Things in SAP are constantly evolving and becoming more real-time scenario friendly. Parallel currency is one of the modifications; their corporation can now utilise several currencies for company codes. Multinational firms can record their financial transactions and generate financial reports in many currencies with the help of the parallel currency capabilities.
Introduction
The blog discusses how having various currencies in company code is a real-time business requirement. We can configure company code so that it posts all financial documents with numerous real-time currencies by following the recommended configurational stages and assignments listed below. Regarding the currencies in S/4HANA, there are numerous blogs and articles on SCN. I just tried to compile all of this knowledge into one blog post using my personal experiences.
Objective Of Blog
In this detailed blog, we will try to explore the following SAP standard functionalities with a real-time scenario.
- Currency Keys
- Currency types
- Currency Keys & Currency Types Assignments
- Currency Types & Company Code Assignments
- Currency Exchange Rates
- Journal Voucher Posting
- Line-Item Report Analysis
1. Currency Keys
Currency keys or currency codes are identical alphabetical codes used to record transactions where the amounts are maintained by currency keys in the SAP system, such as USD, EUR, INR, & PKR. Nearly all transactional T-Codes give us the ability to designate the currency of the transaction or document by choosing the currency key.
- SPRO-> SAP NetWeaver-> General settings-> Currencies-> Check Currency Codes
Currency Keys
All of the widely used currencies have already been defined by SAP in a system with ISO global standard marks as general settings, and the company also offers the freedom to define new currency codes in the system using 5-character alpha-numeric currency keys with alpha-numeric ISO codes, or you can use multiple currency keys with the same ISO code by checking the “Primary” box. (Highlighted in the screenshot that follows)
Creation of Currency Key
2. Currency Types
Another critical SAP feature is currency kinds. The function of a currency in the SAP system is defined by its currency type. Instead of explicitly assigning a currency key to the ledger, as is the case in business scenarios, we set the currencies to organisational entities or units, and the system automatically assigns the currency keys to currency types.
A company code in the T-Code OX02, for instance, might receive the SAR. If so, the system will automatically treat it as local currency or corporate code currency. The ledger and company code will also receive the same currency type, which is 10, as SAR, which is assigned automatically.
Let’s explore the currency types and their assignments in the SAP S/4HANA system.
- Document Currency (00) – Simply put, the currency of financial documents is known as document or transaction money. There is no connection between this currency and any of the organisational units. If we post the client’s invoice in JPY (Japanese Yen), JPY will be the document currency (Japanese Yen). The S/4HANA system will verify the most recent exchange rates and convert the document currency into the currencies of our organisational units.
- Company Code Currency (10) – We allocate the currency to the company code because it is a separate organisational entity. Currency provided with a company code is regarded as company code currency.
- Controlling Area Currency (20) – We can choose the currency type 20 in the controlling area and attach any currency key to that region. The Controlling area’s currency shall be regarded as the currency provided by the Controlling area. The advice in this case is to avoid using the currency of the controlling area. Any other currency kind is also acceptable, including Index Currency, Hard Currency, and Group Currency.
- Group Currency (30) – The SAP S/4HANA system’s client currency, set at the time of client configuration, is known as Group Currency. It can be seen in Table T000 or T-code SCC4. The client’s designated currency is determined by the needs of the business.
- Index-based Currency (40) – Index Based Currency is made up and based on a specific nation. In anomalous times, like times of severe inflation or an emergency, this currency helps firms submit their financial information.
- Hard Currency (50) – Hard Currency may serve as the nation’s reserve currency and aid in inflation or any unusually long period of time, such as index-based currency. It has been assigned to the nation in T-Code OY01 and is also a country-based currency.
- Global Company Currency (60) – In an organisational system, the region, division, or nation may be represented by a company code. It might use different currencies, thus using the corporate currency can help with reporting consolidation. By tying the appropriate business currency to the company, we may have consolidation reporting in that currency. Consolidation currency or global company money are other names for company currency.
Tabular Summary Of Currency Types
Currency Types Summary
Since we now have a solid foundational grasp of currency types and keys, we can go on to assigning the keys to organisational units. We’ll also look at the assignment of one organisational unit to another.
