Multinational companies must handle revenue recognition across different currencies and tax regimes. Light provides comprehensive multi-currency support, automatically managing exchange rate fluctuati...
Last updated Feb 18, 2026 · 3 min read
Light operates with three currency perspectives:
Transaction currency: The currency of the original business transaction. If you invoice a customer in EUR, that's your transaction currency.
Local currency: The functional currency of the legal entity. A UK subsidiary operates in GBP, a German subsidiary in EUR.
Group currency: The consolidation currency for your entire organization (often USD or EUR for multinational groups).
When you create a revenue transaction, Light automatically calculates and stores amounts in all three currencies, applying appropriate exchange rates at the transaction date (the valuation date).
When revenue is recognized under a release template, each periodic release uses the FX rate from the original transaction date. This preserves the economically-agreed revenue amount while converting correctly for local and group reporting.
Example: You invoice a US customer for USD 12,000 on January 1 with a 12-month deferred revenue release (GBP entity, group USD):
Each month, Light releases USD 1,000 and GBP 791.67, maintaining the original exchange rate throughout the 12 months. This prevents distortions from changing FX rates between months.
Good to know: Light uses the valuation date (typically transaction date) for initial rate determination, then applies that rate consistently across all release periods.
You can override the default FX rate on any transaction if your company uses a different methodology:
This is useful when your company locks rates internally (e.g., monthly average rates) rather than using spot rates.
For long-duration recognition periods, you may experience significant FX volatility. Light preserves the original FX rate locked at transaction inception, ensuring:
If you need to adjust revenue for subsequent FX movements, create a separate FX revaluation (FX) document rather than modifying the original revenue release.
An FX revaluation document (FX type) records unrealized gains or losses from currency fluctuations. When held-to-maturity revenue or payables experience FX changes, FX documents systematically adjust reporting values.
To create an FX revaluation:
When deferred revenue spans multiple legal entities, each entity records its portion in its local currency. During consolidation:
Light automatically handles these consolidation mechanics, ensuring your consolidated P&L and balance sheet correctly present multinational deferred revenue.
Month-to-month FX fluctuations can create translation differences (especially for balance sheet items like deferred revenue). Light segregates:
This segregation is essential for IFRS and GAAP compliance, separating economic FX impacts from accounting translation mechanics.
Tip: Configure separate GL accounts for realized and unrealized FX movements to simplify variance analysis and reporting.
Your balance sheet reports deferred revenue in local and group currencies. Light's reporting engine:
Revenue recognition on the P&L appears in transaction currency initially, then translates to local and group perspective.
Lock rates consistently: Decide whether to use spot rates, monthly average rates, or forward rates, then apply consistently across all entities.
Separate FX movements: Use FX documents to record unrealized gains/losses rather than adjusting revenue recognition, maintaining audit trail clarity.
Document rate source: Maintain a schedule of which rates were used for which transactions to support audit procedures.
Test translations: Run trial balances in each currency periodically to validate that translation differences are within expected ranges.
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