I would like to change our base currency. From my reading of the forum and my own experiments this is not a simple task. It looks like the most widely accepted advice is to create a new business and enter starting balances. I will try to explain my scenario, and would be grateful if anyone can advise if the new business approach is still the best idea or if I should be doing something else.
For several years we have been using the Zimbabwe Dollar (ZWL) as our base currency. For a time that was the main currency we were trading in. We purchase stock from South African suppliers who invoice us in South African Rands (ZAR), and we have also made purchases in British Pounds (GBP). We have also been making sales and purchases in US Dollars (USD). Over time the ratio of ZWL to USD transactions has shifted, and now nearly all our sales and local purchases are in USD. However, our accountant has consistently said that we have to report to our tax authority in ZWL.
Today, however, I submitted our figures to our accountant for our first quarterly income tax return (all in our base currency of ZWL), and pointed out that our ZWL income is almost negligible, less even than our monthly ZWL bank charges. She suggested that we report in USD instead. I asked if it would be permissible to change our base currency to USD, and she said it would (as long as we could find a way to do that in our accounting software).
There are two big reasons that I would like to change our base currency to USD:
- Many of the reports and much of the information on the
Summarypage are effectively meaningless to us, because they are in a currency which is experiencing hyperinflation. The foreign exchange gains and losses on our liabilities and credits obscure the real USD values that we are interested in. - We purchase stock in foreign currency and mostly sell it in foreign currency. But if our purchase and sales prices are translated back to ZWL and there is some inflation between the purchase and sale dates, it greatly inflates our apparent profits in ZWL, and we end up paying much more in tax than we would if our costs of goods and our sales were kept in USD.
Since we already have all the relevant currencies and accounts set up in Manager, I naively thought that I could simply change the base currency, batch update our customers and suppliers with the correct currencies, and everything would recalculate and balance. Then I realised the exchange rates needed to be batch updated too, and with some work I have managed to do that. Now I see that a lot of the journal entries will need to be changed, but that becomes problematic because some of those were based on ZWL base currency values of goods, and changing those would change historical figures that we submitted in previous tax filings.
I did make a business backup before starting on any of these changes, so for now I will restore that and start looking at the option to create a new business and carry over the starting balances. We have more than 2,000 customers and more than 2,600 inventory items, so I am fearful that it would be a big task. But I’ll do some reading before I panic too much or start the process. Any input would be appreciated.