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.