Growing your manufacturing business may include going global, which presents both opportunities and challenges. The opportunity is capturing more customers or market share for sure, but one of the major challenges is managing localized compliance across the various regions of the world.
Each region typically requires a unique set of financial reporting standards for tax compliance reporting. Also, you will need to adapt to and support the business culture of the local employees. Global common models, which consist of centralized business processes, information consolidation, and analytics, are critical to running a successful business. But how can you ensure that data and reports align with your company’s strategic objectives while accommodating regional business differences?
Common Solutions to the Global Compliance Challenges
The obvious global compliance solutions are: use separate business systems in each country tailored for that country’s reporting and compliance requirements or put a centralized or common system in place with regional reporting and localized compliance modules. The first option makes consolidation extremely challenging as there may be manual processes required to support the data generation and management requirements. The latter approach allows you to maintain a common business systems footprint while addressing the uniqueness of the global compliance requirements inside one global system.
Up-to-Date Compliance and Centralized Alignment
A cloud ERP system that supports multi-national enterprises ranging in size, reach, and complexity—from single-site job shops to the largest enterprises on the planet—gives you the ability to adapt to local business cultures as well as ensure compliance. Inherent international capabilities should include multiple language and multiple currency support along with highly tailorable functions, screens, and reporting. You also want to make sure the system gives you global enterprise visibility with reporting and tracking capabilities to meet local and regional requirements while providing services and support on a global basis to keep systems up-to-date and in full compliance.
A flexible cloud ERP system will go a step beyond simple language and currency translation, allowing the user to adapt the user interface to local language including changing the labels on menus, tabs, fields, reports, and messages. It may also be necessary to change the format of currency data fields to accommodate the number of digits and decimals for the specific currencies involved. Some countries have specific requirements that dictate formats and organization in the Chart of Accounts to include certain accounts that may not be recognized in other country accounting systems.
Flexibility with Tax Codes and Payments
Of course tax codes are different in each country. An ERP system’s accounting module must be flexible enough to accommodate the specific requirements of each country in which it operates, including national, regional, and local tax application, and sufficient identifiers for data and activities to be able to accumulate the information needed to complete the reporting. Flexible reporting and database-driven codes allow your company to build, generate, and submit the required statutory reporting for each country. Like tax codes, payment handling requirements may vary by country. The system must support multiple payment terms and have the ability to group payments for bank transmittal and processing within a defined bank file structure. There may also be some unique cash management requirements or banking related procedures.
Complying with national and regional requirements is never a case of “once-and-done.” Regulations, tax rates and structure, reporting requirements, and regulatory mandates are continually in flux in every country around the globe. Maintaining the tax and reporting framework is a forever and ongoing necessity. That’s why it’s critical to put a system in place that supports individual country tax and reporting requirements with minimal effort and disruption from everyday business operations—the best way to expand globally.
To learn more about cloud-based global compliance, download the brochure: Global Compliance Services within the Plex Manufacturing Cloud.
About Baker Tilly
Baker Tilly is a professional services firm with a specialized management and business technologies consulting practice. We offer comprehensive Plex Manufacturing Cloud implementation, and business integration services, as well as highly tailored Plex optimization services supporting enhancements, and enablers designed to improve operational efficiencies. Baker Tilly is an independent member of Baker Tilly International, the world’s eighth largest accountancy and business advisory network of independent accounting and business advisory firms in 141 countries, with 28,000 professionals. As the largest and exclusively branded independent member of Baker Tilly International, Baker Tilly is able to call upon member firms around the world to provide organizations with local expertise in any overseas marketplace. We use our valuable perspective on international growth and foreign regulations to provide tailored, global solutions that help our clients overcome the challenges of worldwide commerce and residency.
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