Foreign Currency Gains and Losses
Prerequisites
Your Home Currency must be configured before you can use this feature.
What Are Foreign Currency Gains and Losses?
When you sell products or services to customers in a foreign currency, the value of that currency changes based on the exchange rate. If the value of the currency goes up or down after you invoice a customer but before you collect payment, then you have made a foreign currency gain or loss on that invoice.
Trial Balance
The following sections describe the Foreign Currency Exchange data in the Balances tab of an accounting period.
See Accounting Period Balances for information about the other sections in the Balances tab. See Foreign Currency Conversion for more information about currency conversion in Zuora.
Realized Gains and Losses
A gain or loss is "realized" when the customer pays the invoice. For example, let's say your Home Currency is USD, and you post an invoice for 100 GBP to a British customer. On the Invoice Date, 100 GBP is worth 150 USD. On date that the customer pays the invoice, the value of 100 GBP has risen to 155 USD. Therefore you make a realized gain of 5 USD.
The following table summarizes the realized gain/loss.
| Invoice Amount | Exchange Rate on Invoice Date | Exchange Rate on Payment Date | Realized Gain/Loss |
|---|---|---|---|
|
100 GBP |
1.50 |
1.55 |
5 USD |
Unrealized Gains and Losses
A gain or loss is "unrealized" if the invoice has not been paid by the end of the accounting period. For example, let's say your Home Currency is USD, and you post an invoice for 100 GBP to a British customer. On the Invoice Date, 100 GBP is worth 150 USD. The invoice has not been paid by the end of the current accounting period. On the last day of the current accounting period, the value of 100 GBP has dropped to 145 USD. Therefore, as of the end of the current accounting period, you have an unrealized loss of 5 USD.
The following table summarizes the unrealized gain/loss.
| Invoice Amount | Exchange Rate on Invoice Date | Exchange Rate on Last Day of Accounting Period | Unrealized Gain/Loss |
|---|---|---|---|
| 100 GBP | 1.50 (100 GBP = 150 USD) |
1.45 (100 GBP = 145 USD) |
(5 USD) |
Viewing Your Foreign Currency Exchange Data
After you run a trial balance or close an accounting period, you can view the Balances tab for data about your Foreign Currency Exchange balance for that period.
Foreign Currency Exchange data is available in the Balances tab for accounting periods with a start date on or after 01-01-2015. Accounting periods before this date will not have Foreign Currency Exchange data.
You can view the following:
- Foreign Currency Exchange Summary
- Realized Gain/Loss Detailed Report
- Unrealized Gain/Loss Detailed Report
Each of these is described in detail below.
Note that additional source transaction types and transaction types are only available if you enable the Invoice Settlement feature and the Invoice Item Settlement feature.
The Invoice Settlement feature is generally available as of Zuora Billing Release 296 (March 2021). This feature includes Unapplied Payments, Credit and Debit Memos, and Invoice Item Settlement. If you want to have access to the feature, see Invoice Settlement Enablement and Checklist Guide for more information. After Invoice Settlement is enabled, the Invoice Item Adjustment feature will be deprecated for your tenant.
The Invoice Item Settlement feature is only available if you have Invoice Settlement enabled. The Invoice Settlement feature is generally available as of Zuora Billing Release 296 (March 2021). This feature includes Unapplied Payments, Credit and Debit Memos, and Invoice Item Settlement. If you want to have access to the feature, see Invoice Settlement Enablement and Checklist Guide for more information.
Viewing Consolidated Balances or Balances for Individual Currencies
To view a consolidated Foreign Currency Exchange Gains / Losses balance for all currencies, select "Consolidated View" from the Currency drop-down menu. Note that if you select Consolidated View, the foreign currency gain and loss information is displayed in the Accounts Receivable section of the Balances tab.
You can also select individual currencies from the drop-down menu to view the balances for that currency only.
Foreign Currency Exchange
To view your Foreign Currency Exchange balance on the Zuora UI, navigate to the accounting period, select the Balances tab, select the foreign currency that you wish to view from the Currency drop-down menu, and then scroll down to the Foreign Currency Exchange section.
