How to Handle Multi-Currency Transactions in NetSuite: Best Tips & Tricks

Managing multi-currency transactions can be complex for businesses operating globally. NetSuite, a leading cloud-based ERP system, offers robust multi-currency functionality to simplify this process. 

This blog will guide you through the essentials of handling multi-currency transactions in NetSuite, covering setup, transaction handling, and reporting.

Why Multi-Currency Management Matters

Multi-currency management allows businesses to:

• Operate seamlessly in global markets.
• Mitigate risks related to currency fluctuations.
• Provide accurate and compliant financial reporting across jurisdictions.

NetSuite’s multi-currency feature supports these needs, offering tools to streamline transactions and maintain financial accuracy.

Step-by-Step Guide to Multi-Currency Management in NetSuit

1. Enable the Multi-Currency Feature

Before handling multi-currency transactions, you need to enable the functionality:

1. Navigate to Setup > Company > Enable Features.
2. Under the Accounting tab, check the box for Multiple Currencies.
3. Save your changes.

Enabling this feature allows you to transact in multiple currencies and access related functionalities like currency exchange rate management.

2. Set Up Currencies

To transact in various currencies, you must add and configure them:

1. Go to Setup > Accounting > Currencies > New.
2. Define the currency details, such as symbol, ISO code, and exchange rate precision.
3. Save the currency.

NetSuite supports major global currencies, ensuring flexibility and compliance with local standards.

3. Configure Exchange Rates

Exchange rates play a pivotal role in multi-currency transactions. NetSuite allows you to:

• Manually update rates: Setup > Accounting > Currency Exchange Rates > New.
• Use automatic updates: Integrate NetSuite with an exchange rate provider.

Exchange rates are used to convert amounts from the transaction currency to your base currency for accurate reporting.

4. Assign Currencies to Customers, Vendors, and Banks

When working with international partners, you can assign specific currencies:

• Customers: Navigate to Lists > Relationships > Customers > Edit and assign the preferred currency.
• Vendors: Go to Lists > Relationships > Vendors > Edit and choose the currency.
• Bank Accounts: For bank reconciliation, assign currencies under Lists > Accounting > Accounts > Edit.

This ensures all transactions with these entities are processed in the correct currency.

5. Record Multi-Currency Transactions

NetSuite simplifies the process of recording transactions like invoices, bills, and payments in different currencies:

• Create an invoice or bill in the customer or vendor's assigned currency.
• NetSuite will automatically calculate the equivalent base currency amount using the set exchange rate.

For payments, ensure you select the appropriate currency for the transaction.

6. Manage Unrealized and Realized Gains/Losses

Currency fluctuations can result in gains or losses. NetSuite handles this through automatic journal entries:

• Unrealized gains/losses are calculated for open invoices or payables.
• Realized gains/losses are recorded when the transaction is settled.

To configure this, ensure the appropriate accounts are set up under Setup > Accounting > Accounting Preferences.

7. Reporting and Analysis

NetSuite’s built-in reports provide detailed insights into multi-currency transactions:

• Foreign Currency Transaction Detail Report: Shows all transactions in non-base currencies.
• Consolidated Exchange Rate Report: Offers insights into currency fluctuations and their impact.
• Trial Balance by Subsidiary (Multi-Currency): For businesses with global subsidiaries.

Customizable dashboards and saved searches allow you to monitor performance and address discrepancies.

4 Best Practices for Multi-Currency Management in NetSuite

1. Regularly Update Exchange Rates

Exchange rates can fluctuate significantly, even within a single day, depending on economic factors, geopolitical events, and market trends. Inaccurate rates can lead to discrepancies in financial reports, resulting in compliance risks and misaligned budgets.

Use NetSuite’s automation tools to integrate with real-time exchange rate providers like X-Rates or OANDA. Automating this process ensures up-to-date rates are applied consistently across transactions.

For businesses with fixed contracts or recurring payments, consider a currency hedging strategy to minimize risks associated with rate volatility.

According to a Deloitte study, 40% of financial discrepancies in multinational companies stem from outdated or mismatched exchange rate data. Updating rates in real-time can reduce this margin by up to 70%.

2. Reconcile Accounts Monthly

Regular reconciliations ensure that your financial records match bank statements and internal systems, preventing issues like double payments, unrecognized transactions, or fraud.

Use NetSuite’s reconciliation tools to automate matching transactions between bank statements and your general ledger.

Schedule monthly reviews of multi-currency accounts, as reconciling frequently helps catch and address discrepancies arising from fluctuating exchange rates.

Companies that perform monthly reconciliations are 50% less likely to experience material financial errors, according to an analysis by the Institute of Management Accountants (IMA).

3. Set Currency Revaluation Periods

Currency revaluation is essential for aligning financials with accounting standards like IFRS (International Financial Reporting Standards) or GAAP (Generally Accepted Accounting Principles). It adjusts the value of assets and liabilities based on current exchange rates to reflect true financial positions.

Enable automatic revaluation in NetSuite to process revaluations at the end of each accounting period, ensuring consistency and compliance.

Configure rules to calculate unrealized gains and losses for outstanding invoices, payables, and intercompany balances.

Review revaluation results using NetSuite’s Revaluation Summary Report to validate and adjust entries as needed.

A PwC report highlights that companies with automated revaluation processes save up to 30% in time spent on manual adjustments and reduce error rates by 25%.

4. Use Segregated Accounts for Different Currencies

Combining funds from multiple currencies in a single account can complicate reconciliations, increase error risks, and make it challenging to track specific currency-related transactions.

For each currency your business operates in, create separate accounts in NetSuite. This simplifies transaction tracking, reconciliation, and reporting.

Assign appropriate permissions to these accounts to ensure only authorized personnel can access and manage them.

Use NetSuite’s Multi-Book Accounting feature to manage multiple currency accounts efficiently while maintaining compliance across jurisdictions.

According to a survey by Finextra, businesses with segregated currency accounts reduce reconciliation errors by up to 40% and achieve faster month-end closes.

3 Common Challenges and Top-tier Solutions

Challenge 1: Fluctuating Exchange Rates

Solution: Use NetSuite’s automatic exchange rate integration to keep rates updated in real time.

Challenge 2: Complex Reporting Needs

Solution: Leverage NetSuite’s saved searches and custom reports to generate tailored insights.

Challenge 3: Handling Subsidiaries with Different Base Currencies

Solution: Use NetSuite OneWorld to consolidate financials across subsidiaries while maintaining compliance with local currencies and regulations.

Conclusion

NetSuite’s multi-currency features are designed to simplify the complexities of global financial management. By enabling multi-currency functionality, configuring exchange rates, and using the system’s reporting tools, businesses can efficiently manage international transactions, mitigate risks, and ensure compliance.

Implement these best practices to optimize your multi-currency processes in NetSuite. If you seek further assistance, consult with our NetSuite expert Nimbus Payments to personalize the solution to your business requisites.

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