Companies take eye off euro ball

The levels reached in their preparation operations is mixed, while concerns continue because of the massive apathy towards euro conversion on these shores.

Only one in two leading clothes shops, supermarkets, hotels and petrol stations are committed to receiving euro notes from the beginning of next year, according to accountancy software makers SunSystems.

Leading stores and attractions – such as the British Airways London Eye and Marks and Spencer – are adapting their cash tills to receive the new notes from 1 January 2002.

But the remainder leave themselves vulnerable to losing trade or an edge to their euro-friendly rivals. With 14.5 million EU visitors spending some 7.8bn euros (Pounds 4.9bn) a year in the UK, conversion could give companies a lead over rivals without euro strategies.

Paul Coleman, chief executive officer of Systems Union, added: ‘We are concerned that if stores accepting euros do not have proper systems in place, then many will find themselves in a major accounting muddle. Software solutions exist today that are fully up to the task, and there is no reason why companies cannot get themselves ready now.’

The UK has been caught between the devil and the deep blue sea. Initially, it will have to deal with the currency in a floating exchange way, rather than fully converting.

Much of the apathy can be placed at the door of the government, which has continued to play down the issue, ahead of the euro referendum, to be taken when the chancellor’s five economic tests are met.

So for now, UK businesses are going to have to deal with the administration without gaining any of the benefits. But the situation is not insurmountable, there will be ways around the issue, but accounting timebombs such as purchase orders could prove problematic.

Companies may be caught out
Companies may be caught out when purchase orders which begin in one currency, drop down and need converting – creating blips in business. Meanwhile, audits next year may have to deal with new currencies, disrupting the process for companies. The restating of assets may also require specialist advice.

‘The problem in the UK is that there is a real false sense of security that the issue will not affect them. During this year, when many businesses should have been preparing for conversion, they have deferred on the idea,’ said Eduardo Loigorri, managing director of Exchequer Software.

‘We in the UK have been badly served by the notion that we will escape the euro issue scot-free. To convert operational and audit operations may take weeks if companies do not have an automated means of carrying out this operation,’ added Loigorri. The UK may be outside the euro when these changes happen, but companies need to ensure their staff are fully up-to-speed with developments.

Forward-looking companies will know that whether the UK is in or out of the euro it won’t be long before French and German visitors will get to know which stores accept their euro notes, saving them currency exchange costs. Meeting this demand will require businesses to have software and systems in place which are compatible and reliable, while there continues to be a worry that even companies that take the euro notes will not be supported by effective accounting and back-office systems.

The euro issue may not be quite as big as the Millennium Bug and there are unlikely to be any real horror stories for UK plc, but there just may be a great deal of inconvenience.


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