Multi-currency invoicing in SAP Business One for exporters

An exporter's month has three currencies in it even when only two appear on documents: the local currency it pays farmers, agents, and staff in; the contract currency, usually US dollars, it invoices in; and the reporting currency the owners and the bank want to see. Spreadsheets cope with this until the first revaluation question from an auditor. SAP Business One is built for it, provided a few decisions are made before the company is set up.

Three currencies, three roles

• Local currency is the currency of the books. Every posting ends up here.
• System currency is a second currency in which every posting is also recorded, usually USD for an exporter. It gives you a full set of accounts in dollars without a separate conversion exercise.
• Document currency is whatever a specific customer or supplier is invoiced in. A contract in USD, a supplier bill in local currency, a freight invoice in euros.

Local and system currency are chosen once and cannot be changed later without starting a new company. That is the first decision, and it is worth getting right.

Exchange rates: where they come from and how often

SAP Business One holds a rate per currency per day. Rates can be typed in, imported from a file, or fetched through a connection to a bank or central-bank feed where one is available. The decision is not technical; it is who owns the rate and how often it changes. Most exporters use the central-bank rate daily for postings and the contract rate for the invoice itself where the contract fixes one.

Realised and unrealised differences

Two mechanisms handle the movement between invoice date and payment date:

• Realised differences post automatically when a foreign-currency invoice is paid at a different rate. The gain or loss goes to the account you nominate. No journal is typed.
• Unrealised differences come from the period-end revaluation, which restates open foreign-currency balances at the closing rate and posts the difference, with an automatic reversal in the next period if you want it.

Auditors ask about both. Having them post from the system rather than from a spreadsheet is usually the point at which finance teams stop dreading month-end.

Pricing, contracts, and margin per contract

Price lists can be held in any currency, so a USD price list for export customers and a local-currency list for domestic sales sit side by side. Sales contracts and their shipments are then tracked against those prices, and the realised margin per contract can be reported after exchange differences are included. For commodity exporters that is often the report the owners actually want, and it is only possible when purchases, processing losses, shipping costs, and the USD invoice share one system.

Setup decisions to make before go-live

1. Local currency and system currency, chosen once.
2. Which currencies each customer and supplier will be invoiced in, and whether any can be invoiced in more than one.
3. The exchange-rate source, the person who maintains it, and the frequency.
4. Accounts for realised and unrealised differences, and whether revaluation is run monthly or quarterly.
5. Bank accounts by currency, and how USD receipts that are converted on arrival are recorded.
6. Tax treatment of exports in your country, including zero-rating and any withholding on foreign payments.

LITPL works through this list in discovery with your finance lead and, where useful, your auditor. It takes an afternoon and saves months of corrections.

A note for groups with several countries

If you run entities in more than one country and want the same processes in each, SAP S/4HANA Public Cloud handles multi-entity and multi-country setups as standard, with consolidated reporting for the group. For a single exporter, SAP Business One is usually the quicker and more adaptable start.