Growth is often a tricky thing, and as much as CEOs drive the business forward, they inevitably need backup from other key executives.
In addition to being agile and adaptive when faced with adversity, CFOs are now expected to embody an entrepreneurial mindset, which has become critical for scaling-up companies, both at home and abroad.
Stepping Up to Challenges
International expansion is often one of the top goals of established companies — an uncharted trail that needs to be trekked carefully as they tap into a sprawling new market. Surely, renowned companies like Twilio, Digital Ocean, and Salesforce didn’t achieve global superstar status overnight, but they certainly planned for international expansion well in advance of actually attempting it.
We’ll talk more in a bit about how innovation is a vital component to this expansion. But first, let’s quickly go through the top hurdles CFOs face in managing global business operations, as well as how to address them:
1. Cultural Differences
Penetrating global markets may mean diversifying the brand through new languages, not only on the customer side but internally as well. Hiring bilingual teams will support global operations and your role as CFO — it will help bridge the cultural divide as you engage with clients, negotiate with partners, or close M&A deals.
The SaaS market grows by 18% annually. The fact remains that many SaaS companies have ventured into the international space before you have, and competition in the industry is fiercer than ever before.
In terms of market share, local companies often occupy the most advantageous position. As a newcomer, it helps to build strong relationships locally to establish your presence in the market and map out your potential growth opportunities in advance.
3. Global Talent and Payroll System
Globalization won’t be successful without the right talent — and an efficient global payroll system. Outsourcing is one of the best ways to keep this function up and running, with providers being equipped with extensive knowledge in local payroll, labor, and tax laws. CFOs are responsible for compliance to these set regulations, as well as the reporting necessary for end-to-end visibility in the countries where the business is present.
4. Compliance to Global Regulations
Sales tax rates vary per country — and so do the definitions of what a software/digital product is, or who is classified as a customer. CFOs must keep current with tax trends and rulings; be aware of restricted markets; and comply with territory-specific regulations. As costly penalties can be detrimental to your global business expansion, having a firm understanding of different tax jurisdictions and implementing automated sales tax operations is a great way to stay compliant.
Innovation Strategies for CFOs
Gartner’s 2021 finance trends report cites digitalization as the top priority of CFOs for the current year. Eighty-two percent of respondents said that they’re spending more resources in data analytics, and 66% on RPA and other work automation technologies.
How CFOs view and drive innovation is important in establishing global business success. It’s one thing to be efficiency-driven; it’s another to also be innovation-driven. Here are some strategies:
- The location matters. The territory where you choose to expand your business is a major factor in driving innovation as you branch out. Are the corporate tax rates competitive in that area? Is the overall business landscape ideal for workforce development or entrepreneurial growth? Aside from these things, you should also consider if territory has regulations that support innovation and long-term growth initiatives.
- Don’t scrimp on technology expenses. If there’s one thing CFOs should really invest in in this business climate, it’s technology. Your infrastructure must extend to your global sites and help all teams everywhere to collaborate, streamline operations, and discover more innovation opportunities. After all, digitalization is the top priority of CFOs for 2021 and even beyond. Chargebee has written an excellent case study on how innovative financial software can go far beyond processing payments, and can actually serve as the foundation for an entire company.
- Innovation starts internally. Fostering a well-defined culture of innovation is important if you want your company to thrive in highly competitive international markets. Using quantifiable metrics and a top-down approach will help you monitor business performance as it scales, ensuring confidence among stakeholders and a continuous flow of ideas.
The CFOs of today do more than just crunching numbers; they also now bear the responsibility of supporting business growth even when faced with the daunting task of muscling into new markets abroad.
A key takeaway is that now may be the time to invest in resources rather than cut costs; encourage teams to think creatively and not just analytically, and prioritize digitalization and diversity on the road to global expansion. This is worth keeping in mind as global business growth is now anchored in innovation — you never know what else you’d be able to come up with that’s relevant to a new market.
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