Multi-currency revaluation

Restating open foreign-currency receivables or payables at a later exchange rate so unrealised FX gain or loss hits the books before cash settles.

Also searched as: FX revaluation, unrealised exchange gain, period-end currency revaluation, foreign currency remeasurement

When you invoice a customer in USD while your ledger currency is LBP (or EUR while books are USD), the invoice locks a document rate on the day it posts. Until the customer pays, the open balance still sits in foreign currency. At period end, accountants revalue that open balance at the closing rate.

The difference between the original local-currency snapshot and the new one is unrealised FX — it reverses or rolls when the rate moves again, and it becomes realised when you settle. Mixing those two is how month-end FX accounts turn into a recon nightmare.

A system that only converts reports at today’s rate without dated snapshots cannot tell you what posted last March. Revaluation needs the open AR/AP in document currency, the closing rate for the period, and a journal that keeps the subledger and G/L aligned.

If you are still one currency and one bank, you do not need revaluation workflows yet. Introduce them when open foreign balances are material enough that a 1% rate move would change the P&L you show the board.

Open USD receivable revalued at month end

Invoice SI-1042: USD 10,000 posted when the rate was 89,500 LBP per 1 USD. Month-end closing rate is 90,000. The invoice is still unpaid.

1. Original LCY = 10,000 × 89,500 = 895,000,000 LBP.
2. Revalued LCY = 10,000 × 90,000 = 900,000,000 LBP.
3. Unrealised FX gain = 900,000,000 − 895,000,000 = 5,000,000 LBP.

Books show AR higher by 5,000,000 LBP and an unrealised FX gain of 5,000,000 LBP. When the customer later pays, any further rate move posts as realised FX against that settlement.

Related modules

• Finance & ledger
• Receivables & payables

Related terms

• AR ageing
• Cost of goods sold (COGS)
• Credit limit

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