NetCash Transactions with Foreign Currencies
Overview
NetCash supports a variety of multi-currency cash application and matching scenarios. Through the Manual Match page, users can apply cash in one currency to an open GL transaction in another currency, and match bank transactions to GL transactions even when exchange rate differences cause mismatched amounts. The walkthrough below demonstrates how NetCash manages cash application and matching across different currencies.
Click here to view the walkthrough in full screen.
NetSuite enforces certain restrictions on transactions involving GL accounts of the Bank Account type based on the subsidiary’s base currency. NetCash operates within these NetSuite limitations. Two key restrictions are outlined below, along with examples illustrating their application:
- When GL Bank Accounts are involved, at least one of the two bank accounts must be denominated in the subsidiary’s base currency. This restriction prevents transfers between two currencies when neither matches the base currency.
- Payments cannot be created in a currency different from the base currency on open transactions denominated in the base currency.
Example: Consider a subsidiary with USD as its base currency, maintaining three bank accounts: USD, CAD, and JPY.
- Transfers between the USD bank account and either the CAD or JPY bank accounts are permitted. However, transfers directly between the CAD and JPY bank accounts are not allowed.
- For cash application, NetSuite allows USD or CAD payments on CAD-denominated open transactions, and USD or JPY payments on JPY-denominated open transactions. However, it prevents CAD or JPY payments on USD-denominated open transactions, as well as CAD payments on JPY-denominated transactions and vice versa.
Step-by-Step Process
Cash Application
NetCash enables users to manually apply cash between bank and GL transactions in multiple currencies.
- Navigate to NetCash > Bank > Match Bank Transactions.
- Click the Cash Application button.
- The Cash Application table displays the currency for each open transaction. The Amount, Open Amount, and Total Amount columns all reflect the currency specified in the Currency column. The Posted Amount column shows the amount in the subsidiary's posting currency, which may differ from the transaction currency:
- When a user attempts to apply a bank transaction to an open transaction in a different currency, NetCash will display a popup—like the one below—allowing the user to confirm the foreign exchange rate that will be used to apply the cash and create the match:
- When the user clicks Confirm, NetCash will generate a payment for the related open transaction, applying the exchange rate shown in the popup to that transaction.
NetCash automatically calculates the exchange rate based on the bank and GL transaction amounts. Users have the option to override this rate or adjust the payment amount before it is created.
Depending on the exchange rate or payment amount entered by the user, the cash application process may result in a rounding journal entry:
It may also create a discount that can be applied to the open transaction. Alternatively, users can choose to leave the transaction open to apply it against a future transaction:
- On the Review Matches page (NetCash > Bank > Review Bank Matches), any match created through cross-currency cash application will display a badge showing the exchange rate used. This is the same exchange rate shown on the associated transaction.
Users should note that the Review Matches page displays amounts in the currency of the associated bank account.
For example, if the account is denominated in U.S. dollars, the amounts shown on this page will be in USD—even if the original open transaction was in Canadian dollars.
If a discount was applied to a transaction after overriding the exchange rate, the transaction record will display both the entered exchange rate and the discount that was applied:
Bank to GL Matching
Differences between the foreign exchange rates used by banks and those used in NetSuite can lead to variances between a bank transaction and the corresponding GL transaction it matches to.
To account for this, NetCash allows users to override the default rounding account during manual matching, enabling the use of an exchange rate variance account instead of a rounding account in these cases.
- Navigate to NetCash > Bank > Match Bank Transactions.
- Make sure the Bank to GL Match button is selected:
- Select the bank transaction and the corresponding NetSuite transaction, even though the amounts differ, and then click the Match button at the top of the screen:
- When there are amount differences on a match NetCash prompts users to confirm that they want to make this match. On the popup that comes up users can also update the Memo and GL Account that will be used on the rounding journal entry.
- If the variance is the result of exchange rate differences rather than standard rounding, the Offset Account in the popup can be set to an Exchange Rate Variance account instead of a Rounding account.
- Click Confirm after updating the Offset Account and Line Memo, if applicable:
The Offset Account will default to the offset account specified in the NetCash bank account setup.
- To review the rounding journal entry, go to NetCash > Bank > Review Bank Matches, and locate the match that includes the rounding journal.
- Opening the rounding journal displays the offset account and Line Memo as recorded. If the account or memo was modified, the updated values will be shown.