Exchange of Currencies Using Spot and Average Rates

Foreign exchange functionality in ProudNumbers allows the translation of data for companies operating in a currency other than the base consolidated currency. The first step for consolidation where mutliple currencies are involved is to set up exchange rates. Currencies are configured from the Client Folder/Foreign Exchange Rates by:

Clicking on the "+"

Entering the rate and date for both Average Exchange Rates and Spot Exchange Rates

Clicking the Save (floppy disk) button
The base currency is derived from the Chart of Accounts on which the Consolidated Client is based. Conversion currencies are obtained from Sage Company/Client import. Average rates are used for Profit and Loss calculations, and spot rates are used for the Balance Sheet, Debtors, and Creditors.

For KPIs, both rates are employed depending on the type of KPIs-whether they are based on Profit and Loss calculations or the Balance Sheet.

Basic Principles for Setting Up Average Currency Exchange Rates:

Set an exchange rate for the previous financial period  (e.g. from 01/01/0001 to 31/12.2023)

For the subsequent periods  ensure that periods used for calculating  are consecutive. Specifically, the 'from' period should be immediately followed by the 'to' period.

If an exact exchange rate exists for the last day of a specific period (either expllicitely  or as part of the larger interval) , ProudNumbers utilizes that rate for transactions during that timeframe
   If an exact/one rate is not available for the specified period, ProudNumbers uses the nearest rate from the past.

If an exact exchange rate is explicitly set for the last day of a specific period, or if it is implicitly part of a larger interval, ProudNumbers uses this rate for all transactions within that timeframe.
Illustrative Example:

Consider an exchange rate set for the period from January 1, 2023, to March 1, 2023. In the context of monthly reporting intervals, such as January 1, 2023, to January 31, 2023, and February 1, 2023, to February 28, 2023, the system identifies exact exchange rates for key dates within the larger interval, specifically on January 31 and February 28. These rates are then utilized for the respective calculations in January and February.

In instances where multiple exchange rates exist for a given month of reporting, the system selects the rate associated with the nearest 'to' date. This ensures accurate and contextually relevant exchange rates are applied for each reporting period. 

Basic Principles for Setting Up Spot Currency Exchange Rates:

Set a rate  the rate applicable on the last day of the previous financial period

Assign rates for specific dates. If the date corresponds to the Balance Sheet run date, ProudNumbers will  use the set rate. Otherwise, the system will automatically select the nearest available rate from the past.