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Understanding Multiple Currencies in PeopleSoft Payables

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Currencies in PeopleSoft
Payables

PeopleSoft offers a uniquely flexible structure that enables you to manage


financial information in multiple currencies. You can use a ChartField to
designate different currency codes within a ledger, or as required, you can
store each currency in a different ledger.
Search PeopleSoft also provides specific input, processing, and reporting features
that satisfy the most demanding requirements of multinational financial
Search for: management. It supports the European Common Currency (Euro), as well
as currency conversions, remeasurement, revaluation, and translation. It
Advanced Search also provides a complete audit trail of all multicurrency processing.
This section discusses:

Multicurrency terminology in PeopleSoft Payables.


Voucher processing in a multicurrency environment.
Payment processing in a multicurrency environment.
Related Pages
PeopleSoft Payables Revaluation processing.
Understanding Multiple Currencies in Multibook in PeopleSoft Payables.
PeopleSoft Payables

Performing the PS/AP Revaluation Process Multicurrency Terminology in PeopleSoft Payables

Contact Us Below are some key terms and concepts that you encounter when you use
Oracle's PeopleSoft Financials multicurrency applications. We've made an
Send us your suggestions effort to use these terms consistently to coincide with generally accepted
accounting terms and Financial Accounting Standards Board (FASB) rules.
Please include release numbers for the
PeopleTools and applications that you are
using. Types of Currency
Currency refers to the denomination of a monetary transaction. PeopleSoft
Follow Us applications use a currency code to identify and track individual currencies.
Though the system does not require it, we suggest that you use the
International Standards Organization (ISO) currency codes supplied with
the application. You may use an unlimited number of currencies in
PeopleSoft applications.

Base Currency The base currency is the primary currency used for a
business unit, and is sometimes referred to as the
unit's book currency. A business unit can have one and
only one base currency. This is generally the local
currency for the organization; however, accounting
rules or other circumstances might dictate otherwise.
In PeopleSoft Payables, you assign a base currency to
each business unit on the General Ledger Definition -
Definition page. PeopleSoft Payables business units

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use the base currency of their associated general


ledger business units. Once established, the base
currency of a general ledger business unit cannot be
changed.

Transaction and Any currency with which a business unit interacts,


Payment other than its base currency, is a foreign currency.
Currency PeopleSoft Payables refers to a foreign currency as a
transaction currency when describing the currency of
the invoice, and as a payment currency when
describing the currency in which payments are made.
The system stores all distribution accounting data in
three currencies: the base currency of the general
ledger business unit on the distribution line, the
PeopleSoft Payables business unit base currency, and
the transaction currency.

Currency Calculations
The system performs several calculations when it works with multicurrency
transactions.

Conversion Conversion is the exchange of one currency for


another. In PeopleSoft Payables, this refers to
expressing the value of foreign currency transactions
in terms of the base currency. Conversion occurs in
many places in your PeopleSoft Payables system.
When receiving vouchers from a supplier, you can
enter a transaction amount in a foreign currency. The
system uses an exchange rate to convert the
transaction amount to the PeopleSoft Payables
business unit base currency and the general ledger
business unit base currency.
When you create payments in one currency for
vouchers in a different currency, the system performs
currency conversion as necessary to enable payment
creation. It uses either the currency rate type, or
override to convert the payment currency into the
voucher's base currency, and the bank's general
ledger base currency. During the revaluation of your
current payables balance, the process revalues unpaid
vouchers, based on business unit's base currency.

Exchange Rate An exchange rate is the value of one currency


expressed in terms of another. Actual exchange rates
vary based on the currency rate type that you use.
There are several recognized currency rate types,
including spot (immediate), current, negotiated
(discount and premium forward rates), average, and
historical rates. The system supports any number of
exchange rates.

Unrealized Gains An unrealized gain or loss represents the difference


and Losses between the amount that you would pay in your base
currency if your outstanding foreign currency accounts
liability balance were paid now and the amount that

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you would have paid if payment was made when the


items were created. If the exchange rate is more
favorable now than when items were created, you
have an unrealized gain. If the exchange rate is less
favorable now, you have an unrealized loss.

Realized Gains Realized gains or losses represent the actual increase


and Losses or decrease, due to exchange rate fluctuations, or rate
type changes in the amount of money paid in the base
currency. The system determines realized gain or loss
only at payment time.

Related Links
Defining General Ledger Business Units

Voucher Processing in a Multicurrency Environment

Multicurrency affects voucher processing at all levels: entering and


validating vouchers, scheduling payments, using control groups, and
posting vouchers.

