It used to be that only very large, successful companies could operate and compete globally. Today, companies of any size can take advantage of global opportunities.

Over the last 30 years, I've watched a lot of companies reach out and attempt a global business model. Some did it with finesse and ease. Others struggled, and many failed. Financially speaking, those that succeeded were deliberate in setting a global financial strategy. They identified the common issues companies face when going global, researched different ways to navigate roadblocks, created a strategy, and ultimately executed a well-defined plan.

Being prepared is the key to successfully managing change in any business. Taking a business global is no different. A well-defined strategy that standardizes processes and sets guidelines will give a business control over the way its finance department operates, complies with local regulations, and communicates with the home office.

Before entering the global market, a business should consider the following for each new location:

• What key performance indicators should be measured for both financial and operational purposes?

• How will it set up and manage the accounts receivable and payable, and treasury functions to support multiple locations?

• How will corporate maintain control over global financial processes?

• How will it manage local tax codes and regulatory requirements for each new global office?

• How should it manage multiple accounting frameworks, such as GAAP and IFRS?

• How will it select a currency strategy for handling multiple currencies?

To help answer some of these questions, the following guidelines provide some direction on how to develop financial processes to support a growing global organization.



Implementing a multi-entity structure will help the business integrate its global organization, instead of managing a series of individual businesses. Attempting to financially manage each location separately leads to duplicate work and inefficient processes. Consolidating, on the other hand, empowers the team with complete visibility to monitor and control global operations.

The following are key elements of a multi-entity enterprise:

KPIs. KPIs should be user-defined by location with the flexibility to calculate both business and financial metrics as needed to gain insight into the successes and needs of each individual entity. Well-defined KPIs will enable a business to analyze, model and plan locally, but still have a global view.

Consolidated business processes. Consolidating standard business processes across the organization will support the demands of a more complex global business model, while eliminating costly duplication in the accounts payables, accounts receivables and treasury functions. A key advantage of consolidated business processes is the high throughput performance that can be maintained, even as transaction volumes and business complexity grow. For example, in a multi-entity environment, only one consolidated invoice would need to be sent to a vendor that serves two separate locations, reducing the time, effort and cost needed to complete this function for both locations.

Workflow. Proper workflow for transaction flow and approvals will be necessary to support both local and enterprise-wide processes. Workflows should be standardized to maintain corporate control, yet flexible enough to meet specific local needs.



Going global means dealing with varying tax and reporting requirements, which adds complexity to financial management. The organization must maintain strong internal controls and governance to ensure transparency and compliance, yet be flexible in order to satisfy each location's requirements. In many countries, the need to account for value-added taxes is a mandatory reporting requirement that probably differs from a company's current tax process, and can be set up as accounts-based or invoice-based. The business will need to determine its approach depending on the countries in which it is currently conducting business.

An organization must also have the ability to manage both cash and accrual transactions and to simultaneously manage the business by both GAAP and IFRS frameworks based on what it decides is the best strategy for its new global organization.



Whether the business decides to standardize on one currency worldwide or manage multiple currencies by location, going global will complicate consolidations; conversion rates will need to be monitored; alerts or other tools will be needed to manage volatility; realized and unrealized exchange gains and losses will need to be accounted for; and the company must be prepared to report in multiple currencies.



Once the company has taken into account the financial considerations and drawn the big picture, it must organize to execute. The people placed in each foreign office must be either local or country-aware of the financial considerations in that geographical region. At the same time, those same people must be well-versed in the company's global strategy and able to operate according to its plan. To support each local office, it is also imperative to hire a local accounting firm to manage audits and ensure that the company meets local, regional or country requirements.

Going global is an exciting step for any small business to take. With some forethought into a global strategy and financial processes that support global requirements, any company can span multiple countries yet still maintain streamlined and integrated financial operations while delivering optimal global business value.

Robert Reid is the chief executive officer of cloud-based accounting and business software developer Intacct.

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