User Review( votes)
As simple as it sounds, if you and your foreign affiliate aren’t using the same ERP and shared services, your push into another country could be needlessly bumpy.
Global ERP system-The smoothness of your expansion into another country can be determined by something as simple as the enterprise resource planning (ERP) system your new affiliate adopts, finance leaders said in a CFO.com webinar on the CFO’s role in global expansion strategies.
Your foreign affiliate may be tempted to use the system it’s comfortable using, but because you’re ultimately responsible for meeting tax rules and regulatory requirements, among other things, it’s risky if the two entities aren’t recording and tracking data in the same way.
“The last thing we want to do is take some worksheets and consolidate to our external reporting and create a risk for our company,” said Anju Nagpal, senior director of functional finance and control for Biogen, the global neuroscience company whose business lines include treatments for Multiple Sclerosis and Alzheimer’s. “We [have to be] tax compliant … then we have to be trade compliant. [We have to conduct] valuation of the product going into that market.”
“It’s painful, and it takes time to put [a single ERP] in place as you grow, or as you acquire, but you have to stick with one, ideally,” said Ashish Gandhi, CFO of global fiber optic manufacturing company OFS. “The hidden cost of not having good information systems can be tremendous.”
One affiliate of a foreign partner Gandhi’s company wanted to work with turned out to have the same name as a company on the sanctions list maintained by the U.S. Department of Commerce. Had the companies been using the same ERP, the likelihood of getting tripped up by that would have been reduced.