As your business grows, you might be thinking about tapping into new regions or markets. While there’s a lot you can do remotely, you’re likely going to need a local team on the ground to realise your vision of building a global company.
Along with recruiting local team members and developing new ways of working, you’ll need to consider how you’re going to navigate employee expenses in these new countries, too. While your current expense policy might work in a domestic context, it’s likely going to need some tweaks and changes to work overseas.
From navigating different tax laws and accounting for the cost of living differences, your expense policy needs to evolve as your business expands internationally. Let’s explain how to take your expense policy global with five practical tips to get your growing business ready for overseas expansion.
Why expense policies matter for internationalising, high-growth businesses
Once you’ve successfully proved your product-market-fit in one country, you might be thinking about expanding abroad. In today’s digital-first world, testing your product overseas can happen faster and more effectively than ever before.
While your first priorities are likely to be testing your product with this new audience and growing a global team, your focus should also be on creating a global expense policy. Why? Well, having a clear set of guidelines for how company profits can be used by your team is essential to keeping your business profitable while scaling overseas.
The more people you bring into your business, the more complex managing your cash flow can become. Without the right framework in place, your finance team may struggle to keep up with the growing workload of reconciling transactions, approving expense reports and chasing lost receipts.
But, reviewing your expense policy (or building one from scratch) and ensuring it works both locally and abroad can help you reduce the risks of expense fraud and free up resources in your team, too.
Here is why you need to get an expense policy sorted as your business goes global:
- You’ll be able to proactively plan for the unique laws and regulations that apply in each country to ensure your company and expense policy remains compliant.
- You’ll be able to tailor your expense policy to each market and geographical area, rather than have one standardised policy that won’t work as you scale internationally.
- You’ll maintain full visibility over your expenses even as your team grows and your business moves into new countries.
5 things to consider when building an expense policy for a global team
Clearly document your region-specific expense policies
While some elements of your expense policy may be standardised across your entire company, you’ll need to allow for geographically specific rules and requirements, too.
What tax rules apply in each country you’re operating in? What information do you need to capture to reconcile transactions? Are allowable and non-allowable expense categories the same across each region?
By ensuring your expense policy is tailored to the local laws in each country you’re planning to operate in, you can save your business the hassle and headache of non-compliant expense claims.
Ensure your policy is aligned with local cost of living
The best expense policies balance the needs of employees with clear budget categories. However, the budgets you set for different expense categories might vary greatly depending on the cost of living in each region.
Make sure to review how much things actually cost in each region when setting your budgets. Be realistic about how much expenses will cost your team and continually review these costs as time goes on (especially in light of the inflationary pressures we’re seeing across the globe).
The more realistic and accurate your budgets are, the happier and more supported your team will feel (no matter where they’re working from).
Watch out for FX fees
If all of your working capital is based in one country, you need to watch out for foreign exchange fees when expanding globally. Plus, as international currencies continue to fluctuate, you might be hit with unexpected conversion costs as prices go up and down.
FX fees and costs can easily eat into your profits, especially as you add new regions into your business. Instead, it’s worth looking for an expense management product that offers corporate charge cards that offer no FX fees.
Look for solutions that offer globally-compatible cards
In a similar vein, it’s important to ensure you can use one consistent payment method for all employee expenses globally. You don’t want employees in one country using company AMEX cards and other employees using their personal funds for company transactions.
By looking for a globally-compatible corporate card, you can make your finance team’s job easier with one single method for processing expenses. Plus, by giving your team corporate cards you can score instant visibility over your expenses and ditch the need to reimburse your team or use your employees as a line of credit.
Find ways to unlock working capital in all markets
When going global, you want to give your team access to the capital they need to jump on the best opportunities. That’s why your expense policy needs to factor in a line of credit for team members, no matter where they are based.
The best expense management platforms should offer corporate cards that offer no fees and can help you continue to thrive (not just survive) even when cash flow is uncertain. This will ensure you’re not taking out loans in each new region and keep your lines of credit consolidated.
When it comes to going global, your expense policy needs to be a top priority for your scaling team. With the right policies in place, you can ensure your processes are compliant and adaptable to a range of local contexts. Plus, you’ll be able to retain visibility over all your expenses even as your business expands into new markets with the right policies in place.
Written by Team Cape
