Managing currencies can be key for your business. Agicap helps you visualise your cash in real-time, whether you're looking at the past, short-term, or long-term numbers, no matter how many currencies you are using. It gives you control over the exchange rates used, so you can assess the impact of your currency hedging strategy, or make sure all your reports (balance sheet, P&L, …) follow the same rates.
Source of exchange rates
We retrieve rates every day, for all available currencies, from our provider.
If the option is enabled, you can customise the exchange rates directly from the user interface, or by importing them.
If you wish to access the exchanges rates used by Agicap, you can export them for your entities, or directly from the consolidation.
How are rates applied?
Whenever Agicap displays aggregated amounts of multiple currencies, a conversion happens.
There are two different approaches, depending on what you are looking for:
Cash balances (red)
Cashflow table (green)
1. Cash balances
💡 The goal is to provide a vision as close as possible to your bank statements.
For cash balances, the following rules apply:
the period's start balance: rates of 1st day of the period
the period's end balance: rates of the 1st day of the next period
Why the first day of next period, as our ending balance? This guarantees that your end of period's balance and start of next period's balance will always match!
2. Cashflow Table
💡 The goal is to provide a vision closer to what you are used to in accounting.
We use a different method in this case:
paid transactions: payment date of each transaction’s rate
expected transaction: expected payment date of each transaction's rate
forecast: first day of the period’s rate
Exchange rate difference
Two methods mean you can have differences between the cash balances computed by Agicap and the cash balances computed from the cashflow table, because different rates are used on the same period.
This difference is called the exchange difference, and is listed as one of the default KPIs. It is a technical difference that has no economic reality, but it can help you assess how exposed you are to currency volatility.
What about rates used in the future?
Agicap only gets rates until the current day. For future periods, the rate used is either:
the period's custom rate if it's been defined
or today’s rate (the latest available)
Effect of defining custom exchange rates
When defining custom exchange rates, calculations are simpler. For example, if you define rates for each month of 2023:
exchange rates defined for Feb 2023 will be used for the cashflow table conversion (and end of January cash balance conversion)
exchange rates defined for March 2023 will be used for the end of February cash balance conversion (and March 2023 cashflow table conversion)
and so on!
In this case, the exchange rate difference will be the gap incurred by the difference between the start of month/start of next month's rates!
Be aware that defining a rate from EUR → USD doesn't set the inverse rate (USD → EUR). If you want both to be equivalent, you must define them consequently!
Consolidation
The rules are the same for consolidations, but you should be aware of two subtlety:
Which rates are applied?
The rates used in the consolidation are specific to each entity: all values from entity A will be converted with the rates applied to A. It gives you the maximum level of control, which can be useful if you do M&A. You will be able to reflect the specificities of the acquired entity during the transition period.
If you don't need different rates, define them directly at the organisation level, and all entities will use the same rates.
You can still override the organisation value for an entity at any time, if you need too.
From the bank account's currency to the consolidation's currency
All values are converted from account's currency to entity's currency first, then from entity's currency to consolidation's currency.
This is a side-effect of the behaviour explained above, which accounts for the various situations you may encounter.