|Before the release of multi-currency accounting||After the release of multi-currency accounting|
|Orders||Any currency||Any currency (no change)|
|Order payments||Base currency or order currency||Base currency or order currency (no change)|
|Bank accounts||Base currency only||Any currency|
|Accounting journals||Base currency only||Any currency|
All Brightpearl accounts will be upgraded to multi-currency accounting over the next few months. If you would like to be upgraded sooner, or on a specific date, please let us know your preferred date below.
Understanding multi-currency accounting in Brightpearl
All accounting journals in Brightpearl record the debit and credit values in both base currency and in the transaction currency, to do this every journal must have a currency and exchange rate.
- The base currency is the chosen currency for financial reporting and must be selected at the start of using Brightpearl.
- The transaction currency is the currency in which each individual transaction is entered.
- The base currency values are calculated from the transaction currency values using the transaction exchange rate.
For all journals, the base currency debits and credits must balance, and the transaction debits and credits must balance.
Since both the base currency and foreign currency values are recorded, Brightpearl is able to display either the base currency or the foreign currency throughout the rest of the system. For example:
- The balance sheet will read the base currency (GBP) accounts receivable amount
- The customer account will read the transaction currency (USD) accounts receivable amount
- The general ledger will show both the base currency (GBP) and transaction currency (USD) accounts receivable amount
Note that a base currency transaction still records the transaction currency debits and credits by using with an exchange rate of 1.000000.
Currencies & exchange rates
Exchange rates are always the relationship of the foreign currency to your base currency; Brightpearl does not support exchange rates between foreign currencies.
In multi-currency Brightpearl you can create multiple exchange rates for each foreign currency, each with an active from date. This provides a full audit trail of rates used and also allows future rates to be added and automatically come into effect on a given date.
There is no automatic update of exchange rates in Brightpearl.
Foreign currency bank accounts & credit cards
Each bank account added in Brightpearl is assigned a currency. When processing transactions:
- Base currency bank accounts can handle transactions in any currency
- Foreign currency bank accounts can handle only transactions in their assigned currency
The balance displayed for each bank account will be in the assigned currency, with the current base currency equivalent value also provided. The conversion to base currency is made on a transaction-by-transaction basis using the exchange rate applied at the time of entry. Since exchange rates are always changing then it is likely that the bank account will need to be periodically revalued in order to keep the base currency asset value current.
Brightpearl provides an automated bank revaluation process. This allows you to revalue the base currency asset value of your foreign currency bank accounts at any point in time.
Bank reconciliations are always done in the currency of the bank account.
Bank matching is always done in the currency of the bank account.
Bank transactions - receipts, payments & transfers
Once you have created foreign currency bank accounts, you can start to use them for bank payments, bank receipts and bank transfers.
The following types of bank transfer can be handled in Brightpearl:
- Base currency to base currency
- Foreign currency to same foreign currency
- Base currency to foreign currency
- Foreign currency to base currency
- Foreign currency to a different foreign currency - triangulation - requires a two stage transfer process from foreign currency to base to foreign currency
Revaluation of foreign currency balances
Brightpearl records the transaction and base currency values using the exchange rate applicable at the time the transaction is created. Since exchange rates are always changing the base value of any foreign currency balances will always be fluctuating. The Brightpearl Bank Revaluation process can be used to create accounting adjustments which will bring the foreign currency bank balances up-to-date with a given exchange rate so that the balance sheet is correct. In addition, Brightpearl provides the Exchange Rate Gains & Losses report which indicates what the change in worth of any outstanding foreign currency accounts receivable and account payables are, this allows year end accounting adjustments to be made.
Foreign currency accounts receivable & accounts payable
Each customer and supplier is assigned a currency which controls the currency of the orders/invoices and credits raised against them. Their currency can be changed at any time to allow account balances to be accumulated in multiple currencies. In addition to this, secondary contacts at a company can have different currencies from the primary contact (billing contact) which also allow for balances in multiple currencies to be accumulated on a single account.
