A client is telling me they want to issue a PO to a company in Euros, they will be getting the invoice from the supplier in Euros, but they will be paying in US Dollars (their home currency).

What do others do in this kind of scenario? My initial thought is that Adagio MC would be overkill if they don't have any foreign currency bank accounts.

Steve

Hi Steve:
I do not think that the issue is having (or not having) foreign currency bank accounts.
Rather, I would think that it depends on the number of Euro trades that the client will be making.

If it is just one or two every month or so, then you could set up another couple of GL accounts to handle the foreign exchange.

For example, if we assume 100 euro = $130 USD and they made a transaction for 100 euro, for the payment I would credit Bank for $100 and a new Bank account foreign exchange for $30. (The other side of the entry would likely be debit AP for either $130 or $100 and another foreign exchange AP account for $30. Or, something similar to this. What we want to do is capture the difference due to the exchange in a separate account so that you can account for the actual amount in USD and if necessary, then make adjustments later on.

It would take some thinking and testing to set this up, but I believe that you are capable.

If on the other hand they are going to be doing a fair amount of trading in other currencies, I would consider the MC module.

What do you think?

Hi Steve,

You need the Multicurrency module.

We have many clients doing this same situation where they issue a PO in one currency, and receipt in that same currency but will pay or wire funds (in Payables) in a different currency that could be in home currency or another currency. Situations that we have handled include USD, CAD, Euros, and/or KRW (South Korean Won). So your Euro PO and subsequent Payment in USD is definitely a feature set of Adagio Multicurrency.

Worth noting as well, that many other accounting solutions cannot handle this.

You need to ensure that the Bank is not associated with AP control account set to make this work after MC is installed. And this can be done without much pain if the client is already using Multicurrency.

The downside if you don't already have Multi-Currency installed is that it will require doing a MC conversion to the entire distribution modules and financial suite, and this is not a trivial task as you are aware, but is doable with some GridView Read/Write.(Your and my favourite Adagio Module)

Best,
Brian