Exchange Rate Revaluation in ERPNext
In ERPNext, you can make accounting entries in multiple currencies. For example, if you maintain a foreign currency bank account, transactions can be recorded in that currency and the system will display balances in the respective account currency.
The Exchange Rate Revaluation feature is used to adjust General Ledger balances based on changes in currency exchange rates. This is especially important during period closing, when companies need updated valuation of foreign currency accounts.
From ERPNext v14 onwards, Exchange Rate Revaluation can process foreign currency accounts even if they have zero balance in either base or account currency. A separate Journal Entry of type Exchange Gain/Loss will be created in draft status for such cases.
To access Exchange Rate Revaluation:
Home > Accounting > Multi Currency > Exchange Rate Revaluation
1. Setup Currency in Account
To use multi-currency accounting, you must define currency at the Account level.
- Go to Chart of Accounts while creating an account.
- Set the Account Currency in the Account master.
You can also update currency for existing accounts:
- Open the Account record
- Click Edit
- Update the currency field
Each account must have a defined currency to enable correct valuation and reporting in multi-currency environments.
2. Enable Exchange Rate Revaluation
Exchange Rate Revaluation is used when a company has multiple currency accounts in its Chart of Accounts.
Follow these steps:
- Go to Setup > Company > Select Company
- Set Unrealized Exchange Gain/Loss Account
This account is used to balance differences arising from currency fluctuations.
The Unrealized Exchange Gain/Loss account is mandatory to ensure correct balancing of revaluation entries.
3. Create Exchange Rate Revaluation
- Go to Accounting > Setup > Exchange Rate Revaluation > New
- Select Company
- Click Get Entries
The system will fetch all accounts where currency differs from company default currency.
It will also fetch exchange rates using:
- Currency Exchange master (if defined)
- System exchange rate (if not defined manually)
- Review fetched entries
- Submit the document
- Click Create Journal Entry
Submitting Exchange Rate Revaluation is mandatory before generating the Journal Entry.
The generated Journal Entry adjusts exchange differences in the General Ledger.
4. Accounting Impact
On submission of the Journal Entry:
- Foreign currency balances are revalued
- Exchange gain or loss is recorded
- Unrealized differences are adjusted in GL
5. Automating Revaluation
ERPNext supports automatic creation of Exchange Rate Revaluation entries.
This can be enabled in Company settings under:
Exchange Rate Revaluation Settings
Automating revaluation ensures that currency fluctuations are consistently reflected without manual intervention.
