When a company first sets up shop in a new country, it will often rely on third-party advisors from a local accountancy firm to get things up and running: filing the documents required for legal set-up, keeping a basic set of accounts for the new office, providing some basic reporting.
There’s nothing intrinsically wrong with that approach – in fact, it’s often the best way to navigate an unfamiliar market, with the guidance of people comfortable with its specific tax and reporting requirements as well as business culture.
But problems can quickly arise when a company sticks with that approach for too long, so that an office that has grown to represent a substantial chunk of its business is still being overseen by external helpers, typically using their own software.
This can lead to an alarming lack of visibility and oversight at a corporate level with the international office both out of sight and out of mind. And regardless of how trustworthy the company’s local advisors may be, that’s at best unhelpful and at worst distinctly dangerous.
From the finance director’s perspective, it’s going to be extremely difficult to roll up data into consolidated financial reports. Routine accounting(opens in new tab) tasks, such as period close and audits, are likely to take longer and consume more resources. And the reports that the corporate finance team provides to company leaders aren’t likely to offer a truly complete view of operations if it’s a struggle to extract the right data out of overseas offices.
In fact, without accurate information on local budgets, costs, forecasts, supplies, labour and projects, it’s nigh-on impossible to know whether the opening of an international office has been a success or failure. Nor has corporate leadership much chance of making sound decisions about the types of opportunities that employees in that region might be profitably chasing, in order to feed the organisation’s wider high-growth strategy.
A better approach might be to still hire those third-party advisors but get them up and running on the company’s global, cloud-based ERP(opens in new tab) system from Day One. And if the company doesn’t have a global, cloud-based ERP system, it may need to think carefully about whether it’s truly ready for international expansion. Then, as the company grows, newly recruited internal hires can take over tasks previously performed by the local firm.
In this way, all information is handled from the start in the same consistent, shared format. It can be accessed from anywhere in the world, giving managers the benefit of real-time insight into company-wide performance. Reporting and analysis can be provided on a global basis, with reports and dashboards presenting up-to-the-minute views of how well the company is responding to challenges and opportunities, both at home and abroad.
The global ERP system still needs to handle the specific local requirements of the international office through local customisations: currency, language, tax regimes, legal frameworks. But at the same time, it can bring that international office ‘into the fold’, making it an integrated part of the wider business, rather than a far-flung outpost that’s poorly understood back at headquarters.
International expansion is difficult. Even at companies that handle it well, intentions and instructions can get lost in translation. But when employees in different locations work from the same system, using the same information, the likelihood of misunderstandings is reduced, cultural and language barriers can be lowered and everyone can be working on the same page.