Note that Zuora does not currently provide foreign currency gain and loss data for Credit Balance. Click [Download all Credit Balance Adjustments] to download a preconfigured data source export that can help you manually calculate foreign currency gains and losses for your Credit Balance.
Realized Gain/Loss Detail Report
The Realized Gain/Loss detail report provides a list of transactions with their realized foreign currency gains and losses for the accounting period.
Download from the Zuora UI
Navigate to the Foreign Currency Exchange summary and click [Download Gain / Loss Detail]. A dialog box is displayed. Select Realized Gain / Loss and click ok.
Download Through a URL
Use the following URL, where you replace {accountingPeriodId} with the ID of the accounting period for which you want to view realized gain/loss data:
https://www.zuora.com/apps/AccountingPeriods.dox?method=downloadFXRealizedGainLossDetail&id={accountingPeriodId}
If you want to download or export a large CSV file, Zuora recommends you to use text editors other than Microsoft Excel to open the file. The maximum row number that Excel supports is 1,048,576.
To find the accounting period ID, navigate to Zuora Finance > Accounting Periods and click on the accounting period. On the accounting period page, copy the sequence of letters and numbers after id= at the end of the URL, for example, 8a8081ae4b9a132a014bfc6721861190.
Fields in the Realized Gain/Loss Detail Report
The following table describes the fields that are included in the Realized Gain/Loss detail report.
| Field | Description |
|---|---|
|
Customer Account Number |
Customer account number associated with the transaction. |
| Customer Account Name |
Customer account name associated with the transaction. |
|
<Customer Account Segments> |
If you have configured any segments related to customer accounts, the segment names appear here as column headings. The segments are arranged in alphabetical order. See Fields Supported by Segments for information about which customer account fields are supported on segments. |
|
Customer Account Currency |
Currency of the customer account. |
|
Home Currency |
Home currency set on your tenant. |
|
Source Transaction Type |
Transaction type of the source transaction. Can be the following values:
An Invoice Payment (future application) occurs when the Payment Date is earlier than the Invoice Date. |
|
Source Transaction Date |
Transaction date of the source transaction. |
|
Source Transaction Number |
Transaction number of the source transaction. |
|
Source Transaction Exchange Rate Date |
Exchange rate date of the source transaction. For example, if the source transaction is an invoice, then the value of this field will be whichever is earlier of the Invoice Date and Posted Date. See How Zuora Calculates Values for the Foreign Currency Conversion Fields for more information. |
|
Source Transaction Exchange Rate |
Exchange rate on the Source Transaction Exchange Rate Date. |
|
Transaction Type |
Transaction type of the applied amount. Can be the following values:
|
|
Transaction Date |
Date when the transaction occurred. |
|
Transaction Number |
Transaction number, such as P-00000001 for an Invoice Payment. |
|
Applied Amount (Transaction Currency) |
The applied amount in the transaction currency. |
|
Transaction Exchange Rate Date |
Exchange rate date of the transaction. For example, if the transaction is an Invoice Payment, then the value of this field will be the Payment Date. See How Zuora Calculates Values for the Foreign Currency Conversion Fields for more information. |
|
Transaction Exchange Rate |
Exchange rate on the Transaction Exchange Rate Date. |
|
Source Applied Amount (Home Currency) |
Value of the applied amount in your home currency on the Source Transaction Exchange Rate Date. |
|
Source Applied Amount Currency Rounding |
The discrepancy caused by rounding the source applied amount during currency conversion. Accurate to nine decimal places. |
|
Applied Amount (Home Currency) |
Value of the applied amount in your home currency on the Transaction Exchange Rate Date. |
|
Applied Amount Currency Rounding |
The discrepancy caused by rounding the applied amount during currency conversion. Accurate to nine decimal places. |
|
FX Gain / Loss |
Realized foreign currency gain or loss for the transaction. For an Invoice, calculated as follows:
For an Invoice Payment (future application), calculated as follows:
|
|
FX Gain / Loss Currency Rounding |
The discrepancy caused by rounding the GX Gain / Loss amount. Accurate to nine decimal places. |
Unrealized Gain/Loss Detailed Report
The Unrealized Gain/Loss detail report provides a list of transactions with their unrealized foreign currency gains and losses for the accounting period.