For every invoice/credit transaction there will always be a base currency conversion, which is used for financial reporting purposes. The conversion to base currency is made on a transaction basis using the exchange rate applied at the time of entry (as seen on the accounting journal). Since exchange rates are always changing then it is likely that any outstanding accounts receivable/payable balances will need to be adjusted for the end of year.
Customer/supplier account balances
A customer/supplier will have a separate account balance for the amounts outstanding in each currency. Each currency balance is managed separately. A toal overall balance for the customer/supplier can be seen in your base currency using the accounts receivable/payable report.
Payments can be processed in the same currency as an order/invoice or in a different currency:
- A base currency order/invoice can be paid in base currency or a foreign currency.
- A foreign currency order/invoice can be paid in the same foreign currency or in base currency.
- Where a foreign currency order/invoice needs to be paid in a different foreign currency, a two stage payment will need to be processed.
Accounts receivable & accounts payable reports
The accounts receivable and accounts payable reports provides a list of customers/suppliers who owe or are owed money, with the amount and age of the debt - useful tools for managing collections and payment runs. These reports provides a complete view of all accounts receivable and payables in base currency (matching the balance sheet value) but can be filtered by currency to view only the accounts receivable/payables in a particular currency, excluding transactions in all other currencies.
Credit limits can only be set in a single currency on each contact. The credit limit set will always be applied in the contact currency. For example, a contact set to currency Euros with a credit limit of 1000, will have a limit of EUR1000. If their currency is changed to GBP, their credit limit will become GBP1000. No conversion is made on credit limits.
Customer statements are created in a single currency and will include only transactions on the customer account that are in the same currency. Where a customer has balances in multiple currencies, separate statements will be available.
Supplier remittance advice
A remittance can be printed in order to inform your supplier of the invoices/credits you are clearing on your account when a payment is made. The remittance advice printed for a purchase payment will always display in the currency of the invoice and payment.
Checks & vouchers (US only)
All payments are recorded in the currency of the bank account used. So when a check is printed from a particular bank account, those payments will all be in the bank account currency.
Exchange rate gains & losses
Brightpearl automatically accounts for exchange rate gains and losses to ensure both the foreign currency and base currency accounting remains in balance.
Gains and losses can occur when a different exchange rate is used for an invoice than the payments received. When an invoice is raised in a foreign currency it also has a base currency value, so when the invoice is paid in the same currency, both the foreign currency and base currency values must be cleared. Where the same exchange rate is used the invoice and payment match in both base and foreign currency and are therefore both cleared. However, if the exchange rate is no longer the same as the invoice a discrepancy will be noted. Where the full foreign currency balance has been cleared then the base currency balance must also be cleared. To do this Brightpearl automatically creates an adjustment for gains/losses.
Multi-currency rounding corrections
Brightpearl journals include the base currency and foreign currency values for a transaction, and both sets of debits and credits must balance. The transaction currency is used to calculate the base currency value at the given exchange rate, however, due to rounding there can be a discrepancy when they are added together which causes the base currency debits and credits to not balance. When this happens Brightpearl will automatically make a rounding correction to ensure the accounting balances.
Other systems also have to deal with these rounding discrepancies but may choose to adjust the other figures instead of adding an extra line to the journal.
Handling inventory on foreign currency sales & purchases
Sales & shipping
Orders and invoices can be created in multiple currencies. Inventory accounting is always managed in base currency. When items are shipped against a foreign currency sales the items are removed from stock at their base currency value. Brightpearl uses the FIFO costing method.
Purchases & goods-in
Orders and invoices can be created in multiple currencies. Inventory accounting is always managed in base currency. When items are received into stock against a foreign currency purchase, the items are added into stock at their base currency value. This value is calculated by converting the foreign currency purchase prices using the exchange rate on the order.
All inventory costs are managed in base currency so when an inventory item value is uplifted by a landed cost, this is also made in base currency. A foreign currency landed cost can be allocated to purchase order items of any currency since all values are converted to base for inventory cost management. A foreign currency landed cost invoice can be entered and paid in the relevant currency.