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Currency issues, Conversion Rate, Selling Currency and Accounting Currency explained

Managing multiple currencies is probably the most complicated portion of the Billing system provided to you, and at the same time, one of the most powerful and unparalleled features of our system. The system allows you to differentiate between the currency (Selling Currency) you want your Customers/Sub-Resellers to view, and your Accounting Currency and seamlessly maintains conversion and Forex issues for these currencies without any manual processes from your side.

The basic theme stems from the fact that your Sales and Accounting may have to happen in different currencies. For instance if your office is in India, while your sales are global, you may wish to display all your Selling Prices and Billing in an Internationally recognized currency such as US Dollar (USD) to your Customers/Sub-Resellers. Meanwhile however, you are legally required to maintain your books of accounts in Indian Rupees (INR). The system resolves this issue by showing USD values to your Customers/Sub-Resellers and maintaining dual currency values for you. At this stage it is important to clarify that if your market is restricted to India, then your Accounting Currency and Selling Currency will be the same. In this case you will not require to understand the implications of having multiple currencies.

As you now already know, the system has two currencies that it maintains for you -

Selling Currency: This is the currency in which all your Selling Prices will be specified and displayed. Your Customers and Sub-Resellers will only see this currency with respect to their dealings with you.

Accounting Currency: This represents the currency in which you maintain your books of accounts in your Country.

Initial Currency Selection

It is important they you select the Selling Currency and Accounting Currency carefully at the time of signing-up as a Reseller. If the need arises, you may modify the Selling and/or Accounting Currency as long as there are no transactions performed within your Reseller Account.

Currency Conversion

When you choose a particular Selling Currency, you will then specify all your Selling Prices to your Customers and Sub-Resellers in that Selling Currency. All transactions will therefore be added with those amounts. In order to maintain along with the Selling Currency amount an Accounting Currency amount too (in case the Selling Currency and Accounting Currency are different), the amount needs to be converted from the Selling Currency to the Accounting Currency. This conversion is done by the system dynamically for every transaction that is automatically added, using a conversion rate specified by you, or the system conversion rate (which is updated daily from a reliable Forex resource). For every manually added transaction, you have the ability to specify both the amounts. Lets understand this with examples:

  • For every Invoice, Receipt, Debit Note and Credit Note that the system automatically generates, it converts the Selling Currency amount to the Accounting Currency amount using a conversion rate. We will discuss how it obtains this Conversion rate later. For instance, if the system raises an Invoice for an Order of USD 100 placed by your Customer, and your Accounting Currency is INR, and the conversion rate from USD to INR is 50, then the system will enter the transaction with the USD value as USD 100 and the INR value as INR 5000.

  • For every Invoice, Receipt, Debit Note and Credit Note that you enter manually for your Customer/Sub-Reseller, you have the ability to specify both the Selling Currency amount and the Accounting Currency amount.

Currency Conversion Rate

At any point in time the system needs a Conversion rate between your Selling Currency and Accounting Currency. This rate can either be specified by you, or automatically maintained by the system itself. We download daily currency exchange rates between EVERY currency in the world. These rates are downloaded from a recognized Forex resource. If you choose to let the system maintain the Conversion rate it, will automatically do so on your behalf and update this rate on a daily basis. If you choose to maintain the Conversion rate yourselves, you will need to update the Conversion rate yourself. You can select your Conversion rate preference from the Finance settings view.

Ideally let the system maintain the Conversion rate on your behalf. Note that despite the fact that the system maintains an automated rate, you still have the flexibility of using a custom rate for any transaction that you manually enter. For example, if you set the Conversion rate to be automatically updated by the system, each time you Add an Invoice/Debit Note/Receipt/Credit Note manually, you will have the ability to specify your own Conversion rate for THAT transaction. The system will however use its own Conversion rate for any transactions that are automatically added.

Forex Difference

If you have a separate Accounting Currency and Selling Currency, it leads to Foreign exchange differences in the booking of an Invoice and Receipt. The system automatically calculates this difference on your behalf and records the same.

Additional Information

Foreign Exchange differences