3 Exchange Rate Design Options for Multi-Country SAP Implementations

  • by Siddharth Priolkar, Senior Consultant, Infosys Technologies
  • September 15, 2008
A good exchange rate design can handle requirements for foreign currency transactions considering local statutory requirements. Various design options are available to meet these exchange rate requirements.
Key Concept

There are a number of statutory requirements around foreign currency processing in a multi-country scenario related to exchange rate source, frequency of exchange rate update (daily or monthly), and local statutory reporting of foreign currency transactions. Some countries mandate the exchange rate used for foreign currency transactions to come from the local national bank. They could also require that you use the latest exchange rates to post foreign currency transactions, which could require daily update of exchange rates in the system. Accordingly, you would need to make local reporting in local currency calculated per these requirements.

Exchange rate design for multi-country SAP implementations must take into account complex factors such as the exchange rate source, update frequency, and local statutory reporting requirements. I’ll explain the challenges and then present three design options to deal with them: an additional parallel currency definition, FI substitution and field exits, and alternate exchange rate types.

I’ll show you the key elements involved in foreign currency processing: currency type and exchange rate type. Then I’ll look at how country legal requirements introduce complexities in exchange rate design related to foreign currency processing. After you understand these key elements and challenges imposed by legal requirements, I’ll discuss the various design options available to meet these requirements.

Siddharth Priolkar

Siddharth Priolkar is a senior FI/CO consultant with Infosys Technologies. He has more than 10 years of experience in the consulting space including more than seven years with SAP systems. The majority of his SAP experience comes from working across the globe in multi-country SAP implementations with clients in the consumer electronics and automotive industries. Siddharth holds a bachelor’s degree in mechanical engineering along with a post-graduation degree in business administration (finance).

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