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Introduction to Multi-Currency

Hansa allows you to record any accounting transaction in foreign currency. A register of Currencies and their respective Exchange Rates for different dates is maintained. Each Supplier and/or Customer can be assigned a default Currency: the one in which they are usually to be invoiced or in which their Invoices are issued. When a Sales or Purchase Invoice is issued or received, Hansa will automatically convert the amount from the foreign to the home Currency, and will create all necessary accounting transactions. The accounts receivable or payable can be reported in either Currency.

Two Currency conversion methods are provided. Either of these can be used exclusively, or they can be used in combination, depending on your requirements. The first method is the simple conversion from the foreign Currency to the home Currency, applicable to the majority of worldwide Currency transactions.

The second method is the dual-base triangulation system, termed the "Dual-Base system" in these web pages. Users of this system fall into two categories:

Voluntary

The Dual-Base system will be useful for companies that have offices in two countries that need to report in both Currencies, for companies operating in countries where there is a second Currency (usually the US Dollar or Euro) in common use in addition to the national one, and for companies in the Euro zone who retain their old national Currency for comparison purposes.

Transitional

The Dual-Base system will also be useful in countries passing through the transitional process of replacing their home Currencies with the Euro. A requirement of this process is that all transactions should be expressable in both the home Currency and the Euro. Direct conversions from the home Currency to any foreign Currency except the Euro are not possible. Instead, the home Currency should first be converted to the Euro, and there should then be a second conversion to the foreign Currency.

At the time of writing, there were no countries undergoing the transitional process, but future enlargement of the EU was imminent. Therefore, where the transitional process is illustrated in these web pages, historical data from a hypothetical company in Holland is used. In this company, the home Currency is NLG (Dutch Guilders) and foreign Currency sales are in FIM (Finnish Markka).

The term "Euro zone" has been used in these web pages to refer to those countries that have completed the transitional process described above and now have the Euro as their main Currency. Companies in these countries should use the simple conversion system, unless they are retaining their old national Currency for comparison purposes. In this case they fall into the "voluntary" category described above.

"Transitional" users should use the Dual-Base system exclusively, in order to comply with European Monetary Union (EMU) rules, while "voluntary" users can be more flexible, using Dual-Base and simple conversion systems in combination as required.

Companies outside the Euro zone but trading with it have the choice of using the simple conversion system or the Dual-Base system. This choice will depend on the volume of trade with the Euro zone and on whether they need the ability to produce all reports in both the home Currency and the Euro. Such a use of the Dual-Base system falls into the "voluntary" category described above.

Similarly companies outside the Euro zone and trading with "transitional" countries can choose whether to use the simple conversion system or the Dual-Base system.

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