Download from the Zuora UI
Navigate to the Foreign Currency Exchange summary and click [Download Gain / Loss Detail]. A dialog box is displayed. Select Unrealized Gain / Loss and click ok.
Download Through a URL
Use the following URL, where you replace {accountingPeriodId} with the ID of the accounting period for which you want to view unrealized gain/loss data:
https://www.zuora.com/apps/AccountingPeriods.dox?method=downloadFXUnrealizedGainLossDetail&id={accountingPeriodId}
If you want to download or export a large CSV file, Zuora recommends you to use text editors other than Microsoft Excel to open the file. The maximum row number that Excel supports is 1,048,576.
To find the accounting period ID, navigate to Zuora Finance > Accounting Periods and click on the accounting period. On the accounting period page, copy the sequence of letters and numbers after id= at the end of the URL, for example, 8a8081ae4b9a132a014bfc6721861190.
Fields in the Unrealized Gain/Loss Detail Report
The following table describes the fields that are included in the Unrealized Gain/Loss detail report.
| Field | Description |
|---|---|
|
Customer Account Number |
Customer account number associated with the transaction. |
|
Customer Account Name |
Customer account name associated with the transaction. |
|
<Customer Account Segments> |
If you have configured any segments related to customer accounts, the segment names appear here as column headings. The segments are arranged in alphabetical order. See Fields Supported by Segments for information about which customer account fields are supported on segments. |
|
Customer Account Currency |
Currency of the customer account. |
|
Home Currency |
Home currency set on your tenant. |
|
Source Transaction Type |
Transaction type of the source transaction. Can be the following values:
An Invoice Payment (future application) occurs when the Payment Date is earlier than the Invoice Date. |
|
Source Transaction Date |
Date when the source transaction occurred. |
|
Source Transaction Number |
Transaction number of the source transaction, such as INV00000001 for an Invoice. |
|
Source Transaction Balance (Transaction Currency) |
Remaining balance of the source transaction in the transaction currency. For example, if the source transaction is an Invoice for $100 and the customer has paid $25 as of the end of the accounting period, then this field will display the remaining balance of $75. |
|
Source Transaction Exchange Rate Date |
Exchange rate date of the source transaction. For example, if the source transaction is an invoice, then the value of this field will be the Invoice Date. |
|
Source Transaction Exchange Rate |
Exchange rate on the Source Transaction Exchange Rate Date. |
|
Ending Exchange Rate Date |
Date used to determine the Ending Exchange Rate. The value of this field is whichever is earlier of:
|
|
Ending Exchange Rate |
The exchange rate on the Ending Exchange Rate Date. |
|
Source Transaction Balance (Home Currency) |
Value of the applied amount in your home currency on the Source Transaction Exchange Rate Date. |
|
Source Transaction Balance Currency Rounding |
The discrepancy caused by rounding the source transaction balance during currency conversion. Accurate to nine decimal places. |
|
Ending Transaction Balance (Home Currency) |
Value of the applied amount in your home currency on the Ending Exchange Rate Date. |
|
Ending Transaction Balance Currency Rounding |
The discrepancy caused by rounding the ending transaction balance during currency conversion. Accurate to nine decimal places. |
|
FX Gain / Loss |
Unrealized foreign currency gain or loss for the transaction. For an Invoice, calculated as follows:
For an Invoice Payment (future application), calculated as follows:
|
|
FX Gain / Loss Currency Rounding |
The discrepancy caused by rounding the GX Gain / Loss amount. Accurate to nine decimal places. |
|
Prior Period Reversal |
This field displays a value of |
Journal Entries
The following section describes the FX gain and los creation for the GL entries.