3. Currency Key and Currency Type Assignments
According to business requirements, we must construct organisational units and assign required currency keys to units. These organisational entities will support financial and managerial reporting, and the assigned currencies of these organisational entities will offer you the option to design the report in any currency you like.
A. Define Company in Enterprise Structure
The company’s organisational structure in SAP FI is at the top level. The business may benefit from consolidating reporting based on company codes thanks to this organisational unit. The corporation will use global company money or consolidation currency as its entity currency (Currency type 60). Whatever currency we choose to give the company when we create it will serve as its official currency worldwide.
- SPRO-> Enterprise Structure-> Financial Accounting->Define company
Creation Of Company
B. Define Company Codes in Enterprise Structure
In a company’s organisational structure for external accounting, a company code may stand in for a region, division, or nation. We are able to assign various currencies to various business codes, and the company code currency will be regarded as local currency (Currency type 10)
- SPRO-> Enterprise Structure-> Definition-> Financial Accounting-> Edit, Copy, Delete, Check Company Code
Creation of Company Code
C. Company & Company Code Assignment
In this step, we provide the company a company code so that the system can recognise the enterprise units and currencies for consolidation reporting.
- SPRO-> Enterprise Structure-> Assignment-> Financial Accounting-> Assign company code to company
Company and Company Code Assignment
D. Controlling Area Currency
The controlling area of a corporate organisation is another component that helps us with cost or management accounting. The controlling area may be assigned a number of distinct company codes and may use currency that differs from the company codes. If we assign EUR to the controlling area and choose the controlling area currency (Currency type 20), then EUR will serve as the controlling area currency in our parallel currencies.
- SPRO-> Enterprise Structure-> Definition-> Controlling-> Maintain Controlling Area
Creation Of Controlling Area
Important Note from SAP regarding the currency type 20 (Controlling area currency)
Important Note From SAP
We shouldn’t employ currency type 20 in accordance with best practises and recommendations. For management accounting purposes, group, hard, or index-based money can be used in place of controlling area currency.
E. Controlling Area & Company Code Assignment (OX19)
It is required to give the controlling area a company code in order to link the financial and management accounting systems and their respective currencies.
- SPRO-> Enterprise Structure-> Assignment-> Controlling-> Assign company code to controlling area
Company Code and Controlling Area Assignment
F. Client Administration (SCC4)
The client is a business-related organisational unit that uses the SAP S/4 HANA system. It has its own set of master data and independent table sets. The only money that is referred to as Group Currency is Client Currency (Currency type 30). In a nutshell, the Client is at the top of the organisational hierarchy. The administration permanently assigns a client’s currency at the time of client configuration.
Client Settings
G. Index Currency & Hard Currency
The money that is issued by a country that is seen as politically and economically stable is known as hard currency or index-based currency. Both the Index and Hard currency need to be kept at the national level. In the current case, the nation is Saudi Arabia, hence we must maintain both currencies in Saudi Arabia (SA).
SPRO-> SAP NetWeaver-> General settings-> Set Countries-> Define Countries in mySAP Systems
Index-Based Currency and Hard Currency in Country
As per the above assignment, EGP will be index-Based Currency, and Hard currency will be PKR.
4. Assign Currency Types to Company code and Ledger
The business code must be given currency types after organisational entities have been given all necessary currencies. We must also retain the leading ledger during this crucial step.
- SPRO-> Financial Accounting-> Financial Accounting Global Settings-> Ledgers-> Ledger-> Define Settings for Ledgers and Currency Types
A. Currency types
Here we must tell the system which currency type will be used at the client or company code levels.
Only company codes are eligible to define company code currencies. For all Company codes in the same client, the global currencies will be fixed.
Currency Types
B. Global Currencies Conversion Settings
We must provide the system with the “Source Currency” and Exchange Rate Type for Global Currencies along with a Translation Date type. Before beginning the critical configuration, let’s conceptually sharpen the foundation.
