This article is relevant if you¬†denominate your vendor bills in local currency but you seek to pay your vendors with a foreign currency.
All editions of NetSuite¬†support foreign currency. ¬†However, there are some foreign currency operations that are not natively supported out-of-the-box without some additional refinements. ¬†In some situations, I see our clients denominate their NetSuite vendor bills in local currency. ¬†Yet, when it comes time to for the client to pay the bill, the vendor agrees to take foreign currency instead of the local currency.
In our NetSuite Systems Integration practice at Prolecto Resources, we have some staff located outside of the United States. ¬† We use Bitcoin as a foreign currency to pay our staff using NetSuite’s Accounts Payable system. ¬†In this scenario, we denominate our obligations to foreign resident staff in USD. ¬†However, at the time we¬†pay the obligation,¬†we¬†take the current Bitcoin market rate and transfer the equivalent number of Bitcoin to satisfy our¬†obligations.
Key Features of the NetSuite Foreign Currency Vendor Bill Practice
The key features of the practice are as follows:
- Use an Accounts Payable Clearing bank account denominated in local currency as an intermediary to pay the obligation. ¬†The accounts should always be zero to know you are in control.
- Use a NetSuite Custom Transaction Type, instead of a journal entry, to clear the account for the actual foreign currency used. ¬†The custom transaction is optional but is helpful to distinguish as a regular recurring practice.
The practice offered in this article effectively mimics the practice offered in my article: How To: Multiple Foreign Currency Cash Receipt Settlement.
Video of the Setup and Use
Watch the 6:39 video to learn the setup and the practice.
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The best practice illustrates a couple key concepts: 1) our firm’s capacity to understanding accounting and business process in a global environment and 2) our ability to innovate with the NetSuite platform to meet business requirements which will streamline day-to-day operations to¬†effectively lower costs and improve profitability. If you are seeking expert leadership with your NetSuite account, let’s have a conversation.