The Hidden Costs of International Expansion and How to Prevent Them
Global expansion promises plenty—more customers, diversified revenue, and prestige of becoming a truly global brand. But behind the allure lies a mess of operational pitfalls. For CFOs and finance teams, moving into new markets without proper preparation can introduce significant risks: reduced margins, inefficiencies, and compliance surprises that eat away at profitability.
In our recent webinar featuring experts from Visa, Tipalti, and Kolleno, we tackled the real-world challenges of international growth and the systems finance leaders need to build in order to succeed.
In this article, we’ll explore the key insights discussed.
Mastering the Four Fundamentals of Global Scale
International growth isn’t just a matter of opening a satellite office. To succeed, you need to coordinate across five core domains:
Human Resource
Deciding between relocating staff or hiring locally
Streamlining onboarding for cross-border hires
Balancing EoR providers vs. upgrading HR tools to support global workforces
Navigating regional compliance and employment laws
Tech Stack
Harmonizing your ERP with local systems
Automating AP, AR, payroll, and expense workflows
Embedding tax compliance into digital processes
Marketing
Re-evaluating your ideal customer profile per region
Building regional awareness and trust
Tailoring communications for cultural and linguistic relevance
Finance
Managing FX exposure and multi-bank relationships
Complying with local tax regimes
Reducing fragmentation in how you pay and get paid
Regulatory & Compliance
Are you meeting the legal requirements in each jurisdiction?
How are you managing IP protections across borders?
Are your operations audit-ready and sanctions-compliant?
Why it matters: Failure to address even one pillar can lead to cascading problems, from payroll delays and regulatory penalties to operational blind spots that undermine your ability to scale strategically.
The Hidden Costs Lurking in Cross-Border Payments
At a glance, international payments may seem like a straightforward part of global business. But behind each transaction lies a web of inefficiencies that can quietly erode margins and strain internal resources. These are not one-off issues, they are systemic frictions embedded into the very infrastructure of how money moves globally. Let’s break down five key sources of cost and complexity.
1. Delays Caused by Multi-Hop Transactions
Most cross-border payments don’t move directly from sender to recipient. Instead, they pass through a series of correspondent banks, each serving as an intermediary. A single transaction might travel from your bank to a correspondent in New York, then to one in Frankfurt, before finally reaching its destination in Asia or Latin America. Each “hop” introduces additional formatting standards, reconciliation needs, and in many cases, manual oversight. The result? Settlements that take several extra days, tying up working capital and placing a constant operational burden on treasury and finance teams tasked with chasing down statuses.
2. Fees That Stack Up—and FX Margins That Quietly Hurt
Every intermediary in the chain wants their cut. Flat transaction fees, often ranging from $15 to $30 per bank, quickly multiply when several players are involved. On top of that, foreign exchange (FX) markups are often embedded in the rates businesses are offered, far from the real mid-market rates seen on financial news tickers. These “hidden” FX spreads, commonly 1–3%, might seem small in isolation but become significant over hundreds of high-value transactions. A €1 million invoice settled with a 2% FX markup adds a €20,000 premium you didn’t budget for.
3. A Minefield of Compliance Requirements
Navigating international compliance is no less complex. Each jurisdiction has its own Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, often with inconsistent documentation and review processes. A payment that sails through one country might stall for days in another due to a missing notarized form or outdated registry data. Adding to the complexity, global sanctions regimes change frequently, and a single update can trigger holds on thousands of payments until names are manually cleared. Without automated compliance workflows, finance teams are left scrambling, dedicating valuable headcount just to maintain payment flows.
4. Limited Visibility and a Lack of Control
Once a payment leaves your ERP or treasury system, it often enters a void. Traditional banking infrastructure doesn’t always provide real-time tracking, so payment statuses like “in progress” may persist for days, with no insight into where funds are or when they’ll land. Disparate messaging standards (e.g., SWIFT MT103 formats) further complicate reconciliation, and failed payments can sit unnoticed in shared inboxes for 24–48 hours before action is taken. This lack of transparency not only frustrates internal teams—it risks supplier relationships and payroll schedules in the regions you’re trying to grow.
