Exchange rates for proration credits
Zuora Finance uses the original invoice's exchange rate for credits to maintain accuracy in financial reconciliation and reporting
According to accounting requirements, any credit issued to you should be translated into the home/reporting currency using the exchange rate as of the original invoice. This prevents ambiguity and incorrect financial treatment when dealing with scenarios involving credit memos (CMs), debit memos (DMs), and invoices that span multiple transactions with different exchange rates. Item-level exchange rate tracking ensures accurate financial reconciliation and reporting.
Zuora includes a feature to handle exchange rate tracking at item level. When you enable this feature, credit memos originating from invoices will use the original invoice exchange rate for conversion to home and reporting currency.
This feature is controlled by an accounting rule.
Accounting rule
When this accounting rule is implemented, the exchange rates will be available at the item level, which is the Credit Memo Item (CMI) level. So, if you have any internal reporting that you are doing based on the header level exchange rates, that reporting should now refer to the item level exchange rates. This is basically a best practice recommendation.
CM FX rate date population
This section discusses different scenarios when CM is generated as a credit of an existing invoice.
Scenario: A proration credit memo is created due to subscription cancellation. Zuora will:
Identify all the invoices associated with the subscription.
For each invoice, retrieve the exchange rate date.
For each line item in the CM, apply the exchange rate date from the corresponding invoice.
Each line item in the CM will have its own exchange rate and exchange rate date based on the associated invoice.
If all the Credit Memo items (CMIs) have the same exchange rate, then the CM level, which is the header level exchange rate, will be populated.
In cases where the CM is created from multiple invoices, the corresponding CMIs can have a different exchange rate, in which case the header level (Credit Memo level) exchange rate will be blank.
Impacted functions
|
Transaction Type |
If accounting rule = No |
If accounting rule = Yes |
|---|---|---|
|
Credit Memo |
CreditMemo.ExchangeRateDate |
CreditMemo.ExchangeRateDate |
|
Credit Memo Item |
CreditMemo.ExchangeRateDate |
CreditMemoItem.ExchangeRateDate|CreditMemo.ExchangeRateDate |
|
Credit Taxation Item |
CreditMemo.ExchangeRateDate |
CreditMemoItem.ExchangeRateDate|CreditMemo.ExchangeRateDate |
|
Credit Memo Application |
CreditMemo.ExchangeRateDate |
CreditMemo.ExchangeRateDate |
|
Credit Memo Application Item |
CreditMemo.ExchangeRateDate |
CreditMemoItem.ExchangeRateDate|CreditMemo.ExchangeRateDate |
|
Credit Memo Part |
CreditMemo.ExchangeRateDate |
CreditMemo.ExchangeRateDate |
|
Credit Memo Part Item |
CreditMemo.ExchangeRateDate |
CreditMemoItem.ExchangeRateDate|CreditMemo.ExchangeRateDate |
Example scenario: Case 1 - Credit from single invoice
PRPC
Recurring Fee $100 USD
Tax
Tax Enabled
Tax rate 0.1
Tax exclusive for PRPC
Subscription
2024-01-01 ~ 2024-03-31 3 months
Billrun
1st billrun
Invoice date: 2024-01-01
Target date: 2024-03-31
The following tables provides the Invoice details:
|
Invoice |
Invoice Item |
Amount |
Service Period |
Invoice Date |
|---|---|---|---|---|
|
INV-1 |
II-1 |
100 |
2024-01-01 ~ 2024-01-31 |
2024-01-01 |
|
INV-1 |
TaxItem-1 |
10 | ||
|
INV-1 |
II-2 |
100 |
2024-02-01 ~ 2024-02-29 |
2024-01-01 |
|
INV-1 |
TaxItem-2 |
10 | ||
|
INV-1 |
II-3 |
100 |
2024-03-01 ~ 2024-03-31 |
2024-01-01 |
|
INV-1 |
TaxItem-3 |
10 |
Cancel subscription from 2024-03-01 (cancel 1 month)
2nd billrun
Invoice date: 2024-02-01
|
Credit Memo |
Credit Memo Item |
Amount |
Service Period |
Memo Date |
CM Rate Date |
CMI Rate Date |
|---|---|---|---|---|---|---|
|
CM-1 |
CMI-1 |
100 |
2024-03-01 ~ 2024-03-31 |
2024-02-01 |
2024-01-01 |
2024-01-01 |
|
CM-1 |
CMI-1_TaxItem-1 |
10 |
Exchange Rate Derivation
DSE
CreditMemoItem
|
Fields |
Value |
|---|---|
|
Credit From Item Source |
InvoiceItem |
|
Exchange Rate |
Original Invoice Item Exchange Rate |
|
Exchange Rate Date |
Original Invoice Item Exchange Rate Date |
Journal run
Trial Balance Run
Accounting Period: 2024-02
Example scenario: Case 2 - Credit from multiple invoices
PRPC
Recurring Fee $100 USD
Tax
Tax Enabled
Tax rate 0.1
Tax exclusive for PRPC
Subscription
2024-01-01 ~ 2024-04-30 4 months
Billrun
1st billrun
Invoice date: 2024-01-01
Target date: 2024-03-31
The following table provides the Invoice details:
|
Invoice |
Invoice Item |
Amount |
Service Period |
Invoice Date |
|---|---|---|---|---|
|
INV-1 |
II-1 |
100 |
2024-01-01 ~ 2024-01-31 |
2024-01-01 |
|
INV-1 |
TaxItem-1 |
10 | ||
|
INV-1 |
II-2 |
100 |
2024-02-01 ~ 2024-02-29 |
2024-01-01 |
|
INV-1 |
TaxItem-2 |
10 | ||
|
INV-1 |
II-3 |
100 |
2024-03-01 ~ 2024-03-31 |
2024-01-01 |
|
INV-1 |
TaxItem-3 |
10 |
2nd billrun
Invoice date: 2024-02-01
Target date: 2024-04-30
The following table provides the Invoice details:
|
Invoice |
Invoice Item |
Amount |
Service Period |
Invoice Date |
|---|---|---|---|---|
|
INV-2 |
II-1 |
100 |
2024-04-01 ~ 2024-04-30 |
2024-02-01 |
|
INV-2 |
TaxItem-1 |
10 |
Cancel subscription from 2024-03-01 (cancel 2 month)
3rd billrun
Invoice date: 2024-02-01
|
Credit Memo |
Credit Memo Item |
Amount |
Service Period |
Memo Date |
CM Rate Date |
CMI Rate Date |
|---|---|---|---|---|---|---|
|
CM-1 |
CMI-1 |
100 |
2024-03-01 ~ 2024-03-31 |
2024-02-01 |
2024-01-01 | |
|
CM-1 |
CMI-1_TaxItem-1 |
10 | ||||
|
CM-1 |
CMI-2 |
100 |
2024-04-01 ~ 2024-04-30 |
2024-02-01 |
2024-02-01 | |
|
CM-1 |
CMI-1_TaxItem-2 |
10 |
Expected result
DSE