Handling USD and TZS in one set of books with TallyPrime

When you create a company in TallyPrime, you set a base currency, which is the default for all transactions, and you can add foreign currencies as you need them. For most Tanzanian businesses that means shillings as the base currency and US dollars added alongside.

Each currency is a master with its own symbol, formal name, ISO code and number of decimal places. Purchases and sales can be recorded in a foreign currency, and so can other accounting entries, so a dollar invoice, a dollar bank deposit and a shilling expense all sit in the same books. A currency can only be deleted if no transaction uses it and no ledger has an opening balance in it.

Exchange rates in TallyPrime are tied to dates. For each date you can enter a standard rate, a selling rate that applies to sales made that day and a buying rate that applies to purchases. The standard rate is a reference that TallyPrime uses to calculate variances from the rates in your actual transactions. You can set rates for one currency in its master, or for several currencies on one screen, and you can change the rate while entering a voucher.

Which rate source you follow is a decision for you and your auditor. TallyPrime only needs the rate and the date. Be careful about editing past rates: Tally warns that removing or altering an existing standard rate can lead to forex gains or losses being recalculated, so take a backup before you change one.

To invoice in dollars, enter the item rate with the dollar symbol and set the rate of exchange for that voucher. When you print, an invoice option shows the total in both the base currency and the foreign currency, which helps when a customer pays in dollars but your records are in shillings.

Tally’s advice is to keep ledgers in the base currency, and to set a ledger to a foreign currency only when you want its balance shown in that currency. A bank account held in dollars is the typical case: as a USD ledger, its balance reads in dollars, the same way your bank statement does.

Customers and suppliers are different. Bill-by-bill tracking and a default credit period are only available for ledgers in the base currency, and TallyPrime doesn’t track outstanding amounts for a ledger set to a foreign currency. So keep a customer who pays in dollars on a shilling ledger and record dollar invoices against it. You still invoice in USD, and every bill shows up in your outstanding reports.

If the rate moves between the day you invoice and the day you’re paid, the difference is a forex gain or loss. TallyPrime calculates it automatically. Realised gain or loss is the actual difference when a bill is settled, and you can see it in the Ledger Forex Gain/Loss Statement. Unrealised gain or loss is the expected difference on bills that are still unsettled in a period. The calculation can’t be switched off.

Until you account for it, the difference appears as Unadjusted Forex Gain/Loss in the Balance Sheet. To post it, you create a forex gain or loss ledger under Indirect Expenses or Indirect Income, set up a journal voucher class marked for forex gain or loss adjustments, and record the journal. The adjusted amount then moves to the Profit and Loss Account.

Any report can be shown in the base currency, in another currency you’ve created, or in several currencies side by side. In a report, Alt+A changes the column to another currency and Alt+C adds a new column for each extra currency. The currency only has to exist; you don’t need transactions in it.

In ledger reports, turning on Show Forex details under F12 shows the foreign currency amounts for each transaction. That’s useful when an owner, a lender or a head office abroad reads the figures in dollars, while your books stay in shillings.

Getting currencies right is easiest at the start: base currency, the dollar currency master, which ledgers stay in shillings and which bank accounts run in dollars, and opening balances entered at the correct rate. Powercomputers configures TallyPrime licences, features and data, customizes reports and invoice formats, and trains your team in basic or advanced Tally, in-house, on-site or remotely, with day-to-day support once you’re live.

Book a free demo and bring a few of your real dollar transactions. We’ll show you how they would be recorded and reported in TallyPrime before anything is set up.