • Currency: CAD (inserted automatically when you select the cash account)

      A payment is always created in the currency of the selected cash account; this currency can differ from the customer's currency and cannot be overridden.

    • Description: Juicer installation
    • Application Date: 1/31/2024
    • Application Period: 01-2024

    On the Documents to Apply tab, the system has loaded the invoice you created for this customer earlier.

  3. Select the Included check box for the row with the invoice, and in the Summary area, click the Refresh button to the right of the Payment Amount box.
  4. In the Summary area, click the View Base button (right of the Currency box), and review the payment amount in the base currency. The payment amount is recalculated in the base currency by the exchange rate of the payment and is $352.24 (C$450.02 * 0.7827176, which is the CAD-to-USD exchange rate that was effective on the payment date of 1/31/2024).
  5. On the form toolbar, click Remove Hold, and then click Release to release the payment.
  6. On the Financial tab, click the Batch Nbr. link.
  7. On the Journal Transactions (GL301000) form, which opens, review the generated GL transaction in the document currency.
  8. In the Summary area, click View Base (right of the Currency box), and review the transaction in the base currency.

    When the payment was released, the following actions were performed in the system:

    • The checking account specified in the payment (10215), which you created in Multicurrency Functionality: Implementation Activity, was debited in the payment amount, which the system converted to the base currency by using the exchange rate of the payment ($352.24 = Round (C$450.02 * 0.7827176)).
    • The Accounts Receivable account of the customer (11000) was credited in the payment amount applied to the invoice; the system converted the payment amount to the base currency by using the exchange rate of the invoice ($330.76 = Round (C$450.02 * 0.735).
    • The realized gain account associated with the CAD currency (42010, which you specified when you defined the currency in Multicurrency Functionality: Implementation Activity), was credited in the amount of the realized gain, which is the result of differences in the rates of the invoice and the payment. The payment rate is greater than the invoice rate. Thus, the result of applying the payment to the invoice is a realized gain in the amount of $21.48 ($352.24 – $330.76).