5. Broader Business Impacts That Compound Over Time
The consequences of these inefficiencies ripple far beyond any one transaction. Days Sales Outstanding (DSO) creeps upward as receivables are delayed due to long payment cycles. Cash flow forecasting becomes unreliable, forcing finance teams to over-reserve cash “just in case,” tying up resources that could be better deployed elsewhere. Meanwhile, supplier relationships suffer when vendors are paid late, and local employees may lose confidence in your brand if salaries don’t arrive on time. Over time, these operational drags can undermine the very goals international expansion was meant to achieve.
Bottom Line: Fix the Friction Before It Drains Value
Every manual process, fee, or delay embedded in traditional cross-border payments represents lost time, money, or trust. By quantifying these hidden costs—in basis points, workdays, and employee hours—finance leaders can build a compelling case for digitization. Modern finance automation platforms can cut through this complexity, helping teams regain control, reduce risk, and turn what was once a drag on global growth into a strategic advantage.
The Cross-Border AR/AP Challenges No One Talks About
While currency exchange often gets the spotlight in global finance discussions, the real friction for CFOs lies deeper in accounts receivable (AR) and accounts payable (AP) processes. International transactions introduce layers of tax nuance, credit uncertainty, and operational inefficiency that can quietly bleed working capital and slow down business velocity.
1. Tax Complexity That Goes Beyond Rates
Every country has its own indirect tax system, whether it’s VAT in the EU, GST in Asia-Pacific, or province-level sales tax in Canada. But the complexity isn’t just in the rates. It’s in determining the right treatment for each transaction type: is it goods or services? B2B or B2C? Physical or digital? Depending on the classification, the invoicing rules and tax implications change. To remain compliant, businesses must register for tax IDs in each jurisdiction where they have a taxable presence, generate invoices in government-mandated formats, and submit them on tight timelines. A missed e-invoice deadline or an incorrectly coded intercompany transaction could mean blocked payments, fines, or repeat audits.
2. Credit Risk Without Reliable Data
Stepping into a new market often means operating without a full credit profile on customers. Third-party credit bureaus may not cover all regions, or may provide only limited data. As a result, many companies either delay onboarding while they gather intelligence or accept greater risk, sometimes blindly. Insurance premiums for covering international receivables also tend to be higher, especially in emerging markets where enforcement of delinquent accounts is notoriously difficult. Legal frameworks for dispute resolution vary dramatically. What might be a two-week process in Germany can stretch to six months or more elsewhere, draining your collections team and lengthening DSO.
3. Local Payment Behaviors That Disrupt Your Processes
From payment rails to customer habits, norms differ radically across borders. In Europe, SEPA transfers are standard; in the U.S., many enterprises still favor ACH; and in Latin America, local rails may be the only viable option. These differences affect not just how you get paid but also how quickly. Choosing the right payment partners can lower transaction costs and improve speed—but stitching together multiple providers adds integration burdens. And beyond infrastructure, cultural expectations vary: 60-day terms may be customary in one country, while another market demands discounts for early payment. Misalignment can quickly damage relationships or distort your cash flow projections.
4. Longer Collection Cycles and Higher DSO
Collecting overseas is harder. Time zone mismatches alone can slow dispute resolution, as each clarification email or call may take an extra day to coordinate. Add in language barriers and differing legal systems, and the process becomes even more drawn out. Holidays that don’t align with your calendar can freeze cash inflows unexpectedly. Worse still, when legal escalation is needed, the costs are steep: engaging local counsel can eat up 5–10% of the invoice value, quickly wiping out any potential penalties you could recover. A small increase in DSO—say, 7 days on 100 invoices—can swell your working capital requirements by millions annually.
