Monday, May 18, 2009

Oracle EBS: Currency Conversion in Oracle Internet Expenses (OIE.K)

This blog post aims to explain where the conversion rate in Oracle Internet Expenses is derrived from and how setting a policy can have quite a significant effect on the total value returned.

The exchange rate used to convert a non-GBP expense claim back into GBP to be paid is handled in two parts within Oracle.

In the General Ledger (GL) there is a table of "Daily Rates";

This shows the currency conversion rate entered into the system for a specific day. As you can see in the screen shot above rather than entering truly "daily" rates the Finance department where I work have entered these dates on a monthly basis - this isn't really a problem so long as you accept that these are the rates that will be used.

The rate stored in the GL is the "base rate" that Internet Expenses uses for the conversion.

The next part is dependent on the conversion policy as configured in internet expenses;

At the moment for the operating unit show above is configured with an allowance of 5% so when the total is converted back to sterling there is a 5% "bonus" paid to the end user.

The effect of this 5% bonus is that on the 31st January 2009 rather than getting a little less back in GBP that they had spend in Euros they got back a little more;

This is "as expected".

The problem with the 5% is that the more you spend the more you make. So if you spend 500 EUR you will get back 525 EUR at the prevailing exchange rate in the GL.
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