Once currencies are enabled, each time entry's duration (in hours) is recorded and linked to a currency. Also recorded are the time entry's date and the hourly rate for the employee. Using these 4 pieces of information, along with the currency exchange rates established when Currencies are enabled, the cost for each time entry can be viewed in any currency.
The following is a simplified overview of how currencies are applied to time entries. The same principles can be used to describe how currencies are applied to time estimates to calculate budgeted costs.
In this example, we want to review the company's costs (in Euros) for a time entry entered by an employee paid in US dollars.
1. Nathan enters 3.5 hours on a task - on Sept 1st.
Nathan's time entry tool
2. Nathan's rate of wages (pay rate) is 45.00 US dollars per hour.
Nathan's employee profile
3. The software records these 4 items for this time entry;
Duration: 3.5
Date: September 1
Rate: 45.00
Rate Currency: USD
When reviewing the cost for this time entry (in views and reports), the costs can be viewed in any enabled currency. In this example, we want to review the company's cost for Nathan's time entry in Euros.
4. Part of the cost calculation is the exchange rate for the day the time entry was entered. The USD > Euro Exchange rate for Sept 1 is 0.7135
Exchange rates as set in the Currencies view
5. Using the Actual Time & Costs view, the company cost for this time entry is calculated as:
Duration x Employee Pay Rate x Exchange Rate on the specified date
3.5 x 45.00 USD x 0.7135 EUR/USD = 112.38 Euros €
Actual Time & Costs view
It's important to note that displayed costs are not actually stored anywhere in the software. These are calculated for views and reports as required based on the currency exchange rates and the 4 items described at the beginning of this topic.
In reality, there are other factors used in calculating costs such as task proratings, overtime rates, etc. These were excluded to keep this example simple, but are detailed in the Client and Company Costs topic.