Post 7 in The Authority Rule Series
On 1 January 2026, Bulgaria joins the Eurozone.
The European Council decided. The conversion rate is set: 1.95583 Bulgarian Lev per Euro. BGN phases out.
You cannot change any of this.
But if you do business with Bulgaria—or your systems handle Bulgarian data—you have dozens of decisions to make. And if you treat this as “just a reference data update,” you’ll miss most of them.
The Reference Data Changes (Non-Negotiable)
Three things happen on 1/1/26 that you cannot control.
BGN and EUR exist as ISO 4217 currency codes. ISO decides. You follow.
The official conversion rate is 1.95583. EU Council set it. Every regulated entity must recognize it.
Bulgaria adopts EUR on 1 January 2026. The date is fixed. BGN ceases as an active currency.
This is reference data. External authority. You follow or you’re non-compliant.
For Acme Ltd, your Bulgarian customer: They’re in Bulgaria (ISO 3166 country code). Bulgaria = BGN until 1/1/26, then = EUR. The EU decided. Acme didn’t get a vote. You didn’t get a vote.
The Cascade Effect
One reference data change triggers decisions across four data types.
Reference Data: Bulgaria joins Euro, rate set (EU authority). Master Data: Do we restructure territories? Change pricing models? (Management authority). Master Records: Update customer currency fields? Change supplier payment terms? (Operational authority). Transactional Records: How do we handle open invoices? Active contracts? Historical data? (Business policy for immutable truth).
Every layer requires different authority, different owners, different decisions.
Master Data Decisions (Strategic Authority)
Management needs to make strategic decisions about business structure.
Do you restructure sales territories? Maybe you’ve had “Eastern Europe Non-Euro” as a territory. Does Bulgaria move to “Eurozone East”? Or stay where it is? This is business strategy, not data maintenance.
Pricing structures. If you’ve priced differently for non-Eurozone versus Eurozone countries, what happens to Bulgarian pricing on 1/1/26? Do existing contracts maintain historical pricing, or shift to Eurozone rates? How do you communicate these changes to customers?
Market segmentation might change. You could segment by currency zone for risk analysis—Bulgaria just switched segments. Your analytics frameworks, risk models, and reporting structures all need strategic decisions about how to reflect this shift.
For Acme Ltd: Your management decides: Do we keep “Eastern Europe Non-Euro” pricing for existing contracts, or move them to “Eurozone” pricing? Do we restructure territories so Bulgaria sits with other Eurozone countries? These decisions change how you organize and price your business.
Master Record Decisions (Operational Authority)
Employees need to update individual entity records within the structures management defined.
Customer #12345 currently shows “default currency: BGN”. Update to EUR? When? Automatically on 1/1/26? Earlier with customer notification? Wait for customer agreement?
Bulgarian supplier records—payment currency fields need updating. But do all suppliers move to EUR at once? What if some want to negotiate new terms? Who coordinates this across procurement teams?
Employee records for Bulgarian staff need attention. Salary currency, expense currency, benefits currency—HR coordinates with payroll, finance updates systems, communication strategy required for affected staff.
For Acme Ltd, Customer #12345:
Current record:
- Default Currency: BGN
- Territory: “Eastern Europe Non-Euro”
- Credit Terms: 30 days
- Pricing Tier: “Non-Eurozone”
Updates needed (following management’s Master Data decisions):
- Default Currency: EUR (automatic 1/1/26)
- Territory: “Eurozone East” (if management restructured)
- Credit Terms: Review if changing to Eurozone standards
- Pricing Tier: Update if management changed pricing structure
Sales rep executes these updates.
But they work within the structures management defined. They can’t restructure territories. They can update which territory Acme sits in.
Business Policy for Immutable Transactions
Transactions happened.
They captured state at that moment.
You can’t change what happened.
But you must decide your business policy for handling them.
Active transactions spanning the transition create complexity. Open invoices in BGN—the invoice was issued in BGN, that’s recorded. But do you accept EUR payment at the official rate? What if payment terms cross 1/1/26? What about invoices due in 2025 but unpaid by 1/1/26? What does your policy state?
Contracts signed in 2024 for three years, denominated in BGN—the contract happened in BGN. Do you amend to EUR going forward? Continue in BGN? Handle currency conversion at each payment? Legal review required, not just data decisions.
Purchase orders in BGN with 2026 delivery create questions. The PO was placed in BGN. How do you handle pricing when currency changes mid-delivery window? Who bears exchange rate risk if you convert? What do contract terms actually require?
Historical closed transactions stay as they are. Paid invoices from 2024—they happened in BGN. Stay in BGN. The transaction is immutable.
But for trending analysis, do you convert historical data? That’s not changing the transaction. That’s a Master Data decision about reporting strategy.
For Acme Ltd:
Immutable transaction: Invoice #INV-2024-789, dated 15 December 2024, amount 5,000 BGN, paid 20 December 2024. This stays in BGN. It happened. You can’t change history.
Open transaction: Invoice #INV-2025-042, dated 20 December 2025, amount 10,000 BGN, due 15 January 2026. The invoice was issued in BGN (immutable). But payment due after currency change. Business policy needed: Accept EUR at 1.95583? Require BGN payment before deadline? Issue new invoice?
