Zero Dollar Invoice Exchange Rate Based on Account Currency Rate
Some organizations require that zero invoices in foreign currency should use the same exchange rate as the invoices on account.
When invoicing time and material (T&M) entries, which are settled against the previous invoices on account, the exchange rate applied to the entries should be the same as for the invoices on account being settled as part of the zero invoice. Consequently, such zero invoices do not have exchange rate variance.
In Maconomy, the on account reconciliation of a T&M invoice can consist of reconciliation against both invoices on account and credit memos on account. This enhancement introduces that any exchange rate variance between the settled invoices on account and the settled credit memos on account is handled as such. The exchange rate applied to the T&M entries should be the same for as the invoices on account being reconciled. Any exchange rate variance between the invoices on account and the credit memos on account that are reconciled with the zero invoice are therefore posted as such.
When you enable the Exchange Rate on 0-invoices as Invoiced On Account parameter, zero invoices for T&M entries are invoiced at the same exchange rate as the one for the invoices on account being reconciled. Specifically, the exchange rate applied to the time and material on a zero invoice is the weighted average of the exchange rates of the invoices on account being reconciled, according to the amount by which they are reconciled.
In particular, this means that T&M entries invoiced on a zero invoice covered by this functionality are not invoiced at the same exchange rate as it was originally registered. This difference appears as a write up/down in base currency and enterprise currency.
Example
In this example, you are working on a job using CAD as the job currency, with a company that uses USD as the base currency.
The job has a WIP amount of 2,000.00 CAD and a net on account amount of CAD 2,000.00. The job has been invoiced on account twice and has one job registration (job entry), which is invoiced at CAD 2,000.00 with on account reduction of CAD 2,000.00.
| Entry | USD | CAD | Exchange rate |
|---|---|---|---|
| First invoice on account | 744.14 | 1,000.00 | 74.414000 |
| Second invoice on account | 740.53 | 1,000.00 | 74.053000 |
| Job registration (for example, vendor invoice) | 1,525.21 | 2,000.00 | 76.260500 |
| 0-invoice | 1,484.67 | 2,000.00 | 74.233500 |
The job registration is invoiced at CAD 2,000 with on account reduction CAD 2,000, thus giving rise to a zero invoice. When this is enabled, the job registration is invoiced at USD 1,484.67 which is the sum of the two amounts invoiced on account.
In the above example, the zero invoice had one job entry, which should be invoiced at a total amount corresponding to the sum of the on account reconciliation in both invoice currency and local currency. For invoices with multiple job entries, this is accomplished by applying an exchange rate from job currency to base currency to all job entries based on the total on account reconciliation. More precisely, this exchange rate is found as the ratio of the total on account reconciliation in base currency to the total on account reconciliation in job currency. Except for a rounding difference, that can occur as a result of rounding to two decimals after applying the exchange rate, this ensures that the zero invoice is not only zero in the job currency but also in base currency and enterprise currency. The rounding difference is posted separately with the posting reference set up for amount rounding and the exchange rate variance of the invoice will be zero.