In today’s interconnected world, expanding businesses face unique challenges, particularly when it comes to managing subsidiaries in different countries. One of the critical aspects of global operations is dealing with multiple currencies efficiently and accurately. Traditional enterprise resource planning (ERP) systems often struggle to handle complex multicurrency scenarios effectively. However, SAP S/4HANA Cloud, Public Edition emerges as an innovative solution, offering a robust solution for expanding companies across the globe. This FAQ blog will delve into the multiple accounting principles/multiple currencies of SAP S/4HANA Cloud, Public Edition, and highlight its advantages for businesses looking to streamline their operations across various countries.
Q1: Is SAP S/4HANA Cloud, Public Edition capable of handling multiple currencies?
A1: Yes, in addition to the Transaction Currency, SAP S/4HANA Cloud, Public Edition supports up to three parallel currency types end to end in all ledgers. And, if your business requires Functional Currency, you can set up a Company Code Currency , Group Currency or your own currency type as Functional Currency.
Q2: Can an organization use a currency other than the national currency as company code currency?
A2: In order to meet legal reporting requirements and to accelerate business configuration, the Company Code Currency is already predefined as the national currency of the company code. As organizations may have different requirements to deal with different currencies, SAP provides powerful multi-currency functionality to address those business need using Group Currency or Functional Currency or Freely Defined Currency as outlined above.
Q3: What is the Functional Currency and how can it be defined?
A3: The Functional Currency is regulated by IFRS (IAS 21) and US GAAP (ASC 830) and specifies the currency of your primary economic environment. In SAP S/4HANA Cloud, Public Edition, you can define the Functional Currency on leading-ledger level for all ledgers in a company code.
Q4: What are some of the best practices companies can adopt with regards to multi-currency functionality?
A4: In general, we recommend to use the Company Code Currency (10) for legal and local reporting and to use the Group Currency (30) for reporting on group-level, such as IFRS and US GAAP. In addition to that, the Functional Currency can be used to meet IFRS (IAS 21) and US GAAP (ASC 830) requirements. By default, the Company Code Currency (10) is defined as the Functional Currency but also, the Group Currency (30) or your own currency can be used as Functional Currency.
Expanding companies across the globe face unique challenges when managing subsidiaries in different countries with varying currencies. The objective of SAP S/4HANA Cloud, Public Edition is to provide a robust solution that supports businesses to embark on its mission to overcome these challenges and unlock their growth potential. With the help of its powerful multi-currency functionality, globally operating companies are given the tools that will aid them in their goals to efficiently manage multiple currencies, gain real-time visibility, comply with regulatory requirements, stay ahead in a competitive market driving operational excellence, enhance financial management, and accelerate their journey towards sustainable success in a multi-currency environment.
Jitu Agrawal is the Head of SAP S/4HANA Cloud, Public Edition at SAP Asia Pacific and Japan.