The worldwide economy is more interconnected than ever, so it’s no surprise that many businesses and industries need global accountants to tackle increasingly complex financial work. Of course, there’s much more to global accounting than signing on a few dotted lines and filling out a few forms. Today, let’s look at the challenges that global accountants overcome daily.
The Rise and Challenges of the Global Accountant
Since the 1929 stock market crash, the Securities and Exchange Commission (SEC) has recognized the need for dutiful, trained accounting professionals. Starting in 1973, the Generally Accepted Accounting Principles (GAAP) were established, and many accountants were trained in their usage and applicability to all different types of companies and industries.
But where GAAP policies and procedures were fine for companies that only did business in the US, this became more difficult as the globalization of business continued throughout the 70s and beyond. Since 2002, the Federal Accounting Standards Board has been working with the International Accounting Standards Board to develop new internationally recognized accounting standards systems.
In effect, global accountants are now more important than ever. These experts are specialists in international tax, transaction mechanisms, and accounting laws and procedures. They often work for international businesses or brands with multiple branches or subsidiary companies in several countries rather than just one.
Traditional Accounting vs Global Accounting
In some cases, traditional accounting is similar to global accounting, though there are some key differences.
Both traditional and global accounting deal with:
- Tracking income and expenses
- Other staples, such as cost accounting
- Ensuring that companies keep accurate, honest books or records of their financial dealings
- Ensuring that everyone, including individuals and companies, understands relevant tax laws and pays taxes on time and in full
However, global accounting is much more complex. That’s because global accounting often has to take into account:
- The different laws between countries
- International treaties
- Currency differences between nations
When a business, for example, crosses borders and opens up a new branch in a separate country, it may need to start using a global accountant for its financial processes. That way, they can ensure that they pay taxes in both countries correctly and traverse any accounting challenges they may encounter.
The Demand for Global Accountants
Indeed, the demand for global accounting has increased, especially in recent decades. Specific industries that often interact with multinational clientele are customers or have many branches in different countries and require the services of global accountants more than most. These industries include:
- Hospitality and tourism
- Healthcare and pharma
- Automaking and other types of manufacturing
- Cosmetics
- Retail brands
- Restaurants and bars
Because global accountants are in such high demand right now, many aspiring financial professionals may consider training to become one themselves. Even better, many global accountants can work remotely thanks to shifts in workplace expectations following the COVID-19 pandemic.
Also Read:
Financial Complexities: Multi-Currency and Tax Implications
Managing multi-currency transactions isn't just about conversion rates and accounting software. Cash flow can become a complex issue when dealing with global clients. Some global accountants turn to invoice factoring to maintain consistent cash flow across different currencies.
This financial mechanism allows them to sell invoices at a discount to a third party, thereby freeing up capital that can be immediately used for ongoing transactions. This allows for accelerated cash flow, reduced risk of bad debt, and the ability to focus on core accounting activities without the distraction of delayed payments.
Global accountants need to know how to navigate these financial complexities, especially if they facilitate high-value transactions or carry out tax services for multinational organizations.
Navigating Multi-Currency Transactions
Every country has its own native or fiat currency. Therefore, global accountants have to deal with many challenges and difficulties, like:
- Exchange rate volatility, or the tendency for currencies to have fluctuating exchange rates rather than staying the same
- Difficulties with translating or converting one currency to another (e.g., if a business wants to receive revenue in one currency but pay taxes in another currency)
- Using accounting software with multi-currency support
This by itself is often enough for a brand to recognize the need to rely on a global accountant instead of a more localized accounting firm.
Understanding Tax Implications Across Borders
But things get even more complicated when it comes to taxation. Businesses and individuals alike don’t want to be subject to double taxation or break international tax compliance laws.
To avoid this, global accountants analyze tax laws, rates, treaties, and conventions between countries—anything that might impact their clients’ bottom line. Indeed, many global accountants are hired on a country basis just to pay taxes.
Technological and Communication Solutions
To accomplish their various tasks and responsibilities, global accounting professionals often leverage different technological and communications solutions.
Technological Tools for the Global Accountant
Of course, global accountants take full advantage of important technological tools that help them get the job done. For example, cloud accounting solutions allow global accountants to access critical software programs from anywhere in the world, provided they have an Internet connection.
AI, ML, and big data in accounting are exciting innovations, albeit still nascent. Simultaneously, cyber security essentials like firewalls and security platforms prevent accountants from worrying about digital intrusions: a vital element of day-to-day security, as global accountants often deal with very sensitive corporate data for a variety of different companies and institutions.
Specific tools can easily be overlooked in the ever-expanding toolkit of the modern global Accountant. While specialized accounting software is front and center, supplementary tools like PDF editors also play a pivotal role. These web apps streamline the process of consolidating multiple document formats, especially when dealing with international invoices, contracts, and regulatory forms.
Once global accounts edit and consolidate their files, they can use one of the many cloud-based expense management solutions to protect their data from hardware damage. Last but not least, they must ensure that their software is GDPR-compliant so that sensitive data remains encrypted, aligning with the rigorous data protection regulations encountered in international finance.
Time Zone and Communication Challenges
Since international brands and enterprises often operate across different time zones, global accountants must also be prepared to schedule meetings, even if inconvenient. They must also be susceptible to cultural elements or etiquette rules – doing business properly in Spain, for example, may not be the same as doing it properly in Germany!
Because of this, many global accountants are trained communication specialists in addition to their other skills. That way, they can ensure they communicate effectively and comprehensively to their clients and there is no miscommunication when they give out important information regarding taxation, currency conversions, etc.
Conclusion
Nowadays, global accountants balance the myriad complexities of their roles using many new solutions, from cloud-based expense management tools to AI models.
Cross-board business is more important than ever, and these specialized professionals will likely continue to be vital parts of international operations and enterprises for years to come. With the advent of remote work, more local experts will work with clients abroad in the future.