Note that If the billing document remains unapplied at the end of the accounting period, the original entries are reversed at the beginning of the next accounting period.
Realized gains and losses
Journal entries for realized FX gain and loss are only available when the following configurations are set:
- Invoice Settlement is ON. For more information, see the Invoice Settlement migration checklist and guide.
- Create FX Gain Loss GL Entries are set to Yes. For more information, see Configure Accounting Rules.
A gain or loss is "realized" in the following cases if:
- Pays the Invoice or Debit Memo
- Credit Memo is applied to Debit Memo or Invoice
- Refund is generated to Credit Memo or Payment
For example, let's say your Home Currency is USD, and you post an invoice for 100 GBP to a British customer. On the Invoice Date (1 Jan 2023), 100 GBP is worth 150 USD. On the date (10 Jan 2023) that the customer pays the invoice, the value of 100 GBP has risen to 155 USD. Therefore you make a realized gain of 5 USD.
Considering the FX rates for GBP to USD as follows:
- 1 Jan 2023 (Invoice Date) - 1 GBP = 1.5 USD
- 10 Jan 2023 (Payment Date) - 1 GBP = 1.55 USD
Journal Entry Transaction Type - Payment Application (External/Electronic, depending on the payment method).
| Debit | Credit |
|---|---|
| Bank Account - 155 USD Accounts Receivable - 5 USD |
Accounts Receivable - 155 USD Realized FX Gain - 5 USD |
Scenario for payment unapplied from invoice.
If the same payment (dated 10 Jan 2023) is unapplied from the invoice (dated 1 Jan 2023), then it would be a Realized gain of 5 USD.
Considering the FX rates for GBP to USD as follows:
- 1 Jan 2023 (Invoice Date) - 1 GBP = 1.5 USD
- 10 Jan 2023(Payment Date) - 1 GBP = 1.55 USD
| Debit | Credit |
|---|---|
| Accounts Receivable - 155 USD Realized FX Gain - 5 USD |
On Account - 155 USD Account Receivable - 5 USD |
Similarly, when a Credit Memo (dated 10 Jan 2023) of 100 GBP is applied to a Debit Memo of 100 GBP and on the Debit Memo date (1 Jan 2023), 100 GBP is worth 150 USD, while on the Credit Memo date, it has fallen to 145 USD. Therefore, it is a realized loss of 5 USD.
Considering the FX rates for GBP to USD as follows:
- 1 Jan 2023 (Debit Memo Date) - 1 GBP = 1.5 USD
- 10 Jan 2023(Credit Memo Date) - 1 GBP = 1.45 USD
Journal Entry Transaction Type - Credit Memo Application Item.
| Debit | Credit |
|---|---|
| On Account - 145 USD Realized FX Loss - 5 USD |
Accounts Receivable - 145 USD Accounts Receivable - 5 USD |
Next, if the Credit Memo of 100 GBP is refunded and on the Credit Memo date (1 Jan 2023) 100 GBP is worth 150 USD while on the refund date (10 Jan 2023), it has fallen to 145 USD, it is a realized gain of 5 USD.
Considering the FX rates for GBP to USD as follows:
- 1 Jan 2023 (Credit Memo Date) - 1 GBP = 1.5 USD
- 10 Jan 2023 (Refund Date) - 1 GBP = 1.45 USD
Journal Entry Transaction Type - Refund Application (External/Electronic depending on the refund method).
| Debit | Credit |
|---|---|
| Customer Cash on Account - 145 USD Customer Cash on Account - 5 USD |
Bank Account - 145 USD FX Gain 5 USD |
Unrealized gains and losses
Journal entries for unrealized FX gain and loss are only available when the following configurations are set:
- Invoice Settlement is ON. For more information, see the Invoice Settlement migration checklist and guide.
- Create FX Gain Loss GL Entries are set to Yes. For more information, see Configure Accounting Rules.
