Overview on Currencies
Currency is the Legal means of payment in a country. In the SAP system you can post in different currencies. For each monetary amount that you enter in the SAP System, you must specify a currency. You enter currencies as the ISO standards, for example, USD for US dollar.
In SAP, all currencies are maintained as per the ISO (International Organization for Standardization) standard.
In this section, one need to:
- check the preset currencies; and
- add new currencies according to your requirements
Here you define the currencies allowed in the system and the exchange rates for Currencies. You must define a company code currency for each company code in FI. In addition, you can define one or two parallel currencies for each company code.
Configuration Steps:
Path:IMG -- SAP NetWeaver -- General settings -- Currencies
1. Check Currency Codes
The currency table must have entries for all currencies which are required in the company’s business transactions.
In SAP, all currencies are defined according to the international ISO standard (International Organization for Standardization). SAP recommends that one should use the ISO standard for your additional entries.
If your entries do not correspond to the ISO standard, you will not be able to use data exchange in international communication (e.g. bank clearing transactions).
Actions
- Check the currency entries for completeness.
- Add the missing currency entries as required.
- Use the ISO standard for your additional entries.
Example:
Create a new currency key
Currency Key: USDZ
Long Text: United States Dollar - 3 Decimals
Short Text: USD 3 deci
ISO Code: USD
Alternative Key: 840
2. Set Decimal Places for Currencies
Each currency has a different number of decimal places. If you are adding new currencies, which do not have two decimal places, you have to enter these currencies in the menu option 'Decimal places'.
In the settings delivered with the system, the most important currencies which do not have two decimal places are pre-set according to the ISO standard.
Activities
1. Check whether in your company currencies are in use which do not have two decimal places, in addition to those delivered.
2. Set the appropriate number of decimal places for these currencies.
3.Define Standard Quotation for Exchange Rates
3. Define Standard Quotation for Exchange Rates
For each currency pair you need to define either the indirect quotation or the direct quotation as the standard quotation for the exchange rate.
This setting is used for the following activities:
- When you process the exchange rates table you can enter the exchange rate either as a direct or an indirect quotation. If the exchange rate you enter does not have the same quotation as the standard quotation set up.
- An exchange rate is only taken from the exchange rates table if it has already been given by the user. If this is a type of exchange rate that demands translation using a reference currency, the standard quotation is used to be determined for further processing.
4. Enter Prefixes for Direct/Indirect Quotation Exchange Rates
Exchange rates can be entered as a direct or indirect quotation. Here you can maintain two prefixes that can be used to differentiate between direct and indirect quotation exchange rates during input and output.
Recommendation : If you use mainly direct quotation exchange rates, you should set the prefix for
- direct quotation as ' '
- indirect quotation as a different symbol, e.g. '/'
If you do not set up a prefix here, the standard setting is valid:
- ' ' for direct quotation exchange rates
- '/' for indirect quotation exchange rates
The prefix ' ' means that you can enter the exchange rate without a prefix.
Example
Your local currency is EUR. You enter a business transaction in the transaction currency USD. '/' has been defined as the prefix for indirect quotation and ' ' for direct quotation (' ' = no prefix necessary). You can then either enter the exchange rate as a direct quotation without a prefix, e.g. '0.97234' or as an indirect quotation with prefix '/', e.g. '/1.08456'.
5. Check Exchange Rate Types
Exchange rates for different purposes for the same date are defined in the system as exchange rate types (you cannot delete existing entries).
If you need to carry out currency translations between number of different currencies, you can simplify exchange rate maintenance by entering a base currency for the exchange rate type.
The standard system includes the exchange rate types for the bank buying rate (G), bank selling rate (B), and average rate (M).
6. Define Translation Ratios for Currency Translation
Here you enter the translation ratios for currency translation. You enter these ratios for each exchange rate type and currency pair. You also specify whether you want to use an alternative exchange rate type for specific currency pairs.
