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This blog focuses on sharing information about new features, best practices and functionalities related to Microsoft business application and solutions in ERP space. Primarily focused on Microsoft Dynamics 365 for Finance and Operations, Power platforms
Did you know this about bank foreign currency revaluation in D365?

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

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 

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

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