International expansion is an opportunity and a risk

Taking a business international is an aspiration that many organizations have, but not that many do it well. Even big companies struggle to translate their popularity from homegrown markets to those in different global regions.

The great benefit of international expansion is fairly obvious—it gives the company access to a new, untapped market—more people and more opportunity for growth. In some respects it also gives you the opportunity to spread your financial risk across multiple economies and currencies. With that in mind, if you look for outside investment or you are a publicly listed company, then you may find that international expansion further attracts outside investors, particularly those who seek to have an exposure to a spread of currencies and economies.

However, those same benefits also present challenges. Your gains in an overseas country may be swallowed by exchange rates, but perhaps more practically, assimilating with different cultures, communities, sets of rules, communications methods, etc., in different jurisdictions is not a question of simply changing the language. To be successful in another country you need to gain the data to understand the market, possibly adapt your product or service accordingly, abide by local rules and regulations, and you need to communicate in a way that resonates with those customers and reflects their contextual expectations. It’s important to get those details right to maximize the opportunity and its outcomes. 

For subscription businesses the opportunity to expand internationally often arises almost incidentally, when a request comes from a customer in another region. While it may be possible to fulfill that customer’s need in the initial instance, the temptation is to then grow in that area as a result. What’s important is that you have the tools within your system to support that decision by understanding your customers fully, and executing that knowledge seamlessly against a clear and informed strategy—that’s what keylight seeks to do.

Adapting pricing strategies for global markets

Pricing for any company is not just a mathematical consideration, but an emotive one as well. When it comes to trading internationally, market knowledge is fundamental to getting pricing right. It isn't necessarily appropriate to charge the same amount across the board, as salaries and living costs vary, and the strength of the local currency may be different, for example. 

With that in mind, it’s important to have a system that can automatically charge both relevant to your local market once you have set the price, and in the local currency. The two elements will provide a better billing experience for the customer and mean they are less affected by exchange rate fluctuations that may cause them to question your invoice or undermine trust.

Mastering time zones and date formats is crucial for operations and customer experience

In a world where we're all digitally savvy but we're also on hyper alert for any signs of fraud, the details really matter. When it comes to things like working with local time zones, it's not just a question of making sure your operating hours and communications align with the region, but also making sure that the way you format and present your information, including your invoices, makes a difference. Where one country formats their dates one way, another does the opposite; where one country uses a decimal point to separate large numbers, another uses a comma.

If you write 3/2/24 in the UK, it will refer to 3rd February, but if you write the same date in the USA it will refer to 2nd March. It's a small detail that could create enormous confusion or inaccuracy. Rather than depend on the knowledge and input of individuals to ensure customers get the right formatting for the right location on every invoice, it’s more reliable and sustainable to depend on an automated approach with keylight's advanced data export, sync capabilities and time zone aware billing runs.

Offering more convenience to global customers

Different regions around the world are often most comfortable and familiar with slightly different payment methods. Where one country uses bank transfers, another may prefer credit cards or PayPal. This is the kind of detail that can nudge a prospect towards a competitor brand if they can't pay the way they feel happy. 

Furthermore, the billing information they need might change from one to the other. As part of your communications, it's important to let customers know in advance that you're about to charge them as some payment methods enable a request chargeback with no reason or it could even be filed as an unauthorized payment collection, which can cause commercial difficulties as well as accounting issues.

Simplifying tax compliance across borders

We have written extensively about tax compliance and the difficulties it can present for businesses as they grow. As you expand across different regions (even across different States in the USA), you will find yourself trading across different sales tax jurisdictions, amongst other things, depending on where money is collected and so forth. 

Staying on top of tax compliance, which is renowned for its regular fluctuations, is almost impossible to do accurately at scale in a subscription business. You need a system that can automatically consider local tax regulations, as well as connecting to services that verify tax ID to lower the risk of fraud.

Ensuring compliance in global operations

It's not just tax that needs to be automatically accounted for in a growing subscription business, but other regulations as well, affecting finance. For example, making sure that customers' financial data is stored correctly and in line with GDPR, ISO statutes and other privacy regulations is incumbent upon you and your system. This can impact your success both in terms of potential risks or fines if something is incorrect, but also in terms of limiting your sales activity. For example, there might be a limit on auto-renewal terms.

Streamlining accounting for business entities and teams

Different areas may have different accounting principles and calendars that need to be aligned, identified and kept on top of. For example, in some countries the tax year lines up with the calendar year, but in the UK it runs from the 6th April to 5th April, and in Australia it runs from 1st July to 30th June. 

Of course, there is some human involvement here, and you may argue that this can all be done manually. However, trade in enough countries and you will probably be able to keep your accountant busy throughout the year on that alone (depending on the structure of your business). Furthermore, as a process that doesn’t give you overarching transparency and is ripe for error, it leaves you open to misinformation on what’s owed, what’s not and when, which can be highly detrimental to your financial success.

To stay on top of things it helps if you use the same accounting tool across all business entities (keylight allows for multiple business entities). That means a system that can accommodate and automate everything you need—the different currencies, formatting, automation and so forth, so you can consolidate information accurately.