While the consolidation aspect of dealing with foreign currencies is probably the most challenging to configure in Dynamics GP, there are still a host of other decisions and setups a company must do to setup Multicurrency. The first being Exchange rates. Companies will have to decide a source for their exchange rates, OANDA, Reuters, Yahoo, etc. and decide how and with what frequency they will get those rates into Dynamics GP. is a critical decision because if exchange rates are mis-entered then that can drastically affect your financial reports. The sources I mentioned above all allow subscriptions to their rates which include downloading a daily file with the necessary rates, then a daily import routine can be written to import these each day. We've even written a routine that automatically calculates the Average Rate at the end of each month. (common misconception but Dynamics GP will not do this for you)
Once the exchange rates and currencies are setup in GP, (Best Practice – do not use the "Z-" currencies that are preloaded with Dynamics GP, create new ones using the ISO Currency Code as the Currency ID) you will need to define the Currency Setups for all your GL Accounts. (Ever wondered what the currency button is for on the GL Account Maintenance window?)
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For Balance Sheet accounts they should revalue by Period Balance, for P&L accounts they should revalue by Net Change. This window does not know if the account is Balance Sheet or P&L, you have to manually assign it.
Finally if you have individual companies that do business in multiple currencies, you will need to perform a remeasurement, or revalue process. This is done in Microsoft Dynamics GP by going to Tools>>Routines>>Financial>>Revalue.
The window above lets you setup the different types of revaluation that you will be running at each month end. There are a lot of choices in this window, but this is where the Rate Types are key. Out of the box, GP comes with BUY, SELL, & AVERAGE. Unless you are doing heavy currency trading, you do not need the BUY or SELL. As a best practice, we setup DAILY SPOT (or MONTH END depending on your exchange rate frequency) and use AVERAGE. DAILY SPOT would be the rate defaulted on all transaction types, and the AVERAGE rate type would be used for revaluing and/or translating the P&L. The different Rate Types, dates, transaction types, are then used to calculate your monthly remeasurement of your General Ledger, Accounts Receivable, & Accounts Payable and will create a journal entry with any changes. The Journal Entry will have a Source Document of 'MC' and will post only to the functional currency so Originating Currency amounts will be $0.00.