A gain or loss is "unrealized" if the invoice/DM/unapplied credit memo/Unapplied Payment has not been paid/applied by the end of the accounting period.
Reversal journal entries must exactly replicate the original journal entries, directly negating them to maintain a clear audit trail and avoid introducing new variables. This ensures that segment values remain consistent with the original entries.
If the customer updates the segmentation rule and wants the new segment values for the reversal entries, they must cancel the journal run for the original FX gain/loss entries. Then they should re-run the journal to reflect the updated segment values. The original FX gain/loss entries and their corresponding reversal entries should always maintain identical segmentation to prevent discrepancies.
The following sections provide examples that show how the unrealized gains and losses are calculated for each use case.
Invoice with balance
For example, say your Home Currency is USD, and you post an invoice for 100 GBP to a British customer. On the Invoice Date (1 Jan 2023), 100 GBP is worth 150 USD. The invoice has yet to be paid by the end of the current accounting period. On the last day of the current accounting period (31 Jan 2023), the value of 100 GBP has risen to 155 USD. Therefore, as of the end of the current accounting period, you have an unrealized gain of 5 USD.
Considering the FX rates for GBP to USD as follows:
- 1 Jan 2023 (Invoice Date) - 1 GBP = 1.50 USD
- 31 Jan 2023 (Last AP Date) - 1 GBP = 1.55 USD
The following table summarises the unrealized gain/loss:
| Debit | Credit |
|---|---|
| Accounts Receivable - 5 USD | Unrealized FX Gain - 5 USD |
Unapplied Payment
Say your Home Currency is USD, and you have an unapplied payment of 100 GBP. On the Payment Date (1 Oct 2023), 100 GBP is worth 150 USD. The payment has yet to be applied by the end of the current accounting period. On the last day of the current accounting period (31 Oct 2023), the value of 100 GBP has fallen to 145 USD. Therefore, as of the end of the current accounting period, you have an unrealized gain of 5 USD.
Considering the FX rates for GBP to USD as follows:
- 1 Oct 2023 (Payment Date) - 1 GBP = 1.50 USD
- 31 Oct 2023 (Last AP Date) - 1 GBP = 1.45 USD
The following table summarises the unrealized gain/loss:
| Debit | Credit |
|---|---|
| Cash - Digital and Third Party - 5 USD | Unrealized FX Gain - 5 USD |
Debit Memo balance
Say your Home Currency is USD, and you post a DebitMemo for 100 GBP to a British customer. On the DebitMemo Date (1 Jan 2023), 100 GBP is worth 150 USD. The DebitMemo has yet to be paid by the end of the current accounting period. On the last day of the current accounting period (31 Jan 2023), the value of 100 GBP has risen to 155 USD. Therefore, as of the end of the current accounting period, you have an unrealized gain of 5 USD.
Considering the FX rates for GBP to USD as follows:
- 1 Jan 2023 (Invoice Date) - 1 GBP = 1.50 USD
- 31 Jan 2023 (Last AP Date) - 1 GBP = 1.55 USD
The following table summarises the unrealized gain/loss:
| Debit | Credit |
|---|---|
| Accounts Receivable - 5 USD | Unrealized FX Gain - 5 USD |
Unapplied Credit Memo
Say your Home Currency is USD, and you have an unapplied CreditMemo for 100 GBP. On the CreditMemo Date (1 Oct 2023), 100 GBP is worth 150 USD. The CreditMemo has yet to be applied by the end of the current accounting period. On the last day of the current accounting period (31 Oct 2023), the value of 100 GBP has risen to 155 USD. Therefore, as of the end of the current accounting period, you have an unrealized loss of 5 USD.
Considering the FX rates for GBP to USD as follows:
- 1 Oct 2023 (Payment Date) - 1 GBP = 1.50 USD
- 31 Oct 2023 (Last AP Date) - 1 GBP = 1.55 USD
The following table summarises the unrealized gain/loss:
| Debit | Credit |
|---|---|
| Unrealized FX Loss - 5 USD | Customer Cash on Account - 5 USD |