Our Tuesday Tip blog series may have a new name, but we’re still giving out the same level of valuable financial advice.
Today’s topic? Multi-currencies: something that’s increasingly popular among Adaptive customers, who are among the fastest-growing companies in each of their industries (just look at the pace at which they’re issuing IPOs).
That incredible growth often means companies are expanding geographically and opening locations around the world. This inevitably introduces new financial complexities, such as creating more financial plans and budgets, using multiple currencies, and consolidating several entities.
Luckily there’s an easy way to manage that.
Adaptive Planning and Adaptive Consolidation have several features to streamline finance processes within companies using multiple currencies. Auto detection of the user’s locale. Auto recognition of accented and ideographic characters that are not part of the ASCII (A to Z) set. Numbers in sheets and reports displayed in the proper format according to the user’s locale. Dates displayed in the geographically correct manner.
The list goes on. And today, we’ll briefly run through how Adaptive simplifies three otherwise complex components for companies budgeting, planning, and consolidating using multiple currencies.
1. Financial Planning according to local currency with automatic currency conversion
You can set a default currency per location/department/cost center that’s then automatically translated to the parent department. Any company handling multiple currencies will have to roll up all the department financial plans into a single corporate plan. Finance teams don’t have the time to manually convert multiple currencies into the corporate parent currency. And with Adaptive, you don’t have to. Because you’ve assigned a parent currency, Adaptive will automatically translate all of those plans into the assigned parent currency at roll-up levels. To better understand this benefit, here’s a great use case featuring a fast-growing company in which teams in each geographic location are using Adaptive to create financial plans using their local currency.
So if you’re running, say, a U.S.-based company, but have U.K. and French offices using pounds and euros, those offices can create financial plans in their local currencies. Those plans will automatically convert into dollars, as long as you’ve set the corporate currency. This is also a great benefit of our Adaptive Consolidation product, as several companies have already learned and benefited from. Here’s one particular example.
2. Intuitively managing exchange rates and cumulative translation adjustment
Centralized currency management is extremely helpful when operating in multiple currencies. As an Adaptive administrator, you can manage exchange rates for each currency for use in financial plans and consolidation, from end of month rates, to average rates, to historical rates. You can import exchange rates or enter them manually in the system. And if you’re modeling a balance sheet, you can automate cumulative translation adjustment (CTA) with a click of a button – and capture the balance sheet variance that’s due solely to differences in FX rates.
3. Importing actuals in the local currency and generating reports in any currency
There’s no need to manually convert currencies when importing actuals. Users at each location can import actuals in the appropriate local currency, and Adaptive automatically converts to the parent currency. Business users can report any financial data in any currency, and administrators can set which currencies are available for use on reports for true flexibility.
Many business leaders within international organizations know the time-consuming, tedious pains of manually consolidating financial plans, budgets, and forecasts in multiple currencies. Streamlining multi-currency budgeting, planning, consolidation, and reporting gives finance teams more time to focus on strategic initiatives, such as implementing rolling forecasts to help maintain a consistently correct, up-to-date view of financial performance.
Discover how to efficiently and accurately turn data into insights. In other words, spend less time fighting fires and more time on strategy. Best-in-class accounting and finance teams capitalize on automated processes that reduce the planning cycle by as much as 75%, improve productivity, and raise visibility into key metrics. Watch this webcast: 6 Essential Steps to Build a Modern Finance Organization