FOR the majority of companies, euro adoption might not be as simple as just converting from Slovak crowns.
The switch will affect systems that many companies don't realise play an important role in their daily function, or that are connected to vital systems. In a recent survey, Ernst & Young gave the euro's impact on MS Excel spreadsheets as an example of this.
Therefore, neglecting the intricacies of the adoption can jeopardise the most basic processes, from goods distribution to salaries to bookkeeping. Accounting and payroll systems will experience the largest impact, according to the Ernst & Young survey.
"Euro adoption could cause a company to have to change its documents, processes, and systems," said Róbert Srnka, manager of business advisory services in Ernst & Young.
Price setting and financing are examples of these processes.
In order to make the switch successfully, Srnka recommends the companies analyse the potential impacts, specify the need for changes in IT systems, processes, and documents, propose the implementation of changes, create and test the changes, and make the conversion.
"All these activities should be put in a suitable frame of project management, management of internal and external comm-unication, risk management, and contingency planning," he added.
Srnka said the main risks of inadequate preparation include violating the law; an inability to receive or make payments, record bookkeeping transactions, or perform cash transactions; disrupting purchasing, sales, storage, and payroll systems; and a tarnished reputation.
According to the law on euro adoption, existing agreements and contracts will remain valid after conversion. But a company should define in which cases it is more advantageous to sign a new contract or stick with the original one, Srnka said.
"A contract that defines the prices of goods might be an example," he told The Slovak Spectator.
Some companies will choose to calculate the price in euros from Slovak crowns when checking shipments, while others might find it more advantageous to sign new contracts and have the same information in a hard copy and electronic form.
"It is exactly this phase of the analysis in which these questions should be answered, leading to different solutions in a variety of companies," Srnka said.
"Concerning processes and information systems, it is necessary to accomplish several steps even in a relatively less complex firm," said Ivo Rozehnal and Martin Váross, ERS managers at Deloitte.
These are, for example, closing bookkeeping systems for 2008, doing a conversion of all the accounts in the main book as well as open items, and verifying the conversion.
Companies will have to be able to function in euros by the first weeks of January, including paying invoices to suppliers. This means it will have to have prepared and tested the communication tools for electronic payment banking systems, receiving orders, issuing shipping documents, sending documents, and paying salaries.
However, the cash transaction system must be able to process Slovak crowns as well during the first 16 days of January, even though the crown will not exist in non-cash transactions, Rozehnal and Váross said.
Rozehnal and Váross continued that, as well as the risk of breaking the law, the unavailability of systems for everyday company operations is the main risk of failing to prepare for the switch.
"That can lead to losses in earnings, customers, a large number of complaints, employee dissatisfaction and an inability to keep obligations to the state," they told The Slovak Spectator.