To enable multi-currency in the Vendor bill

Client Business Scenario

• The client is purchasing items from an international vendor in USD.
• In the same vendor bill, the client needs to record local expenses (such as custom duties, freight, carrier charges) that are paid to Indian authorities in INR.
• The business expectation is to record both the USD and INR amounts in a single transaction as part of the same commercial invoice.
• NetSuite does not allow for multiple currencies in a single Vendor Bill, as each transaction is limited to one currency.

Core Limitation in NetSuite

• Vendor Bill Currency: In NetSuite, a Vendor Bill has a single transaction currency, and all line items (whether items or expenses) must be entered in that currency.
• Multi-Currency Restriction: A Vendor Bill can either have all lines in the same currency (USD in this case for the goods) or in INR (for local expenses), but not both in a single transaction.

Solutioning

Approach 1: Record as separate Bills

To address this issue, we will propose a workaround using two separate transactions that will help maintain accurate accounting records while adhering to the system limitation of a single currency per transaction.

Solution Steps

1. Step 1: Create the Vendor Bill for USD Items

• Transaction Type: Vendor Bill
• Currency: USD
• Line Items: The purchased items (in USD) will be recorded in this Vendor Bill.
• Amount: Enter the purchase amount in USD for the items purchased.
• Accounting: This bill should debit the appropriate expense accounts (such as Inventory, Cost of Goods Sold, etc.) in USD.

1. Step 2: Create a Vendor Bill for INR Expenses (Custom Duties, Freight Charges)

• Transaction Type: Vendor Bill (Separate)
• Currency: INR
• Line Items: The local expenses (such as customs duty, freight charges, and carrier fees) should be recorded in this bill.
• Amount: Enter the local charges in INR for custom duties, freight, and any other expenses that are paid to Indian authorities.
• Accounting: This bill should debit the appropriate expense accounts (such as Freight, Custom Duties, etc.) in INR.

1. Step 3: Linking Both Transactions

• Vendor Reference: Both bills should be linked to the same Vendor (the international vendor in question).
• Memo/Description: Ensure both Vendor Bills have similar reference or memo fields indicating they are part of the same commercial invoice, and they should reflect the total amount (USD + INR).
• This is crucial for tracking purposes to ensure that both transactions belong together as part of the same invoice.

1. Step 4: Foreign Currency Payment Handling

• For the payment, you will need to handle the exchange rate conversion when paying the vendor in USD for the items and the Indian authorities in INR for local charges.
• Payment for USD Vendor Bill: This will be made in USD. You can either make the payment through a bank account set to USD or pay the amount in INR if the bank account is in INR, applying the exchange rate during the payment process.
• Payment for INR Vendor Bill: This will be made in INR to the Indian authorities. Use the INR bank account to pay for these local charges.

1. Step 5: Accounting for the Payment

• Both payments will need to be recorded in the system separately under the respective currencies (USD for the vendor bill and INR for the local expenses).
• Ensure that the payments are associated with the correct Vendor Bills and update the vendor balance accordingly.
• In case of currency conversion gains or losses (for example, when the payment amount in INR fluctuates), NetSuite will automatically handle the exchange rate differences, and adjustments will be posted to the appropriate accounts.

Pros

• Accurate Accounting: This solution allows the accurate recording of both USD and INR amounts while maintaining proper accounting records.
• Currency Compliance: NetSuite will handle each transaction’s currency separately, ensuring no violations of the system’s multi-currency limitations.
• Audit Trail: The two separate Vendor Bills will maintain a clear audit trail for the total commercial invoice, with references to the associated payments and charges in both currencies.
• Transparency: By creating separate bills for different currency transactions, the solution ensures transparency in accounting, reducing the risk of errors during reconciliation or audit processes.

Cons:

• Splits the commercial invoice across two transactions, which may not visually align with the business’s expectation of “one transaction.”
• Requires additional steps to track both bills under the same invoice reference (e.g., via reporting or custom fields).
• Slightly increases administrative effort.

Approach 2: Use a Single Vendor Bill in USD with Journal Entry for INR Adjustments

This approach records the Vendor Bill in USD (including INR expenses converted to USD) and uses a Journal Entry to handle INR payments to Indian authorities.

Steps:

1. Create a Vendor Bill in USD:

• Go to Transactions > Payables > Enter Bills > New.
• Select the international vendor (currency: USD).
• Set the transaction currency to USD.
• Add line items for the purchased items in USD.
• Add expense lines (e.g., customs duty, freight) by converting INR amounts to USD using the exchange rate from the commercial invoice date (manually calculate or use NetSuite’s exchange rate feature).
• Reference the commercial invoice number in the Memo or a custom field.
• Save. The total amount owed to the vendor is now in USD, including converted INR expenses.

1. Pay the Vendor in USD:

• Process a Bill Payment in USD for the full amount (items + converted INR expenses).
• This overpays the vendor for the INR portion, which you’ll adjust next.

1. Create a Journal Entry for INR Adjustments:

• Go to Transactions > Financial > Make Journal Entries > New.
• Debit the Accounts Payable (A/P) account in USD (for the INR portion paid to the vendor).
• Credit a clearing account (e.g., “INR Expense Clearing”) in USD.
• Convert the INR expenses to the actual INR amount using the same exchange rate.
• Debit the clearing account in INR.
• Credit the appropriate expense accounts (e.g., Customs Duty, Freight) in INR.
• Save. This reallocates the INR portion from the vendor to the correct expense accounts.

1. Pay Indian Authorities in INR:

• Use a Write Check or Expense Report transaction in INR against the clearing account to pay the Indian authorities (e.g., customs, freight vendors).
• Clear the amounts from the clearing account.