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A CFOs checklist for going international

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A CFOs checklist for going international

What to investigate before you hit the ground running in a new country

CJ Gustafson
May 2, 2023
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A CFOs checklist for going international

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On Friday we hit the 25,000 subscriber mark. Pretty wild that there are that many people who are down to jam on SaaS metrics, business models, and monetization strategies each week. I started writing this “playbook” of sorts for myself, and found a tribe of people who are interested in the same stuff along the way.

And since we’re all numbers people… for context, this means we could sell out Madison Square Garden every Tuesday at 7:22 AM EST…and 4,211 of you would be stuck drinking Miller Lites in the parking lot.

Madison Square Garden
I like the Celtics, but Jay Z sold out Madison Square Garden in a documentary I saw once, and that was like really cool

You’ve all inspired me to hone my craft, while having fun along the way.

The entire editorial staff, including Editor in Chief Walter (and our new intern), thank you for your support.

Here’s to 50,000… See ya there.


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Prestige Worldwide

Becoming a global firm is an aspiration for many employees and executives. It’s validation that you’ve achieved product market fit, regardless of geographic borders, and a chance to plant your flag overseas, ideally before your competitors can do so.

But it’s not all crepes and clams casino when you decide to go worldwide. It’s a web of administrative decisions that all tie back to your overarching cultural approach to expansion.

Said another way, you don't want to act like a US company operating in Belgium; you want to act like a Belgian org that just happens to have a US headquarters.

How you build your back office, design your hiring strategy, and localize your technology all go into building trust with local workers and customers. Here’s what I’d suggest you investigate before making a major investment abroad.

Mostly metrics is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

1. Getting people paid:

First and foremost, if you hire new workers, you’ve got to make sure they can get paid on day one (well, day 15 or day 30, depending on how their local payroll schedule works - something else to get straight). Please do not underestimate this startup time. I’ve personally launched in a new country where we had unforeseen bank account issues after hiring people, and couldn’t pay them until month two. This snafu did 10x the damage of an employee not having a laptop on their first day. It set us back in terms of employee trust, something that’s already hard to come by when the rest of the squad isn’t there to answer questions. Some things to consider:

  • How often do employees get paid?

    • In most countries outside the US it’s 1x per month, rather than semi monthly

  • Do you pay people from a local bank?

    • If so, you’ll have to open an account with a local banking institution, which probably requires going to a local branch in person

    • You’ll also have to hold the country’s local currency, and therefore develop a basic hedging strategy (more on this below)

    • I’ve worked at places where we made cross border transfers every month (for example, we paid people in Italy out of a French domiciled account since they were both getting paid in Euros). But this can get risky if political instability develops in the region and you can’t get dollars in or out

  • Who bears the currency risk, the company or the employee?

    • Are you converting USD to local currency and holding it?

    • Do employees even want to receive their local currency?

      • Many contractors in South America and Eastern Europe actually prefer to be paid in USD, due to currency instability

    • Do you cover exchange fees?

      • Most companies do not cover exchange fees, but do cover the transfer (payroll) fee

      • Brex's local-currency cards, local reimbursements, and local billing give orgs the ability to get people paid in more currencies faster. (Avoiding unnecessary FX fees, for the win!)

2. Granting equity

Will employees get to participate in the company’s long term success? Employees are quick to sniff out if they are being treated like second class citizens when it comes to equity.

  • What are the local regulations regarding granting employees equity?

    • Granting equity internationally is a multi variable equation

    • Employee stock option plans in different countries have different rules

    • And granting an employee equity can be different than granting a contractor equity

  • What are the tax consequences for the company and for the employee?

    • For example if you grant equity to employees in Israel they get hit with income tax at the date of the grant (ouch!)

    • This can be a hefty bill, and subject to income tax, national insurance, and health care premiums.

    • Therefore, the company usually has to help them set up trustees to accept and hold equity on their behalf, which is a whole different can of worms

  • Which securities can you grant employees?

    • Granting ISOs vs NSOs vs RSUs is a big decision you’ll have to make

    • Luckily there are companies like Easop to help you unlock the potential of Employee Stock Ownership Plans (ESOP) to attract, motivate and retain a global, remote workforce

3. Ease of doing business

Every country has it’s own steaming cauldron of political, economic, and business cycle risks.

  • At the highest level, does the government generally help or hurt?

    • Weigh government subsidies vs tax filings and regulatory complexities

    • For example, Switzerland will help companies avoid taxes almost entirely

    • On the other side of the spectrum, it takes an average of four years to enforce a legally binding contract through India’s government

  • How hard is it to hire and fire people?

