Exchange rate conversion is generally done using a direct exchange rate from one currency to another. For example, if a resource incurred an expense in American dollars and would like to be reimbursed in Canadian dollars, most financial applications use a direct conversion rate between these two currencies.
Changepoint supports two methods of currency conversion:
By default, the system uses the direct conversion method, if exchange rates are available. If no exchange rates are available, the system uses the triangulation method. Invoicing, expenses and various reports can use the triangulation method.
For triangulation to function properly, it is imperative that all enabled currencies have one exchange rates configured to and from one common currency, such as the default currency for the billing office.
Conversion for invoicing
The system first looks for a direct conversion from the expense currency to the invoice currency.
If no conversion definition is found, the system calculates:
Expense amount * y / x = Converted amount
Where x and y are derived in the following order or preference (such as, use the first case where both conversions are found):
Conversion for expenses
The system first looks for a direct conversion from the expense currency to the resource's base currency. If it is not found, the system uses:
Expense amount * y / x = Converted amount
Where x and y are derived in the following order or preference (such as, use the first case where both conversions are found):
Triangulation example
A resource incurs a billable expense of US$ 500.
The invoice currency for the engagement is British pounds sterling. No direct conversion rate is available from US dollars to British pounds.
The billing office currency is Euro.
The calculation is: (500 USD x .6387) / 1.0065 = 317.29