2 Sage One Multi-Currency Getting Started Guide It s been a long time coming but finally our Multi-Currency functionality is here! The functionality allows you to: Run your business in your country s main currency (we call this your Home Currency) whilst allowing you to track both customers and suppliers in their Foreign Currency. Send out customer statements in your customers chosen currency (same for suppliers). Create multiple bank accounts in either your Home Currency or in any Foreign Currency you choose. Download the latest exchange rates from the internet while still allowing you to edit these rates, per transaction. Calculate your realised and unrealised gains and losses on your Foreign Currency transactions. OK lets get going. STEP 1 Activate the Multi-Currency functionality On the menu bar go to Company Change Company Settings Multi-Currency. Click Enable Multi-Currency and select your Home Currency which in 95% of cases will be South African Rand. The Home Currency is simply the currency of the country your main business operates in and what you usually report your financial statements on i.e. your profit and loss etc.
3 STEP 2 Add the other currencies your business trades in Example: let s say you sold goods to customers in South Africa, the UK and the USA. You would use 3 currencies: You would sell in Rands to your customers in South Africa You would sell in Pounds to your customers in the UK You would sell in Dollars to your customers in the USA Sage One already knows about the Rands currency because you selected it as your Home Currency. But you still need to tell Sage One about your other currencies ie. the Dollars and Pounds. To do this, click on the Add Currency button. The following screen is displayed: Click Add Currency and select the currency from the drop down list until you have added all the additional currencies you require. Sage One will automatically download the latest end of day exchange rate from the internet. (Source: openexchangrate.org). This rate can always be edited by yourself whenever you need to.
4 STEP 3 Set each customer and suppliers trading currency Sage One needs to know which currency each of your customers/suppliers trade in. In the example previously mentioned you would sell to the UK customer in Pounds and the USA customer in Dollars. Note: you cannot change the customer or supplier currency choice once selected. Example: a customer resides in the UK and you select Pounds as their trading currency. You then sell to them in Pounds over time. This customer then moves to the USA. You cannot simply edit the customer s details and change the customers default currency. You will have to create a new customer ie. You will then have 2 customers let s say Smith UK and Smith USA. How will this affect you: Because you have been using Sage One for a few months you ve probably already set up some customers and found a way to invoice them in Rands. You will now have to create a new foreign customer (or supplier) for that business. We suggest that when the balance on the existing customer (or supplier) goes down to zero you simply mark it as inactive. So although you may end up with 2 entries for the same customer (or supplier) in your list of customers, the inactive customer won t appear in drop down selection lists etc. On the menu bar go to Customers Lists List of Customers to add your new customers. You will notice a Default Settings section on the bottom right on each customer or supplier you add. Besides some other information, select that customer or suppliers trading currency from the Currency selection list. Sage One will now use this currency whenever you sell goods to this customer.
5 So how does this all effect Sage One s workings? Now let s see what happens when you invoice a customer that has been set up as a foreign customer. Note the following in the above example: 1. Sage One automatically knows that Smith & Co is a foreign customer because you specified this at the time of creating Smith & Co as a customer. 2. Sage One automatically picks up that it s a Pound based customer same as above. 3. The line items on the invoice are displayed in the foreign currency. 4. The invoice totals are displayed in the foreign currency. 5. The translated Rand value (highlighted in yellow) is also displayed at the bottom of the invoice just to let you know what Sage One will recognise in your Profit and Loss report. It will not be printed on the invoice the customer receives. Note: the exchange rate reflected in the top section of the invoice above shows 1 Pound = R21, This can be edited on the document itself by simply clicking on the rate and changing it. But this topic needs further explanation below because no doubt you are asking yourself when do I click on the green Change Rate option? Read further on when you would click on the green Change Rate option. Just for clarity if you only want to change the rate used on this particular invoice don t click on the green Change Rate option just edit the rate itself (the one in the red box on the top portion of the screen).
