What is this page about: How to set up currencies in Light, from base and local currency rules to configuring FX accounts and running period-end revaluation.
On this page
- Understanding currency in Light
- Set an entity's local currency
- Configure FX accounts
- Enable revaluation on an account
- Run currency revaluation
- Best practices
- Related articles
Understanding currency in Light
- Base currency: your company's reporting currency, set when the company is created. It cannot be changed afterwards.
- Local currency: each entity's operating currency, set when the entity is created. It cannot be changed afterwards. To use a different currency, create a new entity.
- Transaction currency: the currency a transaction posts in. It can differ from the entity's local currency, and Light converts it automatically.
- Exchange rates: Light applies daily ECB rates by default. You can override these with custom rates, set daily or monthly.
Set an entity's local currency
Each entity's local currency is fixed at creation, so confirm it before saving.
- Go to Settings.
- Open Entities.
- Click + Create entity for a new entity.
- Select the currency from the Local currency dropdown. This field is required. The entity can't be saved without it, and there's no default.
- Click Create or Save.
Configure FX accounts
Light posts foreign exchange gains, losses, and revaluation entries to accounts you designate. Set these up before posting multi-currency transactions.
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Click the gear icon at the bottom of the left sidebar.
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Open Settings.
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Under Records, open Chart of accounts.
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Click the Account defaults tab.
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Set an account for each of the following:
- FX loss: realized foreign exchange losses.
- FX gain: realized foreign exchange gains.
- FX unrealized: unrealized FX gains and losses.
- Currency translation adjustment: currency translation differences.
- Rounding: rounding gain or loss on currency conversions.
FX loss, FX gain, FX unrealized and Currency translation adjustment are the four FX accounts. Set all four before your first period-end close. Rounding catches the few cents left over when Light converts an amount into the entity's local currency and the group currency.
Enable revaluation on an account
To include an account in period-end FX revaluation, turn on revaluation from its edit form.
- Open Chart of accounts, then open the account you want to revalue.
- In the FX settings section, set Entity revaluation settings to Revalue (the other option is Do not revalue).
- Set Group revaluation settings to End of period to re-translate the balance at the period-end rate for the group, or Historical to keep the rate it was posted at.
- Click Save.
The FX revaluation task picks up open accounts payable and accounts receivable documents, plus every account set to Revalue.
- P&L accounts can't be set to Revalue. Light rejects it on save, including for the FX gain, FX loss and FX unrealized accounts.
- Accounts payable and accounts receivable always revalue. Switching either to Do not revalue is rejected on save.
- Equity and fixed-asset accounts start on Do not revalue. That includes the Currency translation adjustment account.
Run currency revaluation
At period end, Light revalues balances held in non-local currencies to current exchange rates and posts the difference as unrealized gain or loss.
- Go to Accounting.
- Open Accounting periods.
- Open the period you want to revalue.
- In the Tasks view, find FX revaluation.
- Click Run on the row to revalue every entity at once, or click the row to open its drawer, tick the entities under Entities to close and click Post revaluation. If the task has already run for this period, the button reads Rerun.
Light values each open foreign-currency balance at the period-end rate, calculates the unrealized gain or loss, and posts FX revaluation documents straight away. Find them in Accounting > Accounting documents with the Type filter set to FX revaluation.
Before you can run this task, these must already be done:
- The previous period's FX revaluation task must be completed for the entities you're revaluing. If it isn't, you'll see: "Fx revaluation tasks in previous periods are still not completed". Complete the earlier period's FX revaluation first. This task can't be forced or skipped.
- The current period's lock tasks (AP, AR, and JE) must be completed. If they aren't, you'll see: "Lock tasks for accounting period are still not completed".
- If the period has an Intercompany documents task, it must be signed off. If it isn't, you'll see: "Sign off intercompany documents before revaluing".
Close the AP, AR and JE lock tasks first, then run FX revaluation. Periods are revalued in order, one after another.
Best practices
- Match each entity's local currency to its primary operating country.
- Set up FX account defaults before posting multi-currency transactions.
- Run FX revaluation at every period close, in period order: a period can be revalued once the prior one's FX revaluation is complete.
- Set Entity revaluation settings to Revalue on the monetary balance sheet accounts that hold foreign currency, such as bank and cash. Leave equity and fixed-asset accounts on Do not revalue.
- Check exchange rate accuracy before processing large transactions.