Base Currency Adjustment
When you do business with customers using foreign currencies, exchange rates can fluctuate daily. These fluctuations may result in gains or losses when transactions remain open for a period of time.
With Zoho ERP, you can track the profit or loss caused by exchange rate changes and apply updated exchange rates to open foreign-currency transactions.
Scenario: You create an invoice for a customer in Euros on 3rd November, and the invoice remains unpaid.On 5th November, the exchange rate changes, raising concerns about its impact on your finances. By adjusting the base currency rate, you can see the gain or loss caused by the rate change and update the exchange rate for open foreign-currency transactions accordingly.
How to Adjust Base Currency?
Follow the steps below to adjust the base currency in Zoho ERP.
- Log in to your Zoho ERP organisation.
- Go to the Accounting module in the left sidebar.
- Switch to Chart of Accounts tab in the modular bar.
- Navigate to Currency Adjustments and click the + Make an Adjustment button.
- Select the currency for which the adjustment needs to be made according to the changed exchange rate.
- Set the date on which you wish to have the adjustment made.
- Set the new exchange rate of the foreign currency to the base currency of your organisation.
- Notes are mandatory. Fill in the reason on why an adjustment is made for your future reference.
Note: We recommend you to have an accountant or a bookkeeper to have the adjustments made according to the date.
Note: You must have open transactions to perform base currency adjustments.
Once the details are filled, you will be navigated to confirm the adjustment.
| Fields | Description |
|---|---|
| Account | The account which is affected due to the change in exchange rates. |
| Balance (FCY) | In this case the FCY is in Euro (EUR). The total amount present in FCY. |
| Balance (BCY) | In this case the BCY is in USD. The total amount in BCY with the previous exchange rate. |
| Revalued Balance (BCY) | The total amount in BCY after the new exchange rate is adjusted and revalued. |
| Gain or Loss (BCY) | This column shows whether you have made profit due to the change or incurred a loss. An amount with a negative sign will depict the loss incurred. |
FCY: Foreign Currency ; BCY: Base Currency
If you wish to adjust the new exchange rate, check the box under the Select column and click on Make an Adjustment.
Once the adjustment is completed, Zoho ERP updates the affected accounts and reflects the changes across relevant reports.
Impact on Reports
Business Overview
| Fields | Description |
|---|---|
| Profit and Loss | Non Operative Income/Expense (Exchange Gain or Loss) |
| Balance Sheet | Current Assets (Accounts Receivable) |
Accountant
| Fields | Description |
|---|---|
| Account Transactions | An entry with Base Currency Adjustment as type will be created. |
| Journal Report | A new section will be created with the date and title as Base Currency Adjustment. |
Currency
| Fields | Description |
|---|---|
| Realized Gain or Loss | Transaction Type: Base Currency Adjustment |
You can delete a base currency adjustment at any time by selecting the entry from the Base Currency Adjustment window and clicking Delete.