There are three core categories of finance that support and empower corporate globalization, global expansion, and the future of international work: (1) global payments, (2) global payroll, and (3) currency management.
Let's dive in.
You can’t work internationally without paying vendors and moving money around the world. Originally we had international wires, and mailing physical checks. It took forever, cost a fortune, and the pain of paying people and businesses prevented companies from expanding oversees without proper preparation and financial tools.
Today, we’re better than that. From the the OGs, such as Western Union, Paypal, and Authorize.net, to where we stand in 2022, international payment providers proved themselves successful.
Payments are a necessity and also a commodity for global growth. To list a few options, here are 101 international payment companies
Paying internationally isn’t as bad as it used to be, and isn't really a pain point for any business: from startups to MNCs. We solved that, and there are still a lot of new companies out there improving on that.
Good luck and thank you to everyone working in B2B/B2C international payments! You really allowed us to grow into a more international world.
Especially during COVID where remote work really took off...
2. International payroll and compliance.
Now that fintech has figured out how to move money internationally, the next step is expanding your team globally to reach the best talent. We’re solving this now.
With the changes COVID has brought to the world, global freelancers, compliance, payroll, and virtual work is here to stay.
"84% of recruiters are in the process of adapting their hiring processes to facilitate remote exchanges"
Now, you can work and get paid anywhere in the world with the same amount of effort it would take the company to pay you locally. From Germany to Sweden to Egypt and Mexico, you can get paid on time, anywhere in the world.
This is the dream for most of us as employees, but it opens a new unique set of problems for CFOs and CEOs of these now global companies. This new opportunity leads us to the most fundamental financial pillar needed to support global expansion.
If a company has international payments due (pillar 1), and international employees (pillar 2), how do they then navigate their currency holdings?
Assuming ‘Bitcoin answers this’ is a few years down the road, every single company that is being built on the former 2 pillars are going to crumble without a secure currency plan for volatility.
Companies still budget in a single currency, report earnings in a single currency, raise money in a single currency, yet pay vendors and employees in multiple currencies.Why?
This is one of the more irresponsible decisions a CFO can make.
They might not feel it month-to-month, but just wait until currency volatility causes a company to miss earnings, short payroll, or cut international hiring due to the misbudget of an exchange rate.
According to McKinsey:
"McKinsey recently conducted focus groups with
CFOs and treasurers of large corporate and mid-
cap European firms. These conversations revealed
significant pain points in cash forecasting and
“Cash forecasting is considered the
least efficient financial workflow by both small and
large organizations—in some cases requiring more
than a week to gather and compile forecasting data
from a variety of formats, causing further strain."
Admittedly, hedging currencies wasn’t that big of an issue until now. We were satisfied using transfer companies or international banking tools to convert currency, paying whatever it costs. It was justifiable to spend time and resources estimating conversion costs and adjusting the budget to cover upcoming international expenses.
In the fintech market today, we’re seeing innovation and growth in the first 2 pillars, international payments and hiring. In my opinion, this leads to the next wave of global financial innovation, pillar 3, a better and automated way for CFOs to manage their own exposure.