In a global economy, businesses operate across borders, dealing with customers, suppliers and employees in multiple currencies. While this opens new opportunities, it also introduces significant financial complexity. Managing multicurrency transactions, ensuring accurate currency conversions and maintaining compliance with accounting standards can be daunting, especially without the right systems and expertise in place. Multicurrency management is not just a technical challenge — it’s a strategic imperative.
Workday Financial Management offers robust multicurrency capabilities to help organizations manage these challenges. However, implementing and optimizing these features requires deep understanding, appropriate configuration and established governance.
Understanding multicurrency in Workday
Workday’s multicurrency functionality is designed to support global operations by enabling transactions in currencies other than a company’s base (or ledger) currency. This includes:
- Transaction currency: The currency in which a transaction is conducted (e.g., a EUR invoice for a USD-based company).
- Company currency: The base currency used for accounting and financial reporting.
- Reporting currency: A translated currency used for financial reporting purposes.
Workday automatically converts transaction currencies into the company currency for accounting purposes and supports reporting in multiple currencies using defined translation rules and exchange rates. Additionally, Workday handles currency conversions for bank accounts, expense reports, items, customers and suppliers.
Despite Workday’s powerful capabilities, many organizations encounter challenges when implementing or managing multicurrency features. These challenges often stem from the need to align system settings with accounting policies, reporting requirements and operational processes across different currencies. Addressing these factors early can help ensure accurate financial reporting and smoother day-to-day operations in a complex business environment. Challenges include:
- Complex currency flows: With multiple currencies flowing through operational transactions, it’s easy to lose track of how and when conversions occur, especially when dealing with cross-border transactions, intercompany transfers or multi-entity setups.
- Complex flows don’t have to mean confusion. We help map how Workday handles conversion at each stage, from transaction entry through reporting, providing visibility into where rates apply, while keeping intercompany and cross-border activity aligned.
- Inconsistent exchange rates: Without a centralized and well-maintained currency rate structure, organizations risk using outdated or inconsistent rates, leading to inaccurate financial reporting and compliance issues.
- A strong rate management process is key. Centralized rate structures and automated integrations for currency rates can be established, ensuring teams always work with consistent, up-to-date data that keeps reporting accurate and compliant.
- Translation and revaluation confusion: Understanding the difference between currency translation (for reporting) and revaluation (for adjusting balances due to exchange rate fluctuations) is critical. Misconfigurations can result in incorrect gain/loss postings and misleading financial statements.
- A clear separation of translation and revaluation processes is essential. Configuring the right rate types, accounts, and processing schedules in Workday helps ensure reporting currency adjustments remain distinct from balance sheet revaluations, keeping gains and losses accurate.
- Limited visibility: Without the right reports and dashboards, finance teams struggle to analyze currency exposure, track revaluation impacts, or ensure compliance with accounting standards like ASC 830 or IFRS.
- Limited visibility doesn’t have to be a barrier. Custom reports and dashboards in Workday can be developed to centralize historic currency rates, revaluation impacts and compliance metrics, giving finance teams a clear view across all entities and standards.
Considerations for effectively managing multicurrency in Workday
Successfully managing multicurrency functionality in Workday requires more than just enabling features. It demands a thoughtful, strategic approach to configuration, governance and ongoing maintenance. Organizations should focus on:
Establishing a clear currency framework
Before diving into configuration, organizations must define a clear structure for how currencies will be used across the enterprise. This includes identifying the company (ledger) currency for each legal entity, determining which transaction currencies will be used for customers, suppliers and employees and defining reporting currencies for consolidated or localized financial reporting.
Configuring translation and revaluation rules thoughtfully
Currency translation and revaluation are two distinct but critical processes. Translation is used for reporting in a currency different from the company’s currency. It requires defining translation methods and assigning them to specific accounts. Revaluation adjusts foreign currency balances at the period-end to reflect current exchange rates, capturing unrealized gains or losses. Organizations must carefully configure these rules to align with accounting standards and internal policies.
Planning for scalability and change
As organizations grow, adding new entities, entering new markets or changing reporting requirements, the multicurrency setup must evolve. It’s important to design scalable configuration from the outset, document processes and configurations for future reference, and regularly review and update translation and revaluation rules.
Ongoing governance and data management
Proper multicurrency financial management requires more than just well-designed configuration; it depends on robust governance and continual data maintenance. Regularly updating and maintaining currency exchange rates is critical to ensuring the accurate and consistent recording of financial transactions. Additionally, each period-end close should include procedures for currency translation and revaluation to maintain the integrity of financial reporting.
Effectively managing multicurrency operations in Workday requires more than just technical know-how; it demands strategic planning, clear processes and ongoing attention to detail. Establishing a solid framework and regularly reviewing the configuration will help ensure global financial operations remain accurate and efficient, no matter how complex the currency landscape becomes.
We’re here to help
Protiviti is a trusted Workday Services Partner with a track record of helping global organizations navigate complex financial transformations. Ready to simplify multicurrency operations? Protiviti is here to help build a scalable, compliant and efficient multicurrency framework in Workday.
To learn more about our Workday consulting services, contact us.
