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How Does Agicap Handle Currency Calculations and Conversions?
How Does Agicap Handle Currency Calculations and Conversions?

Managing cashflow across multiple currencies can be complex; Agicap simplifies this with automatic currency calculations and conversions to give you clear insights.

Updated over a week ago

What Rates Are Used for Currency Conversions?

Agicap uses exchange rates to convert transactions and balances into your chosen currency. Here's how the rates are determined:

  • Default Rates: If no custom rate is specified, Agicap uses exchange rates from our partner Currency Layer.

  • Custom Rates: You can specify your own exchange rates if needed.

For Total Inflow and Outflow Calculations

  • Paid Transactions: The exchange rate on the transaction's date is used.

  • Expected Transactions: The current day's exchange rate is applied.

  • Forecasts: The exchange rate from the first day of the current offset period (e.g., the first day of the month).

For Cash Balance Calculations

  • Beginning Cash Balance: Uses the exchange rate from the first day of the current offset period.

  • Ending Cash Balance: Uses the exchange rate from the first day of the next offset period (or the current day's rate for future offsets).

How to Export Exchange Rates Used in Calculations

You can export the exchange rates used in your calculations:

  1. Go to ⚙️ Settings > Export My Data > Exchange Rates.

  2. Choose the entity or consolidation you wish to export.

  3. Customize the export period (❗limited to 5 years).

  4. Download the file, which contains all exchange rates used, including custom rates if present.

Currency Conversion in Consolidations

Agicap handles currency conversions in consolidations using the same principles as for individual entities. This ensures consistency across your cashflow analyses.

Currency Conversion in Project Cashflow Management

  • Conversions in the Project Cashflow table follow the same rules as in the entity cashflow plan.

  • The project's Current Balance and Current Margin are computed using the total inflows and outflows already converted.

Understanding Exchange Differences 💡

When dealing with multiple currencies, you might notice a difference called Exchange Difference in your cashflow plan. This occurs because:

  • Transactions are converted using exchange rates applicable at their dates.

  • Cash Balances are converted using exchange rates from the beginning and end of the offset periods.

This difference accounts for fluctuations in exchange rates over time. It doesn't represent actual gains or losses but explains the discrepancies due to currency conversions.

Example

Let's say your account has a balance of $100 at both the beginning and end of the month.

  • Exchange Rate at Beginning: $1 = €0.95

  • Exchange Rate at End: $1 = €0.90

The converted balances are:

  • Beginning Balance: $100 x 0.95 = €95

  • Ending Balance: $100 x 0.90 = €90

The €5 difference is the Exchange Difference, reflecting the change in exchange rates, not actual transaction changes.

Updating Exchange Rates for Transactions

When you change the payment date of a paid transaction:

  • The transaction amount is recalculated using the exchange rate applicable on the new payment date.

💡 Tips

  • Regularly review your exchange rates, especially if you're using custom rates, to ensure your cashflow reflects accurate conversions.

  • Remember that exchange rates can impact your cash balances even without actual changes in transaction amounts due to rate fluctuations.

FAQ ❓

How does Agicap handle currency conversions for future forecasts?

Agicap uses the exchange rate from the first day of the current offset period for forecasts. This provides a consistent rate for forecasting future transactions.

Can I specify custom exchange rates for my calculations?

Yes, you can specify custom exchange rates in Agicap. This allows you to use your preferred rates instead of the default rates from Currency Layer.

Why do my cash balances differ when changing the display frequency?

This can happen due to the method of computation. When you switch display frequencies (e.g., from daily to monthly), the exchange rates applied may differ, causing small variations in the converted cash balances.

  • Daily Display: Each day's balance is converted using the next day's rate; multiple conversions occur.

  • Monthly Display: The month's end balance is converted using the rate from the first day of the next month; only one conversion occurs.

How can I minimize exchange differences in my cashflow plan?

To minimize exchange differences:

  • Consistently use the same exchange rates where possible.

  • Update your exchange rates regularly.

  • Be aware that exchange differences are normal in multi-currency cashflow management due to rate fluctuations.

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