Handling payment application proposals in multiple currencies
Multi-currency payments allow businesses to accept and manage transactions in various currencies, which is particularly useful for companies with international customers. For example, if your business sells software online, a customer in Germany can pay in euros, while a customer in Australia can pay in Australian dollars. This flexibility helps your customers purchase more easily and makes it simpler for you to manage currencies.
When you post a payment, it uses the currency code assigned to the bank account.
Payments to local currency (LCY) bank accounts
Payments to LCY bank accounts can be made in any currency. The bank automatically converts incoming foreign currency to the account’s local currency based on the current exchange rate. For example, you can transfer USD to a Euro-denominated account, and the bank will convert it to euros.
However, applying payments to invoices is subject to specific rules. The allowed currencies are controlled by the Application between Currencies field in the Sales & Receivables Setup and Purchases & Payables Setup.
The Application between Currencies field determines which currencies can be applied when matching payments to invoices:
- None - all entries involved in one application must be in the same currency.
- EMU - you can apply entries in euros or one of the old national currencies (currencies of the countries that are part of the European Union).
- All - the entries can be in any currency.
Continia Banking respects posting limitations but can still match and apply invoices in different currencies, regardless of the bank account type.
FCY bank accounts
You can only make payments to a foreign currency (FCY) bank account in the currency assigned to that account. When applying payments to invoices, the allowed invoice currencies are determined by the Application between Currencies settings in Sales & Receivables Setup.
Handling multiple currencies in Continia Banking
In Banking, handling multiple currencies is straightforward and requires no extra setup. The system uses standard settings from Sales & Receivables Setup and Purchases & Payables Setup.
Key points:
- The currency of the bank account is always used for posting.
- Payments to LCY accounts can be made in any currency.
- Both LCY and FCY entries can be processed for LCY accounts.
- For FCY accounts, entries can be in LCY, the same FCY, or a different FCY.
When reconciling payments, any rounding differences are handled automatically. The system creates an additional journal line using the appropriate G/L account from the customer’s or vendor’s posting group.
Example: If you have a GBP bank account (local currency) and receive a payment for a EUR invoice, the system matches the payment to the invoice and generates journal lines to handle any rounding differences.
All payments posted to bank account ledger entries are recorded in the currency of the bank