Companies that transact in multi-currencies do come across instances where their aged account balances do not match with the aged reports. For example, accounts inquiry account balance for an accounts receivable account does not match with the aged balance (BALAGEGRP) report.

In this blog we will look at the best practices to enable a perfect matching.

Prerequisites:

    a. In Setup, General parameters, SUP chapter, FMT group, select the DECRCU parameter (No. decimal currency rate) and set the value to 9.

This will allow 9 decimals for currency rates.

        - You will see this change in the inverse rate column under currency rate’s function.

     b. In Setup, General parameters, ACC chapter, MTC group, select the LOWMTCGEN parameter (Exch. rate var./ Low matching) and set the value to “Yes”.

         This parameter is to control whether a conversion variance entry must be calculated when a partial payment is made (lower-case matching).

• Note, when you are transacting in different currencies, it is highly recommended to have a dedicated bank account for each payment currency.

          Having separate bank accounts will avoid gaps between two reports as payment transaction currency will be the same as the bank account currency.

          For example, have a USD bank for USD payment transactions and EUR bank for EUR payment transactions.

• In case you choose to use one bank account to process payments with different currencies you will likely see the above issue where there is no perfect match. In that case you would have to follow the best practices mentioned in this document.

     c. In Setup, A/P-A/R accounting, Payment entry transactions, select the entry transactions used in payment receipts and verify the,

         “Rate type” = Daily rate and the “Invoice rate application” = NOT checked.

     d. In payment entry transaction go to the Steps tab and under Bank posting grid tunnel into the automatic journal groups.

• Assign a free grouping criteria formula “[F:PYD]VCRNUM” for the following auto journal lines.
  • PRINC lines 10,50,53,56
  • PYODD line 20
  • ACCBP lines 50,53,56

         PRINC line 10

• Note, whenever you modify an auto journal, it must be protected with an activity code and make sure the legislation codes are active for those lines.

Now let us look at the behavior of the general parameter LOWMTCGEN.

LOWMTCGEN = No (reports/inquiries not a perfect match)

• Create 2 customer BP invoices - transaction currency EUR, and company currency USD.

• Create a partial payment receipt for the above invoices in EUR (Bank currency USD).

         Payment receipt

• Once the receipt is posted system will automatically match the lines.
• Notice, invoice DIR00022 is fully matched (uppercase ‘B’), and invoice DIR000023 is partially matched (lowercase ‘a’).

• Matching currency balance is 100 EUR, and account balance is 151.32 USD.

• In accounts inquiry the accounting balance for this BP and control a/c is 151.32 USD
• [inv. 1,110.00 (1,000USD x 1.11) – rec. 958.68 (900USD x 1.0652) = 151.32 EUR]

• But in “customer aged balance to date” inquiry, total balance of this BP is 111.00 USD.
• [inv. 1000.00 – rec. 900.00 = 100.00 USD x invoice rate 1.11]

• And in BALAGEGRP aged balance report, the BP balance is 111.00 USD.

LOWMTCGEN = Yes (reports/inquiries perfect match)

Invoice:

Receipt:

Manual matching:

• Inv. DIR000024 fully matched

• INV DIR000025 is partially matched with a MTCCV record.

• Matching balance for invoice DIR000025 = 111.00 [100 EUR x 1.11 inv rate]

• To fix the invoice DIR000023 lines, Unmatch the match letter ‘a’ and rematch them.
• Now the account balance and the matching balance are the same.

• Customer aged balance to date:

Report:

I hope this article is useful to understand the behavior of the LOWMTCGEN parameter and the best practices to have a perfect match when dealing with different currencies.