Foreign Currency Settings (Fixed Exchange Rates)

Business Value

In foreign currency business, fixed exchange rates are often agreed upon to avoid price fluctuations. Standard Microsoft Dynamics 365 Business Central, however, always uses the dated standard exchange rate (Currency Exchange Rates). In addition, settling a foreign currency invoice with a payment in the same foreign currency on a foreign currency account produces an exchange rate difference when the invoice and the payment are posted at different rates.

With Foreign Currency Settings in 365 business Banking you can maintain fixed exchange rates per bank account and per customer/vendor, and optionally have a payment adopt the exchange rate of the entry it is applied to.

Feature Description

The fixed exchange rates are maintained dated per account and currency, just like the standard currency exchange rates. When posting through the payment reconciliation journal and the general journal, the currency factor of a line involving a bank account/customer/vendor is determined in the following order of precedence:

1. Applied-to exchange rate – when the Use Applied-to Exchange Rate option is enabled on the bank account and the line is applied to an entry, the payment adopts the exchange rate of the applied entry (e.g. the invoice). For an application against several entries, the earliest entry date is used.
2. Fixed customer/vendor rate – a fixed rate maintained on the customer/vendor.
3. Fixed bank account rate – a fixed rate maintained on the bank account.
4. Standard – when none of the above is defined, the standard currency exchange rate applies.

Maintaining a fixed exchange rate on a bank account

1. Open the Bank Account Card.
2. Choose the Fixed Exchange Rates action.
3. Enter, per line, the Currency Code, Starting Date, Exchange Rate Amount and Relational Exch. Rate Amount (the currency factor is the exchange rate amount divided by the relational exchange rate amount).

Maintaining a fixed exchange rate on a customer/vendor

1. Open the Customer or Vendor Card.
2. Choose the Fixed Exchange Rates action.
3. Enter the rates as on the bank account. This rate overrides the bank account rate.

Enabling the applied-to exchange rate

1. Open the Bank Account Card.
2. Set the Use Applied-to Exchange Rate field to Applied-to Entry.
3. When a payment is applied through this bank account (in the reconciliation or general journal), the exchange rate of the applied entry is used for the payment.