5. Multi-Currency Payables That Create Reconciliation Chaos
On the AP side, manual processes are still far too common. Matching purchase orders, receipts, and invoices across multiple currencies is tedious and error-prone. Fluctuating exchange rates between invoice issuance and payment can lead to mismatches that complicate reconciliation. And when decentralized teams are running payables from spreadsheets or siloed tools, audit readiness suffers. The lack of standardization and control across jurisdictions makes demonstrating compliance and accuracy a major challenge.
The Automation Advantage: Transforming Global Finance Operations
Fixing these issues isn’t about adding headcount—it’s about embedding intelligence and automation into the finance stack. Leading automation platforms act as a central nervous system for your global operations, offering smarter controls, better visibility, and the ability to scale without friction.
Managing FX Volatility at Scale
Rather than reacting to market swings, automation allows you to set predefined hedging rules that trigger forward contracts when currency thresholds are breached. By aggregating FX exposure across subsidiaries, companies can also negotiate better rates from liquidity providers. Real-time dashboards surface exposure by currency, counterparty, and maturity date, giving treasury teams the tools to act decisively.
Flawless, Real-Time Currency Conversions
Manual conversions create risk and delay. Automation platforms connect directly with banks to convert currencies at the moment of payment, logging every rate, timestamp, and transaction detail for auditability. With multilateral netting capabilities, businesses can offset receivables and payables in the same currency, cutting fees and reducing total transaction volume.
Tax Compliance That Keeps You Audit-Ready
Instead of maintaining country-specific spreadsheets, embedded tax engines automatically classify products, apply the correct VAT or GST rates, and generate e-invoices in formats like PEPPOL or CFDI. These systems also manage remittance schedules and prepare tax returns—freeing teams from manual entry and ensuring local compliance.
Scaling Payments Without Scaling Headcount
As you expand globally, manual approval chains break down. Automation lets you configure workflows by value thresholds or entity, ensuring invoices over a certain amount go to the right approvers without delay. Supplier portals enable self-service onboarding, where vendors can upload tax IDs and bank details directly. Bulk payment runs—across currencies and jurisdictions—can be launched in one click.
Unmatched Visibility and Control
Automation platforms consolidate all payment data into a unified dashboard, giving finance teams full transparency on payment status across geographies. Instant alerts flag exceptions—whether a payment is stuck, failed, or flagged for compliance review—so issues can be resolved before they escalate. Every user action is logged and time-stamped, providing a complete audit trail for internal or regulatory review.
A Strategic Roadmap for Finance Leaders
Start by mapping your current workflows against industry best practices. Identify areas with the most friction, whether in FX handling, AR collection, or tax filing, and prioritize automation pilots in your highest-volume or highest-risk regions. Align with stakeholders across treasury, tax, procurement, and IT early, and define success metrics like reduced settlement times, FX cost savings, or error-rate declines. As early wins compound, layer in advanced capabilities like dynamic discounting, anomaly detection, and cross-entity netting to push even further.
From Growing Pains to Growth Engines
Expanding internationally comes with unavoidable complexities, but with the right automation approach, finance leaders can turn costly friction into a competitive edge.
What we learned from Visa and Tipalti during the webinar is clear: the path to sustainable, profitable international growth runs through automation. By modernizing your finance operations, you don't just keep up—you gain an edge.
📽️ Want to dive deeper? Watch the full webinar here.
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Getting more from NetSuite: A finance team’s guide to smarter approvals & cash collection workflows
NetSuite is a powerful tool, but it is also a significant investment. Without the right processes in place, it is easy for finance teams to be stuck with out-dated and inflexible workflows that require heavy investment (both financially and manually) to be fixed.
The good news? ApprovalMax and Kolleno are hosting a webinar detailing how to unlock NetSuite’s full potential, creating an automated end-to-end finance solution that will improve cashflow and reduce errors.
In this webinar, you will learn how to:
Save costs
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Solve problems with customisation and scalability
Reduce errors and fraud
Be sure to register to see real-life examples of businesses maximising ROI and discover practical steps to strengthen your internal controls.
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