INFORMATION INDEPTH NEWSLETTER
Financial Management Edition
Oracle Corp
March 2012 Stay Connected: Facebook Blog Twitter Mix
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Are You Prepared to Manage the Collapse of a Currency?

Finance managers were reminded how volatile the world financial market can be when Venezuela changed its official currency to the Bolivar Fuerte four years ago. Now concerns about additional volatility are swirling as financial markets wait to see if one or more European Union countries might abandon the euro and return to a local currency because of economic challenges impacting the region.

Fortunately, users of Oracle E-Business Suite, PeopleSoft, and JD Edwards have an insurance policy for currency volatility or changes in their operating and accounting currency. These applications help finance managers smoothly make the necessary adjustments if and when a country adopts a new currency.

Using Oracle E-Business Suite as an example, the New Functional Currency (NFC) feature helps finance managers revise ledgers from an old to a new currency. The related New Currency Business Services (NBS) feature makes the necessary adjustments to order books. Similar tools are available for PeopleSoft and JD Edwards EnterpriseOne solutions. NBS is useful not only in the impacted country, but also to companies in any countries that do business there.

In Oracle E-Business Suite 12 and 12.X the currency changeover follows a simple three-step process.
    Step 1: The solution creates and initializes a new ledger in the target currency
    Step 2: It then adds a new currency accounting value to the old currency transactions in the subledgers to support the balances in the new currency ledger.
    Step 3: Using the new currency environment, finance managers enter new currency invoices and transactions into subledgers.
At this point, finance managers are able to fulfill payment and collection activities with the new currency. The solution also converts open orders in both the sales and procurement cycles, and other currency transactions.

The entire process is fairly quick and straightforward. Finance organizations should schedule a weekend for preprocessing work, running the changeover process, and then performing post-process reconciliation. Usually one weekend each to test the process and conduct a trial run are also required.

Get more details about how Oracle Applications handle currency changes.


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