Finance Dublin
Finance Jobs
Friday, 12th April 2024
    Home             Archive             Publications             Our Services             Finance Jobs             Events             Surveys & Awards             
Euro timebomb about to explode Back  
Yvonne Cullen says that the timing of detailed preparatory steps will be determined by a company’s preferred changeover date, but says businesses should remember that key customers/suppliers may have a significant bearing on when to convert, so it may not be entirely a matter of choice.
With less than six months to go to euro conversion, SMEs should be rolling out their euro changeover implementation strategy already.

Pricing and invoicing in euro between companies will become more and more common over this transitional period until 1st January 2002, when euro notes and coins will come into circulation, and national notes and coins will start to be withdrawn.

By 1st January 2002 you must be able to price your goods and services in euro, invoice your customers in euro, pay your staff and suppliers in euro, maintain accounts in euro and make all tax returns in euro.

In business transactions, if some companies are using euro and others Irish pounds, it is important that the rules for converting between them be clearly understood and correctly followed.

Some problem areas to be aware of Accounting software has emerged as a key issue for a number of smaller companies. Many businesses found that their off-the-shelf accounting packages did not support their changeover requirements and upgrades to their packages were needed in order to allow them to trade fully in both currencies during this transitional period. While ‘euro’ upgrades are becoming available, the euro functionality between upgrades differs considerably.

Some upgrades produced by a number of Irish software houses include a dual currency option that allows businesses to operate fully in both currencies at the same time. Other ‘euro’ upgrades simply include a conversion calculator that enables the user to convert a euro amount to Irish pounds or vice versa but essentially they remain single currency packages that allow businesses to operate either in Irish pounds or euro, but not in both at the same time. SMEs should check out their accountancy software immediately.

Implications for SMEs
A large company is likely to have specific departments for each function likely to be affected by the euro. But in a small company many functions may be carried out by one person: tackling all the issues may be a big problem, so the work should start as soon as possible.

Action List
Whether you employ 20 people or 2,000 people; whether you operate in a manufacturing or service industry; and whether you are a local, national or multinational organisation you should follow a similar planning process to ensure that your organisation is fully prepared for the changeover to the single currency.

Forfas have developed a five-part process to manage the changeover.

1. Assign Responsibility and gather information - this should already be completed
For owner-managed and smaller enterprises, there may be particular resource constraints involved. Therefore, access to industry and other representative bodies will be of benefit, to quickly gain an understanding of the issues involved and to avoid ‘re-inventing the wheel’. The process should be driven by the owner/manager, with the involvement of key personnel. Professional advisers may also be able to assist, particularly in the management and direction of the changeover project.

2. Perform business impact analysis - this should be completed
Once you have a general understanding of EMU, you will need to assess how it will impact:
• how you do business with your customers
• the products/services you sell
• how you do business with your suppliers
• existing and potential competition

A tool has been developed, as part of the EMU Business Awareness Campaign, to assist with this overall business analysis and identification of priority areas (please check out the website: www.emuaware .forfas.ie)

3. Identify functional implications - this should be completed
Once you have developed an understanding of how EMU is likely to affect your business you will need to focus on the detailed changes required for each of the key business functions (such as marketing, purchasing, and IT systems). A series of EMU functional checklists is now available which outlines the practical implications for enterprises in six key areas:
• Marketing, Sales and Distribution
• Production, Product Development and Purchasing
• Accounting and Finance
• Information Technology
• Human Resources
• Legal

Ideally each checklist should be completed by the employee or manager who is responsible for the function or, at a minimum, by an employee/manager who has sufficient knowledge about the business to assess which issues are relevant.

4. Prepare functional workplans - this should be completed
At this stage you should have a good understanding of how EMU is likely to affect your business, as well as the key practical issues that need to be addressed. You should also have an understanding of when you will need to convert to the euro. Therefore you and your managers will be in a position to develop detailed workplans of what needs to be done, who needs to do it and when.

5. Design, test and implement changes - this should be in process
Finally, prior to the planned implementation, you will need to ensure that the changes are capable of practical implementation in the time envisaged, and that these changes will produce the desired results. This applies not only to IT systems changes, but also to changes in operating processes - from price list conversions to handling customer payments to dealing with employee queries.

Even if you are expecting to convert at the latest possible date, delaying your planning is likely to prove unwise. The changeover to the euro will be both challenging and rewarding as it brings opportunities for your business including new market possibilities and perhaps a new competitiveness basis (price, quality, innovation, responsiveness). If your action list is not diminishing you need to reassess your preparation for the euro immediately.

Digg.com Del.icio.us Stumbleupon.com Reddit.com Yahoo.com

Home | About Us | Privacy Statement | Contact
©2024 Fintel Publications Ltd. All rights reserved.