Preparing for the Euro: Key Steps for Bulgarian Companies Based on Croatia’s Experience

As Bulgaria prepares for its eventual entry into the eurozone, companies across the country will need to adapt their systems to operate with the euro. Although the exact timeline for the switch remains unclear, businesses must begin updating their software systems, fiscal devices, and other critical processes to ensure smooth operations post-transition.

This adaptation will be crucial as the moment of Bulgaria's entry will serve as a deadline for necessary preparations. Larger companies, in particular, can expect a significant amount of work to be involved, with initial estimates indicating that businesses may need between 6 to 8 months to fully adjust. According to government sources, managers should allocate funds in their budgets to meet these requirements.

For businesses that currently report transactions in Bulgarian lev, the transition to the euro means substantial changes. Any software that reports financial data in lev will need reworking, especially for resource management systems. The extent of these changes will vary depending on how deeply integrated the systems are into business operations. With the switch, companies will transition their primary currency to the euro, affecting everything from revenues and expenses to liabilities and assets.

In the period leading up to the euro's adoption, businesses will be required to submit reports and documents in both lev and euro. After the official changeover, systems will again be required to handle reports in both currencies, though this time the conversion will be reciprocal. This process will be a complex project, with varying levels of complexity depending on the type of system in place.

Taking inspiration from Croatia's experience when it joined the eurozone on January 1, 2023, Bulgarian businesses can anticipate similar challenges. Croatia’s preparation began in January 2022, with a multi-step process aimed at ensuring that businesses were ready for the switch. The first phase involved reconfiguring software systems to remove any dependence on the local currency, while the second focused on ensuring core business software was prepared for the introduction of the euro. Dual labeling, a necessary adjustment, was implemented across systems to ensure compatibility with the new currency.

Some of Croatia's challenges included dealing with internally developed systems and outdated software that required replacement to meet the euro adoption deadline. As in Bulgaria’s case, changes also had to be made to systems that were less visible to customers, like data warehouses and reporting tools. Additionally, changes to system integrations were required, with new fields added to ensure smooth communication between different systems.

Apart from the technical adjustments, Croatian businesses faced several one-time costs during the transition, including the modernization of IT systems, accounting updates, and employee training. Companies also incurred logistical expenses related to the production and distribution of euro banknotes, as well as recalibrating ATMs and point-of-sale systems to accommodate the new currency. Legal and compliance changes, such as updating contracts and financial documents, were also necessary to ensure businesses adhered to the new currency regulations.

In terms of physical cash management, Croatian businesses had to manage both kuna and euro during the transition period, which involved additional handling and security measures. The introduction of dual labeling was also a significant logistical expense, requiring systems and materials to reflect both currencies for months leading up to the switch.

Ultimately, Bulgarian companies should take note of the challenges faced by Croatian businesses in preparing for the eurozone transition. This preparation will involve not only updating systems but also ensuring that employees are trained and that all legal and logistical requirements are met. As the date of Bulgaria’s euro adoption approaches, businesses must be proactive in planning and budgeting for these essential changes.

Source: Balkan Services press release