Handling intercurrency allocation
Understanding why NEOSYS doesn't allow intercurrency allocation
People sometimes think that lack of intercurrency allocation is a weakness in NEOSYS but it isn't.
1. Logically an account should have an entry in the movements that clearly and accurately represents the conversion of one currency into another so that there is no question of what has been done in a multi-currency account.
2. NEOSYS is a true multicurrency system and therefore automatically keeps totally separate accounts for each currency posted into an account. You can see this because when you ask for a Statement of Account for a third party account then NEOSYS automatically shows multiple statements per currency discovered in the account. If NEOSYS was to allow allocation between currencies then, if you think about it for a while, for any particular currency account then the balance of the outstanding items would no longer match the balance of the movements in the account.
The fact that NEOSYS also provides a combined account showing both currency and base amounts for internal financial reporting and audit does not remove the need to prepare per currency accounts for an account.
Procedure to handle intercurrency allocation
As there is no way to allocate intercurrency items, you need to follow the procedure below :
Example:
- Advance payment received from a client for 40,000 AED / 40,000 base
- Invoices to the client have been raised in USD (i.e. you have USD invoices amounting to 10,000 USD / 36,750 Base)
- When you go to Voucher allocation you will not be able to allocate 40,000 AED against the invoices raised to the client
- Hence, you need to pass a manual journal entry as follows: Client A/c Dr 40,000 AED / 40,000 Base & Client A/c Cr 10,884 USD / 40,000 base
- Before posting this entry you can allocate the USD amount to the USD items in the Client A/c
- Incase you do not want to allocate now, than you can save the journal and later on go to the Voucher allocation and you will be able to allocate.
- Same example would apply to a supplier or any other account for which you need to do intercurrency allocation
