Foreign currency transactions
Overview
Foreign currency transactions are used to buy goods from suppliers, or sell goods to customers, who transact in a foreign currency. Find out how to create foreign currency transactions and how exchange rates affect your landed costs and cost of goods sold (COGS).
Foreign currency purchase orders
A foreign currency purchase order is a purchase order denominated in a foreign currency. That means the Unit Cost of each line item, as well as the Product Total and Total of the purchase order, is in a foreign currency.
To create a foreign currency purchase order, assign a foreign currency cost tier to the purchase order – the currency of the cost tier becomes the currency of the purchase order. You can assign a foreign currency cost tier in two ways:
select a supplier with a foreign currency cost tier, which will become the Cost Tier of the purchase order, or
directly set the Cost Tier of the purchase order to a foreign currency cost tier.
Each line item’s cost at the selected cost tier becomes its Unit Cost on the purchase order, and since that cost is in a foreign currency, the Unit Cost is in a foreign currency too. If a line item has no cost at the selected cost tier, its cost at your local cost tier becomes its Unit Costafter being converted, according to the purchase order’s current Exchange Rate, into an equivalent value in the foreign currency. And if you enter the Unit Cost directly, it’s entered in the foreign currency.
Alternatively, you can create a foreign currency purchase order by directly assigning a foreign currency to the purchase order’s Currency. Each line item’s cost at the selected cost tier (or else your local cost tier) becomes its Unit Costafter being converted, according to the purchase order’s current Exchange Rate, into an equivalent value in the foreign currency. If you enter the Unit Cost directly, it’s entered in the foreign currency.
Exchange rates, landed costs, and cost of goods sold (COGS)
When you sell a unit bought in a foreign currency purchase order, Cin7 Omni uses the purchase order’s Exchange Rate to convert the unit’s Unit Cost (excluding any tax) into an equivalent value in your local currency. This local currency purchase cost goes into the unit’s landed cost, which in turn goes into the sale order’s cost of goods sold (COGS).
By default, a purchase order’s Exchange Rate is a variable exchange rate that updates daily at midnight (12:00 am NZST); Cin7 Omni downloads the latest market rate from Xe.com. But you can also set a fixed exchange rate that won’t update with the market:
Enter the desired exchange rate into the Exchange Rate field
Select Save.
The Exchange Rate Last Updated field on the purchase order, as well as the Update Logs on the purchase order’s admin page, tells you whether you’re using a variable (automatic) or fixed (manual) exchange rate and when it was last updated.
Entering an Invoice Date to the purchase order will lock the Exchange Rate. A locked Exchange Rate doesn’t update daily with the market and won’t let you enter a new fixed rate. To change a locked Exchange Rate, you must unlock it – but first talk to your accountant, because if you’ve already synced the purchase order to your accounting software, you will create discrepancies:
Remove the Invoice Date.
Select Save.
Enter a new Exchange Rate.
Re-enter the Invoice Date.
Select Save.
Also talk to your accountant when you on-sell units before having been invoiced by the supplier. The purchase order’s Exchange Rate may change after you dispatch the units, which will affect their landed cost and that month’s cost of goods sold (COGS).
Foreign currency sales orders
A foreign currency sales order is a sales order denominated in a foreign currency. That means the Unit Price of each line item, as well as the Product Total and Total of the sales order, is in a foreign currency.
To create a foreign currency sales order, assign a foreign currency price tier to the sales order – the currency of the price tier becomes the currency of the sales order. You can assign a foreign currency price tier in two ways:
select a customer with a foreign currency price tier, which will become the Price Tier of the sales order, or
directly set the Price Tier of the sales order to a foreign currency price tier.
Each line item’s price at the selected price tier becomes its Unit Price on the sales order, and since that price is in a foreign currency, the Unit Price is in a foreign currency too. If a line item has no price at the selected price tier, its price at the local price tier becomes its Unit Priceafter being converted, according to the current Exchange Rate, into an equivalent value in the foreign currency. And if you enter the Unit Price directly, it’s entered in the foreign currency.
Alternatively, you can create a foreign currency sales order by directly assigning a foreign currency to the sales order’s Currency. Each line item’s price at the selected price tier (or else the local price tier) becomes its Unit Priceafter being converted, according to the current Exchange Rate, into an equivalent value in the foreign currency. If you enter the Unit Price directly, it’s entered in the foreign currency.
The Exchange Rate of a sales order updates daily at midnight (12:00 am NZST); Cin7 Omni downloads the latest market rate from Xe.com. Once you enter an Invoice Date, the Exchange Rate will lock and no longer update.