SAP Knowledge Base Article - Public

3729318 - Currencies and Functional Currency Handling in SAP S/4HANA Cloud (Public Edition)

Symptom

SAP S/4HANA Cloud supports multiple currency types by design. However, functional currency behaviour, configuration dependencies, and reporting limitations are often misunderstood, especially when the functional currency differs from the company code (local) currency.

"Image/data in this KBA is from SAP internal systems, sample data, or demo systems. Any resemblance to real data is purely coincidental."

Environment

SAP S/4HANA Public Cloud Edition 

Cause

Resolution

1. Supported Currencies – General Overview

SAP S/4HANA Cloud (Public Edition) supports all ISO-standard currencies by default.

2. Currency Types in SAP S/4HANA Cloud (Public Edition)

2.1 Transaction / Document Currency (Currency Type 00)

The transaction (document) currency is the currency in which a business transaction is executed (for example, invoice or payment currency), independent of the company code currency.

Key Characteristics

  • Set during transaction entry
  • Used in customer/vendor invoices, purchase orders, and payments
  • Serves as the source currency for automatic conversion to company code currency
  • Example: A German company (Company Code Currency EUR) sells goods to a customer in the United States. The sales transaction is recorded in USD. The document/transaction currency is USD  

2.2 Company Code Currency (Currency Type 10 / 11)

The company code currency is the base currency for legal accounting and is used for all financial postings in the company code.

Key Characteristics

  • Always in a 1:1 relationship with the country currency
  • Automatically derived during company code configuration
  • It is default value provided as best practice content. Cannot be changed during or after initial activation.
  • Used for financial statements, trial balance, and P&L

Examples

  • EUR for a German company code
  • USD for a US company code

2.3 Group / Global Currency (Currency Type 30 / 31)

The group currency is defined at client level and is used for cross-company consolidation and unified reporting.

Key Characteristics

  • Defined during system setup as part of Finance Primary Settings
  • Cannot be changed after initial content is defined and activated
  • Used in consolidation and internal reporting
  • Also referred to as Global Currency or Consolidation Currency

Example

  • USD delivered as best-practice content
  • Any ISO code available in the system can be selected as group currency

    Setting Your Group Currency

2.4 Freely Defined Currency (Currency Type Y* / Z*)

A freely defined currency is a custom currency type configured in addition to standard currencies to support specific reporting or operational requirements.

Key Characteristics

  • Used for management or parallel reporting
  • Configured per company code and ledger
  • Examples: reporting in CHF when group currency is USD and company code currency is EUR

Configuration

  • SSCUI: Define Currency Settings for Ledger and Company Code
  • Prerequisite: Can be assigned to company code & ledger before any postings are created in the system.

    Create Additional Currency Types

3. Functional Currency

The functional currency represents the primary currency of the economic environment in which an entity operates, as required by IFRS / GAAP.

Key Characteristics

  • There is the NO option to enter a manual exchange rate from the document currency to the functional currency at the time of the posting.

  • The amount for functional currency is converted during document posting and can be overwritten.

  • In case of “internal” postings (CO allocations, settlements, depreciation runs), the functional currency is calculated based on historic exchange rates.

  • In reporting, the Functional Currency amount is displayed in one column (independent of whether it is the Company Code, Global or 1st freely defined currency) to enable one way of working, especially for those employees working across different Company Codes

    • Can be company code currency, group currency, or freely defined currency.

    • Defined per company code and ledger

    • Can be set as default transaction currency using the app Edit Options for Journal Entries - My Settings

Configuration

4. Functional Currency – Important Considerations

  • Functional currency can only be defined for company codes without postings across connected systems
  • In case there are postings only in Customizing and Test system customer can use the app Schedule Accounting Data Changes/ template Reset Transaction Data to reset transactional data
  • Functional currency is not exposed in reporting but can be identified based on currency type defined as functional currency (currency type 10, 30 or Y/Z)
    • Asset Accounting
    • Inventory Accounting
    • Product Costing
    • Actual Costing
    • Margin Analysis
    • Predictive Accounting
  • Product cost planning supports only company code and group currency
  • Event-based Revenue Recognition (EBRR) calculates revenue and cost amounts based on the company code currency. Amounts in functional currency are then calculated from the company code currency amounts, using the creation date of the relevant object — such as a project item, service item, or sales item — as the conversion date.
  • Material valuation supports freely defined currency
  • Cost component split is not available in the 3rd currency
  • Group Reporting can source only one functional currency
  • Functional currency cannot be used as source currency for group currency
  • Tax reporting is typically performed in company code currency
  • Tax Reconciliation apps support local currency only
  • Correspondence (e.g. Account Statement or any other standard forms)/ Dunning:
    Does not support Functional Currency.
    Communication with customers must be in transactional currency.
    Company Code Currency and Functional Currency are rather used internally or in reports to other legal entities like authorities.
  • Credit Risk Management:
    Credit risk management uses only the currency defined at the credit segment ((Create Credit Segments -102104)
    The reason is that credit risk management is setup centrally at customers and the segment can cover multiple company codes. 
    Therefore, any data that is transferred to Credit Risk Management is translated into the credit segment currency.
  • Collection Management:
    Does not support Functional Currency.
    Similar Situation as for Correspondence. In direct communication with the customer the transactional currency is used.

  •  Dispute Management:
    Does not support Functional Currency.
    Similar situation as in Collections due to its tight integration with Collections.
    Communication with customers must be in transactional currency.
    Company Code Currency and Functional Currency are rather used internally or in reports to other legal entities like authorities.