Entering Multicurrency Vouchers


Each voucher has a transaction currency denomination. The currency code
for the transaction appears by default through the PeopleSoft Payables
control hierarchy (business unit, voucher origin, control group, and
supplier). If required, you can change the currency and rate type on the
voucher. You can change the currency code for the voucher on the
Voucher - Invoice Information page or on the Voucher - Attributes page,
and you can change the rate type for the voucher on the Voucher -
Attributes page.
For each voucher, the system converts the transaction currency to the
voucher base currency using the exchange rate and exchange rate type.
By specifying the exchange rate source, you can enter a specific exchange
rate or have the system determine the exchange rate from the exchange
rate tables. If you select User as the source, enter the exchange rate
yourself. If you select Tables as the source, the system uses the invoice
date of the voucher and the exchange rate tables to determine the
exchange rate to use.
The transaction currency code applies to all amounts entered onto the
voucher. At save time, the system performs a conversion to the base
currency defined for the business unit and to the PeopleSoft General
Ledger base currency for the distribution line on interunit accounts.
Transaction balancing occurs on both the transaction and the base
amounts. During voucher save, base amount rounding differences are
added to the largest expense accounting lines for each voucher line.

Scheduling Payments for Multicurrency Vouchers


Payment scheduling creates scheduled payment records for each voucher.
Each scheduled payment has a gross payment amount and a discount
payment amount. The scheduled payment amounts are converted based
upon the currency exchange rate of the voucher transaction currency. You
can override the currency rate or rate type on the Holiday/Currency
Options page selected from the Voucher - Payments page. When you enter
a specific rate, the rate is used to convert the currency between the

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voucher transaction currency and the payment currency. When you


override the rate type, the new rate type is used to convert from the
transaction currency to the payment currency and from the payment
currency to the bank's base currency and the voucher's base currency.

Note: If you use a rate type on the payment that is different from the
rate type on the voucher, realized gain and loss may occur.

Related Links
Completing Voucher Attributes
Scheduling and Creating Voucher Payments for Online Vouchers

Payment Processing in a Multicurrency Environment

Multicurrency also affects payment processing at many levels.

Payment Selection
From a multicurrency perspective, PeopleSoft Payables determines the
amount of a given currency required to pay a scheduled payment. The
payment currency does not have to be the same as the voucher
transaction currency. In fact, the payment currency can be in any currency
that you have set up for the bank. You can either accept the default or
select another valid currency code.

Payment Creation
During payment creation, the system converts the voucher transaction
currency to the payment transaction currency for the payment. It converts
the payment transaction currency to the voucher base currency and the
bank base general ledger currency for posting. The amounts form the basis
of realized gain and loss accounting entries created in payment posting.
PeopleSoft Payables supports checks, automated clearing house (ACH)
payments, direct debits, wire transfers, electronic funds transfers (EFT),
drafts, GIRO, letters of credit, and bank transfers. The Pay Cycle
Application Engine process (AP_APY2015) consists of payment selection
and payment creation. Output processes print checks and create files.
The payment creation process populates the payment amount and bank
base amount of the payment. The payment table also holds the
corresponding currency codes and rates. The check print process
accesses the currency code table to access symbols and descriptive
information to print on the check and remittance advice.
The Trial Payment Register, the Payment Register, and the Payment
Forecast reports all reflect multicurrency payments.

Note: During payment creation, the system calculates the payment


transaction currency from the voucher transaction currency.

Image: Reviewing Currency Conversion for payments and vouchers


This graphic shows the currency conversion process for vouchers and
payments.

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Payment Posting
The Payment Posting Application Engine process (AP_PSTPYMNT)
creates accounting entries that relieve liabilities and record payments, as
well as discounts taken or lost, VAT, withholding and realized gains and
losses. The Payment Posting process also creates accounting entries
resulting from canceled payments (void and stop checks). The system
calculates the exchange rate gain or loss by subtracting the
BASE_CURRENCY at payment time from the BASE_CURRENCY at
voucher entry time. However, if the voucher's transaction currency is
different from the payment's transaction currency, the gain or loss is an
overall gain or loss.
When the Voucher Transaction currency and the Payment Transaction
currency are not equal, and you use the General Ledger Balance By All
Currency, the Payment Posting process will automatically generate
additional entries to balance by Foreign currency. The amounts will be
posted to the RSAF (Rounding Suspense for Foreign) account and the
system will use the ChartField values that were established on the
Accounting Entry Template.
Image: Reviewing Exchange Rate Gain or Loss process flow
Exchange rate gain or loss process flow.

