Sharing the currency conundrum
Euroscepticism is all very well in political debate, but when it comes to financial systems, UK companies are going to have to mix it with the Europeans. Right now, however, systems developers aren’t ready, reports Guy Dresser.
Multi-currency functionality is something which many software packages offer – up to a point. This means that a system will run one base currency with others reporting into it. This is fine as far as it goes. But if a company wants to report in two base units, things become rather more difficult. In the banking sector, reporting in several base currencies is not unusual. And for UK subsidiaries of overseas companies, using sterling and, say, francs or deutschmarks is par for the course. The problem is, there are relatively few corporate financial systems that will cope with this.
According to Dennis Keeling, director of the software trade association BASDA, the problem is acute. Many companies will not be able to cope with the transition to a single European currency – regardless of whether the UK goes ahead with it. He explained: ‘Not everyone has to report in more than one language. But this will affect corporates or those who do business with other companies in different European countries. Even low-scale products will be required to show transactions in more than one currency.’
Jyoti Banerjee, managing director of Tate Bramald Consultancy, warned businesses to ensure their software was able to cope with the change before it was too late. He said: ‘Software houses have to re-engineer software to cope with it. It will be simple for some, but heart-rending for others.’
Banerjee added: ‘There is no track record for the euro. No one knows what the specifications are. Even the Bank of England has been vague on this issue. Companies need to wake up to the problem.’
One software developer which can cater for more than one base currency is the Dodge Group. Originally a US-developer, Dodge has a healthy client base in the banking and financial sector. Managing director Alan Hambrook said that translating currency units for accounting purposes was the big issue. ‘Software needs to cope with multiple base currencies simultaneously, right down to transactions. Lots of software can’t do it or offers a simplistic translation. You should be able to run your accounts as though you had different ledgers all in different currencies.’
Dodge developed its software with this capability by working with French-owned Banque Paribas, one of its biggest customers. UK developers have not been so lucky.
Dennis Keeling criticised the Bank of England for appearing to follow the UK Government’s Eurosceptic position. ‘The Bank’s view has been that the only requirement for the UK is a wholesale currency for monetary union, not retail. This assumes we’re not going for it as a country but will trade with European partners.’
Keeling said this view put the UK firmly at odds with French and German software companies, who received help from their banking sector and develop their products accordingly.
‘We have set up a working party at BASDA to try and specify the requirements and discuss our needs with the Government. It is typical of the Bank of England that it doesn’t talk to software developers. We should have been involved in consultations right from the start.’