Knowing Your (Global) Numbers
When thinking about your business, where do most of your customers live? Where are you looking to expand your customer base next?
If you don’t already have some international customers, chances are you likely will. In our ever-changing world, one certainty is that business continues to grow globally, despite setbacks from the Covid-19 pandemic.
However, internationalization is about much more than just where your customers are based. To be truly successful and to ensure the growth of your business, it is vital that your accounting and financial management systems are equipped for a global world.
Below are a few reasons you need to think about your numbers globally.
- Transparency
By far the most important reason for internationalized accounting and financial management systems is that it encourages transparency and consistency. No matter the size of the firm, companies and government agencies around the world can produce comparable financial statements, reducing errors and confusion.
This clarity can also reduce bad actors from manipulating any holdings, funds, or transactions. Equally important, comparable financial statements mean that investors can make more informed decisions – meaning your business could access capital from investors around the world!
The International Financial Reporting Standards (IFRS) is a good source of information as these standards are required to be used by public companies based in more than 160 countries, including all of the nations in the European Union.
If your company is private or if you are unfamiliar with their work, the IFRS is a set of accounting standards that govern how particular types of financial transactions are reported. The standards were developed and are maintained by the International Accounting Standards Board (IASB).
2. Accountability and Efficiency
Even when a company has good intentions, sometimes mistakes are made. However, if your team approaches accounting with an international framework, you’ll likely avoid common errors that occur when converting financial information from your home country’s system to a foreign system.
A clearer understanding of your company means that poor management practices can be held to account. Depending on your business’s financial activities, it isn’t uncommon to have regulators reference financial statements and make important legal decisions based on this information.
The bottom line is that having an international mindset when approaching your financial management systems will make your firm more accountable in the eyes of investors and regulators.
3. Uniformity
A recurring theme throughout this article is the idea that operating under an international accounting and financial services standard sets uniformity across industries around the world. Using a common system makes it easier for anyone to not only understand your statements but also to understand and compare the growth of economies.
Investors can identify both opportunities and risks across the world, thus improving capital allocation.
However, most importantly for your business, the use of an international system lowers the cost of capital and reduces international reporting costs. This means you have more money to spend on other parts of your business!
As a cloud accounting firm, Numeric has the financial know-how to take your business global. We are proud to partner with Xero, Fathom, and ApprovalMax, all of which adhere to IFRS and GAAP standards.
Contact our team today to discover how we can install robust financial reporting systems for your business!
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