This capability allows companies to normalize currency fluctuations and provides a clear, accurate portrayal of financial performance across different countries while at the same time producing report with actual conversion rates at the end of the period.
Scenario: A global corporation with operations in Europe, Asia, and North America uses CPM software to consolidate and report their financial performance. The corporation wishes to evaluate performance without the potential distortion of currency fluctuations.
Solution: The financial reporting software reports results in constant current or 'currency neutral' terms and true conversion rates. By analyzing the performance in the original currency (constant currency), the corporation can steer clear of temporary exchange rate fluctuations, thereby achieving a true reflection of operational performance. Meanwhile, analyzing true conversion rates allows an understanding of gains or losses influenced by currency rate variations.
If this is a critical feature, the system should contain a table that shows currency conversions over time. Depending on the type of business, this might need to be at a daily time granularity.
Most businesses plan a beginning and end rate, then average that out. If you are dealing with a heavily fluctuating currency it may be necessary to be more thorough than a simple beginning and ending average. If the business is selling goods into an economy experiencing hyperinflation, it may even need to be hourly - though this is admittedly an extreme example.
Not covered in this requirement but still important is what-if planning for currency conversion rates. As of this writing, Argentina is undergoing an economic transformation with uncertain results. If selling goods in that environment, it would be helpful to have multiple versions with different inflation rates side by side, pushed out many years.