The date of Bulgaria's entry into the euro area is still not definitively precise. However, companies in the country must adapt their software systems to work with euros.

The exact moment is a starting point for businesses because it sets a deadline by which companies in the country will have to prepare their business software, update their fiscal devices and make other significant changes if they want to continue operating smoothly after the country joins the euro area.

Official sources of information on the subject, such as the website on the introduction of the euro in Bulgaria, stress that for some larger businesses, the preparation will require many hours of work at the expense of employers. Initial estimates suggest that this would take between 6 and 8 months. The institutions advise every manager to budget for the necessary resources.

"Any software system that accounts for cash in euros must be redesigned when switching to euros.

The introduction of the euro in Bulgaria will affect business resource management software in enterprises and will necessarily require readjustment. "How significant the change will be depends on the level at which a system has entered process management," explained Vladimir Rashev, managing partner at IT consultancy Balkan Services.

Every company can work in different currencies, but one is the main one in which accounting records are kept. Of course, according to Bulgarian legislation at the moment, it is the Bulgarian lev. With the changeover to the euro, it is the base currency to which companies equate their entire business—revenues, expenses, receivables, payables, inventories, assets—that is changing.

Separately, before the introduction of the euro, the base currency will be the lev, and systems will be required to submit certain documents and reports in both currencies. Thereafter, the base currency will be replaced by the euro and again, for a certain period of time, systems will be expected to produce certain documents and reports in both currencies (only this time, will the conversion be reciprocal).

These requirements make the overall process of changing software systems a complex project for any company.

The degree of complexity can vary from system to system. This is because they are different in structure and process scope.

Adoption and introduction of the euro - the experience of Croatia

Croatia joined the euro area on 1 January 2023. For most businesses in the country, preparations for adopting the single currency began in January 2022 and continued throughout the year.

From an IT perspective, the preparation process goes through several steps.

The first step is preparing the various software solutions (core business systems, DWH, etc.) and removing everything that is fixed according to the local currency.

The second step is preparing all the main software systems for the introduction of the new currency and making all the necessary changes in advance so that it is feasible, such as the dual designation.

"Some possible challenges during this step were internally developed systems (the company develops its software solutions) and lack of resources to implement the necessary changes. Old systems that were not maintained were also a case study. Because of this, some of the software systems were replaced with others while adopting the euro," said Ivana Rosancic, Business Intelligence Consultant from the Croatian IT company KOIOS team.

The third step is to prepare the systems that are not so "visible" to customers, such as DWH, the reporting systems at different levels inside and outside the organizations.

A fourth step, parallel to the previous two steps, is related to changes in the integrations between the different systems, mostly to add additional fields.

The fifth step relates to changes in the early euro procurement process—pre-provisioning banks and shops so that they can function fully after the new currency is adopted.

The adoption of the euro in Croatia also entails various one-off costs for businesses, such as:

  1.    Modernization of IT systems

Companies must upgrade their IT systems to cope with dual currency operations, price conversions, and the introduction of the euro in accounting and financial reporting systems.

  1.    Accounting and reporting changes

Adjustments to the accounting systems are required to ensure correct accounting in kuna and euro and to handle the new exchange rates and dual currency display.

  1.    Training

Training programmes have been implemented to train staff to handle the euro, understand the new procedures and use the updated IT systems.

  1.    Logistical changes

Costs have been incurred for the production, distribution, and secure storage of euro banknotes and coins. This also includes logistical adjustments such as recalibration of ATMs and POS systems to dispense and accept euros from the changeover date.

  1.    Compliance and legal changes

Legal and compliance costs arise when ensuring that all contracts, invoices, and financial documents are updated.

  1.    Physical cash management

There are costs associated with managing the withdrawal of kuna from circulation and the introduction of euro banknotes and coins. Businesses must handle payments in both currencies during the transition period, which involves additional cash handling and security measures.

  1.    Introduction of dual marking

The introduction of dual marking requires updating systems and materials to display prices in both kuna and euro, a process that starts several months before the official euro introduction date.

Company management should also be aware of the risks arising from software systems' realignment. Possible situations include loss of history, migration from opening balances, and the likelihood that queries are now done from a different location; specific queries may be slower or have to be done in two parts.