Buyers poised to drive euro adoption

17 January 2002
More news

17 January 2002

Some purchasers in the UK have used the single currency for up to three years already, and they will have something to say about its future. David Arminas reports

Since 1 January, euro coins have been jingling in the pockets of the public in the 12 countries that opted to drop their old currencies. Holidaymakers are returning from the continent, at times appearing genuinely excited about getting euros out of cash machines in one country and spending them in another. No more exchange rates to worry about. No more calculating your spending in order to arrive at the airport with just enough foreign currency for a coffee and a doughnut.

UK purchasers on business trips abroad will get first-hand experience of the euro's transparency for costing as they cross borders and can immediately compare prices to decide what is good or bad value for hotels and meals. For these purchasers, there should be an air of familiarity in handling euros. Although it will be the first time they touch a euro note or coin, many have been dealing with euros on paper for the past year - up to three years in some cases.

The debate over Britain's entry is certain to intensify as the politicians on each side realise the stakes are getting higher. It is set to remain at the top of the political agenda as consumers get used to using the currency on holidays abroad.

Anecdotal evidence suggests that a growing number of UK retailers and tourist attractions will accept euros in 2002. They will receive the new currency throughout the coming year and suppliers, both resale and indirect, can expect pressure to deal in euros.

For the past two years, many large companies on the continent have published their accounts in euros and their decision to focus on euros had forced some of their UK suppliers to trade with them in euros as well.

So the drive towards adopting the euro could come from industry, as our news story suggests, rather than the public at large. Suppliers that deal in euros could have an advantage over those that don't.

Companies increasing their trade in euros with suppliers could begin to argue that the nation should have done with it and move over to the single currency. The impetus for the euro could come from within the supply chains of industry.

Details are sketchy about the amount of euro-invoicing in Britain before 1 January. But supply chain consultancies and purchasers in large companies have little doubt that UK-based companies will operate a euro account with their UK suppliers.

Change of heart

The move by some British purchasers to trade in euros with domestic suppliers began more than two years ago, but it was far from universal, and was even half-hearted in some cases. Many clients didn't use it, and left it when they had a choice.

This will change in 2002 and UK suppliers and purchasers ignore euro invoicing at their peril. Suppliers that can invoice in euros will be ahead of the game for winning or extending contracts this year.

A move towards more euro-invoicing will be a test of the purchasing department's relationship with its finance and IT counterparts. Finance and procurement have not spent enough time working on this in 2001 to be ready for the euro as a hard currency today, let alone for the possibility of the UK joining the euro-zone in the near future.

Now is the time for purchasers to ensure their IT suppliers have allowed for euro changes to their corporate systems. This is an area much overlooked in the public sector, where much local government traditionally does little buying outside the UK and so has not been exposed to working in euros.

The argument for purchasers to set up a long-term euro-strategy for their UK supply chain will become overwhelming in 2002. If, or when, the UK moves into the euro-zone, its purchasers should be ready to go from the day of the announcement, no matter what the year.

The government has promised a referendum before making a decision on joining the euro. When informed debate is needed about the practicalities of using the euro, the collective voice of purchasers should be loud and clear.

SMjan2002

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