An invoice in foreign currency exists if the currency in which the invoice amount is specified differs from the local currency set in the company code.
If you enter an invoice in a foreign currency, the following settings must have been made in the system:
You must have defined the currency you are using to enter the invoice.
You must have configured an exchange rate for the given currency and the local currency in Customizing.
Hint
Purchase Order in a Foreign Currency
For a purchase order (PO) in a foreign currency, the buyer decides whether the exchange rate is fixed or not. The buyer will find the Fixed Exchange Rate indicator in the purchase order in the (header) data for Delivery and Invoice.
If the exchange rate is fixed, the system uses the exchange rate from the PO to translate the foreign currency into the local currency at goods receipt (GR) and invoice receipt (IR). If the exchange rate is not fixed, the system uses the current exchange rate when posting a GR. In Logistics Invoice Verification, the system also suggests the current exchange rate as the exchange factor. However, you also can enter the exchange rate manually, and you must enter the exchange rate before you make the allocation.
If the exchange rate is not fixed, exchange rate differences can occur as a result of using different exchange rates for GR and IR. Exchange rate differences are actually the same as price differences. The system posts the exchange rate difference using the following logic:
- When there are PO items with account assignments, the consumption account is credited or debited with the exchange rate difference.
- When there is a material with an MAP and stock coverage, the stock account is credited or debited with the amount of the exchange rate difference.
- When there is a material with a standard price, or a material with an MAP but no stock coverage, the method of posting the exchange rate difference depends on the Customizing settings. You can choose whether the exchange rate difference is posted to a special exchange rate difference account or the normal price difference account for price variances.
Customizing Exchange Rate Differences (ERD)
To configure the settings for posting exchange rate differences, in Customizing for Materials Management, choose Logistics Invoice Verification → Incoming Invoice → Configure How Exchange Rate Differences Are Treated (OMRW).
You decide whether postings are made in an exchange rate difference account or a price difference account by setting the Treatment of Exchange Rate Differences indicator.
If you set the Treatment of Exchange Rate Diffs. in Company Code Currency indicator, the amount of the exchange rate difference is always posted in full to an exchange rate difference account, regardless of the material’s price control, and whether there are PO items with account assignment. The settings for the Treatment of Exchange Rate Differences indicator are no longer relevant in this situation.
The valuation of the inventories or consumption is effectively done at the exchange rate for the GR, and not at the exchange rate of the invoice. When you post the GR, the fixed exchange rate from the PO is not used. The translation of the PO values to the local currency is always done at the posting date of the goods receipt.