Payment Currency 

Use

You use this function if you wish to use the automatic payment facility to make payments in which the currency of the items to be paid is different from the currency of the payment.

This enables you, the payer, to fulfill your obligations to pay in any of the currencies currently at your disposal.

You can either come to a general agreement with your vendor about which alternative currencies can be used, or make separate arrangements for individual cases about the payment currency and, if necessary, the payment amount.

You can specify an alternative payment currency in the open item. You can also specify an amount. This states the equivalent of the gross amount of the open item in the payment currency.

Integration

The payment currency function is supported in both Accounts Payable (FI-AP) and Accounts Receivable (FI-AR).

In the liquidity forecast in the Treasury component (TR-CM-CM-CM-LF), the expected payment flow for customer or vendor open items is normally stored in the relevant document currency.

Prerequisites

You must make the following settings in Customizing for Financial Accounting (FI):

Change the field selection for the reconciliation accounts and posting keys in which you want it to be possible to enter a payment currency or an amount in payment currency. The fields Payment currency and Amount in payment currency can be found under Payment transactions.

If you want it to be possible to change the Payment currency and Amount in payment currency fields at a later date, you must maintain the document change rules for those fields. When making the settings, please note that changes are only worthwhile if the line item has not yet been cleared.

You can define the new fields as selection fields, search fields or sort fields for the clearing transactions and line item display.

When the payment is made, the system automatically generates line items for the differences in amount resulting from the amounts being specified in payment currency. You define the relevant accounts in Customizing for Financial Accounting in the activities Define Accounts for Payment Differences with Alternative Currency and Define Clearing Accounts for Payment Differences with Alternative Currency.

Features

Payment Currency for Document Processing

You can specify an alternative payment currency and an amount in the payment currency for line items that can be paid automatically. You can enter any currency except the document currency.

If an amount in payment currency is specified, this takes the place of the gross amount in the payment program. This means that cash discount and withholding tax may be deducted from the amount on payment.

The amount in payment currency is subject to a plausibility check. The gross amount in document currency is translated into payment currency. The translation is calculated from Document currency ® Local currency ® Payment currency. The system uses the exchange rate contained in the document header for the first step of the calculation, and the current average rate from the exchange rate table for the second.

If the amount entered differs from the amount calculated in this way by more than one percent, thus exceeding the tolerance specifications in the company code table (maximum exchange rate difference), the system issues a corresponding warning. The message settings can be changed, so you can suppress the message or change it into an error message if required.
For more information on setting system messages, see the Implementation Guide (IMG) for Financial Accounting under Change Message Control for Document Processing

The system uses the payment currency for invoice-related credit memos. If the invoice contains an amount in payment currency, the system enters the corresponding amount in the credit memo.

Invoiced amount

100 DEM

Amount in payment currency

180 USD

Credit memo amount

20 DEM

Amount in payment currency

36 USD

The payment currency and the corresponding amount can be changed in a line item, provided that the document change rules have been configured to allow this.

Payment Currency in the Payment Program

The payment program determines the payment amount of an item in the predefined payment currency as if the item had been posted in the payment currency. Not all of the required amounts are available in the payment currency, so the system carries out the following translations:

Gross amount of item

If the item does not contain an amount in the payment currency, the system determines the amount when running the payment program.

Payment currency is the local currency, and company code settings specify that exchange rate differences are not to be posted when clearing in local currency.

In this case, the local currency amount is transferred as an amount in payment currency.

Payment currency is the local currency, and exchange rate differences can be posted when clearing in local currency.

In this case the amount in document currency is translated into local currency at the current exchange rate. The result usually differs from the original posting amount in local currency.

Payment currency is different from local currency.

In this case the amount in document currency is translated into payment currency at the current exchange rate. The translation is calculated from Document currency ® Local currency ® Payment currency.

Cash discount amount, cash discount base, withholding tax base

These amounts, where specified, exist in document currency. Once the amount has been determined in payment currency, these amounts are updated by the rule of three.

If, in addition to the payment currency, the amount in payment currency has also been specified, a new difference is produced when the payment is posted. The specified amount will usually differ from the amount arrived at by translating at the current exchange rate. The difference represents an overpayment or an underpayment, as agreed with your business partner, and is automatically posted by the system. As with exchange rate differences, the difference amount is only given in local currency. You must specify a difference account in Customizing for automatic posting. See also: Payment Currency: Posting Example 1

The following scenarios exist for automatic posting:

In this case, the system determines the local currency amount to be posted to the bank subaccount by translating the payment amount.

If the specified difference account is not tax-relevant, the whole difference amount is posted as one line item in local currency: Payment Currency: Posting Example 1

If the specified account is tax-relevant, the tax is calculated from the difference amount (in the same way as cash discount): Payment Currency: Posting Example 2

In this case, the local currency amount to be posted to the bank subaccount is the total of the local currency amounts of the items for payment, less cash discount and withholding tax.

If the specified difference account is not tax-relevant, or if a difference account has not been specified, the system does not generate a difference posting. In Payment Currency: Posting Example 1, the local currency amount in the bank subaccount would be changed to 1800 DEM.

If the specified difference account is tax-relevant, the posting to the bank subaccount is changed (1800 DEM instead of 1776 DEM), as well as the posting to difference account 2 (24 DEM instead of 0 DEM). See also: Payment Currency: Posting Example 3

Manual Clearing

If an item is cleared in a different currency from the one in which it was posted, the system translates the amounts into the clearing currency at the current exchange rate. This translation is omitted if the clearing currency is the same as the specified payment currency and an amount has already been entered in the payment currency. In this case the system uses the amount in payment currency.

The same difference postings may result as with the payment program, when the payment program can post exchange rate differences.

In line items for which a payment currency has been specified, the payment currency replaces the document currency. The expected amount is the amount in payment currency minus the expected deduction of cash discount. If an amount in payment currency has not been entered, the system translates the amount in document currency into payment currency and uses this instead of a specified amount. The translation is calculated from Document currency ® Local currency ® Payment currency.