Multicurrency is NOT an afterthought!
This CloudAve article on multi-currency gives an update on the efforts other online accounting software developers are undergoing to add multi-currency capabilities to their solutions. Clearly it’s dawned on them that even SMBs need to handle more than one currency in today’s globalized market. For us it’s in our genes. FinancialForce.com Accounting has always been multicurrency because it’s a multi-everything, international system designed that way from the ground up. This approach is central to our SaaS strategy and we couldn’t imagine approaching this in any other way. OK, FinancialForce.com is a cloud accounting solution for midmarket and enterprise companies as well as SMBs, but to us multicurrency is a fundamental part of an accounting system – we know that from our 30 years’ experience. It seems that the rash of small cloud players entering the online accounting space are playing catch up to those of us with deep experience in developing financial accounting systems. But it could be dangerous to treat vital functions such as multicurrency as an afterthought. We’ve taken a look at some of the offerings announced recently: One solution detailed in the article describes an approach to calculating and posting unrealised gains and losses that shows a lack of foresight. From our experience its approach is simply not practical.
- It appears to calculate gains/losses on the payable line so only considers the balance sheet rather than providing revaluation capability for the income statement.
- Posting and calculating realised and unrealised currency gain/loss on a daily basis would lead to clutter in the GL and could obscure rather than help (in our experience it’s only necessary to calculate unrealised gains/losses once a period or quarter… We prefer to put the control of this process in the hands of the user which is the approach we’re taking.)
- Using the currency master to calculate unrealised values can cause problems. The rate to use will differ between balance sheet and income accounts.
Another application listed, Freshbooks, looks to be lacking some key functionality. It appears they have now extended the application to allow definition of a currency against an account, but there is no mention of currency revaluation or multiple base currencies. Our multicurrency functionality has been born out of decades of heavy duty international accounting experience. Our founder company, CODA, handles some of the world’s most challenging multicurrency accounting demands, from the International Red Cross in Geneva (which accounts in every known currency in the world) to all of the currency handling for Travelex worldwide. So we know what we’re talking about! Of course, our users don’t have to have complex currency needs – if they only need dollars and cents, or pounds and pence, that’s fine. Don’t get us wrong – it’s great to see others finally waking up to the need for multicurrency accounting in our increasingly interconnected world. But beware – not all multicurrency is the same!