If you plan to use the multicurrency features of Costpoint, you must first establish a functional currency on the Configure General Ledger Settings screen. This is a system-wide selection.

The functional currency is the currency in which the books and records (General Ledger) of your company are kept and is usually the currency of the country in which your company is located. 

The transaction currency is the currency in which the invoice is issued or the voucher processed. Certain programs in Costpoint Billing and Accounts Payable convert the transactional currency back to the functional currency when you enter the voucher or process the bill. All functional and transaction currencies and their associated conversion rates are stored in the history tables. Costpoint uses these amounts and rates to calculate the unrealized gains and losses at the end of the accounting period and the realized gains and losses when the voucher is paid or the cash receipt is entered. 

In Costpoint, you can also create the invoice in one currency and pay it in another currency. This is a common occurrence when dealing with the Euro. The currency in which the invoice is paid is the pay currency. You enter the pay currency when entering the cash receipt or selecting the voucher for payment. Use the Exchange Rates subtask of the Manage Cash Receipts screen for pay currency selection in Accounts Receivable and use the Select Pay Currency group box on the Select Vouchers for Payment screen for pay currency selection in Accounts Payable. For example, the XYZ Company keeps its financial records in US dollars (functional currency). This company is doing business with a British company that wants to be billed in British Pounds (transactional currency). However, because the work on the project is being conducted in France, the invoice is paid in French Francs (pay currency).  

If you use a pay currency, you must use a process called triangulation, where the transaction currency and the pay currency are converted back to functional currency to calculate the realized gain or loss on the transaction. You can enable the use of triangulation on the Configure Multicurrency Settings screen. Usually, the pay currency is not known at the time of bill calculation or voucher entry. Therefore, you enter the pay currency when receiving the cash or selecting the voucher for payment. You can establish a default pay currency on the Manage Vendors screen. You can also limit which pay currencies are allowed for a particular vendor.