Foreign account revaluation (customers and suppliers)
How to
Revalue foreign customer and supplier accounts
Open: Sales Ledger > Period End Routines > Foreign Account Revaluation.
Open: Purchase Ledger > Period End Routines > Foreign Account Revaluation.
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Choose the Currencies to update.
The exchange rates used for the revaluation depend on how each currency is set up in Currencies and Exchange Rates (Accounting System Manager).
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Select Revalue all currencies to revalue all foreign currency customer or supplier accounts.
This uses the exchange rate for each currency as it is set up in Currencies and Exchange Rates. You cannot change the exchange rate here.
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Select Revalue a single currency to revalue all customer or supplier accounts for the specified currency.
- If the Currency uses a Single exchange rate, you can change the Exchange rate here, if required.
- If the Currency uses a Period exchange rate, the Exchange rate box shows the period exchange rate that has been set for the date selected in the Revaluation Date box. You cannot change the Exchange rate.
- If the Currency you select has been set as both a Single & Period currency, the Exchange rate box shows a single exchange rate as well as the period exchange rate for the selected Revaluation Date. You can change the Exchange rate if required.
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- Enter a Revaluation date. This is the date the revaluation transactions are posted. If a currency uses a period exchange rate, the exchange rate set for this date is used.
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Choose your Posting option.
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Select Produce report only to print a report detailing what the revaluation may post.
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Select Produce accounting adjustments to post the revaluation of the transactions to the nominal ledger. This also prints the report detailing these postings.
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- Click OK to start the revaluation process.
Useful info
About foreign account revaluation
You will encounter exchange rate fluctuations because of the time between entering invoices onto the system and making or receiving payment for those invoices. Use this option to manage exchange rate differences in foreign sales and purchase transactions.
Sage 200 deals with these exchange rate differences in two ways:
Automatic revaluation of transactions
Sage 200 automatically revalues your foreign currency transactions when they are part or fully allocated. Losses or gains made from these exchange rate fluctuations are automatically posted to your exchange rate differences nominal account.
You can view the associated revaluation transactions in the Transaction Enquiry window, by selecting Alloc/Reval History from the Select drilldown drop-down list.
Examples of revaluing transactions
You enter an invoice for $1000. The exchange rate is £1 = $1.5. The invoice is worth £666.67.
The following double entry posts to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Default Sales Account | 666.67 | |
| Debtors Control Account | 666.67 |
You enter a receipt of $1000 for this invoice, the exchange rate has changed to £1 = $1.6. The payment is worth £625.
The following double entry posts to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Bank Account | 625.00 | |
| Debtors Control Account | 625.00 |
The receipt is worth £41.67 less than the invoice. When the receipt is allocated to the invoice, the revaluation takes place. The following values post to the Nominal Ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Exchange Differences Account | 41.67 | |
|
Debtors Control Account |
41.67 |
When a receipt is part allocated to an invoice, only the portion of the invoice that is paid, is revalued.
You enter an invoice for $1000. The exchange rate is £1 = $1.5. The invoice is worth £666.67.
The following double entry posts to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Default Sales Account | 666.67 | |
| Debtors Control Account | 666.67 |
You enter a receipt of $500. The exchange rate has changed to £1 =$1.6. The receipt is worth £312.50.
The following values post to the nominal ledger.
| Nominal Account | Debit | Credit |
|---|---|---|
| Bank Account | 312.50 | |
| Debtors Control Account | 312.50 |
This receipt is allocated to the invoice. To calculate the revaluation, the base currency allocated value of the invoice and the receipt are compared. The difference between the values is posted to the exchange differences account.
In this example:
- The invoice value of the $500 (£1 = $1.5) is £333.33.
- The receipt value of the $500 (£1 = $1.6) is £312.50.
- The difference is a loss of £20.83.
The following values post to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Exchange Differences Account | 20.83 | |
|
Debtors Control Account |
20.83 |
Every time a receipt is allocated to the invoice this revaluation occurs.
You enter another receipt of $250. The exchange rate is £1 = $1.4. The receipt is worth £178.57. The following values post to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Bank Account | 178.57 | |
| Debtors Control Account | 178.57 |
You allocate the receipt to the invoice. The revaluation occurs.
In this example:
- The invoice value of the $250 (£1 = $1.5) is £166.67.
- The receipt value of the $250 (£1 = $1.4) is £178.57.
- The difference is a gain of £11.90.
The following values post to the nominal ledger.
| Nominal Account | Debit | Credit |
|---|---|---|
| Exchange Differences Account | 11.90 | |
|
Debtors Control Account |
11.90 |
You enter an invoice for $1000. The exchange rate is £1 = $1.5. The invoice is worth £666.67.
