The resolution of the United Kingdom to exit the European Union was just one of the major political decisions that will have global effects. The trade wars between the United States and China have also created unrest, but there are environmental, economic, and political concerns in countries across the globe that are impacting global economics. The global market is an open network of import and export for countries all over the world, but these exchanges will only be as strong as the international finance and banking industry that sustains them. There are challenges within every industry, but here are some of the more pressing issues that will face international businesses within the realm of finance.
Global operations usually require a team of individuals that understand the international market, as well as the trends, practices, and regulations of the country in which you hope to grow. Your business structure should be able to become multinational, perhaps with a division that is specifically in charge of global exchanges. If you are going to put an office on the ground in a foreign, you need a financial partner that works with both local and international clients. For those who are taking advantage of the oil discoveries and investment potential in Guyana, the Guyana Bank for Trade and Industry Limited has both local and international experience with currency exchange, investment funds, and traditional savings accounts. Your business structure should be supported by the local market where you plan to do business but also the investments you are going to make in overseas transactions.
Your company may be in compliance with United States tax regulations and licensing fees, but overseas markets have a new set of laws and regulations to contend with. The tariffs and legal fees associated with approval to conduct business can be steep, and one misstep (even out of ignorance) could cost your company some serious cash. Not only do you have to worry about the fines for any breaches, but you may also be left with products in warehouses or goods that are refused entry due to regulatory non-compliance. Though the global economy is moving toward more secure and efficient digital transactions, the regulatory landscape between countries can be a headache for those who don’t have the right people in place. On the other hand, some countries are governed or influenced by those who have questionable ethics, and you need to be aware of the bribery and questionable financial requests that might follow your request to do business.
The way you establish your pricing in the United States is similar to how the process works overseas, but there could be more variables included in the decision. Your direct competitors on the local market are a good starting point, but you need a long-term pricing strategy that accounts for the additional distribution challenges, increased overhead, multinational marketing plans, and any taxes or fees you have to pay. What you may consider a low price could still be outrageous compared to the local currency exchange and average wages, but you also have to account for how the exchange affects your suppliers or local operating costs.
If you thought U.S. tax structures were confusing to navigate, consider the different rates, systems, and compliance requirements that accompany doing business in foreign countries. Where you choose to locate your business will affect your tax liabilities, and doing your homework can help you avoid overpaying on taxes. Know where tax treaties between countries exist to eliminate paying twice the taxes on a single transaction. International accounting practices often make tax efficiency a priority, with some companies relocating their headquarters to countries or locations that are known to offer “business-friendly” corporate tax policies.
Acceptable Payment Methods
With the internet giving e-commerce unlimited potential, it has become easier for businesses of all types to sell their products overseas. The challenge for these businesses is establishing acceptable payment methods that offer secure processing. The protection of personal and financial information is a priority for digital transactions, and there are several globally-recognized payment options that provide this security. Many sites and sellers are moving toward cryptocurrency, such as Bitcoin, for the increased purchase security and the lack of fees associated with transfers or transactions. Your ability to pay vendors overseas may also be challenging, especially if your traditional payment methods aren’t accepted. The currency exchange rate could also be damaging to your bottom line, as your profit and expenses could rise and fall with economic and currency fluctuations. Best practices include paying suppliers and managing production costs through the same currency that you are selling in.
Preparing to enter a global sales market requires navigating the competition, the paperwork, and the cultural trends or practices that may impact consumer habits. Your company, no matter how strong it is on U.S. soil, can be severely impacted by a lack of awareness and understanding with global finance and banking practices.