After completing this lesson, you will be able to:
Execute the valuation of open supplier items in foreign currency using the Foreign Currency Valuation job template
Foreign Currency Valuation Run
When a transaction is made in a foreign currency on a supplier account, it is converted to the company code currency using the exchange rate on the posting date.
Since this exchange rate may differ at the end of the period, the open items must be re-evaluated based on specific business and legal standards.
Business Scenario: Foreign Currency Valuation
Jake will support the foreign currency valuation in accounts payable in the subsequent period-end closing.
To prepare for this new task, he first familiarizes himself with the basic terms:
Select the play button to learn how to perform foreign currency valuation in SAP. Understand the valuation method, valuation area, and the generation of valuation postings. Watch now!
To perform a foreign currency valuation, a valuation method must be configured in the SAP system. This determines the
Exchange Rate Type
The method is assigned to a valuation area. When scheduling a valuation job, assign a valuation area and key date.
The foreign currency valuation run generates the valuation posting on the key date, the valuation expense/revenue from the currency valuation, and the offsetting entry on an adjustment account. The posting cannot go directly to the payables reconciliation account, so it goes to an adjustment account. The valuation area also controls ledger determination.
The posting is reversed the next day, but this can be changed in the job parameters.
Foreign Currency Valuation Demo
Jake's manager, Sandra, asked him to test foreign currency valuation using a testing environment. He double-checks his balance sheet, accesses the General Ledger Account, and accesses a USD 10,000 invoice.
Select the play button to learn how to perform foreign currency valuation in SAP using the Fiori App Schedule General Ledger Jobs. This video provides step-by-step instructions on accessing the valuation template, scheduling the job, and reviewing the results.
Run a Foreign Currency Valuation
In this exercise, you prepare and execute a foreign currency valuation run. Afterward, you will analyze the balance sheet and income statement results.
Some countries don't allow you to reverse year-end foreign currency valuation postings in the following year. To avoid this, use the Year-End Valuation delta logic for valuation runs. This option is a standard delivery in SAP S/HANA Cloud for certain countries.
Business Scenario: Delta Posting Logic
Jake accidentally selected the Delta Logic Year-End Valuation during his test of the foreign currency valuation for company code 1010. The system issued the following error message: Year-End/Mid-Year Valuation is not permitted for area IF.
In the future, Jake might need to use the delta logic for other company codes. Let's walk him through the posting methodology.
Select the play button to learn more about the year-end valuation delta logic in this informative video.
Here are the features of Year-End Valuation delta logic for valuation differences:
If an FI valuation area uses this logic, only one FI document is posted without any reversal posting.
If the exchange rate stays the same, there won't be any further valuation posting.
If the exchange rate changes, the open item will be valuated again, considering only the difference from the previous valuation.
During the fiscal year’s end, the delta posting logic is tested for a company code. Jake oversees running this test.
Select the play button to learn how to perform year-end valuation using Delta Logic in SAP. Follow step-by-step instructions to select the valuation area, check the results, and analyze the posting logs.
So, to use "Year-end valuation" as delta logic, navigate to the Open Items: Subledger section and select the relevant field. Don’t forget to check the valuation difference in the New Difference column and the amount to be posted in the Amount Posted column.
Finally, remember this posting log will only display one financial posting since no reversal posting exists for this document.
Please note that for Mid-Year Valuation delta logic, a valuation posting, and a corresponding reversal posting will be generated in the next posting period.
Analyze a Foreign Currency Valuation run with Delta Logic
In this exercise, you analyze an already executed foreign currency valuation run using the delta logic.
Were there some terms in this lesson that you’d like further information on? See below a glossary of mentioned terms:
Valuation Method: A valuation method is used to revaluate supplier open items in foreign currency. It defines, for example, whether a lowest value principle or always valuate is used for valuation. The valuation method is assigned to a valuation area in the configuration of the SAP system.
Valuation Areas: Valuation areas are used in Financial Accounting for closing operations. You use them to depict different valuation approaches/accounting principles.
Financial Statement Adjustment Account: Valuation postings are not made on the payable's reconciliation account. They are posted on a separate G/L adjustment account in the same financial statement item as the valuated payables reconciliation account.