Example
As of 01/01/1999 the exchange rate for DEM (German Mark) to FRF(France) will be calculated via EUR. To translate amounts enter:
- 01/01/1999
- The exchange rate type under which the exchange rates of the European national currencies are stored in the Alt. ERT field
7. Enter Exchange Rates
Exchange rates are required to:
· Translate foreign currency amounts when posting or clearing transactions.
· Determine the gain and loss from exchange rate differences
· Evaluate open items in foreign currency and the foreign currency balance sheet accounts
The system uses the type M exchange rates for foreign currency translation when posting and clearing documents. An entry must exist in the system for this exchange rate type. The exchange rates apply to all company codes.
8. Maintain Exchange Rate Spreads
In this activity you can derive the bank buying rate and bank selling rate using the average rate and the spread. By spread, we mean the difference between the average and buying rates or between average and selling rates. You convert to the buying or selling rate by first determining the average rate, then adding or subtracting the spread from that average rate.
Example
If the average rate between USD -> DEM is 1.46000 and the spread is 0.00400, the bank buying rate derived is 1.45600.
To make that calculation you must make the following entries in this step:
M (rate type) USD (From) DEM (To) 0.00400 (spread)
9. Define rounding rules for currencies
For the company code/currency combination for which payments are to be made not in the smallest denomination, but in a multiple of it, enter the currency unit (rounding unit) to which amounts are to be rounded.
This ensures that the amounts in this currency are always rounded to this unit. The payment program evaluates your entries to determine the cash discount and rounds off the amount accordingly.
10. Define Worklist for Exchange Rate Entry
Here you create a worklist for entry and editing of exchange rates. Users receive authorization to enter exchange rates at the worklist level. It is possible for two or more users to edit two or more worklists in parallel, as the lock applies at the worklist level during editing.
You can assign each combination of exchange rate type, from and to currencies to one worklist only.
Click on New Entries:
11. Assign Exchange Rate to the Worklist
Here you assign exchange rates to a worklist. You can assign all exchange rates to a worklist that are to be entered at the same intervals and linked to the same authorizations. You can enter the rates either directly in the productive system using transaction TCURMNT.
Click on to New Entries:
Click on Save.
12. Expiring Currencies
You can use this new function to allow currencies to expire. This means that you can attach warning or error messages to the creation/change of objects in the currencies expiring.
For example: the currencies participating in the European Monetary Union that then lose their validity after the end of the dual currency phase.
For longer running objects (such as sales orders) you can enter a date for a warning or error message.
In this way, you can ensure that on/after the end of the dual currency phase, these objects can no longer be created/changed in the currency that is being discontinued.
This function can also be used to discontinue currencies of countries where there is high inflation.
i. Define expiry reasons
In this IMG step you define the expiry reasons for the currencies that you want to allow to expire.
Example
The Austrian Schilling loses its validity at the end of the dual currency phase. You want to prevent objects in this currency being create/changed drawing up to/after the end of this dual currency phase.
EURO - European Monetary Union
You can assign this expiry reason to the participating currencies in the next IMG step.
The Austrian Schilling loses its validity at the end of the dual currency phase. You want to prevent any objects in this currency being created/changed leading up to or after the close of the dual currency phase.
ii. Define expiring currencies
In this IMG step you assign the expiring currencies an expiry reason as defined in the earlier step. You also define the new currency that is to replace the expiring currency.
iii. Define warning and error dates
You can also enter a date for a warning and/or error message for each link between expiry reason and object type. The warning date is earlier than the error date
Example:
According to your requirements, e.g. 01.01.2002 as a warning date and 06.30.2002 as the error date for the object types made available by SAP. For company code dependent objects you can restrict the check by company code. When a user then wants to create/change an object in ATS from the 01.01.2002 a warning message and from the 06.30.2002 an error message will appear for the assigned object types and company codes.
Will shortly update with the SAP configuration screens as well.
Thank you,
Mukesh Sharma