Some of the common problems that face multinational companies is how to deal with multiple sub-companies with different tax requirements while managing a single inventory space.
In a globally competitive world, businesses have to balance a multinational presence across borders and time zones to stay ahead of the competition. eCommerce isn’t bound by borders, it’s a global market that can reach anybody anywhere in the world which presents an undeniable growth opportunity. The cross-border shopping trend is not slowing down in 2021, in fact it’s continuing to gain traction.
Did you know that Americans, Norwegians and Australians respond better to prices that end in a 9, while other countries like China, India and Brazil sell better when prices end in a 0.
One of the greatest challenges of cross-border business is how to handle the accounting and tax information. It’s important to understand the tax requirements of your chosen location. We work with clients in many countries and deal with various taxes like VAT, GST, PST, HST, sales tax and more. Every business needs to understand the taxes applicable in each relevant country before making a move.
Running a business in two different countries could potentially have two different tax requirements, resulting in the need to run two different accounting ledgers for each tax entity.
The benefits of an Inventory Management System
Businesses need to ensure they have the right amount of the right products that customers want to be successful. Sales can be received from multiple sales channels, locally or internationally. Being able to fulfill the products that the customer wants in a timely manner is one of the crucial elements to a successful product-selling business. Effective inventory management is at the heart of enabling this to happen.
Inventory management software (IMS) is crucial for companies that want to work cross-border or across multiple platforms. When inventory is correctly managed, sales can be increased, customers will be satisfied and the business can gain a competitive advantage. A good IMS will be able to work in real-time, warn when inventory is low, remove out-of-stock items from the online stores and constantly track sales, so you can make informed decisions from what’s really going on in your business, rather than just operating off intuition or gut feel like so many people do.
Did you know? The majority of abandoned carts are due to surprise or high shipping costs, followed by the purchase not reaching the minimum cost to qualify for free shipping.
An inventory management system can help reduce the stress of managing stock over multiple locations, track shipping and give real-time updates. The inventory management system is linked to the accounting system, and links to the tax rates and entities compliance requirements. Thus, there is a direct correlation 1:1 between the accounting system and the inventory management system.
The Frequently Asked Question
People are often contacting us and requesting that they can use one inventory system for multiple entities stock, because those entities share the same product database. The prices of stock for purchasing is often the same, because is sourced from the same supplier but sold to the two or more different entities within the group. Even the sales can sometimes be channeled into one entity and then on sold to the inter-company entity. Of course, it seems logical that you could run the same inventory system for the “group”, however, due to the need to have a separate accounting system for each tax entity and the one-to-one relationship to the inventory system that is required, businesses in this situation often need to have two accounting systems and thus, two connected inventory systems.
The WAOConnect Recommendation
When you’re choosing your accounting and inventory management systems, make sure you start off with a scalable inventory management tech stack that can accommodate your customer demand. This will help with scalability and make sure that every aspect of your business is running smoothly.
Before choosing Xero or QuickBooks Online as your accounting system, understand that you will need to have a different accounting file and inventory management software connected to your accounting system to manage the inventory and accounting for each entity. That means two or more subscriptions for accounting depending on how many companies and the same multiple subscriptions for your IMS. This can get expensive and difficult to manage multiple databases, even if you can connect them together to save time on raising orders between intercompany entities.
The only cloud based system we recommend currently that doesn’t charge you for multiple companies, is Odoo. Odoo is a cloud based ERP solution that includes e-commerce, B2B, accounting, manufacturing, warehouse, inventory management , quality management and more. It also includes various integrations or third-party apps for e-commerce systems that need to connect to 3pl’s, marketplaces and stores like Shopify or Amazon.
Using Odoo, the business is able to select and pay for only the modules that they require without taking on the entire system like most ERP solutions require. This also has huge financial benefits for smaller companies that are trying to limit costs but also grow internationally and have the complexities of multiple companies across various countries.
Need help building your tech stack?
Building and implementing a sustainable tech stack to cover your accounting and inventory isn’t easy. If you need guidance or direction on how to start with a scalable system – speak to our staff. Book a free consultation now.