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If a situation arises where the voucher is in currency A, the payment is in


currency B, and the voucher's base is in currency C, you have a potential
realized gain or loss. In this situation, the payment accounting entry foreign
currency is the currency of the payment.
When rounding errors occur during the generation of accounting entries,
the amounts are posted to the rounding suspense account. Rounding
suspense account entries can be reclassified in PeopleSoft General
Ledger for any ledgers.

Related Links
Holiday/Currency Options Page
Running and Managing Pay Cycles

PeopleSoft Payables Revaluation Processing

Revaluation adjusts the domestic currency value of asset and liability


account balances that are maintained in foreign currencies. It is necessary
to reflect the actual value of these assets and liabilities in the domestic
currency, because the exchange rates fluctuate between the domestic
currency and the foreign currencies. Revaluation is generally performed at
the end of each accounting period and results in a domestic currency
adjustment to the account being revalued, with an offsetting entry being
made to the revaluation gain or loss accounts. In PeopleSoft Payables, the
PS/AP Revaluation process determines the revaluation adjustment
required for the balance sheet account and creates a journal entry for this
adjustment and its offsetting gain or loss amounts.
You might need to revalue your open payables for financial reporting
purposes. PeopleSoft Payables enables you to create summarized
revaluation accounting entries and input these entries into the Journal
Generator. You can run the revaluation for one or many PeopleSoft
Payables business units.
You revalue transactions as follows:

1. Run the PS/AP Revaluation process.


The PS/AP Revaluation process creates the unrealized gains and
loss entries for selected PeopleSoft Payables business units for a
given period. The PS/AP Revaluation process inspects the
transaction tables and applies a specified exchange rate to each
unpaid, scheduled payment which has a voucher transaction
currency that is not in the business unit's base currency. It then
applies the exchange rate to create a revaluation base amount,
which it uses to create a revaluation accounting line.

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2. Run the Journal Generator Application Engine process (FS_JGEN).


The Journal Generator process creates journals from the revaluation
accounting lines. Make sure that you have set up an accounting
definition to relate the revaluation accounting lines to journal lines.
You also need a journal generator template specifying the creation
of a reversing journal for revaluation.

If you run revaluation in PeopleSoft Payables, rather than in PeopleSoft


General Ledger, the process happens at a specified level of detail. This
provides more flexible results if your exchange rates are volatile. If you do
run the process in PeopleSoft Payables for the accounts that you use here,
you do not want to run the PeopleSoft General Ledger revaluation against
the same account balances in PeopleSoft General Ledger, because you
would be double counting.

Note: Vouchers must be posted before you can run revaluation.

Related Links
Payables Definition - Definition Page
Performing the PS/AP Revaluation Process

Multibook in PeopleSoft Payables

The Multibook feature supports multiple base currencies, each in the form
of a ledger, defined for a business unit. Optionally, you can post a single
transaction to all base currencies (all ledgers) or to only one of those base
currencies (individual ledgers).
With the Multibook feature, several ledgers are grouped together within a
ledger group. Ledgers within the group share the same physical structure,
but each ledger can have its own base currency. The ledger group controls
how transactions post to all ledgers within the group or to an individual
ledger. The system automatically converts transactions to the applicable
base currency and then posts to the corresponding ledger. This gives you
full, drill-down support and cross-currency comparisons at both the
summary and transaction levels.
Enable the Multibook feature on the Installation Options - Overall page, by
selecting the Create Multibook Accounting Entries in Subsystems check
box. If this check box is selected, and if your ledger group is set up for
secondary ledgers, the PeopleSoft Payables posting processes and
revaluation process create the accounting entries for those ledgers.
However, if this check box is not selected, the PeopleSoft Payables posting
processes and revaluation process create only the primary ledger entries.
The Journal Generator process creates the secondary and translate ledger
entries.
Set up ledger groups on the Ledger Groups - Definition page.
The calculations for secondary ledgers are dependent upon whether you
are using Translation or Non-Translation ledgers:

Non-Translation The system creates accounting entries by converting


ledgers from the transaction currency to the base currency.

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Translation The system creates accounting entries by converting


ledgers from the primary ledger base currency to the translate
ledger base currency.

Use the Multibook feature to maintain the real-time balance of certain


accounts in the ledger. You can track gain and loss for secondary ledgers
more accurately (when they are non-translation ledgers).

Related Links
Installation Options - Products Page
Setting Up and Using Multibook Ledgers
Ledger Group Page
Multibook Ledgers Using Entry Events

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