In our previous blog, we looked at the Multiple Currencies feature in NetSuite. This feature is invaluable to businesses that operate internationally. Being able to use multiple currencies in your NetSuite account is just the first step, however. What about the currency exchange rates? Because exchange rates change so frequently, it’s essential that NetSuite accounts for that fluctuation in order to ensure financial accuracy in transactions and reporting. Let’s take a look at the NetSuite currency exchange rates features.

Features for NetSuite Currency Exchange Rates

First things first, you’ll 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 business 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

Setup for exchange rates is fairly straight forward. Let’s take a look. 

Base Currencies

First, you’ll 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. You would set the base currency for a standalone company on the Company Information page. And for companies with multiple subsidiaries, you would set the base currency for each subsidiary on the subsidiary record (Setup > Company > Subsidiaries). 

On the subsidiary record, you’ll assign one of your preconfigured currencies to this subsidiary using the dropdown list on the Currency field. After setting the base currency for a subsidiary, the record for that currency will reflect that it is a base currency. 

Update Times

Second, you’ll need to ensure that your currency records have the right exchange rate information. To check that, navigate to your 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, you’ll 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. You’ll also want to make sure the checkbox Automatic Update is selected. 

Exchange Rate Providers

How, exactly, does NetSuite get the information for exchange rates? 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. 

If you want to know more about each of these rate providers, you can check out the HSBC website and the Xignite website. However, you would want to have a conversation about these providers with your NetSuite account manager or a NetSuite consultant for more details specifically on how these would work in your NetSuite account. 

Triangulation

A final key aspect of setting up currency exchange rates in NetSuite is creating anchor currencies for triangulation. Exchange rates are, necessarily, comparative in nature. Your exchange rate provider tracks the exchange rate between pairs of currencies, and this is the information that NetSuite will pull into your account each morning. Triangulation is necessary when your 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 your 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. 

Conclusion

If you’re trying to set up your NetSuite currency exchange rates, hopefully this blog has got you going in the right direction! Before you leave, don’t forget to drop your name and email below to join our mailing list. We send out a single email each week with our most recent NetSuite blog, which is a simple way for you to keep growing in your knowledge of all things NetSuite. Until next time!