Did you know this about bank foreign currency revaluation in D365?

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Imagine an organization with 20+ entities maintaining 50 or more bank accounts with different currencies. How cumbersome it is to revaluate every bank account to reflect the balances accurately from time to time in an ERP application for key decision making?

D365 for finance now provides ability to revaluate bank balances for multiples banks of different legal entities on a single screen. This blog space provides you all the required details from configuring to ciphering behind the new bank foreign currency revaluation functionality in D365.

How it works? 

At the outset, bank foreign currency revaluation feature can be enabled through feature management or from cash and bank management module.

Finance and Operations Preview 
p Feature management 
New 
3 
USMF 
Not enabled 
10 
Scheduled 
Feature management 
New 
Not enabled 
Scheduled 
x 
Bank 
V Feature name 
Enable bank revaluation globally without a parameter 
Cannot Disab 
Finance and Operations Preview 
Enable bank revaluation globally with... 
Feature added 5/9/2019 
Cash and bank management 
Learn more 
p Search for a page 
USMF 
Enable inquiri 
Expense repot 
Opt-in Featun 
Budget analys 
Interest distrit 
save OPTIONS p 
Cash and bank management parameters 
General 
Bank reconciliation 
Postdated checks 
Number sequences 
Set up general information for banks 
Use review process for payment rever... 
Yes 
Use review process for deposit slip pa... 
Yes 
Enable escheatment 
No 
Allow copies of payments: 
No 
CREDIT LIMIT TOLERANCE 
Bank credit limit tolerance 
None 
FOREIGN CURRENCY REVALUATION 
Enable bank revaluation 
Yes

The bank balances will be revalued if banks base currency is different than the accounting currency or reporting currency of the legal entity, there will be no revaluation entries If the banks base currency is same as accounting currency. Likewise, for reporting currency 

Finance and Operations Preview 
[R Save -1- New Delete 
BANK ACCOUNTS 
p Search for a page 
Transactions 
Balance Balance control 
TEST NH : Bank of Europe 
General 
Routing number type 
None 
1458 
1228909 
EUR 
None 
Bank account 
TEST NH 
CURRENCY 
Currency 
EUR 
Finance and Operations Preview 
p Search for a page 
DEW 
Active for all transi 
Fiscal calendar 
Fiscal 
DEMF 
Routing number 
1458 
Bank account nu Y 
1228909 
INTERNAL INF-OF 
Main account 
Edit 
Ledger calendar Recalculate ledger periods OPTIONS 
Ledger 
Description 
Contoso Entertainment System . 
Account structures 
Currency 
Accounting currency 
EUR 
Reporting currency 
USD 
Chart of accounts 
Shared 
Balancing financial dimension 
Accounting currency exchange rate type 
Default 
Reporting currency exchange rate type 
Budget exchange rate type 
Budget

The transaction will be created for the difference between the old and new balance calculated for accounting currency and reporting currency. The most important is the entries are split based on the new balance calculated for each financial dimension that are posted to bank transactions 

Please refer to the example below to get the comprehensive understanding of this feature 

Let’s say the below transactions are posted for the bank account by business unit 

Date Business unit Exchange rate 
(USD – EUR) 
Base currency amount 
(EUR) 
Accounting Currency Amount 
(EUR) 
Reporting currency amount 
(USD) 
9/04/2020 001 85.356 100 100 117.16 
9/12/2020 002 84.409 100 100 118.47 
9/18/2020 002 84.366 100 100 118.53 
9/25/2020 001 86.026 100 100 116.24 
      
  Total Balance 400 400 470.40 
  001 200 200 233.40 
  002 200 200 237.00 
Finance and Operations Preview 
p Search for a page 
Voucher 
Checks Deposit slips 
Original document 
Invoices 
Print v 
Bank document list 
TEST NH 01 : BANK OF EUROPE - NH 01 
Bank transactions 
Show 
All transactions 
Overview 
Date T 
General 
Bank reconciliation 
Financial dimensions 
Voucher number 
ARPM000160 
ARPM000161 
ARPM000162 
ARPM000163 
Bank transac... 
01 
01 
01 
01 
Payment reference 
PAYNHOOOOI 
PAYNH00002 
PAYNH00003 
PAYNH00004 
De... 
Check number 
9/4/2020 
9/12/2020 
9/18/2020 
9/25/2020 
OPTIONS 
Currency 
EUR 
EUR 
EUR 
EUR 
Amount in trans... 
100.00 
100.00 
100.00 
100.00 
Amount 
100.00 
100.00 
100.00 
100.00 
DEW 
Amount in reporting currency 
117.16 
1 18.48 
118.54 
116.24

The revaluation is run as on Sept 30th, 2020 with exchange rate of 85.358.

Note the base currency of the bank and the accounting currency is same. Hence, there will no revaluation entry for accounting currency. But the transaction entry will be created for the difference in balance for reporting currency (USD). 

D365 revaluation calculation:

Business unit Old Balance 
(USD) 
New balance 
(USD) 
Revaluation Difference D365 Calculated revaluation loss 
(50%) 
001 233.40 234.31 0.9 -0.9 
002 237.00 234.31 -2.7 -0.9 
Totals 470.40 468.61 -1.8  

Revaluation calculation for each dimension = Total revaluation difference * Percentage of balance in each dimension  

Total revaluation difference = $-1.80 

Percentage of balance in each dimension = New balance in each dimension / New total balance 

New balance in both dimension (001 & 002) = $234.31

New total balance = $468.61 

Percentage of balance for both departments (001 & 002) = $234.31/$468.61 = 50% 

So, the revaluation calculation for both departments (001 & 002) = $-1.80 * 50% = -0.9 

If you like the post, please share with your connection. Also, follow and watch this space for more information on Microsoft business applications.

Reference:
https://docs.microsoft.com/en-us/dynamics365/finance/cash-bank-management/bank-revaluation

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