What should start-ups consider so that cash management does not become an expensive affair during internationalization? An overview.
Why international expansion can become a real finance trap
The business idea has taken off, the product is booming, customers are enthusiastic and sales are also good. For many companies, these are the perfect conditions for venturing into the international market. But be careful! Anyone who forgets that internationalization requires a lot of preparation, especially when it comes to finances, can quickly turn the dream of global success into a business-damaging nightmare.
Anyone leaving the borders of their domestic market needs a well thought-out strategy for dealing with foreign currencies, international tax rates and different invoicing requirements. What horror scenarios await companies that lack the right strategic approach? And how can they successfully manage cash management in previously unknown territories?
Is it time to shake up the international market? With nexnet's payment clearing solution, you won't lose track when handling different foreign currencies and tax rates.
When internationalization is taken lightly ...
... the company quickly faces financial ruin. Because even if a growing business is cause for celebration, many CEOs underestimate the enormous accounting effort behind growth and internationalization. Dollar, rouble, yen - are the differences really that big? No doubt many have asked themselves this question and, at worst, dismissed it with a slight shrug of the shoulders as a triviality. Then it usually doesn't take long before the first inconsistencies are noticed in the books and cause panic. Those who do not pay attention to correct currency management and tax handling not only risk incorrect amounts in the month-end closing process: inventories and sales are quickly incorrect, reporting is full of errors - and the company is completely mismanaged.
How start-ups avoid chaos when dealing with foreign currencies and taxes
The correct handling of foreign currencies is crucial to the success of a company. The most important principles here are the use of daily exchange rates, the correct valuation of inventories at the end of the month and the correct posting of currency differences. If these principles are not adhered to, the accounting will be incorrect and the annual balance sheet will be a rude awakening.
But the right currency management alone is by no means enough, because anyone who ventures onto the global stage must also overcome various tax pitfalls. In e-commerce, for example, the question arises as to whether haptic or digital goods are being traded - because this really does make a difference from a tax perspective. A digital good is immediately available, which means that VAT must be paid immediately. The situation is different for haptic goods, which will only be delivered in five or six days: Here, too, VAT must be paid immediately, but to where? Who is the tax recipient? And which country receives the tax if, for example, the product is ordered in the UK but delivered from Germany? Start-ups should get help and support from experts here so as not to lose track. And it should always be documented exactly what leads to which tax.
Are you looking for a solid partner for financial management during your internationalization? nexnet will help you to keep an overview at all times.
Why finance outsourcing is particularly worthwhile for start-ups
It has become clear: The international financial cosmos is complex and difficult for non-specialists to understand. Start-ups often lack a standardized system or the manpower to handle the new and more complex financial flows during internationalization. This requires manual intervention and often leads to errors. It is therefore worthwhile for them to outsource their financial management in order to meet the complex requirements when dealing with foreign currencies, taxes and invoices. Payment clearing from nexnet processes all cash movements in all currencies using daily exchange rates - and turnover and VAT are automatically recorded using international tax rates. By outsourcing cash management, young companies avoid many common sources of error in cross-border activities. This allows them to concentrate on their core business again, while exchange rates, invoicing and tax handling are professionally monitored and managed by the external service provider.
Keeping an eye on all finances with nexnet - even during internationalization
The Berlin-based company nexnet, one of the leading business process outsourcing service providers for accounts receivable management, can look back on more than 15 years of experience in the national and international mass transaction business and supports DAX companies as well as young and growing companies. The individual nexnet solutions adapt to the increasing complexity of business processes and thus help companies to get all financial flows under control.
With Payment Clearing, nexnet offers companies a simple solution to monitor financial transactions efficiently, securely and conveniently - internationally, industry-neutral and certified. This allows companies to concentrate on their core business, i.e. generating reach and turnover, while nexnet ensures the correct handling of financial flows in the background.
Article image: Eyeem
