Adding currencies and updating exchange rates

Adding currencies and updating exchange rates

Once multi-currency is enabled, you can add new currencies and manage exchange rates. Exchange rates determine how currency amounts are converted for reporting and settlement. Keeping them current is essential for accurate financial records.

Before you start

• Multi-currency must be enabled (see "Enabling multi-currency").
• You must have system settings or currency management permissions (usually granted to accounting managers or administrators).
• Gather the current exchange rates for the currencies you need. These are typically based on a standard source (e.g., central bank rates, market rates) and updated daily or weekly.
• Identify which currencies your business operates in or plans to operate in (e.g., AFN, USD, EUR, PKR).

Adding a new currency

1. Go to Settings → Currencies (or Settings → Exchange Rates, depending on your product). Open in Usystems

2. Look for a New Currency or Add Currency button.

3. Click to open the currency form.

4. Select the currency code from the list provided (e.g., USD, EUR, GBP, AFN, PKR). The system will populate the currency name and symbol automatically.

5. Enter the exchange rate relative to your base currency. For example, if your base currency is AFN and you are adding USD, enter how many AFN equals 1 USD (e.g., 1 USD = 88 AFN).

6. Optionally, set an effective date for the rate if the system requires it. This allows you to track historical rates.

7. Click Save or Add. The currency is now available for use in transactions and accounts.

Updating exchange rates

Exchange rates change frequently. You should update them regularly to ensure transactions are recorded at the current rate.

Manual update

1. Go to Settings → Currencies or Settings → Exchange Rates. Open in Usystems

2. Find the currency whose rate you need to update in the list.

3. Click to open it or look for an Edit icon.

4. Update the exchange rate field with the current rate.

5. If the system supports it, the date field will auto-populate with today's date. Otherwise, ensure the date reflects when the rate is effective.

6. Click Save. The new rate is now in effect for new transactions.

Using historical rates

If your system supports date-based exchange rates, you can enter multiple rates for the same currency with different effective dates. This is useful if:

• You need to revalue past transactions (period-end closing).
• You use periodic (e.g., weekly) rates rather than daily rates.

When recording a transaction, the system will use the rate that was effective on the transaction date.

Archiving a currency

If you no longer use a currency, you can archive it (remove it from active use without deleting historical transactions).

1. Go to Settings → Currencies. Open in Usystems

2. Find the currency and click to open it.

3. Look for an Archive button or toggle the Active switch to off.

4. Click Save. The currency is removed from dropdown lists but remains available for viewing historical transactions.

Common currencies and codes

Accounting impact

Exchange rates affect how transactions are recorded and how accounts are valued:

• Transaction recording: When a transaction is recorded in a foreign currency, the amount is converted to the base currency at the rate effective on the transaction date.
• Exchange gains and losses: If a transaction is settled at a rate different from the recording rate, an exchange gain or loss is recorded. These are tracked in dedicated accounts (often called "Exchange Realized Gain/Loss" or similar).
• Period-end revaluation: At the end of a reporting period, foreign currency accounts are sometimes revalued to the current exchange rate. Unrealized gains or losses are recorded in a revaluation account.

Tips & common mistakes

• Update rates before period-end closing: Exchange rates used during the period should be finalized before you close the period for reporting. After period-end, rates should be frozen to prevent changes to historical records.
• Use consistent rate sources: Choose a reliable source (e.g., your country's central bank) and use it consistently. Mixing sources can make reconciliation difficult.
• Document your rate updates: Keep a log or record of when rates were updated and which source you used. This is important for audit purposes.
• Revalue foreign accounts at period-end: If you hold significant balances in foreign currencies, consider a revaluation at the end of each reporting period to ensure balance sheet accuracy.
• Avoid manual currency conversion: Let the system convert amounts automatically using the configured rates. Manual conversion introduces errors.