The following double entry posts to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Default Purchase Account | 666.67 | |
| Creditors Control Account | 666.67 |
You enter the payment of $1000 for this invoice, the exchange rate has changed to £1 = $1.6. The payment is worth £625.
The following double entry posts to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Bank Account | 625.00 | |
| Creditors Control Account | 625.00 |
The payment is worth £41.67 less than the invoice. When the payment is allocated to the invoice, the revaluation takes place. The following values post to the Nominal Ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Exchange Differences Account | 41.67 | |
|
Creditors Control Account |
41.67 |
When a payment is only part allocated to an invoice, only the portion of the invoice that is paid is revalued.
You enter an invoice for $1000. The exchange rate is £1 = $1.5. The invoice is worth £666.67.
The following double entry posts to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Default Purchase Account | 666.67 | |
| Creditors Control Account | 666.67 |
You enter a payment of $500. The exchange rate has changed to £1 =$1.6. The payment is worth £312.50.
The following values post to the nominal ledger.
| Nominal Account | Debit | Credit |
|---|---|---|
| Bank Account | 312.50 | |
| Creditors Control Account | 312.50 |
This receipt is allocated to the invoice. To calculate the revaluation, the base currency allocated value of the invoice and the receipt are compared. The difference between the values is posted to the exchange differences account.
In this example:
- The invoice value of the $500 (£1 = $1.5) is £333.33.
- The payment value of the $500 (£1 = $1.6) is £312.50.
- The difference is a loss of £20.83.
The following values post to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Exchange Differences Account | 20.83 | |
|
Creditors Control Account |
20.83 |
Every time a payment is allocated to the invoice this revaluation occurs.
You enter another payment of $250. The exchange rate is £1 = $1.4. The payment is worth £178.57. The following values post to the nominal ledger:
| Nominal Account | Debit | Credit |
|---|---|---|
| Bank Account | 178.57 | |
| Creditors Control Account | 178.57 |
You allocate the receipt to the invoice. The revaluation occurs.
In this example:
- The invoice value of the $250 (£1 = $1.5) is £166.67.
- The payment value of the $250 (£1 = $1.4) is £178.57.
- The difference is a gain of £11.90.
The following values post to the nominal ledger.
| Nominal Account | Debit | Credit |
|---|---|---|
| Exchange Differences Account | 11.90 | |
|
Creditors Control Account |
11.90 |
Revalue outstanding amounts on customer or supplier accounts
Use the Foreign Account Revaluation option in the Sales or Purchase Ledger to make sure that the value of outstanding transactions on your foreign currency accounts reflects the latest currency exchange rate.
Revaluation rules
When your foreign currency accounts are revalued, the following rules are applied:
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Currencies using a Single exchange rate.
The revaluation uses the exchange rate specified in the exchange rate table in Currencies and Exchange Rates.
If you set the currency exchange rate to be amendable and have the necessary user permissions you can change the exchange rate.
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Currencies using Period exchange rates.
The revaluation uses the exchange rate set for the period applicable to the receipt date or revaluation date.
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Currencies using both single and period exchange rates.
The revaluation uses either the single or the period exchange rate depending on the option selected in the customer or supplier account. Each customer or supplier that uses this currency will be set to use either the single rate or the period rates.
- Transactions with a Query flag against them are not revalued.
- If the invoice and the receipt have the same exchange rate, no revaluation takes place.
- The revaluation only posts the value of the difference in the exchange rate, and not the full base value of the transaction.
When transactions are automatically revalued, the following rule is also applied:
- When an invoice is paid in a future period, the revaluation values are posted to the deferred posting file.
When you use Foreign Account Revaluation to revalue outstanding amounts, the following rules are also applied:
- Only outstanding or part outstanding transactions up to the specified Revaluation date, are revalued.
- If the Revaluation date is in a future period, the revaluation values are posted to the deferred postings file.
Outcomes
- Revaluation reports are produced.
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If Produce accounting adjustments is selected, the outstanding values on the accounts are revalued. This posts the value of the difference in the exchange rates to the exchange differences and debtors control nominal accounts in the Nominal Ledger.
Note: If there have been no exchange rate changes, then there are no postings made to the Nominal Ledger.
Before you begin
You must have:
- Set the currency descriptions and exchange rates for foreign currency accounts.
- Created customer and supplier account records for customers and suppliers who operate in foreign currency.
- Selected Use foreign currency revaluation in the Sales and Purchase Ledger settings.
- Set up your default Exchange Rate Differences nominal account in the Nominal Ledger.