6 The Change Rate option will only be used when you want to set an exchange rate to be applied globally throughout Sage One especially when you have many users logged into the system. Sage One automatically updates your exchange rates daily from the internet. However, you may decide to rather use rates that you enter manually. There can be many reasons for this: You have taken out forward cover and want to use the forward cover rate. You may want to rather use rates that are more conservative. Not only does Sage One allow you to edit default rates per transaction, but the app also allows you to control your rates for given periods if you so choose. How to tell Sage One to use manually entered rates between specified date ranges We touched on the Change Rate option in the previous section above. Clicking this option brings up the following screen (you can also get to this screen through the menu bar by going to Company Change Company Settings Multi-Currency and then clicking on the edit link on a particular currency: You will notice there s a left hand pane as well as a right hand pane in the above screen. These panes are used to tell Sage One how you would like to apply your exchange rates to any transactions you are busy processing and are going to be processing going forward. You can either tell Sage One to always use the latest internet rates the left pane (even if this option is chosen, you will still have the ability to change the rate on the transaction itself). Or you can tell Sage One to rather use custom rates which you will enter into the above screen on the right pane. If you choose the right hand pane then Sage One won t use the latest internet rates on each transaction you process. Rather it will apply the rates you enter into the right hand pane.
7 You also have the option to tell Sage One to use a specific rate within a date range. So let s say you come to work in the morning and say I want all my transactions to use a particular exchange rate for the week. You would then select the Apply to all new transactions tick box and specify the dates for which you want that rate to be used (let s say Monday to Friday). If you only click the New Custom Exchange Rate button (and not the Apply to all new transactions tick box), then Sage One will simply use whatever rate appears on the right hand pane until you change it. The above is important to understand. Because you always want to know where the rates are coming from. Remember: whatever method is chosen, you can always overwrite the rate that Sage One defaults to on the particular transaction you are processing whether it be a supplier invoice, a customer invoice, a journal etc. Although it sounds a bit complicated don t worry too much about it. What about bank accounts? Ok we ve discussed exchange rates, customers, suppliers etc. so lastly let s discuss your bank accounts. It s the same story as with customers and suppliers you can t change a bank s currency setting once it s created. So let s set up a new Pound bank account. On the menu bar, go to Banking Add a Bank or Credit Card You can see the currency selector on the top right. It s exactly like choosing a currency when you created your customer.
8 Now let s receive money into the account: Remember: we are receiving money from the customer for whom we did an invoice earlier for. The invoice details were as follows: We sold him goods for at the time, this translated to R4,559. Now we have received the Pounds but the exchange rate has changed i.e. It s now gone up to 24 Rands to the Pound. So you processed the invoice at R4,559 but received the equivalent of R5,087 i.e. You received R528 more because the Rand weakened against the Pound! Now let s look at how this currency profit is shown on the profit and loss report:
9 Because we have defaulted the Forex Realised Gains / Losses system account as an expense, we show the profit as a negative. Lastly let s say you don t have a foreign currency bank account and that the customer simply sent the Pounds to your bank who then converts it and deposits R5,087 into your Rand bank account. You can see it s a very similar story except you enter your Rand amount first and Sage One calculates the foreign currency instead of the other way around. Which Sage One reports are effected by Multi-Currency? Customer Supplier Age Analysis Whenever you choose these reports, you will see a Use Foreign Currency tick box option: Note that if you select the Display balances in the Customer s currency option, you will see a list of all customers some in your Home Currency and some in their Foreign Currency. Obviously there won t be totals at the bottom of the report because you can t total different currencies. If you choose not to make this selection, then all customers will be displayed in your Home Currency with your foreign customers converted at the prevailing exchange rate.
10 Customer and Supplier statements The same option is available when you print customer and supplier statements. It makes sense to select the option because you would normally want your customers receiving their statements in their currency. Profit and Loss report You will see both realised and unrealised gains/losses on your income statement: Realised gains/losses are calculated only on those customers/suppliers with foreign balances that have been settled (realised). Example Sold items to a customer for $100 = R1,000. The customer settles you when $100 = R1,200. Your income statement would then show a realised profit of R200. If the customer hadn t yet settled his account then the income statement would show an unrealised profit of R200 which is really a potential profit that s why it s called unrealised. Balance Sheet The cumulative unrealised values of all foreign amounts (customers, suppliers and foreign bank accounts) will be shown on the balance sheet. Banks however will be shown as a separate line called Forex Gains/Losses Banks. Currency differences for customers/suppliers will be shown simply as either Forex Realised Gains/Losses or Forex Unrealised Gains/Losses. Example You have a foreign bank account with $200 it was recorded when it was worth R2,000. When you print the balance sheet, it s now worth R2,400. An unrealised gain (potential gain) of R400 will be shown on the balance sheet.