Think about the purchases you’ve made in the last few months. Have any of them been cross-border? If the answer is yes, you’re not alone. With the emergence of the omnichannel shopping experience, consumers are experiencing seamless buying across borders and are increasingly purchasing from foreign websites and businesses for product that they either can’t find in their home country or are too expensive to buy locally. What does this mean for your own business? If your business operates globally or is preparing for cross-border expansion, it is critical to have an accounting and inventory software that will support multiple currencies so you can remain competitive in today’s buyer landscape.
Whether you’re a small retail business or an established importer and exporter, the challenges of buying and selling in different currencies are common – the fluctuating cost of inventory, tracking ever-changing exchange rates, and reporting currency profits and losses are just a few factors to consider. And these challenges are even greater if you use spreadsheets to monitor this information since you’re more likely to make errors, resulting in inaccurate financial data - it’s enough to pull your hair out!
With the proper multi-currency accounting and inventory software, you can track and manage real-time exchange rates in order to have a clear perspective of the financial landscape – as it stands at present time. Other advantages include:
Creating Customer Invoices and Vendor Purchase Orders in Multiple Currencies
Setting default currencies for customers and vendors who operate in a different currency ensures that any transaction which you perform with them will be converted to your home currency without any additional manual calculations or entries. And, to sweeten the deal – customer quotes and purchase orders can be created in the customer or suppliers’ currency, and once converted to a sale or purchase, the system will record the transaction in the appropriate currencies (i.e. payable in the supplier’s currency with a foreign exchange difference and the inventory or expense in the home currency). This eliminates the manual process of having to remember to convert pricing for inventory or factor in exchange rates when posting the transaction.
Global Accounting Consolidation
If you handle accounting for your business, you know how complex reporting can be when dealing with multiple currencies. Imagine having the ability to convert transactions from the currency in which they took place to your home currency - how much time and effort do you think you’ll be able to save by having the converted amount automatically recorded into the G/L? This is just the tip of the iceberg - by eliminating the manual processes of factoring in various currencies, closing times are accelerated and transparency is maximized. And, you can monitor unrealized foreign exchange gains or losses by running appropriate reports at any point in time.
Other important functionality is the ability to perform bank transfers between accounts with different currencies. Entering the amount in one currency which you transferred and the amount in the foreign currency which it was converted to will allow the system to determine the amount to record in the exchange difference account without the need for an additional entry.
Landed Cost Tracking
With accounting and inventory software that also includes robust landed cost features, there is the additional benefit of knowing the true cost of inventory with exchange rates included. The software will perform foreign exchange calculations on any landed costs associated with a purchase - costs such as freight, customs, brokerage etc.
Of course, global businesses need more than just multi-currency functionality in their accounting and inventory software to operate seamlessly. Other factors to consider when evaluating vendors for your global business include multiple languages which is especially beneficial to businesses with clients and vendors requiring information and documents in another language - an example of this would be sending invoices in your customer’s language. It is also important to keep in mind your unique industry-specific needs such as global compliance adherence, regulations and taxation.