Small to medium-sized enterprises will be confronted with much higher costs, proportionately speaking, than large companies in the transition period of the euro's introduction.
A report compiled by the European Federation of Accountants (FEE), and published by the Institute of Chartered Accountants in Ireland, recommends that Small to medium-sized enterprises (SMEs) prepare sooner rather than later because of their limited resources.
The report, entitled Euro Currency Checklist, warns: "Waiting until the last moment will only increase the costs substantially."
The information technology (IT) aspect is the most pressing and the issue of tackling systems changes must begin now, according to the report.
Whereas a large enterprise has whole teams devoted to changeover problems, it usually falls to the SME's beleaguered accountant to take on the new brief.
"The auditor/accountant of the SME will need to provide advice and to check whether the enterprise is making adequate preparations for the introduction of the euro as part of the audit."
But because of the effect on sales and marketing, this department should be "the drivers of the commercial implications of the move to the euro, not the financial department", according to the report.
Enterprises will have the option of making payments in euro in 18 months time, even though the currency will not be launched until January, 2002. Some will find themselves under increasing pressure from suppliers or buyers to do euro transactions.
The European Council will decide next April or May whether Ireland has met the entry criteria as first wave members. But the distinction has little bearing on the SME's preparations. As the report notes: "Second wave accessions could occur not long after the launch of EMU on 1 January 1999. Therefore E-day could be very close or identical for the first and second wave countries."
SME's should note that the six-month period during which the country's indigenous currency and the euro currency are expected to co-exist (between January and June 2002) could be reduced. "There is a pressure to achieve the switch in as short a time period as possible. . . there might be an intensive change over for say two weeks followed by several months when a small percentage of consumers will continue to use national notes and coins."
The SME's task includes gathering information on customer attitudes, identifying areas needing change, budgeting for the change over and planning its implementation.
The potential for growth is significant: There are opportunities for business development through what is, in effect, an enlargement of the domestic market.
"The euro is likely to increase competition due to greater transparency in pricing and simplified cross-border trading."
The European Federation of Accountants recommends that SMEs establish a team to look at the overall implications. The team should include "someone with the seniority to view the enterprise as a whole and the authority to get things done".
"The euro has implications for all aspects of your enterprise's competitive edge: including financial reporting, treasury activities, IT, invoicing procedures, contractual procedures, costs of import and export, internal procedures, payroll procedures, etc."
Delay will at least put you at a competitive disadvantage, at worst it will close you down: "You will put your enterprise at risk if you do nothing or delay preparation until the last minute as there will be no time to think the process through or to find proper advice and technical support."
The FEE's latest checklist is available from the FEE website: http://www.euro.fee.be/
