Euro Changeover – a Pain for Accounting Firms

On 23 July the changeover to Euro has been finally confirmed in Lithuania. The new currency will begin to function on 1 January 2015, so don’t be surprised by a seemingly emptier account on the New Year’s Day. As with any reform, there are almost as much opinions about the Euro as there are people living in Lithuania. Some are afraid that prices will go up, while large businesses are looking forward to foreign investors, whereas small companies are puzzling over how to acquire the funds necessary for the changeover. It will cost particularly dearly to those Lithuanian accounting firms, which, when acquiring the needed software updates, will have to pay for each and every one of their clients, including even the smallest ones.

Every Client Will Cost You

Up until now, accounting firms made use of computer software systems which are designed to help keep records in Litas. Since, starting 2015, Litas will be replaced by the Euro, it will be necessary to update the whole system. This is an especially painful blow to those accounting firms which manage a large number of small clients, because each one of them will add to the costs. It doesn’t matter what kind of client it is – a small partnership, a state enterprise, or a sole proprietorship that only brings a few Litas-worth of profit to the accounting firm. Therefore, some clients will become not just unprofitable but even cause losses.

47 Thousand Litas Spent on Software Updates

One of the companies which provide a Euro conversion service has already announced their pricing system. The price will be calculated for each company individually according to the following formula: number of cores x 230 Lt. So, if a firm has bought a two-core software package and uses it on three companies, their individual price to convert to Euro will be as follows: 2 x 230 + 2 x 230 + 2 x 230 = 1380 Lt.

For larger firms, who provide accounting to 10 or more companies, a different formula will be applied: number of cores x 230 Lt + number of additional companies x 230 (additional companies are all the managed companies minus 1). Which means, that if you are using 5 cores to manage 200 tiny companies, the software update will cost you nearly 47 thousand Litas.

After the Changeover – Another Half-Year with Litas

Since we’re talking about the business of accounting here, company managers aren’t even expecting any compensation. They will either have to draw huge amounts of money out of their own pockets, or raise the prices of their services. As of yet, nobody is even thinking about how this will affect clients, but it is already clear that they will have to share the burdens of their service providers. As if that wasn’t enough, even after the changeover, accounting will still remain tied to Litas. 2014 reports for balance, profit and expenses will have to be done in Litas, while the ongoing months’ records will be kept in Euro. Accountants will be fighting this two-front war until 1 June, at which point the term for submitting accountability documents ends.