This feature is invaluable to businesses that operate internationally. Being able to use multiple currencies in the NetSuite account is just the first step, however. Exchange rates change so frequently, it’s essential that NetSuite accounts for that fluctuation in order to ensure financial accuracy in transactions and reporting.
Features for NetSuite Currency Exchange Rates
First, need to decide which currency exchange features you will enable. There are two exchange rate features, both of which are located under the International section of the Company tab in Enable Features. Both of these features require that the Multiple Currencies feature has also been enabled. The most basic of these two features is the Currency Exchange Rate Integration feature. When this feature is enabled and set up, you can set up your account so that currency exchange rates are updated daily.
The second feature is called Currency Exchange Rate Types. This feature cannot be turned off once it has been enabled, and many businesses may not have a use for it. So you’ll want to look into it before you turn it on in your account. What does it do? Without this feature, NetSuite will store a single currency rate per currency pair and date. With the Currency Exchange Rate Types feature, however, you can store multiple exchange rates for a currency pair on a single day. Primarily, this feature would be used by businesses that also have the Intercompany Framework feature. This feature would allow those businesses to have a corporate exchange rate type for intercompany transactions and accounting, as opposed to the default exchange rate used for all other transactions and accounting.
Setup for NetSuite Currency Exchange Rates
Base Currencies
Need to establish your base currencies. Companies that do not use OneWorld will have only one base currency, while companies that do use OneWorld will need to choose a base currency for each subsidiary. The base currency for a standalone company is on the Company Information page. For companies with multiple subsidiaries, set the base currency for each subsidiary on the subsidiary record (Setup > Company > Subsidiaries).
After setting the base currency for a subsidiary, the record for that currency will reflect that it is a base currency.
Update Times
Need to ensure that the currency records have the right exchange rate information. To check that, navigate to list of currency records (Lists > Accounting > Currencies) and select the name of one of the currencies in the list. This will pull up the currency record.
On the currency record, need to choose the time zone for when the currency’s exchange rate will be updated. There are four representative time zones to choose from. NetSuite will automatically run the exchange rate update at about 6:00 in the morning for your selected time zone. Also want to make sure the checkbox Automatic Update is selected.
Exchange Rate Providers
There are two exchange rate providers that you can choose from for your NetSuite account: HSBC and Xignite. To select one of these as your provider, navigate to Accounting Preferences (Setup > Accounting > Preferences > Accounting Preferences) and locate the Rate Provider dropdown list under the Exchange Rate Integration section on the General subtab.
Triangulation
Exchange rates are, necessarily, comparative in nature. The exchange rate provider tracks the exchange rate between pairs of currencies, and this is the information that NetSuite will pull into the account each morning. Triangulation is necessary when the rate provider does not actually track the exchange rate between a specific currency pair. In that case, NetSuite would use an anchor currency as an intermediary, pulling the exchange rate between each of the two currencies and the anchor currency and then using those two values to determine the exchange rate between the original currency pair.
To specify anchor currencies, navigate to the Exchange Rate Integration section on the General subtab of Accounting Preferences. Here, select the checkbox Use Triangulation Calculation by NetSuite. When you select this checkbox, you’ll be able to select your preferred primary, secondary, and tertiary anchor currencies.
