NetSuite Best Practice: Receive Local Currency for Foreign Currency Invoices

This article is relevant if you use NetSuite to denominate your invoices in foreign currency but you want to accept local or base currency to satisfy the the invoice payment.

Background

In my article, Learn How To Accept Different Foreign Currency in NetSuite Cash Receipt Operations, I discuss the practice for accepting local currency for transactions denominated in another currency.

In that article, the method shows the fundamentals for modifying the customer payment exchange rate and to use the undeposited accounts (or a clearing account) to receive US Dollars for a Russian Ruble accounts receivable invoice transaction.

Easier NetSuite Foreign Exchange Cash Receipt Operations

Admittedly, the approach I offered would work for the occasional foreign currency receipt operation. However, our client needed a more flexible and easier method to “simply receive cash” and take care of all the accounting.

Accordingly, I worked with our team to invent a helper cash receipt payment application that allows you to accept local currency (e.g., USD) for foreign currency (e.g. British Pounds) denominated invoices.

The illustration and procedure below makes some key assumptions:

  1. Paid in Full: The total amount of local currency collected was the amount that would satisfy the invoice in full.
  2. Single Foreign Currency: The payment in local currency is for payment against invoices all denominated in the same foreign currency.

NetSuite Foreign Currency Customer Payment Entry Operation

Here are the major steps used to accept local currency to apply against open NetSuite foreign currency invoices. I recommend clicking on the images in sequence to better understand the application.

  1. Select Customer and Currency: NetSuite cash payment records must be denominated in the foreign currency that you seek to apply payment. Select the right customer and currency.
  2. Select Undeposited Funds: while optional and clearing bank account techniques can be used, select the Undeposited funds account so we can perform a subsequent bank deposit (below) for the actual local currency received.
  3. Enter Total Local Currency Received: record the total amount of local currency received in the custom field. The application disables the native amount received because we automatically calculate the foreign currency unit equivalents in the operation. This operation is what makes the solution “natural” to Accounts Receivable bookkeepers.
  4. Select Invoices Paid: select the invoices that were paid with the local currency received. Note that the application indicates how much more additional local currency is to be applied.
  5. Commit Customer Payment: commit the payment record. The general ledger will calculate a gain/loss but this will be reversed in the next operation.
  6. Perform Bank Deposit for Local Currency: now deposit the actual local currency in the target bank account selecting the customer payment record in the previous operation. The system will calculate a gain / loss which reverses out the effects of the previous transaction.

The operation mimics closely the standard cash receipt process using NetSuite Cash Payment records.

Refinements to Foreign Currency Cash Receipt Operation

The operation significantly enhanced the client’s cash receipt operation. Procedures were developed for invoice over and under payments. We also helped the client create CSV uploads for other bulk operations where one local currency payment was to apply to hundreds of foreign currency invoices.

Get the Prolecto Accept Foreign Cash Receipts Bundle

We developed the application so that we can give it to our clients who have foreign currency operations. Like all the software algorithms we have produced since acting as a NetSuite Systems Integrator in 2008, we offer these enhancements without license charge. Our goal is to leverage the NetSuite platform and our expertise in Accounting and Operations to help our clients get more out of their NetSuite investment. If you have a NetSuite foreign currency challenge, let’s have a conversation.

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Marty Zigman

Holding all three official certifications, Marty is Southern California's NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 25 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.

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