We’ve had a few requests for a blog post that explains how Currency Conversion (multiple currencies) works in the Free Version of SpendMap, that is, what happens in SpendMap when you place Purchase Orders in currencies other than your own (landed) currency.
In a nutshell, when you set up a new supplier, you can tell SpendMap the currency to use (i.e. the currency the supplier’s Purchase Orders and invoices will be in), and then SpendMap will convert those orders to your local/landed currency for internal reporting purposes.
Here’s how it works…
Step 1 – Your Default/Local/Landed Currency
First things first, you need to set up your local/landed currency. That’s the currency SpendMap will use for internal reporting. We’ll use United States Dollars (USD) for this example.
Step 2 – Your Supplier’s Currency
Next, tell SpendMap which currency to use for each supplier. Let’s say that a Buyer in the USA is ordering something from a supplier in Canada to make the most of the strong US dollar…
Step 3 – Purchase Orders in Your Supplier’s Currency
Now, when you process Purchase Orders for that supplier, the orders will be in the supplier’s currency (Canadian dollars in this example)…
Step 4 – Currency Conversion (Reporting in Landed Currency)
In most cases, orders that are placed in your Supplier’s currency will be converted to your local/landed currency for reporting purposes, so that you can “compare apples to apples”. For example, your budget reporting, inventory valuation, spend by supplier, and similar reports that might include purchases in many different currencies, will be converted to your local/landed currency for easy comparison.
For example, here’s the Spend by Supplier Report, showing that we just spent US $730.20 (not $1,000) with our friendly Canadian supplier…
I say “in most cases” because there are a few exceptions where you still might want to see your supplier’s currency, in which case SpendMap will ask you whether you want to use your supplier’s currencies or your landed currency. The PO Listing Report is a good example.
Step 5 – Update Exchange Rates
Since exchange rates between currencies fluctuate all the time, you should update the Rate Field (the exchange rate) for each currency code in SpendMap from time to time. You can do this manually in the Tax and Exchange Rate Master File, or check out this blog post to learn how to automatically update the exchange rates from Yahoo! Finance.