We buy mostly from Canadian companies and a few US companies, however, our US purchases are increasing. We currently post through inventory receipts in CAD and then hand write a cheque in USD with a journal entry (in Ledger), the difference going to a foreign exchange expense account. A problem with this is that we have no vendor transaction history in Payables.

Is multicurrency something we should consider to solve this? Or is there another way to have transaction history for our US vendors? Is multicurrency difficult to set up? Where should I look for instructions on how to set it up and use it?

If we had multicurrency set up, would we also be able to sell product in USD? Maybe multicurrency would give us the opportunity for more US and International sales.

Hi Susan,

Here's a 'coles notes' version of how multicurrency works; I'm sure this won't answer all your questions but perhaps may lead you in the right direction. Others may want to add ther comments as well.

- MultiCurrency is essentially a database of exchange rates. What are the rates for other currencies (US dollars or others) against your home currency (CDN dollars). You can set up different rates for each day, or use weekly or monthly rates - depending on how accurate you want to be and how often you want to enter new rates.

- When creating a transaction in Adagio that supports MultiCurrency, you specify the USD currency amount and the program can calculate the Canadian equivalent. Both amounts are stored with each transaction, along with the rate and other information. You can also override amounts when required. This means you can invoice your customers and pay your vendors in their currency and have the program automatically determine the CDN amount, along with the accounting.

- Though this wouldn't happen often, some transactions allow a 3rd currency - such as paying a European vendor (base is Euros) with USD currency, where your home currency is Canadian. The program tracks all of this for you.

- Reports can print amounts in either the USD amounts or the Canadian equivalent amounts, making comparisons easier.

- There are revaluation functions that allow you to adjust the home equivalent amount of outstanding transactions, if currency fluctuations are consideratble - as they have been over the past year. The GL accounting for Exchange Gain/Loss is handled for you.

- You don't have to use MultiCurrency to keep track of a couple US vendors, depending on how much detail you need to keep. You can create separate Control Account Sets that are reserved for US vendors and when doing transactions for them, 'pretend' amounts are in USD. There are reporting and other considerations - I may be making this sound simpler than it is - but depending on your needs, you may not be required to have the MultiCurrency program to do this, though it makes it easier to have it.

- Once MultiCurrency is enabled on a database, it cannot be (easily) disabled. Thus you may want to talk with your Adagio consultant to determine what the best steps are to pursue and investigate.

Hope this little bit helps. The Multicurreny manual (PDF download from our website) may also offer some insite to what will work best for you.

Does multicurrency require the purchase of a separate module?

For the interim, we would like to look at the Control Account Set with "pretend" amounts for the vendor transactions that you mentioned. Can you give me more specific instructions or direction to where I can find more info on this method?

Hi Susan,

Using separate control accounts for each currency is an easy method of tracking small numbers of foreign currency transactions. It relies on the fact that when a vendor send you and invoice in US $$, and you send them a cheque in US $$, drawn on a US $$ bank account, then no foreign currency transactions have occurred.

As long as you remember to make a journal entry at the end of the month agains the USD control account to reflect it's value in $CAD (the entry is to unrealized gain/loss on exchange and a companion foreign currency adjustment account for the control account).

This is simpler to manage unless you have a large number of purchases from the US.

Andrew,

Thanks for the info. I think this will work for us. One question though. Since we are using POA to create our Payable batches and the amounts in POA are entered in CAD$ (so they are reflected in our inventory cost in CAD$), will we have to delete those payable batches, then re-create the payable in AP in US$ ?