When considering entering a foreign country, what are the top considerations for the CFO? (Webinar Attendee Question)

These are a few things that I would consider when entering a foreign country:

* People. Will there be an expansive base of persons or person to interact with the local populace and business entities.

* Technology. Will the foreign countries technology base allow the CFO to interact and integrate systems on a seamless base.

* Language. Will the CFO or someone be able to communicate fluently in that countries native language. There is nothing more insulting than claiming to speak another language and all that you can say is hello. Be truthful.

* Market share. How much of the market share of that foreign entity is controlled by a local business. The incoming company may pose a serious threat to business as usual.

* Flexibility. How flexible is the CFO going to be when entering someone else's back yard. When you are in another market, you have to play by their rules. You have to think as them. "When in Rome do as the Romans do."

These are just a few things that I thought of right off the top of my head. I am sure that there is a vast amount of other options available to the CFO who seeks to expand their companies horizons.

You cannot underestimate the culture, business norms, and legal requirements.

*Does the employee base expect regular and frequent pay raises?
*Are bonuses merit based or just deferred salary?
*How difficult is it to terminate employees? What are the leave policies?
*Are you going to get 100% productivity from your international employee base?

Also if you plan on using an ex-pat, please understand the tax complexities and huge expense it involves.

Corporate tax impacts also can become large issues if you don't get good advice or plan properly. The foreign account reporting required by the IRS is also one additional hurdle and hassle

Controls over foreign assets can be difficult so strong controls over small portable but expensive assets need to be established as well as acess over cash.

Lastly, most countries require a legal representative who can be held personally responsible for illegal acts or losses. Think carefully about who you want in this role and make sure you corporate D&O policy covers them.

Don't go internationally on a whim. It is an expensive commitment that will occupy a large amount of your time.

What the contributors have said is great and accurate in my opinion. I would add:
- Very strong controls and governance
- Local leadership and keep to a minimum the expats as they can be heavy on the admin costs for a local operation and can have a hard time culturally unless they have experience with the market
- Use expats on trusted leadership roles to oversee HQ interests
- DSO/DPO very carefully tracked and controlled. It can get ugly quickly
- Patience if is a US based company. The nature of doing business abroad is more like base hits in a baseball game rather than home runs
- Act quickly when issues arise. Many companies dismiss the issues because the foreign operation is not fiscally material until there are severe financial collapses

In global enterprise software companies I have worked in, the customer contracts are all with the US entity even when there are local sales people in the foreign subsidiaries. This protects IP and is smart from a tax perspective.