Currency Settings

This article explains how currencies are configured in Light, including local currency setup on entities and FX-related account configuration.

# Understanding currency in Light

Light supports multi-currency accounting:

• Base currency: The company-wide reporting currency, set when your company is created (it cannot be changed afterwards)
• Local currency: Each company entity's operating currency, set during entity creation
• Transaction currency: The currency transactions are posted in (may differ from local currency)
• Exchange rates: Conversion rates between currencies for translation and revaluation. Light uses daily market rates by default; you can also set custom FX rates

# Configuring local currencies for entities

Each entity has its own local currency, set when the entity is created:

1. Go to Settings (gear icon) → Entities
2. Click + Create entity (for new entities) or click an existing entity and then Edit
3. Select the Local currency from the dropdown
4. Click Create or Save

The local currency is the default currency for all transactions at that entity. Transactions can be posted in alternative currencies with automatic conversion.

Good to know: Local currency cannot be changed after entity creation. If you need to change it, you'll need to create a new entity.

# FX account configuration

Light uses designated accounts for foreign exchange gains, losses, and revaluations. These are configured in the Account defaults tab:

1. Go to Accounting → Chart of accounts
2. Click the Account defaults tab
3. Configure the following FX-related accounts:
   • FX loss: Account for realized foreign exchange losses
   • FX gain: Account for realized foreign exchange gains
   • FX unrealized: Account for unrealized FX gains and losses
   • Currency translation adjustment: Account for currency translation differences
   • Rounding: Account for rounding gain/loss on currency conversions

These accounts receive the gain/loss entries generated during currency conversions and period-end revaluations.

# Currency revaluation

At period end, Light can revalue balance sheet accounts to current exchange rates through the FX revaluation closing task:

1. Navigate to Accounting → Accounting periods
2. Click on the period you want to revalue
3. In the Tasks view, find the FX revaluation task
4. Click Run revaluations
5. Light identifies accounts enabled for revaluation that hold balances in non-local currencies, calculates unrealized gain/loss, and creates adjustment journal entries

Tip: Run FX revaluation before closing other period tasks to ensure financial statements reflect current rates.

# Multi-currency accounts

Accounts can be configured to track foreign currency transactions. When creating or editing an account in the Chart of accounts, check the Revalue open balance for foreign currency transactions checkbox to enable automatic FX revaluation for that account.

# Best practices

• Set each entity's local currency to match its primary operating country
• Configure FX account defaults before posting multi-currency transactions
• Run FX revaluations at every period close
• Enable the revalue checkbox on balance sheet accounts that hold foreign currency balances
• Verify exchange rate accuracy before processing large transactions

# Related articles

• Managing Entities
• Chart of Accounts Setup
• Fiscal Year and Accounting Periods
• Tax and VAT Configuration
• Setting a Custom FX Rate for Your Company
• Setting a Custom FX Rate per Entity
• When Custom Rates Apply vs System Rates