Reconciling Exchange Rate Differences

When sending payments to the bank in a foreign currency, there may be a risk of exchange rate differences between the exchange rate at which the currency is calculated when being exported from Business Central and the exchange rate used in the bank. Such a difference will be reflected when the bank account statement is imported to the bank account reconciliation page, where any difference between the bank account statement line and the bank account ledger entry will affect the reconciliation.

Exchange rate differences will be handled in the bank account reconciliation journal by Statement Intelligence, which automatically creates a ledger entry for the difference in a general journal ready for posting.

Note

Automatic handling of exchange rate differences only applies to payments of a bank account using local currency (LCY). Bank accounts set up in foreign currency in the balance account setup will not be subject to exchange rate differences, as payments can only be made in the selected currency linked to the bank accounts in question.

How Statement Intelligence identifies the exchange difference

When performing automatic bank account reconciliation, Statement Intelligence will search for a bank account entry for settlement, which is done by searching for the UPR number of the bank account line. The UPR number is the payment's unique reference number, which is created on the payment record in the payment journal, and then follows the payment to the bank and back to the account reconciliation journal. If the payment is in a foreign currency, and if there is a difference in the amount between two entries with the same UPR number, then the difference will be interpreted as an exchange rate difference.

To manage exchange rate differences in the bank account reconciliation journal

Ledger entries for exchange rate differences are automatically generated in a general journal by Statement Intelligence when the bank account statement is imported to the bank account reconciliation journal. You must post the general ledger entries in order to create bank account ledger entries in the reconciliation journal.

  1. Use the Search for page or report icon and search for Bank Account Reconciliations, then select the related link. This opens the list of bank account reconciliations.
  2. Open the bank account reconciliation page.
  3. Navigate to the Bank Statement Lines and see the column Status. After having imported a bank statement, the lines with exchange rate differences will have the status Exchange rate difference.
  4. I the action bar navigate to Journals > General Journals. This opens the general journal where ledger entries have been created for the exchange rate differences.
  5. Validate that the ledger entries are correct and post the entries.
  6. Close the ledger journal. When closing the ledger journal Statement Intelligence will automatically create bank account ledger entries for the posted ledger entries, and reconcile these entries with the bank statement lines.
  7. Navigate to the bank statement line from which the exchange rate difference occurred, and see that the line status is now OK.

The exchange rate differences have now been reconciled.