HowTo:Currency Conversion

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Last update: 05/2009

If a group comprises companies belonging to different currency areas, the individual statements are not easy to consolidate because of the different currencies. The currency conversion serves to convert the local currencies (e.g. of the group companies) to a central currency (e.g. of the group). There are a number of options to depict the local currency (LC) and the group currency (GC) in Professional Planner 2008.

Exchange rates[edit]

In Professional Planner you can convert the currencies according to the modified closing rate method (Currency Conversion) or according to a global average rate.


Currency conversion[edit]

In Professional Planner there are three exchange rates available for conversion:

  • Average rate
  • Opening balance rate
  • Closing balance rate

The average rate is used for calculating P&L values, while the opening and closing balance rates are applied to all stock values. (The rates are entered in the document Currency Conversion). In Professional Planner the currencies are converted according to the modified closing rate method considering previous periods. The following image shows the conversion of LC values to GC values.


WaehrungNettoerloese.gif


The LC are converted to GC according to the following formula:

WaehrungFormelWaehrungsumrechnung.gif


This means in March: (3,000/0.7) – 3,333 = 952

If previous periods are not to be considered for converting a value, you can define this information in the properties of each field reference (Currency without previous periods).


Average rate[edit]

You can enter an average exchange rate valid for the entire dataset, if you do not need to apply different rates for different periods or for P&L and balance sheet values. Enter the exchange rate in the document Master Data.


Currency conversion methods[edit]

Since you can save data in a Professional Planner dataset in one currency only, there are different options to depict LC and GC. It depends on whether you want to save data in GC or LC and how many datasets are required.

Solutions with one dataset[edit]

LC or GC dataset - 1 exchange rate/DS[edit]

To depict the LC values or the GC values enter the exchange rate valid for the entire dataset in the document Master Data. Select the menu item Currency (Tools menu) to execute the currency conversion. The values are then multiplied by the conversion factor and displayed in the document. The standard documents display an active currency conversion by:

  • showing the description Currency under the document title
  • displaying under the document title the currency name entered in the workbook Currency Conversion
  • displaying under the document title the currency name entered in the workbook Currency Conversion


LC - 1 exchange rate/company/period[edit]

The data in the dataset are in LC. For each company an exchange rate is entered per period in the workbook Currency Conversion. If you want to convert the single group companies to GC use the menu item Currency. In doing so, you receive the correct GC for each single entity but not for the whole group. The total on group level is calculated using a sum formula in adjusted documents.


Benefits:

+ easy to handle

Disadvantages:

- not possible for groups, since only one conversion factor is used


GC - 1 exchange rate/company/period[edit]

The data in the dataset are in GC. For each company an exchange rate is entered per period in the workbook Currency Conversion. If you want to convert the single companies to LC use the menu item Currency.


Benefits:

+ group level in GC

+ conversion of single companies into LC

Disadvantages:

- subsequent data or exchange rate alterations require a reimport of the data.


Adapted BCL with 2 currencies[edit]

In this case the LC and GC values are saved on different field references, i.e. the dataset contains LC and GC data at the same time. This solution requires a customized adaptation of the BCL in use. For instance, it is suitable for a sales planning solution.


Benefits:

+ all data are saved in the dataset

+ exchange rates and data can be changed at any time

+ excellent solution for sales datasets

Disadvantages:

- the standard documents set cannot be used, since different field references are required

- not suitable for datasets based on complex BCLs (e.g. containing balance sheet planning)

- requires BCL adaptation


View-only solution[edit]

The data are saved in LC in the dataset. Individual formulas are used in a workbook, in Professional Planner Services 2008 for Excel or Excel Connector to convert them. Exchange rates can be saved and maintained in an administration dataset.


Benefits:

+ easy to handle

+ exchange rates and data can be changed at any time


Solutions including two datasets[edit]

Currency conversion with Professional Consis[edit]

The data are entered and saved in LC in Professional Planner. They are then transferred to Professional Consis, converted into GC and returned to a second Professional Planner dataset.


Benefits:

+ easy to handle

+ no adaptations required


Disadvantages:

- requires Professional Planner Consis

- process coordination

LC - 1 exchange rate/company/period (option 1)[edit]

The data are saved in LC and using the Currency Conversion Manager transferred in GC to a second dataset based on currency.ped. In the first dataset the single entities can be correctly depicted in GC. The group level can be seen in the second dataset.


Benefits:

+ no adaptation required

+ currency differences are depicted in the GC dataset (currency.ped)

+ average and period-end exchange rates are depicted correctly


Disadvantages:

- in the GC dataset no planning is possible

- subsequent data or exchange rate alterations require a reimport of the data into the GC dataset


LC - 1 exchange rate/company/period (option 2)[edit]

The data are saved in LC and using an adapted manager transferred to a second dataset in GC. In the first dataset the single entities can be correctly depicted in GC. The group level can be seen in the second dataset.


Benefits:

+ any target BCL can be used

+ conversion without considering previous periods possible

+ definition of the translation method per field reference (QxP)

+ average and period-end exchange rates are depicted correctly


Disadvantages:

- requires adaptation

- subsequent data or exchange rate alterations require a reimport of the data into the GC dataset