Making a company successful with a global footprint is always considered as a big achievement by any measure. As soon as a business is established locally, an entrepreneur may consider taking on the global market. According to many businesses, having an international expansion is the natural step forward when the business is growing.
It cannot be denied that entering new offshore markets represents a great opportunity. But the move can be disastrous as well. Having a successful business in a foreign country is as difficult as establishing a new business. This is why it is important for the entrepreneurs and business leaders to have a clear understanding of the challenges involved with global business expansion.
Global business expansion involves a whole array of risks and the expansion can seriously drain out business resources, whether in the form of financial capital or human capital.
Here throughout this blog post we are going to list out the accounting challenges corresponding to international expansion and the ways they can be handled by the NetSuite One World and Oracle NetSuite accounting software.
Complicated Structural Changes
The expansion to international locations involves several steps and it can take months of time for successful completion. Though you can embrace simple approaches such as opening just a branch office instead of establishing a fully-fledged subsidiary, there are limitations of this approach. The subsidiary formulation has its own pros. The biggest advantage offered by a subsidiary is giving the parent company freedom from liabilities.
On the other hand, a subsidiary can also turn the accounting process into a complicated one. Just because a subsidiary works as a separate business entity, it needs to adhere to local accounting rules and practices. It needs to produce its own financial balance sheets and statements. At the same time these financial statements impact the financials of the parent company involving several different accounting standards.
On top of that, when it comes to integrating financial data from subsidiaries operating in different countries, the rules can vary from one country to another making the financial bookkeeping even more complicated and time consuming. This is why financial bookkeeping that involves managing financial reports from subsidiaries in different countries, is often vulnerable to data errors.
To meet the challenges of these complications, a well equipped financial management system that is designed for companies with several subsidiaries can be highly effective. Oracle NetSuite for accounting and ERP solution along with NetSuite One World module is specifically designed and configured to help companies with international presence to deal with all these challenges corresponding to accounting and legal compliance in a streamlined manner.
Addressing the Language Gap
One of the biggest challenges companies face for global expansion is to decide the language for communicating with customers, local staff and local stakeholders. It is well known that customers generally rely on companies that communicate in their language and this is why often an anglophone marketing strategy will have limitations in francophone or Spanish speaking countries.
It is also common that business staff are comfortable in communicating in their native language and when they are forced to communicate in a foreign language they become less productive. The same principle also applies to internal documents, training tools, accounting books and pretty much everything where communication is needed.
NetSuite One World with its multilingual support covering all leading languages around the world helps a business adapt to the local dialect and appear local to the customers and employees. With NetSuite, a business no longer needs to worry about the language barrier when pushing expansion across international locations.
Challenge to Track Subsidiaries in Real Time
Having real-time visibility over all your business processes across locations is key to efficient management. This becomes really challenging when a business operates through multiple subsidiaries across global locations. Lack of visibility of overseas business operations can have a negative impact on the decision making process of companies.
When the subsidiaries of a business make use of different accounting software while some even rely on traditional spreadsheets, getting access to business operations data from different locations and in real time is not possible. On top of that, subsidiaries in different countries as per their market needs may need to track different sets of KPIs.
NetSuite ERP system custom implemented by an expert NetSuite implementation company can provide a highly tailored and consolidated approach to offer real time access to business operations and accounting data. While the system works in a consolidated manner by bringing together different facets of business data, it also allows customizing the KPIs for different subsidiaries as per the local market needs.
Integrating Multiple Currencies
When a company is doing business in several countries, it is understandable that it needs to handle transactions in multiple currencies based on the location of the subsidiaries. The differences of currency values can add to the complications of account management, bookkeeping and financial metrics. On the other hand, the fluctuating rates of currencies can also impact the overall revenue earning of a business.
This challenge to deal with multiple currencies is common to most international brands operating across locations. For example when a US brand is operating from India and the Indian Rupee loses value against US Dollar, this can impact the revenue earned by the Indian subsidiary of the company.
Fortunately, we have NetSuite One World, the global ERP system to help international businesses deal with location specific challenges. NetSuite One World accommodates multiple currency transactions and takes care of the calculation and financial tasks based on the real time currency value.
Addressing Variety of Tax Rules
Businesses expanding globally always need to keep pace with the evolving tax policies in different countries where they have operations. In some countries several provisions of the tax laws expire quickly to pose challenges for the accounting team. Political changes such as the presidential election in the US often lead to major changes in tax laws and exemptions.
On the other hand, in some countries handling the indirect taxation such as Value Added Tax (VAT), sales tax and use taxes can turn out to be too complicated and effort consuming for the financial managers and accountants. The challenge becomes havoc when a business enters a new market which in regard to taxation laws and practices differ tremendously from the country the company belongs to.
In some countries tax rules even change from one federal state to another adding more complications to the accounting process. Obviously, a traditional accounting software is too under-equipped to handle these multifaceted requirements and tax rules at different levels.
NetSuite cloud accounting module and One World offers a very consolidated taxation management and accounting approach to help international businesses manage taxation in a country specific manner without losing control of the financial and accounting process.
Adhering to Compliance Standards and Regulations
Adhering to the regulatory norms and compliance standards in a foreign country can be really challenging for any business. In certain countries the roles of different administrative departments and agencies often overlap and conflict with varying explanations. This blurs the accountability and responsibility behind several operational regulations.
Adhering to compliance is often seen as the biggest challenge for many international companies. There are too many examples when a business in a foreign country has been penalized for not meeting the compliance while in reality it resulted from misinterpretation of the compliance norms.
NetSuite One World as a unified ERP solution can help your business stay updated on the country specific compliance requirements and can allow you to configure operational procedures based on them. An experienced NetSuite Alliance Partner with global expansion projects can further help you achieve maximum results from the platform.
NetSuite OneWorld as the Perfect Tool for International Expansion
NetSuite OneWorld is configured, designed and customized to help businesses trying to expand across overseas markets. It helps a business to emerge as an international brand by providing a global view of all the business subsidiaries. With real time data driven insights across locations it helps business strategies and top management to take most informed business decisions based on the specific market demands and needs.
NetSuite OneWorld helps a business in dealing with all the challenges arising from the efforts for international expansion. From managing multiple currencies to facilitating multilingual communication to complying with country specific tax laws and regulations to adhering to regional compliance, it provides everything that a business needs to face the challenges of global expansion. NetSuite consulting services well versed with global business expansion challenges can further help you configure the right tools and NetSuite modules as per your business needs.
Conclusion
Does your business want to ensure a global presence? Are you intimidated by the challenges corresponding to different tax laws, compliance, etc.? Are you lacking comprehensive controls to keep track of your subsidiaries across international locations? Here comes NetSuite One World to deal with all these challenges and run your international business operations in a streamlined manner.
