Modern-day import and export businesses deal with global customers and transact in multiple currencies. They face a multitude of challenges. One of those challenges is managing foreign-currency transactions and funds in various currencies concurrently. Human errors in currency conversions can cause material misstatements in financial reporting, leading to inconsistencies during the audit and compliance violations. As such, it becomes crucial to deploy ERP software to streamline currency conversion tasks and achieve greater financial accuracy and transparency.
Potential Risks of Manual Currency Conversions on Import-Export Businesses
The following are the potential consequences of adopting manual currency conversion practices in foreign currency transactions for global import and export businesses:
1. Higher Conversion Costs
Ideally, businesses want to keep their conversion costs lower. Currency conversion errors can erode your company’s profits and impact various stages of the business.
2. Increased Global Transaction Complexity
If your company is still relying on manual currency conversion practices, purchasing goods from India and selling them to a distributor in Israel can become a complex and error-prone operation.
3. Exposure to Currency Volatility
Global businesses hold funds in multiple currencies for strategic conversions. Without an Enterprise Resource Planning system, your business is exposed to extreme currency volatility, leading to shrunken profit margins.
4. Lack of Tech Integration
To enable seamless movement of funds in a range of currencies, businesses rely on modern tools and technologies. Such an integration would not be possible without implementing a sophisticated system of currency conversions.
5. Reduced Financial Watchfulness
Businesses still relying on manual practices can lack the financial watchfulness required to track shadow balances, uncover financial abnormalities, and identify discrepancies in the primary and alternate accounts.
6. Timing Mismatches
Manual exchange rate entries can cause mismatches in time, leading to discrepancies in the financial settlements.
How Sage Intacct Solves Multi-Currency Complexities of Import-Export Businesses?
Sage Intacct encompasses various features that promote intercompany synergies and manage global supplier payments & operations. Here’s how it benefits your organization:
1. Intercompany Transactions
Some companies follow unique reporting currencies across their subsidiaries and have established protocols in place. Sage Intacct automates complex inter-company transactions, eliminates data entry, and provides real-time insights into inter-company transactions.
2. Tackle Global Consolidations
Sage Intacct provides an AI-powered personal financial assistant called Sage Copilot. The system accurately consolidates financial data across different currencies. Get advanced reporting across different subsidiaries, parent companies, and headquarters with automatically-calculated live exchange rates.
3. Eliminate Manual Checks & Corrections
Sage Intacct eliminates labor-intensive activities such as manual checks and corrections. It automates everything and promotes higher accuracy to ensure audit-readiness and a higher level of compliance.
4. Auto Retrieve Foreign Exchange Rates
Sage Intacct automatically retrieves the foreign exchange rates and manages multiple currencies across different suppliers and customers. The AP automation and AR automation module enables you to make strategic decisions by uncovering unrealized gains and losses due to currency fluctuations.
5. Multiple Transaction Currencies in General Ledger
Another distinct benefit of Sage Intacct is its support for multiple transaction currencies in the General Ledger. It provides a single platform to manage different transactions across various currencies and exchange rates. The finance module in ERP eliminates the need for managing separate reporting currencies for each entity in your organization.
Final Words
Sage Intacct is a comprehensive platform that automates your company’s multi-currency accounts payable and receivable, and simplifies multi-entity functionality. It delivers a graphical map to drill down into key financial information and master multi-currency accounting for better accuracy, compliance, and growth. By using Sage Intacct for your multi-currency transactions, you can avoid rate timing mismatches, incorrect calculations of FX gains & losses, financial inconsistencies, and audit trail gaps.
