Foreign currency volatility is an unavoidable reality for businesses operating across borders. As companies expand internationally, fluctuating exchange rates make it harder to maintain accurate financial records and comply with accounting standards.
If your finance team still handles foreign currency revaluation manually or through disconnected processes, it’s time to consider a modern approach to streamline this process. The answer lies in leveraging foreign currency revaluation in D365FO, a powerful feature designed to automate revaluations and ensure financial accuracy.
With D365 foreign currency revaluation, finance teams can realign balances, automate foreign currency revaluation accounting entries, and maintain audit-ready transparency.
This is the first blog in a series exploring the foreign currency revaluation process in Dynamics 365 Finance & Operations. In Part 1, we’ll focus on:
The Accounts Payable (AP) revaluation process
When does the revaluation of foreign currency take place?
How the process supports compliance and operational efficiency
What is foreign currency revaluation?
Foreign currency revaluation is an accounting process that adjusts the value of transactions and balances denominated in foreign currencies to reflect current exchange rates. This ensures that financial statements accurately represent foreign currency assets and liabilities at the end of each reporting period.
Foreign currency revaluation in D365 can be applied to general ledger accounts, bank accounts, accounts receivable, and accounts payable. The system calculates unrealized gains or losses based on updated exchange rates and posts the necessary foreign currency revaluation accounting entries to designated accounts. This process enables organizations to remain compliant with IFRS and GAAP while maintaining accuracy, consistency, and transparency across their financial records.
Benefits of using foreign currency revaluation in D365 F&O
Implementing foreign currency revaluation in D365FO provides finance teams with powerful tools to improve accuracy, efficiency, and compliance across global operations. By automating the process and reducing manual intervention, businesses can strengthen financial control while minimizing the risks associated with currency fluctuations. Here are some benefits of using this feature:
1. Accurate financial reporting
Realign foreign currency balances using updated exchange rates to ensure financial statements reflect the true values of foreign currency assets and liabilities, maintaining compliance with IFRS and GAAP standards.
2. Minimized currency risk
Identifies unrealized gains and losses proactively, enabling businesses to manage FX exposure before it impacts overall financial performance.
3. Streamlined month-end close
Automates foreign currency revaluation accounting entries and adjustments, significantly reducing manual effort during period-end processes.
4. Audit-ready transparency
Produces system-generated revaluation journals with complete traceability, supporting stronger audit integrity and internal controls.
5. Scalable for global operations
Supports revaluations across multiple legal entities and currencies, making it ideal for organizations with international operations.
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Modules supporting foreign currency revaluation in D365 F&O
Foreign currency revaluation in Microsoft Dynamics 365 Finance (D365FO) can be applied across multiple modules, ensuring accurate and compliant adjustments across all areas impacted by currency fluctuations. The feature is available in:
Accounts Payable (AP)
Accounts Receivable (AR)
Cash and Bank Management (C&B)
General Ledger (GL)
Outstanding transactions in each of these modules should be revalued using the foreign currency revaluation feature. In the case of AP and AR, the process generates foreign currency revaluation accounting entries in the General Ledger to record unrealized gains or losses. This ensures that sub-ledgers remain aligned with the general ledger.
Because the AP and AR revaluation already post the necessary entries to the General Ledger, the accounts receivable and accounts payable main accounts should be excluded from the General Ledger foreign currency revaluation to prevent duplication.
Accounts Payable (AP) foreign currency revaluation in Dynamics 365 F&O
In Part 1 of this series, we focus on the Accounts Payable (AP) foreign currency revaluation in D365. This process ensures that all open-vendor invoices in foreign currencies are adjusted to reflect the latest exchange rates on the revaluation date.
When the revaluation is executed in the AP module, the system:
Identify all open vendor invoices
Revalues these invoices based on the exchange rate on the revaluation date
Posts the unrealized gain or loss in the General Ledger
At settlement, it reverses the unrealized amount and posts the realized gain or loss
Example scenario:
Date
Action
Exchange Rate (AED to SDG)
Transaction Amount
Unrealized Exchange Gain/Loss
Realized Exchange Gain/Loss
15th October
Invoice Journal
610
610,000
–
–
31st October
FCR at month end
615
–
5,000
–
15th November
Payment of Invoice
620
620,000
–
10,000
Running AP foreign currency revaluation
Step 1: Post vendor insights
Go to AccountPayable > Invoices > Invoice Journal
Click on New and select the relevant journal, then click on Lines.
Provide relevant details, such as Vendor account, invoice number, Invoice date, Debit/Credit amount, Offset account, etc.
Validate the journal, mark it as ready, approve it, and post it.
View the posted voucher through the Voucher button.
Below is the Voucher:
Step 2: Run foreign currency revaluation
Now go to Account Payable > Period Task > Foreign Currency Revaluation.
Click on Foreign Currency Revaluation
Select Relevant particulars such as Methods, Use Posting Profile From, Considered Date, Date of Rate, Use Posting Profile From, Posting Profile, Dimension, and Description if required, and click on OK. The Foreign currency revaluation will then be posted.
Select the Foreign Currency Revaluation Execution and click on Voucher to see the entries.
You will see the following results:
If there is an Unrealized Loss
Description
DR
CR
Unrealized Gain/Loss a/c
xxx
Creditor a/c
xxx
If there is an Unrealized Gain
Description
DR
CR
Unrealized Gain/Loss a/c
xxx
Creditor a/c
xxx
Below is the voucher for FCR for the Invoice Journal we posted above:
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Navigate to Accounts Payable > Vendors > All Vendors
Select the relevant vendor and check Transactions
Step 4: Settle the invoice
Go to Accounts Payable > Payments > Vendor Payment Journal
Click on New, select the relevant journal, and click on Lines.
Select the relevant Vendor Account and click on Settle Transaction.
Select the relevant transaction and click on OK.
Mark the journal reports as ready, and then the treasury team will approve and post the journal. Once the journal is posted, its voucher can be seen by clicking on the voucher button.
Below is the Voucher of the journal we posted. To see all related vouchers, go to options in the Fast Tab and click All related Vouchers.
At the point of settlement, by default, the system reverses the previous unrealized gain/loss on foreign currency revaluation and Records the realized gain or loss on the relevant transactions. All the related vouchers can be seen in the image below:
Conclusion
Dynamics 365 Finance & Operations provides a powerful, automated approach to foreign currency revaluation, ensuring compliance, accuracy, and efficiency for global operations. Whether you’re managing Accounts Payable, Accounts Receivable, or multiple legal entities, D365 equips your finance team with the tools to handle currency fluctuations confidently.
As a certified Microsoft Dynamics 365 partner, Confiz helps organizations implement and optimize foreign currency revaluation in D365FO tailored to their unique business needs. From configuration to deployment, we ensure a smooth transition and long-term value.
Get started today – contact us at marketing@confiz.com to learn how we can support your foreign currency revaluation journey.
