Going for growth: using regtech and fintech to get ahead

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Ambitious mid-sized organisations will always be looking for opportunities to grow. On a near daily basis, business leaders will be asking themselves: 

  • Is there potential to offer our existing customers a new product or service? 
  • Or is it time to break into a new market? 
  • And, if this is the chosen route, do we remain a “one-country” company?
  • Or do we expand internationally to capture a greater market?

Growing beyond borders is a bold move – one which may be even more challenging than creating an entirely new product line. Not only do you need to consider different tax structures and regulations, but you need to build a sustainable operation where control is more remote, that addresses language and cultural concerns, and that takes into account mounting geopolitical issues. 

With so many different factors to consider, it’s no surprise that many organisations feel daunted by international expansion. In fact, an overwhelming 89 percent of US decision-makers believe their organisation is not qualified to successfully address aspects and challenges of going global, according to recent research

A decade ago, only the most well-funded start-ups or large enterprises would dare to venture out. However, today’s fintech and regtech offerings are allowing mid-size companies to take giant leaps forward. And, if you get international expansion right, determine safe harbors where you can maximise opportunities, and understand how to manage workload intense processes, the returns for your business can be huge. Here’s how to overcome some of the biggest expansion challenges and win big on the global stage.

Keeping compliant in any country

Conducting business compliantly can be a challenge even in your home country. But once you start going global, many more new requirements surface. Some of the considerations should include: 

  • How do you know if business partners are legitimate entities? 
  • Are you verifying them using government blacklists or getting proper identification information? 
  • What are the tax implications for working with them?
  • What internal and external fraud controls do you have in place as you add markets?

For the finance department, moving money outside the organisation in the form of payments can lead to inadvertent law breaking and fraud and subject the business to government fines. It can even lead to suspended operations. 

This is where regtech comes in. It has the ability to provide greater control around processes by leveraging the autonomic capabilities of software, establishing and checking actions against rules and conditions. Even the best compliance officers can’t verify every task, but regtech software, with its tireless capability for detailed checks and balances, will be a mainstay in your global operations.

Managing finance functions

Finance functions in a one-country business become much complex when that business expands to multiple territories. From addressing currency concerns to ensuring funds properly land into a supplier’s bank account, there is far more to manage. While some businesses address these issues by hiring staff, savvy finance departments leverage fintech solutions that meet and adapt to the dynamic world of global payment processing. 

For example, software can be used to collect payment details, establish approval workflows, and manage the execution of payments. This alleviates the risks and knowledge failures that come from handling these processes manually. As those in the supply chain understand, it’s not always cost effective, safe, possible or efficient to be paid with a wire transfer. Depending on the banking infrastructure in that country or the amount, the cost for more expensive transaction methods like wires can eat away at profitability. At the same time, organisations are looking for more secure and cost-effective ways to make a payment beyond paper checks. 

Ensuring effective communication

When conducting business across borders, it’s crucial to be clear on intent as misunderstandings can derail expectations and relationships. Being linguistically and culturally aware of a potential partner requires not only translation, but a prescribed approach to handling those communications. That includes the use of localised online portals for communication and exchanging information and, of course, standardised emails for process-oriented communications and notifications. The basis for strong fintech and regtech solutions is that communication pathways are streamlined.

This operational difference not only relieves finance staff from the need to chase down contact and account information, it normalises data that enters the database by guiding the partner to supply the right content and verifying it is syntactically or systematically accurate. Portals also improve the security of the overall process by encrypting information rather than have it change hands over email or phone calls. Formulating standard business operational communications into portals and standard email templates frees up the finance staff as well.

Addressing operational efficiency

Many larger enterprises and multinationals deal with growth by staffing up or utilising shared service cost centres. However, it’s unlikely that midmarket companies will have that same luxury. Their very nature requires a lean, scalable approach that is simple yet efficient and effective. However, according to the recent Going Global survey, while nearly half of mid-sized organisations plan to employ technology to assist finance operations in expansion plans, a significant amount of solutioning is still focused on hiring staff.

Ambitious organisations should look to technology to help them scale wherever possible, to keep growth costs under control. By automating the management of multi-currencies, multi-entities, global payments and foreign transaction fees, organisations can minimise the number of new hires and remain operationally efficient. This will also ensure there is a strong and scalable infrastructure in place for when you are ready to expand into even more locations. 

Maintaining central control

The finance organisation must maintain consolidated visibility on the health and activities of the business at the upper level and across each entity, regardless of what country they are operating in. They must enact processes to ensure compliance and financial controls at the corporate and entity level. And, through all this, finance needs to work to streamline operations, yet still address independent workflows for each office and business unit.

Centralising finance functions across multiple entities involves using technology to establish flexible, but controlled workflows for each entity from a central point. This will allow corporate headquarters to have deeply configurable and controlled permission options, keeping the business in a strong position for compliant, efficient and sustainable international growth.  

Chen Amit, CEO of Tipalti 

Image Credit: CafeCredit / Flickr