One of the attributes of a rental rate is whether it is a pre-paid rate. This feature is turned on or off on page 2 of Edit Rental Rules/Rates. Besides the obvious feature of requiring a deposit on a reservation, the pre-paid flag changes other behavior within the Reservation, RA Open and Estimate pop-up window programs. This logic also has a connection to rental rates that are quoted in a foreign currency. This chapter summarizes these behavior changes.
II. DEFINITIONS
Pre-Paid Rate - This is a rate which when used on a reservation requires that the renter place a deposit on the reservation that is equal to or greater than the estimated charges as displayed by the F8 Estimate pop-up screen.
Local Currency - This is the local legal currency for the location. For example, in Mexico, it would be Pesos. In the US, it is US Dollars, in England it is British Pounds.
Foreign Currency - Any currency other than your local currency. For operations in Mexico, the US dollar is a foreign currency. For operations in the US, the Euro and Canadian dollars are foreign currencies.
Foreign Currency Rate - This is a rate whose prices are quoted in a currency other than the rental location's local currency.
Exchange Rate – The rate used to convert one currency to another.
Note: For most examples throughout this chapter, it is assumed that the Euro is the local currency and that US Dollars are accepted as a foreign currency and used on a Foreign Currency Rate.
III. REQUIRED SET-UP STEPS
A. EDIT CURRENCY CODES (Accounting Control Files Menu)
This program is used to:
For convenience, standard currency codes established by the International Standard Organization have been pre-loaded into this file. Although their codes are 3 characters, within CARS+ only the first 2 characters of the codes are used.
B. EDIT EXCHANGE RATES (Accounting Control Files Menu)
This program is used to:
As exchange rates can vary dynamically, this program allows you to maintain exchange rates as often as desired. Each record has a date and time when it becomes effective.
The example shown below is one where the local currency is Euros and the exchange record will be used to convert US Dollars to Euros.
| OPTION: __ EDIT EXCHANGE RATES 1 Currency Code US 2 Posting Company 3 Effective Date 06-01-11 4 Effective Time 0000 5 Divide by Rate .666 6 Multiply by Rate 1.5 1SAVE 2NEXT 3ERASE 4 5BACKUP 6 7HELP 8 |
C. EDIT LOCATIONS (Location Control Files Menu)
It is necessary to define the local currency for each location. The following fields are all located on the third page of the Location record:
Local Currency
Enter the appropriate 2-letter currency code for your currency.
Currency Symbol
This field is available for rental operations having locations in more than one country and where the countries have different symbols that represent their currency. By entering the currency symbol in this field, the correct symbol can be made to print on customer documents for each country. (This does not affect any CARS+ Reports.)
Enter up to 6 characters representing the currency symbol for this location if it is other that “$”. (If this field is left blank, “$” will be used.)
Symbol Place
Indicate if the symbol should be printed before or after the amount.
D. EDIT RENTAL RULES/RATES (Rate Control Files Menu)
By enter a "Y" in the "Rate Prepaid" field on page 1, the rates are designated as requiring pre-payment.
By entering a Currency Code in the “Currency” field on page 1, the rates are designated as being entered in that foreign currency.
A Rate Product can be designated as both Pre-paid and as a foreign currency rate.
E. CUSTOMER FILE UPDATE (Customer maintenance Menu)
When rates are defined as both pre-paid and quoted in a foreign currency a special Form of Payment (FOP) Code MUST be set up for adjustments in Currency Exchange Rates (see the discussion on RA Open below). Like all FOP Codes, this code must be set up in the Customer File Update program. Specifically, the following fields must be filled in:
IV. COUNTER INSTRUCTIONS
A. RESERVATIONS
As stated above, a pre-paid rate when used on a reservation requires that the renter place a deposit on the reservation that is equal to or greater than the estimated charges as displayed by the F8 Estimate pop-up screen (as such, not only must the Time and mileage charge be prepaid but so
must all automatically applied options and options reserved on the
reservation). Failure to do that will prevent the user from saving the reservation. This is also true when after editing an existing reservation, if the edits result in additional charges (such as extra days), those additional charges must also be pre-paid by an additional deposit.
