Concept: Foreign Currency Customer Contracts
In Workday, each company has a ledger currency, but you have the ability to create customer
contracts in a currency different than the company ledger currency. When you create a customer
contract, currency conversion doesn't occur until there's billing or revenue recognition
associated with the contract.
Example: A Canadian company creates a contract for a customer in France. The customer
contract and billing are in the contract currency of EUR, and the revenue is in the company
ledger currency of CAD.
Billing
When you create a billing schedule and generate billing installments, the installments are
in the contract currency. Currency conversion doesn't occur at this stage because there's no
accounting.
When you create a customer invoice, Workday posts the invoice amount to a ledger account
and currency conversion occurs. The invoice amounts display in the contract currency. The
journal lines display both the contract currency amounts and the company ledger currency
amounts in their respective currencies.
Revenue Recognition
When you create a revenue recognition schedule for customer contracts with accrued or
deferred revenue, the installments are in the contract currency. Currency conversion doesn't
occur at this stage because there's no accounting.
When you recognize revenue, currency conversion occurs. The journal lines display both the
contract currency amounts and the company ledger currency amounts in their respective
currencies.
Currency Rates
Workday provides these currency conversion rates that you can use when you create revenue
recognition schedules and accounting for foreign currency customer contracts:
Currency Conversion Rate | Description |
|---|---|
Blended Rates | Workday only supports blended rates on foreign currency revenue recognition
schedules and accounting created before September 10, 2022. When you generate revenue
recognition installments, the installments use the rate on the customer contract
effective date as the foreign currency conversion rate. The conversion rate determines
the revenue amount in the company ledger currency. When you:
You can manually override the conversion rate used to generate the
original revenue installments by editing the revenue recognition schedule. The rate
you set overrides all invoice rates, even when you invoice before recognizing
revenue. |
Contract Effective Date | Workday uses the contract effective date to determine the foreign currency
conversion rate. |
Invoice Rates | Workday only supports invoice rates on foreign currency revenue recognition
schedules and accounting created before September 10, 2022. When you generate invoices
before recognizing revenue in the same period, Workday uses the invoice rate to
determine the foreign currency conversion rate. |
Revenue Recognition Installment Date | Workday uses the installment date to determine the foreign currency conversion
rate. When there isn't a rate for the installment date, Workday uses the rate for the
most recent date when you generate revenue recognition installments and accounting.
After you generate revenue recognition accounting, the rates on the revenue
recognition installment lines match the rates on the operational journal
lines. |
Schedule Override Rate | Workday uses the schedule override rate that you specify to determine the
foreign currency conversion rate. |
Currency Adjustments
When there are variances between billed and recognized revenue amounts in ledger currency,
you can create adjustments using these tasks to reconcile the variance:
- Create Ledger Currency Adjustment Installment: Create adjustments at the end of the customer contract term.
- Create Customer Contract Foreign Currency Adjustment Journal: Create adjustments at the end of the month or anytime during the customer contract term.
Example: At the end of the customer contract term, the sum of your ledger currency billed
amount and your recognized revenue amount for the customer contract line reveals a
difference of $11.30 in your accounting. To create a currency adjustment installment, select from the related actions menu of the approved revenue recognition schedule
with foreign currency.