Tech has changed the way all businesses think about expansion. Disruptors move into new geographies quickly to gain a first-mover advantage. Funding models are designed for a high cash burn during a company’s early years to facilitate rapid scaling.

While growth is critical to disruptors, it should not come at the expense of planning and preparation: choices regarding operations and banking structures can determine both your short- and long-term success.

Saytların yığılması

When disruptors expand into new territories, they can do so using multiple strategies. Often in the tech space companies are cash rich and more focused on speed than costs. Some may buy an existing company in order to immediately achieve scale in a market, gaining an established customer and partnership base (including banking providers).

In other circumstances, companies may look to new markets to leverage expertise that they don’t yet have in house. In some cases, they might do this without establishing a physical presence. One option is to work with an employer of record (EoR) provider, which can hire tech developers, such as coders, on the company’s behalf.

Finding the right expansion model can be challenging, given the many options and local conditions. For example, in Poland – which is known for its strength in R&D and engineering – it is common for foreign firms to buy companies off the shelf rather than set up their own operations.

Companies can get local advice and support from banks, especially those with local experts around the world, to assess optimal growth strategies for companies in their sector in the countries concerned.

However, working with multiple banks can lead to a lack of visibility and additional operational burden to manage different banking relationships in different regions.

Companies setting up a manufacturing entity in a country will have an easier time opening a bank account with a regional or global bank as they have more sophisticated banking requirements. For those planning to collect locally, it is important to be selective when choosing a bank as it impacts their customers’ experience.

Just as it is important to get advice on support on the best operational expansion routes in a market, so it is crucial to understand local banking rules and regulations. For instance, in Germany it is a requirement to have a bank account in advance of incorporation to facilitate the necessary capital injection.

Local knowledge is especially important given the limited treasury resources of many firms, especially for many fast-growing companies in the tech sector. Banks with an in-country presence are often better placed to explain the nuances of each market.

Discussing banking structures with your bank can also help companies to look beyond their immediate requirements so that they have the right foundations in place for future opportunities.

For example, while a firm’s immediate objective might be to hire coders in a new country, it might plan to sell locally in the medium term. Thought should be given to the practicalities of collections, such as how customers will pay, what currency they will use, whether collections will be converted to the company’s base currency (and in what way), and how funds will be repatriated to head office.

Similarly, while it might initially seem easier to retain banking relationships inherited when a local company is acquired, such arrangements can reduce visibility and control, increase costs, and result in time-consuming and complex relationship management.

In some countries, there may be additional reasons to work with an international bank. For instance, in Japan, many domestic banking portals have no English-language option. Equally, the local low value payment scheme, Zengin, is only available in Japanese, so companies need support to utilize it.

Whether you are going global for the first time, or expanding into your tenth market, each country has quirks and nuances. Global banks, such as Citi, can provide valuable insights on operational and banking structures that help you navigate complexity and achieve your objectives.

Citi has a global network covering nearly 100 countries and direct membership of around 400 clearing systems. We have clients in most sectors and markets, so we know what works.

Citi Commercial Bank combines a global perspective and capabilities with local business and banking knowledge. We make it easier for you to go global, helping you to determine the most effective operational and banking structure for your needs today – and providing the flexibility to take advantage of the opportunities of tomorrow.

Check out more about how Citi Commercial Bank can help you here.