  • Tax Reporting and Tax Reconciliation:
    Tax reporting is typically performed in company code currency.
    The only exception is if RITA is active and the country where the company is registered has a different currency, then Tax reporting currency can only be done in this currency. 2907372 - UPDATE: Restriction Note for RITA in SAP S/4HANA CE2005 and further Releases: 'Registration for Indirect Taxation Abroad: Not supported Apps, Countries and Processes.'
    Tax Reconciliation apps support company code only>
    Tax reporting and tax reconciliation in functional currency is not supported.

    • Treasury Management (TRM)
      At present, functional currency is not supported in Treasury Management. The system currently supports only position currency and valuation currency, which are aligned with transaction currency and company code currency in accounting.
      As a result, treasury valuation is performed based on the company code currency, not on a separate functional currency.

    • Group Reporting can source the functional currency measure. However, it is not possible to keep 2 "source" currencies simultaneously.

    •  For CO reports:

      The delivered standard reports do not support functions currency out of the box.

      The functional currency can be added to the standard reports (should be possible for all WebDynpro reports with released queries).

      User: EXTENSIBILITY_SPEC

      App: Custom Fields

      Tab: Data Source Extensions --> select "Create"

      Select in Data Source query of the report. P&L - Plan/Actuals --> C_PROFITANDLOSSPLANACTQ2903

      Select in Tab "Field Selection" Amount in Functional Currency and Functional Currency. Save and Publish.

      G/L Account Line Item - Raw Data

      Analytics

       

       

    5. Functional Currency in Data Migration – Open Items and Balances

    Functional currency is fully supported in Open Item and Balances as migration objects.

    Template fields available:

    Field Description 
    HWAER / DMBTR1st local currency (company code currency)
    HWAE2 / DMBE22nd local currency
    HWAE3 / DMBE33rd local currency
    WAERS / WRBTRTransaction (document) currency

     

    • The currency key fields (HWAER, HWAE2, HWAE3) identify which currencies are being provided
    • The amount fields (DMBTR, DMBE2, DMBE3) hold the amounts in those currencies

    Two approaches are supported:

    1. Provide all currency amounts explicitly (system does not recalculate)
    2. Leave second local/group currency empty (system calculates using exchange rates)

    Migration objects:

    FI - Accounts payable open item

    • The file template contains following amount fields WRBTR, DMBTR, DMBE2, DMBE3.
    • The documentation contains following comment regarding the two approaches of currency and amount handling:
      • Provide all relevant currencies and related amounts via the template. When you do this, the provided values are adopted from the template regardless of the existing exchange rates in the system.
      • In the template, keep the second local/group currency field and the related amount empty. In this case, the amount is automatically calculated by valid exchange rates in the system.
      • The exchange rate is determined using the provided posting date which is defined as migration key date using the Define Settings for Legacy Data Transfer app.

    FI - Accounts receivable open item

      • The file template contains following amount fields WRBTR, DMBTR, DMBE2, DMBE3.
      • The same two approaches regarding the currency and amount fields apply here as well (see above for point for more details).

    FI - G/L account balance and open/line item

    • The file template contains following amount fields WRBTR, DMBTR, DMBE2, DMBE3.
    • The same two approaches regarding the currency and amount fields apply here as well (see above for point for more details).

    6. Functional Currency – APIs

    • In posting API, customers can enter the amount for company code currency/group currency/ free define 1 currency amount.

    7. Functional Currency – Logistics

    Motivation:

    • Functional Currency is the main currency used for valuation, reporting, and tracking stock values, often defaulting to the company code currency.
    • When goods movements are posted, the system converts foreign currency transactional data into the functional currency for accounting, alongside the local currency.
    • The HANA built-in CURRENCY_CONVERSION function uses the exchange-rate type (Kurstyp) "M" (the average rate) by default. 
    • All analytical apps have Display Currency as input option. For some it is mandatory, other (Like Multiple Stocks), offer to show company code currency and an arbitrary Display Currency in parallel. The apps displaying documents do not have a currency conversion option.

     

    Limitations:

    • Stock values are fundamentally company code currency - based.
    • Functional currency is not a native logistics valuation currency.
    • Display currency does not guarantee reconciliation with financial balances.
    • Customers may:
      • Misinterpret display currency as financially exact
      • Expect logistics values to reconcile 1:1 with accounting in functional currency
      • Rounding differences stem from data model granularity, not currency conversion

    Mitigations:

    • If the selected materials have a different currency than the display currency, the system converts the local currency of the company code into the display currency.
    • In order to calculate inventory values exactly, SAP recommends that you always specify both filter criteria Reporting Date and Display Currency together.
    • This field is prefilled from the user settings if the currency is maintained in the user profile under Default Values.

    8. Functional Currency – Globalization Service

    • DRC reports only gets data from the company code currency

    9. Currency Exchange Rates

    Exchange rates are maintained using:

    Key Notes

    • Rates can be uploaded or automated via APIs
    • Translation depends on defined source currency
    • Functional currency cannot be used as source currency

    10. Relevant Customizing Activities

    • Check Exchange Rate Types (102349)
    • Define Translation Ratios for Currency Translation (102568)
    • Define Standard Quotation for Exchange Rates (102611)
    • Define Currency Settings for Ledgers and Company Codes (103379)
    • Check Currency Codes (107225)

    See Also

    3492731 - FAQ: Currency Translation in SAP S/4 HANA Public Cloud

    Keywords

    KBA , FI-GL-GL-2CL , Basic Functions (Public Cloud) , How To

    Product

    SAP S/4HANA Cloud Public Edition all versions