Multiple Exchange Rates using P0015 or P11154

[Nashaat]

My question is specific to exchange rates management in JDE. Is it possible to have multiple exchange rates for a single country to a single country. Example: USD to EUR for P&L and USD to EUR for Balance sheet. Is this possible to do in JDE using the normal applications or another workaround ?

Any ideas or suggestions are welcome ?
Appreciate
Nashaat

 

[DBohner-(db)]

I'll defer to one of the Functional folks to provide the Pros/Cons - regarding how you cook the the books, as a developer should....

You could create imaginary countries - EPL and EUR and....

For my own sanity (because I like to understand things)... why would an organization setup different Exchange Rates in such a way?

(db)

 

[Alex Blasenheim]

Nashaat,

JDE handles this in a different way. It is explained very well in the multicurrency manual. During the course of the month all transactions are processed using the daily exchange rate. One can override the rate at the time of entry. One can even have a specific exchange rate based for a particular supplier/customer. This is usually based on a legal contract.

What your company needs to do is setup the computation ID (P1114) which is setup one time per company. It is here where the system determines how to recalculate based on what type of account (P&L, BS, etc). Rate types most commonly used: M- Month end for balance sheet, A – Month average for P&L, H – Historical for equity/retained earnings. At month end close, the restatement program (R11414A) is run and makes all adjustments necessary.

There should be no need for customization.

 

[Alex Blasenheim]

See my previous post as to what JDE does. To answer your question why? Think of it this way:

At the end of the month your house which is considered a "balance sheet" item is worth whatever it is at that moment. So you would use the exchange rate at the month end which is at that moment. P&L expenses happened the day it hits the General Ledger. So the accepted accounting practice is to take an average of the exchange rates during the course of the month. There is something called detailed currency restatement used for highly inflationary countries but that is a discussion for another day.

 

[MattNorman]

We have a customisation to do this.

We hedge exposure to exchange risk for certain client contracts. Since each client contract has a different value, and cash profile, the hedge contract has a different hedge rate.

We also pool some exposure.

I hope this is valid reason for having multiple exchange rates for currencies!

 

[Nashaat]

Alex, Thank you very much for your direction. I realized that P1114 can handle the computations you have mentioned right after my message. For some reason I did not see my own conversation on jdelist.com since March. Strange.

@Daniel: I think Alex and Matt have defined it quite well. Think of it another way. Daily you buy fish at daily exchange rate. End of month when you do your books, you work with your detailed transactions (receipt) of the month. Now if/when you interact with bank (real money taken to bank or suppliers paid for their fish supply) who may do that at end of month on that rate. Lets say for simplicity this end of month is the closing rate / average rate. So on one hand I have a daily rate with it's transactions, and on the other hand a closing rate. I need to manage these somewhere and somehow at transaction level and then reporting level. Maybe if there is money left I can buy more fish, in Italy the equivalent of Sea Bass is called "Orata".

Alex does this by creating a rule, and Matt is taking any differences on reporting level to hedge on it. Both have answered my question because I need to know the delta, then make a treasury deal so that i am not losing money in the process or make sure that exchange rate risk is not killing the business.

Hope this was helpful. Thank you gentlemen for your prompt replies.
Regards
Nash