Going global: How accountants can support SMEs expanding internationally

Fuelling this trend are difficulties attracting new customers locally due to cost-of-living pressures to the many opportunities for global-wide promotion thanks to social media.

For accountants, this opens up exciting avenues to work with small-to-medium enterprises (SMEs) as they move into new markets.

However, expansion also comes with challenges, whether it be navigating diverse tax systems to managing foreign exchange risks.

We speak with Matt Loop, vice-president and Head of Asia at Rippling HR and payroll services, and Kama Atcheson, partner at FL Finance and Lending, about how accountants can support their clients as they grow.

Meeting general costs – from tariffs to logistics to marketing

“If you’re an SME looking at expanding internationally, be prepared for significant variations in business costs across countries,” Loop says.

“For instance, marketing expenses will likely include adapting content to local languages and cultures, investing in targeted advertising on local platforms, and collaborating with local influencers or agencies.”

Matt Loop, vice-president and Head of Asia at Rippling HR and payroll services

Logistics, including shipping, warehousing and distribution, also vary in cost and complexity from region to region, as do tariffs and import duties.

“We recommend that finance professionals on SME teams conduct thorough research to ensure they can afford the costs involved in global expansion,” he says.

In addition, it’s important to budget for potential delays.

“I've worked closely with fashion businesses buying stock,” Atcheson says.

“There can be a long wait by the time stock is made and sent across. The cash flow cycle can really drag out. Typically, you’re looking at a 90-100 day time frame to get cash back; but, when you’re going overseas, it blows out dramatically.”

Atcheson recommends investing in financial products to secure cash flow, as well as insurance – just in case something goes wrong.

Complying with international tax obligations

“Each country has its own tax regulations, and it’s crucial to be aware of these to avoid unexpected liabilities,” Loop says.

These liabilities might include corporate taxes, value-added taxes (VAT) and withholding taxes.

Kama Atcheson, partner at FL Finance and Lending

Accountants that work with SMEs should look into tax treaties between Australia and the countries where they’re expanding – as double taxation could be an issue.

“Engaging local tax advisors is recommended, as they can provide invaluable insights and help ensure you stay compliant with all relevant tax laws,” Loop says.

Ensuring compliance with local laws and financial reporting requirements

Every nation has its own local laws and financial reporting requirements.

“Compliance is critical for smooth operations in new markets,” Loop says.

“This entails understanding and adhering to various regulations, including employment law, health and safety standards, and environmental regulations. Financial reporting standards may also differ.”

He advises employing team members who are in a good position to navigate the complexities, whether they’re experienced or have the capacity to learn quickly.

Loop also recommends streamlining systems, either independently or through a service provider. Rippling, for example, looks after HR needs across the globe.

“Whether your operations span a few countries or are distributed across multiple continents, you need a streamlined, efficient system to handle HR, payroll and compliance to manage your teams in one place,” Loop says.

Managing foreign exchange risks

“To mitigate the volatility associated with foreign exchange rates, SMEs should consider strategies such as hedging and the use of multi-currency accounts,” Atcheson says.

“Hedging can protect against unfavourable currency movements, stabilising cash flow and protecting margins.

“Multi-currency accounts simplify transactions in foreign currencies, reducing the need for frequent currency conversions and associated costs.”

At the same time, SMEs should consider partnering with a bigger, established firm to secure the best rates.

“Small businesses are not privy to the best rates in a lot of cases,” Atcheson says.

“Whereas established firms have existing relationships in place, and are transacting on a larger scale.

“By partnering, you can get the benefit of that – as opposed to having to start off unknown and having to prove yourself.”

Accessing capital

Given that managing cash flow is one of the biggest challenges of international expansion, SMEs should consider strategies for accessing capital. There’s a variety of financing options to choose from, including conventional loans from banks, government grants and venture capital.

“While venture capital is ideal for high-growth companies looking to scale rapidly, government grants offer non-dilutive funding,” Loop says.

It pays to think outside the square to fund expansion plans.

“Crowdfunding platforms and angel investors are excellent alternatives,” Loop says.

“These provide, not only financial support, but also valuable networks and expertise to help you navigate the challenges of entering new markets.”

Seeking expert advice can make capital-related decisions easier.

“Leveraging a well-connected finance specialist can save considerable time and resources,” Atcheson says.

“These professionals have pre-established relationships with financial institutions that specialise in global partnerships, and can navigate complex financial landscapes to secure the best deals for your business.

“Accountants, working hand in hand with financial specialists, can advise their clients together. When there’s good synergy between all three parties, that’s when the client is in the best hands overall.”