Freely Defined Currency or Additional Currency + Functional Currency in S/4HANA Public Cloud

[Shakeel_Ahmed]

I keep getting queries on available currencies in S/4HANA Public Cloud, specially about 3rd currency option and its usage. That is why I am putting it here so that other people can also benefit from it.

Currency Options in S/4HANA Public Cloud

1. 
   
   
   
   1. Transactional Currency > Currency Type ‘00’
   
   
   
   

Transaction Currency is used during the transaction/ accounting transaction. It could be any currency in the world (defined in the system). Ultimately system will save the data into Transaction currency, Company Code, Group Currency, Functional Currency, and Freely Defined Currency (if defined). As such no configuration is required for transaction currency to work except currency availability in the system and exchange rate type and its maintenance.

1. 
   
   
   
   2. Company Code Currency > Currency Type ‘10’
   
   
   
   

Company Code currency is local currency of a country. It is predefined and cannot be changed in S/4HANA Public Cloud

1. 
   
   
   
   3. Group Currency > Currency Type ‘30’
   
   
   
   

Group Currency is required to generate group level reporting in the single currency from the system for all the available company codes.

It is defined during system activation, and it is a pre-activation activity.

1. 
   
   
   
   4. Freely Defined Currency > Custom Currency Type e.g., ‘Z0’
   
   
   
   

Freely defined currency also known as 3rd currency and additional currency

In case, your business needs an additional currency then you can define 3rd currency or additional currency or Freely Defined Currency in S/4HANA Cloud system

Functional currency

Functional currency refers to the main currency used by a business or unit of a business.

Note: Functional currency is also available in S/4HANA Cloud, but it is not a currency type. Functional currency needs to be assigned to one of the existing currency types which means it does not increase number of currencies in the system for your reporting as it uses one of the existing currency types.

Functional Currency can be assigned to Currency Type ‘10’ or ‘30’ or any custom e.g., ‘Z0’.

By default, company code currency (10) is defined as Functional Currency. You can change it unless there is no posting in the company code.

 

How to Create and use Freely Defined Currency in S/4HANA Public Cloud?

Pre-conditions for defining additional currency are as below:

1. 
   
   
   
   1. There shall be no journal entries posting in the company code.
   
   
   2. If actual costing is activated: There shall be no changes to the accounting attributes of materials that are relevant for actual costing (price determination = 3) in the company code.
   
   
   
   

Note: If there are postings in Dev and Q system but not in P system in the company code in this situation you can delete these accounting entries through job template ‘Reset Transaction Data’ from the app ‘Schedule Accounting Data Changes’. After this you would be able to create and use additional currency in the company code.

Config: Define Additional Currency

Node: Define Currency Settings for Ledgers and Company Codes 

Created ZA and ZB Currency Type. You can define multiple Currency Types but you can assign only one currency type to one company code. However, generally one currency type (for additional currency) is sufficient for multiple company codes.

If you do not tick 'Company Code Specific Conversion' in the previous step then you have to maintain conversion setting in this place. since we have selected it, hence we would map the conversion setting in the next step. This is called Global Currency Conversion Setting and it is applicable for all company codes if the system.

Assigned Currency INR in ZA and SGD in ZB against Company Code SKL1. Also maintain Conversion settings.

Option to assign 3rd Currency/ Freely Defined Currency is available in Company Code and Ledger combination and here you have restriction to assign just one additional currency type. We have used currency type ZA (INR) for both the ledgers in company code SKL1.

Functional Currency also selected as ZA.

 

Additional Currency & Functional Currency in Transaction: Journal Entry App

Additional Currency & Functional Currency in Reporting: Display Line Items in General Ledger App

Additional Currency & Functional Currency in Reporting: Balance Sheet/Income Statement App

 

Important Points:

• 
  
  
  
  • If you are adding currency in the existing (already live) system for new company code. Currency conversion setting cannot be global. It must be company code specific.
  
  
  • 3^rd currency for all leading ledger and company code must be the same. However, you have option not to use 3^rd currency for non-leading ledgers or use the same as leading ledger.
  
  
  • Functional Currency can be assigned to Currency Type ‘10’ or ‘30’ or any custom e.g., ‘Z0’
  
  
  • If your production system is live and has transactions; you would still be able to add 3^rd currency for new company codes which you would create in the same system/landscape.
  
  
  
  

 

-----END-----

Learn > Share > Grow

 

Stay connected for more such learnings and blogs.

 

Relevant Blog:

Advanced Foreign Currency Valuation in S/4HANA Cloud (Cloud ERP)