Recording Foreign Currency Transactions

Introduction

The easy and accurate capture (and reimbursement) of foreign currency expense claims is a key requirement for international organisations.

systems@work has been at the forefront of multi currency software development for over 10 years and our applications include tools and functionality to ensure that foreign currency claims are handled accurately and appropriately for the varying needs of our clients.

This article explores some of the options that are available in expense@work, forms@work and time@work with specific reference to employee expense claims. However the techniques and options discussed are equally applicable for a wide variety of foreign currency transactions such as Invoice Registration, Purchase Requisitions and Cash Advances.

One important point to note relating to Credit Card transactions is that our software will automatically import these with the base currency value already calculated by the Credit Card provider.

 

Option 1 – Employee Entered Exchange Rate

Many of our clients opt to allow employees to enter their own exchange rate into the expense form. After all, the only rate that really matters to an employee is the rate they obtained when they converted their home currency to foreign currency. For example in the screenshot below you can see how the employee is claiming a taxi expense in USD and then entering the exchange rate that they wish to be reimbursed at (i.e. the rate they obtained at the Bureau De Change).

foreign-currency-claim-example-01

 

Option 2 – Exchange Rates Held In The System

systems@work also enables organisations to hold exchange rates in the system so that these can automatically be applied when the employee enters their expenses. Rates can set at any level (for example Monthly, Daily or Weekly) and can be entered manually into the system by an Administrator when needed or uploaded via a Spreadsheet or CSV file. For example on this form we can see how our employee is making a claim for 200 Euros of Hotel expenses and the system is automatically giving him a rate of .82 based on the data held in the expenses system for May 2015.

foreign-currency-claim-example-02

 

Option 3 – Employee Override

Another option often favoured by our clients is a hybrid of options 1 and 2. As you can see in the example below our employee is claiming 200 Euros as before but on this form he is being given the option to enter his own rate. If the field is left blank then the system uses the automatically generated rate but if the employee enters a rate then this is used instead. This approach has the advantage of allowing managers and finance staff to see both rates and judge as to whether the rate being claimed by the employee is reasonable. Tolerance levels can also be set so that (for example) if the claimed rate is more than 10% greater than the official rate then a warning can be displayed.

foreign-currency-claim-example-03

 

Option 4 – Automatically Obtaining Rates Via The Internet

Options 2 and 3 above are based on exchange rates being held inside the application. An alternative approach is to use our Web Services support to obtain rates in realtime via the Internet. In the example below our employee is reclaiming a Hotel expense following a trip to China. When they enter the value of the Hotel (3, 030 CNY), the system goes out to the internet and obtains the current exchange rate (in this case .1). As with example 3 above, the employee would have the option to override this rate if required.

foreign-currency-claim-example-04

 

The cost and accuracy of information provided via the internet varies depending on the service used. systems@work supports the open Web Services Description Language (WSDL) which is used to obtain data from a wide variety of information providers. Some of these providers will publish exchange rates based on the current mid market rate while others provide additional information such as historical rates based on a particular transaction date.