For businesses operating internationally, correctly handling foreign currency transactions is essential for accurate financial reporting. NetSuite's multi-currency capabilities are designed to manage this complexity by tracking amounts in both the transaction's currency and your subsidiary's base currency. This guide provides a fact-checked and expanded overview of how to enter, manage, and report on foreign currency transactions.

The Foundation: Base Currency and Exchange Rates

In a NetSuite OneWorld account, every subsidiary has a base currency, which is the primary currency used for its financial reporting (e.g., USD, EUR, JPY). When you create a transaction in a different currency (a foreign currency), NetSuite uses an exchange rate to calculate the equivalent value in the subsidiary's base currency.

How Currency is Determined on a Transaction

1. Entity Record Default: The primary source for a transaction's currency is the Primary Currency field on the customer or vendor record. You can set this on the Financial subtab of the entity's record. When you select that entity on a new transaction, the currency will default to their primary currency.

2. Manual Selection: You can manually change the currency on a transaction form itself. The Currency field will display a dropdown of all currencies available for that subsidiary.

When a foreign currency is selected, NetSuite automatically looks up the correct exchange rate from the Currency Exchange Rates table (found under Lists > Accounting > Currency Exchange Rates). The rate is determined by the transaction date and the currency pair (e.g., EUR to USD).

Overriding the Exchange Rate

If you have the necessary permissions, you can manually override the system-provided exchange rate directly on the transaction form. This is often done for transactions that use a specific, contracted rate. When you change the rate, all base currency amounts on the transaction will recalculate instantly.

**Best Practice:** Always document the reason for an exchange rate override in the transaction's memo field to maintain a clear audit trail.

Understanding the Dual Amounts

Every foreign currency transaction in NetSuite stores two sets of financial values:

• Transaction Currency Amount: The amount in the foreign currency (e.g., €10,000). This is the value that the customer is invoiced for or the vendor bills you for.

• Base Currency Amount: The equivalent value in your subsidiary's base currency (e.g., $11,500), calculated using the transaction's exchange rate.

Realized vs. Unrealized Gains and Losses

Fluctuations in exchange rates between the time a transaction is created and when it is paid create currency gains or losses.

• Realized Gain/Loss: This is calculated and posted when a payment is applied to a bill or invoice. If the exchange rate on the payment date is different from the rate on the original transaction date, the difference is posted to the Realized Gain/Loss account.

• Unrealized Gain/Loss: At the end of each accounting period, you should run the Revalue Open Currency Balances process (Transactions > Financial > Revalue Open Currency Balances). This process generates a journal entry that adjusts the base currency value of all open foreign currency receivables and payables to reflect the current period-end exchange rates. This gain or loss is considered "unrealized" because the payment has not yet occurred.

  
  

Maintaining Exchange Rates

You have two options for keeping your exchange rate table up to date:

1. Manual Entry: You can manually enter rates for each currency pair and date under Lists > Accounting > Currency Exchange Rates.

2. Automatic Updates: The recommended approach is to enable the Currency Exchange Rate Integration feature (Setup > Accounting > Currency Exchange Rate Integration). This allows NetSuite to automatically download daily exchange rates from a designated provider (like Xignite or Refinitiv), saving significant time and improving accuracy.

   
   

Common Issues

• Exchange Rate Not Found: If you get an error that a rate is missing, it means no rate has been entered in the exchange rate table for that specific transaction date and currency pair. You must add it manually to proceed.

Incorrect Base Amount: If the base currency amount seems wrong, the first thing to check is the exchange rate being used on the transaction.