This article is relevant if you denominate your vendor bills in local currency but you seek to pay your vendors with a foreign currency.
Background
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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See Related Articles
- Considerations for Activating NetSuite Foreign Currency
- Learn How To Jump NetSuite Foreign Currency Transaction Boundaries
- Solve NetSuite Foreign Currency Cash Operations with the Prolecto Account Clearing Transaction Bundle
- Contrasting Bitcoin as an Asset versus a Foreign Currency in the NetSuite Accounting System
- How To: Transfer Foreign Currency Between NetSuite Subsidiaries
Marty Zigman
Holding all three official certifications, Marty is regarded as the top 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 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.
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Hi @Marty I used the bank account on Custom Transaction type but when I am creating custom transaction then its giving an error “The account used by the transaction is not available on this subsidiary.” Suiteanswers “92046” suggest to use inlcude children to avid this error, but how to avoid this error when account type is “Bank” As banks can not be assigned to multiple subsidiaries.
Hello Navson,
Yes, all the rules around Banks remain. They are subsidiary specific. We generally have to choose a Current Asset for this kind of work and then we work with our clients on balance sheet presentation formats. Most of the time, this kind of work relates to account clearing and thus, in practice, should be zero dollar value.
Marty
Hi Marty, there seems to be an issue with OW and the solution proposed. When we create a bank account we need to choose only one subsidiary resulting in the error mentioned by Navson.
“The account used by the transaction is not available on this subsidiary.” when the subsidiary differs from the one in the user.
If we choose to do an Other Current Asset account for the clearing account we cannot choose to pay to it.
Any solutions?
Hello Federico. Consider that you need to be more inventive with your clearing account solutions. Deem a clearing account as an Current Asset. Deem another virtual bank account as the payout structure. Craft records that allow you to jump the subsidiary boundary. It’s going to take multi-step operations so a Custom Transaction Type can help create a more elegant solution.
See these links for inspiration:
https://blog.prolecto.com/2019/03/09/solve-netsuite-foreign-currency-cash-operations-with-the-prolecto-account-clearing-transaction-bundle/
https://blog.prolecto.com/2018/09/02/how-to-cross-netsuite-foreign-currency-boundaries-with-the-account-clearing-model/
https://blog.prolecto.com/2018/07/15/best-practice-account-clearing-method-for-electronic-payment-method-reconciliation/