When issuing transactions in foreign currencies, you may gain or lose value based on exchange rates. Most businesses dealing with foreign currencies want to keep track of their gains and losses on the dollar.

ParagonERP makes it easy to do so with this run once rule!

Designed to revalue all of your foreign currency gains and losses from the receive payment and make payment modules - you can now settle your monthly gain/loss with a push of a button . Paragon does all of the calculating for you, and generates and adds one pending transaction to your journal. You can reconcile the amount, and post it to your books when you're ready.

This rule calculates the difference in dollar amounts between issued invoices and their corresponding receive payments (or as the case may be - the difference between vendor invoices and their corresponding make payments). Once the rule has been run, you'll be able to see the exchange amount applied, as well as the corresponding journal entry number associated to the make/receive payments (which can be viewed from the more tab of those transactions).

Some setup is required before you can install and run the rule.

You can set the following up yourself, or contact us at support@paragon-erp.com to get assistance!

Step 1: Set up GL accounts

GL chart

First, make sure you have created the right GL accounts and that they are correctly linked.

In your chart of accounts, you'll need the following:

• 1 accounts receivables account
  
• 1 accounts receivables exchange account
  
• 1 accounts payable account
  
• 1 accounts payable exchange account
  
• 1 gain/loss account
  

GL setup

In your GL setup, make sure you have the above accounts linked (or mapped) in the payment in/rebates & payment out/rebates tabs.

Note that you do NOT need to set up a link for the exchange gain/loss account. The rule will do the work for you. 

Step 2: Set up attributes

Next, you need to set up the attributes that will appear in the more tab of the make payments and receive payments transactions.

From the attribute panel in settings, add

• a free flow text attribute titled journal number, and
  
• amoney attribute titled applied exchange. 
  

Add the attributes to your transaction screens

Once you've created your attributes, go to screen setup in settings and add them to your receive payment and make payment screens, in the more tab.

Step 3: System setup

Accounting currency

In the my company module, take note of your accounting currency. Here, ours is in USD.

In order for the rule to pick up any differences in exchanged dollars, you'll have to issue transactions in a currency that is different from your company's accounting currency.

Exchange rate table

Before you start issuing transactions in different currencies, make sure you have set up your exchange rate table to take into account the dollar amount difference.

You'll want to at least set up two different exchange rates in order to calculate a difference.

Step 4: Configure and run your rule

Once you're ready to install the rule, contact us at support@paragon-erp.com. We'll set up the rule for you, and configure it to read your GL accounts and attributes.

My rule is ready to run, now what?

Once you've configured all of the above, and we've setup your rule, you can start issuing vendor invoices/invoices and make/receive payments - and then run the rule!

Running your rule

Once everything is complete and ready to go - run your rule.

First, hit the settings button from the top right hand corner of the screen. Then, from the rules engine card, select rules.

Keep in mind that this rule is intended to revalue the differences in exchange rates between your invoices and payments. When you run your rule, the pending journal entry automatically created will be dated at the end of the month you ran it for - the dates you choose to run the rule for are transaction dates, and not the fiscal period. 

A notification letting you know a journal entry has been created for your gains/losses will display in the top-right corner of the rules screen.

An excel export that reflects the exchange values in the journal will automatically be added to your download folder.   It will look similar to this:

The title of the excel file will be the journal entry that was created to reflect your exchange gains/losses.  At the top of the sheet, you will find the month the rule was run for, and again, the journal number of the gain/loss posting.

Beginning on row four, the details of your transactions will be listed.

Payment: The payments related to the posting will be listed first.

Transaction: The invoice/vendor invoice or credit/vendor credit source transactions.

Invoice Total: The total amount you've invoiced, or been invoiced for.

Payment amount: Total amount paid on the invoice.

Payment exchange: The exchange rate set for the payment transaction month.

Transaction exchange: The exchange rate set for the invoice transaction month.

Difference: The monetary difference between the invoice and payment amounts based on the different exchange rates set at the transaction dates.

GL account: The exchange accounts you set up in your GL chart of accounts that the journal entry affected.

Review the pending journal entry

Navigate to the journal entry module to verify the details of the automatic pending journal entry.

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What's next?

Interested in setting up more rules with ParagonERP?  Contact us at support@paragon-erp.com