Active contract: 3-year service agreement signed March 2024, annual fee 50,000 BGN. The contract was signed in BGN (immutable). But 2026-2027 payments are due post-transition. Business policy needed: Amend contract to EUR? Continue BGN payments? Renegotiate terms?
Your business context determines every answer.
Where You Convert (Master Data About Reporting)
Even when you decide to convert historical transactions for analytics, you choose where.
This choice is itself a Master Data decision—management defining how the business reports and analyzes across the currency transition.
In transactional systems: Leave closed transactions alone. Preserve source truth. The 2024 invoice happened in BGN. Keep it in BGN. Don’t rewrite history in operational systems.
In your data warehouse: Convert everything to EUR for trending. Apply official rate consistently across ten years of data for clean analytics. Your CFO wants year-over-year revenue trending without currency splits? Warehouse conversion strategy solves this.
Both strategies are valid. Don’t confuse them. One preserves operational truth. The other enables analytical consistency.
For Acme Ltd: Their 2024 invoice stays in BGN in your billing system (source truth). But your data warehouse might convert all BGN transactions to EUR at 1.95583 so your CFO can see clean year-over-year revenue trending without currency splits. That’s a reporting strategy decision, not changing what happened.
What Companies Get Wrong
They treat this as “reference data maintenance.”
IT updates currency codes on 1/1/26.
Done.
Meanwhile: Finance hasn’t decided pricing strategy for Bulgarian customers. Commercial hasn’t restructured territories. Legal hasn’t reviewed contract implications. HR hasn’t coordinated employee salary changes. Data teams haven’t decided warehouse conversion strategy. Customer service doesn’t know how to answer “what happens to my BGN invoices?”
The reference change is simple.
The response requires coordinated business decisions across every function.
What This Potentially Means for You
My assumption is that most companies already have policies for all of the above.
Why?
Because Bulgaria is not the first country to join the EURO since it was launched. Eight countries have joined since, making Bulgaria the ninth.
But the below might still be useful.
Map your Bulgarian exposure across all four data types. How many customers? Suppliers? Employees? Open contracts? Active transactions? Historical data? Without this baseline, you can’t assess impact or coordinate response.
Separate reference updates from business decisions. Currency codes update automatically. Everything else needs a decision and an owner. Don’t let “it’s just data” thinking hide strategic choices.
Identify decision owners by data type:
- Reference monitoring: IT/Data team (follow EU/ISO)
- Master Data restructure: Management/Commercial/Finance (strategic)
- Master Records updates: Operations/Sales/HR (operational)
- Transaction handling: Finance/Legal/IT (business policy)
Document your conversion policy by record type and system layer. Not one policy. Multiple policies for different contexts. What converts in transactional systems? What converts in the warehouse? What stays as-is?
Recognize the deadline is real.
Bulgaria joins 1/1/26. Your systems either handle it or break. No extensions available.
Putting It All Together: One Customer
Watch how Acme Ltd, your Bulgarian customer, cascades through all four data types.
Reference Data (External Authority – You Follow):
- Bulgaria = ISO 3166 country code (can’t change)
- BGN → EUR on 1/1/26 at 1.95583 (EU decided)
Master Data (Management Authority – Strategic):
- Decision: Move “Eastern Europe Non-Euro” territory to “Eurozone East”?
- Decision: Bulgarian pricing—maintain premium or align with Eurozone?
- Decision: Credit terms—continue historical or adopt Eurozone standards?
Master Records (Operational Authority – Within Strategy):
- Customer #12345 “Acme Ltd”
- Current: Currency = BGN, Territory = “Eastern Europe Non-Euro”
- Update: Currency = EUR (automatic 1/1/26)
- Update: Territory = “Eurozone East” (if management restructured)
- Update: Pricing tier (following management’s pricing decision)
- Communication: Sales team notifies Acme of changes
Transactional Records (Immutable + Business Policy):
- Invoice #INV-2024-789: 5,000 BGN, paid December 2024 → stays BGN (happened)
- Invoice #INV-2025-042: 10,000 BGN, due January 2026 → accept EUR payment? (policy)
- 3-year contract: 50,000 BGN annual, signed 2024 → amend or continue? (legal + policy)
- Analytics: Convert historical BGN to EUR in warehouse? (reporting strategy = Master Data decision)
One customer. Four data types. Different authority at each level.
Miss the distinction, and you’ll govern everything the same way.
Get it right, and the work becomes clear.
Why The Four Types Matter
Without distinguishing data types, companies make two mistakes.
Mistake 1: Treat everything as reference data. “Just update the codes.” Miss all the business decisions. Systems work but business processes break.
Mistake 2: Treat everything as master data. Try to govern the EUR code. Create approval workflows for ISO standards. Waste effort on non-decisions.
The framework reveals what needs decisions versus what needs compliance.
Reference data: Comply with EU/ISO. Master Data: Management decides strategic response. Master Records: Employees update within strategy. Transactional Records: Immutable, but business policy determines handling.
Get the authority pattern right, and January becomes manageable.
Get it wrong, and January will be chaos.
The Authority Rule: Can you redefine what this means, and do you need others to accept your definition? If you need others to accept = reference data. If you don’t = master data.
Read the full series at charlotte-malmberg.ghost.i
Leave a Reply