If you’re still using excel for any of your processes, read this stat
Excel is so(oo) 2005. But even now, it always seems like a great idea in the beginning to use excel spreadsheets…until years pass when your company has presence in multiple countries and you get audited and discover that numbers don’t match and errors could go back years.
In the world of auditing, untangling a company’s excel files to assess proper financial tracking and reporting can be a nightmare – especially when the company has hired different employees over the years and can no longer consult with them to find out what their assumptions were and what might have gone wrong. Plus, you may have to redo years of work, making the people you originally hired a huge wasted expense.
Whenever clients have issues with accounting such as reconciling numbers, it’s almost always due to human error made in excel. We’ve seen cases where tax authorities have had to go through 10 years of excel data document sourcing because a company struggles to reconcile numbers. At best, these audits take months or years to settle and normally not in the company’s favor (yikes!).
But it’s not just about accounting and tax; when you’re expanding your business internationally, the technology for international expansion you use to engage employees in any kind of process (be it workflows, business development, financial tracking or reporting, communication, etc.) needs to suit the needs you’ll have both unique to your company and across multiple jurisdictions.
Maybe the current systems you have in place are outdated and require an upgrade. Or maybe you struggle to find one software that meets all of your needs. Whatever it is, there is one thing we know for sure: scaling your business requires having the right technology to optimize your processes across numerous legal entities and functions. And having efficient and effective systems is about being proactive, mapping out your processes, preparing quality data inputs, and ensuring any process to be automated is effective and efficient. You will realize this is time well spent when it comes to preparing for a year-end statutory audit or when defending a tax audit!
How technology for international expansion fits into your operating model
The words “digital transformation” are big buzz words, but it might be hard to understand what exactly is happening when a company adopts it. In a nutshell, it can be defined as the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers.
Christopher Penn says it best through this framework below that shows the intersection between People, Process, and Technology. When people engage with a process, your business can scale. When people engage with technology, your business becomes innovative. And when technology is connected to the process, your business can have automation.
Image from christopherspenn.com
5 Benefits to connecting technology for international expansion with your processes
Here are 5 key reasons why your business – especially if you’re growing internationally – needs to be strategic about technology:
- Automate tasks, which improves efficiency
Automating tasks can free up a lot of time for employees to tend to other work, and also eliminate distractions. Not only that, but technology can help you be more efficient in your role and have better oversight for our group. If you’re the Global Head of Tax, for example, you have a technology enabled dashboard that shows you which countries will have an upcoming tax compliance so that your attention can be focused accordingly (this is what we do at weConnect).
- Ensure your business is compliant
Let’s say you are responsible for global transfer pricing policy and want to make sure your company has a 2-5% operating margin at year end and a certain level of cash. You can set your technology with controls that flag countries that do not comply with your company policies and processes and have that technology notify you ahead of time.
- Dramatically minimize human error that comes from manual tracking
As far as financial controls and reporting are concerned, this is a game changer. Even the most attentive employee can make mistakes occasionally that can go undetected. With technology that has policy and process-based rules embedded into it, there are no margins of error.
- Save money on labor costs
When you have a tool to help you with automation and you no longer have to monitor employees for accuracy (or at least the initial oversight role is undertaken by technology), your company can save money by reducing overtime work or unnecessary positions. Another way businesses save money when they find an efficient provider is that the systems and exceptions can be managed by junior members instead of mid to senior level members, reducing salary costs and inefficient use of time.
- Effectively communicate cross-functionally
A lot of software – especially financial ones – will send prompts to remind people of tasks that need to be completed by a certain date so that someone in another function can continue the process. Simple prompts like these help your company have better oversight of your group and cross-functional communication.
The wrong way – and the right way – to go about incorporating technology for international expansion
You can’t automate a process that is inefficient. And sometimes, full automation might not be possible nor the end goal. Oftentimes, we see companies research and implement technology for international expansion and try to train their employees to use the tools without fully knowing and understanding their policies and processes which are why they needed the tool in the first place.
Take this story of a Fortune 10 company, for example. They wanted their country-specific statutory benefits, employee onboarding tasks, and time and attendance modules to connect to a leading finance and HR software, but it couldn’t be done. They wound up spending $500,000 USD in consultant and software engineer fees trying to integrate their data into the software and it failed. When they came to weConnect, we helped them identify a semi-automated workaround with improved efficient processes that met their needs and cost them $10,000 in total to implement.
Instead of finding a software and trying to fit your needs to it, we recommend starting with a manual approach, which we call process mapping. Write down all of the processes you have within each function. What needs to be done? What are the steps taken throughout this process? Who are the people involved in this process and how do they communicate about the process?
Once you have your list of process requirements, then you can then contact providers directly with this information and find out how their software can help you and what they can do to customize to your exact needs.
And here’s the thing: depending on your business and the jurisdictions you are expanding to, you might not find one software that meets your needs 100%. For example, many companies want to have one global HR platform, but countries like Japan, China and India sometimes don’t work with many global solutions. It’s important to map out processes in each jurisdiction to see where you’ll need to spend more time and or money. It could still be worth your time to have 80% of your needs met even if it means having separate processes (and technology) for a few jurisdictions coupled with a few manual processes where it makes sense.
Process mapping might sound daunting at first, but keep in mind that technology is an enabler for efficient processes and will be your key to scaling in a way that’s efficient, cost-effective, and compliant.
Ready to improve your effectiveness and efficiency through the use of technology?
A final point about leveraging technology is that many companies do not utilize the full capabilities of a software. You could say that in the same way it’s true that we only use 10% of our brains, many of us only use 5% of our technology capabilities. For example, in excel there are over 500 functions to use, but the average user might only be aware of 10 of them. And the same applies to tools like Outlook or Gmail – there’s a multitude of functions that are available, but you may only be using a small fraction of them.
At weConnect, we have a dedicated systems and back-office software team so that our service teams are all leveraging the systems full capabilities when we help our clients with accounting and back-office systems. We are committed to helping companies understand, map and establish the most efficient and effective processes across multiple jurisdictions and then apply the right technology (e.g. accounting system) so these processes run smoothly in the background while you focus on your bottom line.
Ready to utilize technology in the most efficient way? Contact us here to learn how we can help you with process mapping.
With special thanks to Sam Barrett from EY’s APAC Operating Model Effectiveness team for his inputs and insights in putting together this series of articles.
International Business Expansion Series
This article is part 10 of an 18-part series about International Business Expansion. Here’s a list of the full series to give you a well-rounded understanding of what to consider when expanding your business abroad:
- A North Star: The #1 Thing that Companies Need for a Successful Expansion Abroad
- The 3 Components of a Market Analysis to Know if Your Product is Viable Abroad
- How to James Bond Your Profit Margin with Location Analysis
- How to WIN in a New Market with These 6 Models of Execution
- Show me the money: How to Fund Your Business Expansion Abroad (Coming 8/24/2021)
- Lost in Translation: How Culture Can Impact Your Business Expansion
- Risky Business: The 2 Key Layers of your Operating Model to Align with Your Growth Strategy
- How the Way You Organize Your People Globally Can Save You on Taxes
- Trash Talk: Why You Need to Analyze Your Processes Before Expanding Globally
- 5 Reasons Why You Should Customize Your Technology for Your International Expansion
- Setting Up a Business Abroad: The 4 Kinds of Structures & Legal Implications