John Francis' clients deal in rupees and shillings, but when it comes time for these nonprofit and government organizations to report back to their funding sources in the states about how they allocated grants, they have to do so in U.S. dollars. Currency conversion may seem simple, but with rates constantly fluctuating, companies with international relations can lose thousands of dollars if the transactions are not recorded at the current rate or if amounts are rounded to the wrong decimal point.
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That's why the roughly 900 clients that Francis serves as president of St. Louis, Mo.-based NFP Consultants, in countries as far-ranging as Pakistan, Kenya, Ethiopia and Uganda, let their accounting software do the work for them.
NFP Consultants sells Sage's MIP Fund Accounting along with FAS Gov and FAS Nonprofit fixed asset solutions, and the vendor named the consultancy as its 2006 Business Partner of the Year based on revenue for the Nonprofit Solutions division.
Because MIP Fund Accounting-which NFP Consultants began reselling 10 years before Sage acquired it in 2001-automatically converts currencies, it allows administrative staff of the Forman Christian College in Lahore, Pakistan, for example, to budget and report to local department heads in rupees, which its staff and administration can relate to, and also report to its U.S. funding source in dollars, with the ability to track the currency at the time each transaction takes place.
Right-time conversion is something Andre Griffith, information systems manager for Barbados-based SBI Distribution, knows all too well.
SBI Distribution supplies food, beauty and pharmaceutical supplies from 800 vendors, including brands like Nestle, Lever Brothers, Revlon and Dr. Scholl's, which are imported from the United States, United Kingdom, Latin America and Asia.
When they come through the port in Barbados, the port records the exchange value at the time. While the American-to-Barbados rate typically is 2-to-1, the ratio is constantly changing when it comes to England, which results in unaccounted for losses and gains when the amount of goods that come in doesn't match the amount SBI Distribution ordered.
Using Sage's Accpac software allows Griffith to track the Barbados equivalent at the time a purchase order is made and to charge vendors for any discrepancies.
"We can do better planning and have tighter control of how we charge the client," Griffith says. "We need to make sure our systems are on top of things."
SBI Distribution formed in August 2002 as a merger of three companies looking for a competitive edge in an area where tourists' dollars contribute a big chunk of change in businesses' pockets.
Griffith went from managing 800 customers to 4,000, placing 600 to 1,200 orders per day, equating to 20,000 to 30,000 orders or 125,000 SKUs per month on a 20-day cycle.
The US $100 million company's database contains 8,000 SKUs, of which at least 6,000 are active.
"[We needed to make] a huge investment in technology to better manage our accounts," Griffith says.
Legacy systems provided no connection between inventory and accounts payable sections and no ability to reconcile with suppliers' statements. Employees manually searched due dates on invoices. Upgrading to Sage Accpac to handle its back-end accounting solved these problems and also eliminated the need for workers to make journal entries in the general "journal" between Inventory Clearing and Foreign Payables accounts.
Several accounting software vendors offer multiple currency features, including Microsoft's Dynamics line, Epicor, Exact Software, NetSuite, Syspro and Traverse. But the level at which they do so varies drastically.
Oversimplification of the conversion process can lead to inaccurate accounting, especially when the product does not calculate exchange rates on a regular basis.
Multicurrency capabilities in Dynamics GP (formerly Great Plains), for example, support daily exchange rates as well as those based on fiscal period averages or on user-defined time period averages.
It supports an unlimited number of currency exchange rates, which can be imported directly into the product instead of having to keypunch them.
A key problem with some accounting systems is that the products do not support more than two decimal places in currency amounts, according to J. Carlton Collins, CPA, an accounting software analyst and president of ASA Research, who has implemented accounting systems throughout the world for the past 20 years. Dynamics GP and others that support three or more decimal places-like AccountMate, Epicor Enterprise, MYOB Plus, NetSuite, Sage Accpac, SAP Business One, Syspro and Traverse-are better equipped to handle multiple currencies and the "inevitable fractions that occur when monies are translated from one currency to another," Collins says.
Dynamics GP also provides the ability for specific currencies to be entered by default for each company, customer or vendor.
"When a clerk records an order from a Mexican corporation, that order is automatically recorded in pesos, and Dynamics GP automatically converts the peso-based order to the base currency for reporting purposes," Collins explains. "This enables users to communicate with customers and vendors in the currencies they prefer, and still record transactions in the base currency with no additional effort. This is an elegant solution. Most accounting system solutions do not offer this type of functionality."
Se Habla Software?
Perhaps even more important than supporting multiple currencies is multiple language capabilities.
"In today's world, there are many reasons for accounting systems to support multiple languages. Doing business overseas is just one of those reasons," Collins says. "It makes sense to be able to produce an invoice in the customers' native language, for if they can read [it], there is a better chance that they will pay it, right? [But] there is a great need to support multiple languages within one's own country as well."
For example, a U.S. corporation may want to cater to the Spanish-speaking community by hiring Spanish-speaking employees, which is easier to do if the accounting system supports the Spanish language. Otherwise, companies would be forced to find bilingual sales representatives, who tend to be more difficult to find and more costly to hire, Collins reasons.
A product like Dynamics AX (formerly Axapta) lets each individual configure it to the unique way he does business, so it's not unusual for one location to have different versions of the software, according to John Lischefska, vice president of product marketing for Fullscope, a Microsoft Gold Certified partner and industry solutions provider.
"One of the beauties of a product like AX is it's a true hub-and-spoke-type architecture, so you can have different instances and roll up all accounting records in a timely integrated way," Lischefska says. "It is clear to us in our experience selling ERP the world is going global, and if you can deliver a product that is truly multinational, you can sell even to midlevel manufacturers because they're growing, too."
Some argue that American-based software companies don't do as good of a job creating truly multilingual products as those that are based in places like Europe, where dealing with a variety of languages from neighboring countries occurs every day. Axapta originated in Denmark and today supports 40 languages in 36 countries. Sage Accpac originated in 1979 in Canada, where it needed to run in both English and French, so even the F functions can be defined by users.
More advanced products go beyond simply word choice to understanding how people work in different countries and phrase different processes.
What Americans call inventory, the British refer to as goods and products. We post a transaction, they book an entry. We format dates as MM/DD/YY, whereas they use DD/MM/YY. Some countries allow for payments using post-dated checks, with a promise to pay later, which is recognized as revenue. Chinese characters complicate things more, as do languages that read right to left instead of left to right. Accounting software needs to satisfy all needs.
"When the menu structure refers to the wrong thing, they feel like they're using a foreign product," ASA Research's Collins says. "You can translate, but there's a whole different approach to making it seem it was born and bred in your area."
Feet On The Street
When resellers venture into other regions, they need to keep all of these differences in mind. Technology aside, cultural misunderstandings can ruin any business relationship, not to mention the physical toll that long flights across multiple time zones can take on people.
When NFP Consultants employees traveled to the Christian college in the Muslim nation of Pakistan, they were put up at the college president's home on campus, complete with barbed wire and three armed guards patrolling the area around the clock.
"It was very awkward," Francis recalls. "It wasn't particularly dangerous, but it was a different kind of environment."
Now Francis is looking to venture into Rwanda and Tanzania.
Having alliances in those countries who can educate them and act as their "feet on the street" is something that is helping resellers like NFP Consultants' Francis and Fullscope's Lischefska succeed.