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2 min read

Why does my sales order credit memo not use the correct exchange rate?

The definition of ‘correct’ can vary greatly in this situation, so instead of answering the question directly, I will list out a few potential reasons why this may happen.

 

Reason 1: No link to original invoice was created when the credit memo was entered

The credit line was manually entered, and was not created using the sales order header or line function to reference the original sales document.  In this situation, since it is not linked to the original invoice, it is going to pick up the prevailing exchange rate for the date the credit memo is entered.

 

Reason 2: New exchange rates were created between the time of the invoice and the time of the credit memo

The credit memo was created using the sales order header function, and the invoice and credit memo were entered with the same dates, but new exchange rates were created between the time that the invoice was entered and the entry of the credit memo. In the customer example that I encountered, they were simply testing the functionality.  Both the invoice and credit were entered with an August 28th date.  When the invoice was posted, it picked up a July 20th exchange rate since that was the last rate entered.  Prior to entering the credit, they populated additional exchange rates, including a rate for August 28th.  As a result, the credit picked up the current rate, August 28th.  In this situation, they simply need to run the ‘Foreign currency revaluation’ function so that the invoice would pick up the August 28th exchange rate as well.

 

Reason 3: Incorrect Accounts receivable parameters

The credit memo was created using the sales order header function, and the Accounts receivable parameter for Default settlement type for credit notes is set to ‘Designated transactions’.  In the customer example that I encountered, they were expecting this option to also control the exchange rate.  In this situation, the ‘Use exchange rate from source documents’ should also be marked.  The default settlement type, is just going to apply to the settlement process between the invoice and credit.  By also marking the ‘Use exchange rate from source documents’ option, the exchange rate used on the invoice will be copied to the credit memo.

 

Mike E