When your IWMS customer enters global business, you will face multi-currency. A company might be run from a certain country, but have customers and suppliers in other parts of the world.
This means that you will have to deal with multiple currencies. Below you will find the most important business challenges you will encounter when your customer is entering the global marketplace.
Working with Multiple Currencies
Every country has its own currency which in most cases forms the basis for its local account ledgers and financial reporting. Information, including the currency name, country, international symbol, languages, pricing, and monetary rounding rules need to be incorporated in your IWMS, if you want to support your global customer. The more global the customer is oriented, the more currencies and rate types your IWMS needs to support.
Sure, there are workarounds (1 base currency, monthly recalculations, etc.), but all true global IWMS’s should be able to deal with an unlimited number of currencies and rate types.
Example
An US-based company has subsidiary in the United Kingdom, and buys facility services from a French service provider. The company has to deal with three currencies. (USD, GBP and Euro). Imagine your customer is all over the world.
Local transactions
Growing a business worldwide means making transactions in more than one currency. Whether you are buying, or selling goods and services, both your suppliers and customers expect you to process payments and receipts in their currency. Any IWMS should support this. This can be quite challenging.
Your customer should be able to enter transactions in any currency. What’s more your customer should also be able to invoice international customers in foreign currencies.
Example
The French service provider invoices the UK subsidiary in Euros. However the UK subsidiary sells its’ products and services in British Pounds and invoices their customers in British Pounds.
Exchange rates
In finance, an exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies is the rate at which one currency will be exchanged for another. (Wikipedia)
Because of the differences in currency value and constant exchange rate fluctuation, the management of exchange rate differences is crucial to a global enterprise. Thus, the management of exchange rate differences is also crucial to IWMS vendors too.
Example
The UK subsidiary wants to compare the costs of the services delivered by the French Service provider, to those of a British service provider. However as the French service provider has quoted the subsidiary in Euros they need exchange the Euro-amount into British Pounds in order to compare apples with apples. What’s more the constant fluctuation in exchange rates calls for the ability to track historical data.
Multi-currency solutions keep track of historical data enabling their customers to effectively manage exchange rate losses and gains.
Consolidated reporting
Global corporations are interested in having a consolidated view of their financial performance in any currency for example in the currency of the headquarter country. Management needs to be able to analyze the financial results of each subsidiary and conduct interventions where necessary. Therefore it’s extremely important to provide an accurate view of business performance in real time–locally and worldwide .
To deal with the day-to-day in-country business the IWMS should allow to print reports in both functional and source (local) currencies.
Example
Corporate management in the US don’t want to manage their business in Euros nor, in British Pounds, and need their reports in US Dollars.
Your experience with Multi-Currency
I’m really looking forward to read how you have dealt with multi-currency, both from a vendor and from a customer perspective. What was your solution? Did the IWMS support multi-currency? Or where there problems with it?
Please use the comment box below for your comment.
i18n, IWMS, Multi-currency
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