Over the past 5 years at Dec. 31, the US dollar has been stronger 3 years while the Cdn. dollars was stronger 2 years. US & Canadian exchange rates have been jockeying for quite some time but staying pretty close to par. Early 2014 is showing the US dollar strengthening. So what does the mean for your Visual ERP system?
Some companies like to set the rates for the year & leave them. Some have been running at par for quite some time. Others change their rates monthly. Some even weekly or daily. So if your exchange rate is now out of date what do you need to do?
Here is your step by step approach for Visual ERP system.
- Change your exchange rate under Ledger, Currency Exchange Rate Maintenance.
- Revalue your non-Canadian accounts to the new rate. Check the Accounting Window:
- Ensure the accounts are flagged in to revalue.
- Typical accounts to be revalued are: Petty Cash, Bank, Accounts Receivable, Accounts Payable.
- Customer Deposits, commission payable and loans if transacted in non-CAD dollars should also be revalued.
- Next check the account at native balance.
- Do the USD accounts show USD only?
- Do they should match the subledger.
- Do not revalue accounts that are created in Cdn. dollars such as PO Accrual, Inventory & Work in Process. Even though there is an argument to revalue, the transactions are not stored in native dollars. However, you would want to consider the financial impact of the rate changes and could possibly create a manual general journal entry.
- Thinking about posting to the above accounts? Don’t. Set up a separate account for each of the types to store the exchange difference. These amounts would need to be written off the next few months based on your inventory turns.
- Consider Updating Visual’s Customer Order Exchange Rates
- Why? Some Reports use this rate: Gross Profit under Visual’s Mfg/Eng. Menu, the Sales Orders and Backorder Reports. This is the rate when the order was entered. When the orders are shipped the invoices will use the new exchange rate but the reports won’t.
- So what can you do? Modify the reports to use the invoice exchange rate. OR another option is using the Gross Profit Report from Post Manufacturing Journals. It does use the invoice exchange rate.
- Change your standard costs?
- The USD purchases will now cost more and should be reflected in the estimated/standard costs.
- Use Reset & Implode to push the updated costs throughout Visual.
- This will be important for quoting.
- Get your procedure here http://ow.ly/tPANJ
Sounds like a lot of work doesn’t it? The first 2 steps can be done in under 15 minutes. Actually probably 5 minutes. The Visual’s revaluation tool is pretty slick. It can save hours of time at month-end. Do you have tight deadlines?
So why go to all this work? Because you want to provide accurate financial information. You want to provide your company the tools to help make good decisions.
By the way, the score of the Women’s Olympic Hockey was Canada 3 – USA – 2.