Source Currency -> The target currency will be obtained through currency conversion. The “Document Currency” that the SAP S/4HANA system will use to convert the amount into the desired and assigned currencies is what we are choosing. Any currency that we enter while submitting the financial Documents may be used as the document currency.
Exchange Rate Type -> With the “Exchange Rate Type” functionality, we can employ a variety of exchange rates for a specific currency pair. Any business, for instance, is free to maintain a separate exchange rate for the same currency pair over the same time period, such as multiple exchange rates for import and export operations.
To preserve the exchange rate type against the currency type for a certain foreign currency exchange rate, such as M (Standard Translation), please click here. Only the exchange rate maintained with exchange rate type M will be used for conversion by the system.
The list of common exchange rate categories is provided below; let’s look at these as well.
Exchange Rate Type G -> The purchase price is another name for the bank buying rate. It refers to the rate at which banks purchase foreign currency from clients and businesses. This currency rate is mostly kept in place for exports.
Exchange Rate Type B -> It is the price at which banks sell foreign currency to clients and businesses. The import market uses this exchange rate.
Exchange Rate Type M-> This rate, which is an average of the aforementioned exchange rate types, is frequently employed by multinational corporations throughout the world to value currencies.
Translation date Type – A translation date is the day on which foreign currency is changed into local money. It is a very important date factor because the exchange rate is determined by the translation date. In standard SAP, the posting date is used to automatically determine the translation date; alternatively, the posting date or document date can be used for the exchange rate conversion.
Real-Time Conversion -> If real-time conversion is enabled, the document will be converted by the SAP system as it is uploaded; if not, it will convert when foreign currency valuation occurs.
Global Currency Conversion Settings
C. Currency Conversion Settings for Company Codes
We must keep the currency type for the company code current if it is defined at the level of the company code.
Automatic retrieval of currency from organisational hierarchy units will be done for all currency types.
Currency Conversion Settings for Company Codes
D. Currency Types & Ledger Assignment
This crucial stage requires that we allocate all currency types, including global and company code, which are unique to company code and ledger.
Company Code Settings for the Ledger
5. Maintain Foreign Exchange Rates (OB08)
Before posting any financial transaction, we must also keep track of the exchange rates between different currencies. Based on the most recent changes to the exchange rates in OB08, the system will convert all currencies. Through T-Code TBEX, we can upload the exchange rates as well.
- SAP Menu-> Accounting-> Financial Accounting-> General Ledger-> Environment-> Current Settings-> S_BCE_68000174 – Enter Translation Rates
Exchange Rate Maintenance – OB08
6. Journal Voucher Posting (FB50)
Any currency specified in the financial document will be referred to as “Document Currency” (Currency type 00), and it may be any currency depending on the needs of the firm for everyday transactions.
A. Basic Data Tab – FB50
GL Account Document – Basic Data Tab
B. Details Tab – FB50
The conversion of merely the Document Currency to Local Currency will display the exchange rate in the Details tab. We can alter the exchange rate for the same currency conversion here as well. For all other conversions, only OB08 will be used for the exchange rate. Figure TCURR
GL Account Document – Details Tab
With the above exchange rate and translation date financial document has been posted.
Posted Accounting Document Display in General ledger View
Posted JV Document – General Ledger View
Document posted successfully in all below maintained currencies
Posted Document – Currencies Table
7. General Ledger Account Line-Item Report
We can have a list of all the currency types and their currency amount in the general ledger account line-item report – FAGLL03
GL Account Line Item Report – FAGLL03
8. Summary
We can implement parallel currency in the SAP S/4HANA System with the aid of all the configurational processes and assignments. All financial papers, including those relating to asset depreciation, will be posted with the designated currency kinds. The ability to retain financial records in various currencies is a benefit for multinational corporations.
9. Conclusion
The SAP S/4HANA system will save the quantities in all the parallel currencies during financial posts, and monetary values will be automatically converted. Reports for G/L accounts allow for the viewing and analysis of amounts in all currencies. We can set up currency conversion to occur in real time or at the time a foreign currency value is executed.
THANK YOU