In addition, if the pre-paid rate is also defined as a Foreign Currency Rate, the deposit MUST be made in the Rate's currency NOT the rental location's local currency. In the Deposit subwindow, the user will be required to enter the deposit amount in the foreign currency field. Like any other foreign currency payment, CARS+ will convert the foreign amount into the local currency and that is the amount that will appear on reports as being ready for banking. See the chapter on Currency Exchanges.
B. ESTIMATE POP_UP
The estimate pop-up when called from within Reservation and when the rate is both a pre-paid rate and is quoted in a foreign currency, will have the total value of all deposits will appear in the Rate's Currency (not in the value that will be banked).
For example, a two day reservation quoted in USD and prepaid in USD will appear as follows:
DAYS : 2 @ $ 50.00 = $ 100.00
APCONFE: $ 10.00
TAX : $ 20.00
DEPOSIT: $ 130.00
TOTAL : $ 0.00
Although the face value of the deposit is $130.00 USD, the the actual amount that will be deposited in the bank will be converted to 86.66 Euros (using the exchange rate illustrated above). Regardless, the estimate will display the deposit in the face value. In this case the the renter pre-paid for 2 days and all taxes associated with those two days.
C. RA OPEN
The behavior of RA Open changes slightly when opening a rental which is based on a reservation whose rate is both pre-paid and quoted in a foreign currency. Like all other foreign currency rental rates, when it is used on a RA, the foreign currency rate is converted immediately to local currency using the exchange rate in effect at the time of Open. A display only field in the Rates subwindow indicates that an exchange rate is in effect and the exchange rate used. This is shown in bold in the illustration below:
| OPTION: ______________ TIME & MILEAGE RATES Option EffDt Dy-Rate/ml Wk-Rate/ml Mt-Rate/ml Xd-Rate/ml Hrs-Rate/ml 1 US1 06-10 31.50/* */* */* 10.00/* 2 MILE */* */* */* */* */* 3 * */* */* */* */* */* 4 * */* */* */* */* */* 5 * */* */* */* */* */* 6 * */* */* */* */* */* 7 * */* */* */* */* */* 8 Free miles/Yield */* Exchange Rate.63105 F2 NEXT 7 F4 PREV 7 |
Note That the exchange rate in the example above has changed from the rate that was effective as of the date when the reservation was taken. It is now .63105 rather than .666.
Normally deposits that are taken in a foreign currency are valued in the local currency using the exchange rate that was effective as of the date the deposit was taken. This rule DOES NOT apply to deposits taken on reservations involving a pre-paid, foreign currency rate. The intent of a pre-paid reservation is that if nothing changes (there are no additional charges) the rental is completely pre-paid and so the client owes nothing more at the time of opening the RA or at the time the rental closes.
But in the illustrated transaction, because of the change in the exchange rate, the deposit taken earlier is now worth more than the two days of charges and taxes. Under normal circumstances, the charges on the RA now that they are converted to Euros would look as follows:
DAYS : 2 @ $ 31.50 = 63.00
APCONFE: 6.30
TAX : 12.60
DEPOSIT: 86.66
TOTAL : -4.76
The renter would be owed a refund of 4.76 Euros due to the currency fluctuation. And obviously, if the exchange rate change had gone in the opposite direction, if the USD was worth less, the renter would be required to make an additional deposit at the time of opening the rental agreement.
As a result, in order to conserve the intent of the pre-payment, the program automatically adjusts the value of the deposit by creating a new Deposit record using FOP "FOREX" to balance out the difference. So in the example above, a second deposit of -4.76 Euros using FOP FOREX will be created so the result will be:
DAYS : 2 @ $ 31.50 = 63.00
APCONFE: 6.30
TAX : 12.60
DEPOSIT: 81.90 (86.66 deposit less 4.76 FOREX deposit)
TOTAL : 0.00
Note:
This does not change the face value of the deposit it still will be reported as $130.00 USD.
This does not change the amount that was deposited in the bank on the day the deposit was taken, it still will be reported as 86.66 Euros.
This only changes the "value" of the deposit as applied to the rental agreement.