    • Consider the impact of work councils, unions, notice periods, and termination safeguards

    • In Russia paid maternity leave can be two full years (!?)

      • I worked at a company where a woman had worked only three months in six years, since she had three children (good for her!)

4. Ability to hire top talent

Choosing a country to expand into is one thing, actually getting talent to work for you there is another.

  • Do you get what you pay for?

    • Cheap talent and great talent are not necessarily the same thing

  • What’s the fully loaded cost of talent, post incentives and taxes?

    • There’s a sizeable benefits uplift in the Nordics that offsets many of the original cost savings you thought you were getting. See rough uplift estimates by country below:

  • Will you win key recruiting battles?

    • We expanded into Poland, thinking we were one of the most attractive companies to work for… then Google showed up

  • Will the cost of labor stay the same?

    • We expanded into Romania, forecasting labor for the next five years at about 60% of what we were paying similar employees in the US

    • This went off the rails fast, as the cost of labor grew at more than 10% y/y for multiple years, as other technology companies, in the words of rapper Benny the Butcher, “flooded the block”, messing up our forecasted labor arbitrage

5. Site selection

Location, location, location. Where you put your office will dictate how often people visit from other countries, the talent you are able to hire, and access to customers.

  • Is the site easy to get to if people are flying in?

    • You’ll probably have employees from nearby countries coming to and from this location, so you’ll want the office to be within 45 minutes of a major airport. Otherwise execs will (mysteriously) avoid visiting because it’s such a hassle to get there (and the hotels probably suck)

    • You’ll also want it to be accessible to customers - if you decide to go to Switzerland and most of your customers are banks in Zurich, don’t rent an office in a canton (local word for town) where there are more cows than people

  • Do the workers you want to hire live nearby?

    • I’ve hired consultants before to map out where the hot spots were in major European cities to ensure people would actually commute to us (developers generally don’t want to commute to the woods)

    • We then cross referenced that analysis with the relative cost of office space

    • And speaking of cost, you need to forecast how that may change over time - I’ve seen rent costs in Portugal double year over year, which totally changed our budget for the region

  • Is there a university pipeline you can tap into?

    • For example, some of the best AI and ML employees are coming out of universities in Switzerland, many of whom intern and later take jobs with local companies in the area

6. Supporting resources and backoffice

You have to think broader than just frontline go to market resources when going abroad. You can’t parachute in one guy and his trick duck, and expect them to crush a $3M quota with no resources. Whenever you decide to go abroad, you’ll have to decide what to do about inside sales, and if you want to bring payroll, benefits, and taxes in house, which would require hiring more people.

  • Where will inside sales sit?

    • Can you put multiple BDRs in one European country who can serve multiple countries within the same time zone?

    • Amsterdam and Germany are common places to build a European inside salesforce

  • What back office functions do you need in order to sell?

    • You probably need some sort of human resources and recruiting to help with onboarding and offboarding, even if you go through a PEO or EOR (more on that below)

  • Do you want to establish a back office hub to serve other regions?

    • We had a large contingent of our accounting team in Bucharest at one company and in Estonia at another

    • They served as the European backbone for all things finance, and also helped us close the books each quarter at the global level

7. Employees vs PEOs vs EORs

It’s possible to hire people without making them all employees - it just depends if it’s the right choice from both a financial and cultural angle. Tapping into PEOs (Professional Employer Organizations) and EORs (Employers of Record) has become increasingly strategic as companies go fully remote and try to hire the best people possible, agnostic of location. Examples include Remote, Deel, Papaya, and Globalization Partners.

  • Should you use PEOs?

    • A PEO is an outsourced way to handle common human resources tasks

    • A PEO typically processes payroll, withholds and pays payroll taxes, maintains workers’ compensation coverage, and administers employee benefits like healthcare and dental

    • PEOs typically charge the company’s they serve a percentage of total payroll cost. Some base their fee on the number of employees you have. Some charge a combination of variable and fixed (all in, it usually costs between $750 and $1,500 per employee per year)

    • Still, PEOs are shown to save companies ~35% on average per year compared to bringing the costs in house (with diminishing returns past ~100 employees)

  • Should you use EORs?

    • EORs are like PEOs on steroids

    • The biggest difference is that PEOs require you to own a local entity and enter into a co-employment arrangement

    • On the other hand, an EOR allows you to hire in other countries without an entity and without a co-employment status.

