---
title: "Exchange rate gains and losses"
canonical: "https://wiki.soft1.eu/space/SS5EN/12060267/Exchange%20rate%20gains%20and%20losses"
format: markdown
---
## Introduction

Exchange rate gains and losses occur due to different currencies that may be used for trading parties, or due to the different currencies used in transactions. Depending on the nature of differences and their calculation method, these are divided into: 

**A) Valuation:** where the trading party has a different currency than the one of the company books, or when the trading party, while he uses the same currency with the books of the company, conducts transactions in currencies other than the currency of the company. 

**B) Document matching (open-item):** when the trading party has a different currency than the one used in the company books, or when the trading party is configured so that his open-items are executed in the currency of the relevant transaction.

Thus the parameters for the currency of the trading party and for the open-item method in the trading parties files (customers / suppliers and debtors / creditors) determine the behavior of the system during calculation of their exchange rate gains and losses.

 

## General

The application provides two jobs for the generation of exchange rate gains and losses documents, job valuation exchange rate gains and losses and job Document open-item exchange rate gains and losses. These two jobs create special transactions document for each type of trading party. To create exchange rate gains and losses documents, in trading party general parameters you must complete the respective series of special transactions and debit/credits for each one of the job types (valuation and document open-item exchange rate gains and losses)


 

## Exchange rate gains and losses (valuation) 

This job provides two methods for calculation: 

 

**A. Calculation based on transaction currency**

This job calculates exchange rate gains and losses based on the exchange rate on the last day of the month from the exchange rates file** per currency and per transaction** which was posted in a currency other than the currency of the company. Then it calculates the difference with the balance of the trading party in the local currency (per currency) formed by the transactions in foreign currency (at the exchange rate of each document). Using the value of the above debit or credit differences, it creates a special transaction entry with trading party and transaction exchange rate relevant to the trading parties cards and the values that must be updated.

 

**B. Calculation based on trading party currency**

In this case, the system calculates the **balance** of the trading party **in his currency **based on the exchange rate of **the last day of the month for the company currency** derived from the exchange rates file. Then it calculates the difference with the balance of the trading party in the local currency formed by the transactions in foreign currency (at the exchange rate of the date of each document). Using the value of the above debit or credit differences, it creates a special transaction entry with null trading party exchange rate, given that the value of the difference must update only the trading party card in the local currency.

 

 

**Executing job...:**

Select from Jobs Menu: International transactions/Exch. rate gains and losses/Based on Valuation, the trading parties module for which you wish to run the exchange rates gains and losses job, in order to display the dialog shown below


 

In the following dialog you must select the following:

- Period: The period of the year for which you wish to run the job.
- Calculation based on currency:
  - Transaction. Select so that the job calculates exchange rate gains and losses based on the transaction currency (discussed in paragraph A)
  - Trading party: If you select calculation based on trading party currency, there shall be calculation of the differences arising only in trading parties which are monitored in a currency other than the currency of the company (discussed in paragraph B)

 

Thus, in order to run the job successfully, the following must apply:

- The trading parties must have a currency other than the currency of the company, if you run the job based on trading party currency.
- Transactions in currencies other than the currency of the company, if the job is run based on transaction currency
- Updated table of exchange rates for the last calendar day of the month in which exchange rate gains and losses are calculated. In case the exchange rate for the last date of the month is not found, a related message is displayed during running the job, in order to be completed by the user.
- The job does not require prior document open-item.

 

## Exchange rate gains and losses (open-item) 

In this case, the application uses the open-items executed between debit and credit documents (documents that create and cover claims) in order to calculate the exchange rate gains and losses between them. The calculation uses the exchange rates of the covered documents.

 

Document matching (open-item) is executed by default in the currency of the trading party, unless during creation of a new trading party you have selected open items to be executed in the currency of the transaction.  As a consequence, if a trading party has the same currency with the company and you have selected his transactions to be executed in his currency, then the system does not cover the requirements for calculating exchange rate gains and losses (open-item) though he may have open-item transactions in a currency other than the currency of the books.

Therefore a prerequisite for the creation of exchange rate gains and losses (open-item) is the existence of matched documents with transaction currency other than the currency of the company and either the trading party to have a currency other than the currency of the company, or his open-items to be executed in the currency of the transaction.

 

Select from Jobs Menu: International transactions/Exch. rate gains and losses/Exchange rate gains and losses (open-item) the trading parties module for which you wish to run the exchange rates gains and losses job, in order to display the dialog shown below 


 

In the dialog filters, select:

- Dates: The dates for which you wish to run the job.
- Per branch of trading party: Select whether you wish the exchange rate gains and losses to be calculated per branch of the trading party.
- Based on daily evaluation exchange rate: Optionally, you can select a specific exchange rate in order to override the exchange rates of settled documents with a constant exchange rate.
- On the date of the settlement document: If you select Yes in the field then the exchange rate gains and losses document will be created on the date of the claim coverage document instead of the last date of the selected period.
- From - to trading party code: Select the range or the specific trading party for which you run the job.
- From - to trading party description:   Select the range or the specific trading party for which you run the job.

 

The execution of job exchange rate gains and losses results to the creation of special transactions documents (customers - suppliers, respectively) based on the settings applied in General parameters of the trading parties.   

 

The prerequisites for the correct execution of job are:

- To execute document matching (open-item)
- To create the conditions for the creation of exchange rate gains and losses (open-item), which means that either the trading parties are kept in a currency other than the company currency, or that the trading parties matching are executed in the transaction currency