Doing business with international clients has numerous benefits, yet challenging at the same time. However, to compete with others across the borders you must be well prepared.
There are many things you can do to make international business easier in terms of marketing and customer support. However, here we will focus on the finances.
- Working with Multiple Foreign Currencies
“Research the norms in your industry before negotiating any contracts or setting product prices,”
– Carine Gursky, Foreign Exchange Manager at Wells Fargo Bank.
Most companies prefer doing business in US dollars as it’s considered a global currency. However, some businesses prefer their local currency instead. For instance, a client in Australia may prefer paying in Australian dollars just like a client in Britain may prefer doing business in British Pounds.
It’s important to touch base with the norms in the foreign country you are interested in doing business with. Failing in the same can cause you to lose business to a competitor who is able to adapt to their preferences better. At the same time, your payment system should accept payments in multiple currencies and allow you to convert in the currency which works with your bank.
Ideally, you should set up a system that can make working with multiple currencies easy and simple. For instance, a software that has a selection of invoice templates centered around the most popular currencies can make your job much easier by:
- Easy invoice creation for a large number of global clients
- Easy calculation of currency exchange rates
- Fewer or no discrepancies in payments
- Easy bookkeeping and reconciliation
- Professional Invoices
You can’t afford to waste time finalizing every individual invoice if you want to work on the other important business operations. So, it’s a good idea to use an invoice software that not only creates invoices for you using your banking information but also reaches the clients on time and follows up in a professional manner. Besides, when you can receive your international payments in less than 48 hours these days, it makes sense to minimize the time taken for receivables and payables.
Good quality invoice software, with support for mobile devices as well, can not only make your business more efficient but also leave a lasting impression on your clients, who after receiving professionally formatted and automated invoices will understand that you are in to win.
- GST on Export of Services
While exports used to attract taxes well before the GST regime, the system has changed a lot today. Now, exports of both goods and services are covered under the IGST law (Integrated GST) and treated as “zero rate supplies”.
Under the new regime, you will be able to claim a refund for the export of services under any of the following options:
- Export under bond or letter of undertaking without paying the Integrated Tax and claiming the refund of the unutilized input tax credit.
- Export on the payment of Integrated Tax and claim refund of the tax under the provisions of section 54 of the GST Act.
It’s important to familiarize yourself with the full applicability of the GST regime on your international business. This is to ensure that you file your taxes property, prevent fines and also keep the cashflow in check.
- Using a Comprehensive Invoicing Software
Since you will be dealing with a variety of foreign currencies, you must use a top of the line invoicing software that can work with them all.
The invoicing platform should also be able to periodically update the exchange rates for all the currencies so that when you issue invoices or receive payments, there are no discrepancies.
It would also help if your invoicing software is GST-ready. Otherwise, you will need to feed the same data into two places which will lead to the wastage of valuable time and also make reconciliation difficult.
Doing business internationally can be tricky. With every different country, there are different tax mechanisms, exchange rates, compliance standards, etc. So, you must make use of technology in as many ways possible. That’s the only way to streamline business operations, lower overhead costs, and help you focus on the big picture.