TFIN50 1 Lesson: Currencies

Lesson: Currencies

2009

Lesson Overview This lesson presents the configurations options in this area.

Lesson Objectives After completing this lesson, you will be able to:

Define currencies in the SAP ERP system

Explain the meaning of different exchange rate type /

Maintain exchange rates ::::::

Use the different tools for maintaining exchat rates

Explain the options for maintaining exchange rates

~ Business Example The company has customers and vendors in several foreign countries. The ea accountant is worried that keeping the exchange rates up to date in th;system will involve a substantial amount of work. You need to convince him/her that it s much less work than expected ifthe tools provided by SAP ERP are used.

/ Currency keys, ex. L I 1 - f .,f , 7-:: <' j .1 1.....__ l'lj)(.,f'OltC-il~ t p W~ M. i vvt.

$-• £-• ¥-• ~ ,(~-tk

Rate ~ 1+------~-

Time

Figure 14: Currencies and Exchange Rate Types

A currency key must be assigned to every currency used. Most currencies are already defined in the SAP System with standard international currency keys. Each currency key can have a validity date.

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Unit 1: Basic settings TFIN50_1

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For every combination of two currencies, you can maintain different exchange rates which are distinguished by an exchange rate type. These different exchange rates can be used for various purposes such as valuation, conversion, translation, and planning.

Figure 15: Translation Ratios

$ £

$ ¥

1 1

1 100

The relationship between currencies must be maintained per exchange rate type and currency pair using translation ratios. This usually has to be performed only once.

Because inflation can heavily influence the relationship between currencies, translation ratios can be maintained on a time period basis.

Exchange Rate Type

From To

$ £ £ $ $ ¥ ¥ $ £ ¥ ¥ £

Every currency combination!

Valid from

Figure 16: Maintaining Exchange Rates

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Exchange Rates

A lot of work every day! -7 Tools and worklists provide help

2009

TFIN50_1

2009

Lesson: Currencies

Maintaining exchange rates is an on-going task.

To reduce maintenance, SAP ERP offers several tools. For each exchange rate type you can use one of the following tools:

Inversion (of the tools available, inversion is the oldest and is seldom used today)

Base currency

Exchange rate spreads

Hint: You can only use one of these tools for each exchange rate type. You can however use different tools for different exchange rate types.

Using report RFTBFFOO, which enables you to transfer external market data in file form, you can automatically update the exchange rate table by uploading an input file in Multicash form.

You can also use the reports RFTBDF07 and RFTBDF14 to transfer exchange rates; the data is transferred in realtime using a datafeed interface if the external datafeed supports realtime provision of exchange rates. Remote Function Call (RFC) creates a direct connection between an external system and the SAP System. For more information about the file input format, data providers, file structures, and so on, see the documentation for this report.

Selling rate B

Average rate M

Buying rate G

+spread

-spread

Exchange rate spread

Exchange~

rate spread

Figure 17: Exchange Rate Spreads

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Unit 1: Basic settings TFIN50 1

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Exchange rate spreads between the bank buying/selling rate and average rate usually remain constant. If the exchange rate spread of an exchange rate type is entered in the system, you only have to maintain the average rate since the buying and the selling rate can be derived by adding/subtracting the exchange rate spread to/from the average rate.

Combination of base currency and exchange rate spreads:

A very efficient combination of the exchange rate tools is:

Using a base currency for the average rate (M)

• Using the exchange rate spreads to calculate the buying and selling rates (B and G)

To enter:

$ £

$ ¥

I

~

I I

~

£ $ ¥

I I 'I'

Figure 18: Base Currency ~~(J..,ClA.1¥tN'-d

Calculated:

A base currency can be assigned to an exchange rate type. You then only have to maintain exchange rates for all other currencies into this base currency. A translation between two foreign currencies is calculated via the base currency, that is, by combining two exchange rates.

Until Release 4.0A, you could not use more than one base currency per exchange rate type. Legal requirements may make it necessary to use different base currencies for the translation into different currencies.

()o.C" ~ ' '\ 1-H<J) u

v~o ~ ev" x. -/ r'tv -7 ~ u

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TFIN50 1

2009

Lesson: Currencies

Direct quotation

Indirect quotation

$ 1

€ 1

Local currency = Euro

€ 1.07021

$ 0.93439

Figure 19: Direct/Indirect Quotation of Exchange Rates

All SAP ERP applications and functions process exchange rates using direct quotation as well as indirect quotation. Whether the exchange rate is defined or communicated using the direct or indirect method of quotation depends on the market standard or the individual business transaction. The use of indirect quotation is neither application nor country-specific - it affects all the components in which exchange rates are used.

In direct quotation, one unit of foreign currency is quoted for the local currency, whereas in indirect quotation, one unit of local currency is quoted for the foreign currency.

Example: Local currency = EUR, foreign currency = USD

Direct quotation: 1 USD = 1.2663 EUR

One unit of foreign currency USD costs the displayed number of units of local currency

Indirect quotation: 1 EUR = 0. 7897 USD

For one unit of the local currency EUR you will receive the displayed number of units of the foreign currency.

For each currency pair you can define either the direct quotation or the indirect quotation as the standard notation for the exchange rate. If the exchange rate you enter does not have the same quotation as the standard quotation set up here, the exchange rate is highlighted to show this.

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Unit 1: Basic settings TFIN50 1

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Worklists

lndi rect ~uof'!tion

Figure 20: Worklists for Maintaining Exchange Rates

In many companies, the maintenance of the exchange rate table TCURR is shared by several employees. The following problems can occur:

Employees maintain incorrect exchange rates (unknowingly or unintentionally)

Employees maintain the exchange rates with the incorrect quotation (indirect instead of direct, or vice versa)

The table is very large, and maintaining it is very time-consuming (scrolling is necessary)

The table TCURR cannot be maintained by more than one user simultaneously.

As of release R/3 Enterprise you can define worklists and then maintain the exchange rates using the transaction TCURMNT. This has the following advantages:

Only the relevant exchange rates can be maintained. You can also assign authorizations for worklists.

Only the relevant quotation can be maintained.

The worklist is smaller and therefore clearer.

Parallel processing of different worklists is possible.

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