This topic deals with how the exchange rates affect various areas in the application if more than one currency is enabled in the system.
Follow the below scenario to see how a requisition that contains a line item in EUR currency affects other transactions in the application for a user whose preferred currency is USD and the Chart of Accounts is set to USD as the accounting currency.
Requisitions, POs, Receipts and Invoices
Bob logs into Coupa and creates a requisition with one item line for a monitor stand which is priced at 300 EUR. In this case, Euros are the transactional currency. Because Bob's preferred currency on his user record is USD, the system calculates the total of the item lines and then shows him the total in Bob's preferred currency of USD using the latest exchange rate specified in Setup-Exchange Rates. So the cart total for Bob's requisition comes out to 467.73 USD.
Bob's self-approval limit is 400 USD. Since the total of the requisition came out to over that amount in USD, the requisition is sent to his next approver. Nick is the next approver in the list and his approval limit and currency is 400 EUR. When he receives the requisition for approval, the req total shows up as 300 EUR since Nick's preferred currency is EUR. Approvers always see the total in their preferred currency.
Since the total of 300 EUR is within Nick's approval limit the requisition gets turned into a PO. The order that gets sent to the supplier contains the total in EUR since the price of the item was specified in that currency. EUR is the currency of the transaction. So the supplier gets a PO with a total of 300 EUR in our example.
The supplier has shipped the monitor stand and Bob logs into the system to receive it. When he goes to My Account to view all his requisitions he sees the requisition totals appear in USD since that is his preferred currency. The requisition total in our example is $467.73. When Bob clicks on the 'truck' button to perform the receipt, he sees the item line specified in 300 EUR. So the receipt is recorded in the currency of the item.
The supplier has sent a bill to Bob for the monitor stand that he has purchased. Bob goes into Coupa and flips the PO to create an invoice. The currency on the invoice create page is EUR (the transactional currency), so all charges from the supplier total in EUR.
When we go to Setup-ManageInvoices the total for this invoice will show up in EUR
Behind the scenes, Coupa automatically adds an accounting currency and value to the transaction. When Bob picked his billing account for the requisition line, the system knew that the billing account came from a particular chart of accounts whose currency is USD. Therefore, the accounting currency for this transaction is USD and the accounting total is 467.73.
Managing Exchange Rates
Since exchange rates change on a regular basis, an admin can update the rate between two currencies in Setup-Exchange Rates. Coupa stores the history of all exchange rate updates between the currencies. When a transaction line is created, the system picks up the last exchange rate created between the two currencies. For example, if there are exchange rates set up between USD and Euro on 3/1/2009, 3/5/2009 and 3/14/2009 and a requisition is created on 3/15/2009, then the system uses the exchange rate that was set up on 3/14/2009 to calculate the requisition total in user's preferred currency.
If another exchange rate was created between the date and time the requisition was submitted and the date and time that the next approver received it for approval, then Coupa uses that exchange rate to calculate the requisition total in approver's preferred currency.
If the transaction line is updated, then the total of the transaction is also updated based on the exchange rate at the time of the update. For example, a partial invoice gets created on 3/3/2009 in Euros and the accounting currency is in USD, then Coupa uses the exchange rate from 3/1/2009 for the accounting total. Note the system uses the invoice date created, not the invoice date, to pick the exchange rate. Then if the invoice is updated again on 3/7/2009, then Coupa picks up the exchange rate for 3/5/2009 to calculate the accounting total.
Budgeting is always set in the currency of the chart of accounts (i.e., accounting currency).
In the example above, if a budget line is decremented, it is reduced by the amount in accounting currency or 467.73 USD.
Purchase Order Chart Report- the Total of Ordered POs is displayed in the currency of the Chart of Accounts specified in the report parameter or the Chart of Accounts of the first PO line in the report. The system converts the totals of PO lines that are in different currencies to the currency of the Chart of Accounts. The code of whichever currency is chosen appears in the report graphic. If there are multiple Charts of Accounts and an exchange rate is not present between accounting currencies, an error is displayed if a conversion cannot be calculated.
Budget Report- budget currency gets defaulted from the currency of the Chart of Accounts. In our example, the PO was in 300 EUR but the budget impact for the billing code that was picked on the requisition was 467.73 USD..
Unreceived Orders, Uninvoiced Orders and Requisition Line Reports- PO and requisition lines are displayed in the currency of the transaction. In our example, the currency is EUR.
Purchase Order Line Report- this report shows the Line Total in the transactional currency. The default view can be customized to include Accounting Total Currency and Accounting Total columns which convert the line total currency to the Chart of Accounts Currency. In our example, the Line Total for the monitor stand is 300 EUR but the Accounting Total shows 467.73 USD since the Accounting Total Currency is USD.
Invoice Line Report- this report shows the Line Total in the transactional currency of the line item on the order. Just like in PO line report, however, the view can be customized to include the Accounting Currency and the Accounting Total to provide the totals in the currency of the Chart of Accounts.
On-Hand Balance Report- Inventory can be purchased in any currency but inventory will be stored in base currency calculated with exchange rates set up in a system. Base currency is configured in Setup-Inventory Settings. On hand balances are loaded in base inventory currency. Valuation is also shown in base currency.