    • You can expect a 20% to 30% markup going through these partners

8. Expense policy and closing the books

As someone who’s nearly killed himself patching together an international systems smorgasbord of QuickBooks + NetSuite + Xero, I can assure you that getting your tech stack right on day one will pay major dividends in the long term. Plus, no one wants to get reimbursed five months later for their trips.

  • Do you have a centralized expense management system?

    • Ideally you have a unified, cloud-based expense management system for employees that can be accessed via mobile by employees across multiple countries

    • Uniformity will streamline training, expense reporting, approvals, and reimbursements while maintaining a centralized record of expenses

    • Brex has this really cool notion of "spend globally, operate locally," where you can manage and administer all your global spend in one place, no matter where it happens.

  • Can you use the same accounting and HR systems?

    • From an accounting standpoint, you’ll want to ensure you have multi currency capabilities so you can track your day to day expenses in local currency and then do your final global consolidation in USD

    • From an HR standpoint, it’s really hard to track contractors, especially if there are GDPR laws that make it difficult to share personnel data cross-border

9. Discounting and Seasonality

From a sales and pricing perspective, there are distinct cultural norms you’ll need to be aware of:

  • Do your discounting practices line up with expectations?

    • In Asia it’s common to discount software up to 80%

    • You should have a unique price book and discounting matrix for every country you sell in

  • When does the government usually buy software?

    • In the US, the second quarter is often when state, local government, and schools empty their excess budgets and get deals done

    • But this is not the same in every country, so you’ll have to check when tax payer dollars are put to use

10. Tech localization

Uber’s technology looked the same in all regions, a level of homogeneity that helped engineers build a consistent product and for customers to expect the same experience wherever they hailed a ride.

  • Do you need to change the UI / UX in your tech?

    • Surprise, surprise: Customers in Spain will expect your software to be in Spanish, not English

  • Can the developers read the notes?

    • I worked at a company where we could only hire people who read Russian - all the code notes in Github used the Russian alphabet, which has 33 letters

11. Taxes, audits, and accounting

Opening a legal entity in another country can be really expensive (usually ~$10K to $30K all in, but sometimes up to $100K) and a total pain in the ass - you have to appoint local directors and fill out a ton of paper work (I was once quite literally buried in paperwork trying to open an entity in Singapore).

  • Do we have enough people on the ground to establish a legal entity?

    • As a rule of thumb, you start to think about establishing a legal entity after a dozen or more people are on the ground there. After that you are more or less indifferent on the cost front

  • Do we need to appoint local directors?

    • They’ll expect to get paid on a quarterly basis, too

  • Do we need to do a local audit every year?

    • There’s literally nothing worse than a German audit. It makes a root canal look like a trip to Busch Gardens.

12. Culture and trust

  • What hours and days do you expect employees to work?

    • It’s rare in some countries to answer your email after 5PM local time

    • The Crown in the UK celebrates like 17 jubilees (still not sure what a jiblee is) every year

    • In Israel they work Sunday through Thursday, with Friday and Saturday as their weekends. This can make scheduling difficult.

  • What language do you expect people to use at work?

    • I’ve experienced problems where the Engineering team spoke one language and the product team, based in the US, spoke English

    • Only a few members of the engineering team spoke English well enough to strategize on sprints, which became a bottleneck to productivity

  • Do customers see you as an interloper?

    • It sounds silly, but you’ll need to show you are actually involved in the community

    • This starts with supporting the local charities in your area


As Bruce Lee said: “Be like water, my friend.”

You have to adapt to the region you are moving into, not force-fit a US-centric frame of mind.

The biggest mistake I see companies make is thinking international expansion is a conquest. If you go in with this mindset, you’re already at a major disadvantage. You can’t just drop a bunch of expats into a region and expect success. You want to win hearts and minds and become one with the community.

After all, people want to play long term games with long term people. So don’t treat international expansion like a land war, nor a vacation. If you do, you won’t get far.

Today's post is sponsored by Brex.

Prestige Worldwide

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A CFOs checklist for going international

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A CFOs checklist for going international

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Karan Sood
Writes Karan’s Substack
May 2Liked by CJ Gustafson

This is a very handy guide ! We have seen all of the issues you mentioned as we go from country to countryZ

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1 reply by CJ Gustafson
Daniel Nerenberg
May 2Liked by CJ Gustafson

It seems to me that you might be missing localized tax incentives. For instance Canada has very compelling R&D tax credit scheme that can result in up to a 50% refund for certain types of employees.

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