Local Compliance in Global Business

Global companies are increasingly migrating finance functions to regional hubs or shared service centres, either through in-house or outsourced operations. Even in a centralised business model, global companies still need to comply with a multiplicity of local regulations and frequently find that challenges of scale and the need for local knowledge result in significant barriers to growth.

BDO has published a report which examines the different business models that companies have adopted to ensure compliance with local regulatory requirements as they centralise. Local compliance in global business is based on interviews conducted in the first half of 2008 with senior finance executives from major global technology companies including AT&T, BT, Dell, Intel, Logica, Microsoft and Vodafone.

Key findings of the survey include:

  • There is no "one size fits all" roadmap.
  • Companies are moving away from the traditional model of having a local Finance Director in each country of operation.
  • The majority of global companies have streamlined operations into a centralised finance function which can create issues with local compliance.
  • Unless compliance issues are addressed, businesses can be exposed to significant risks and the maximisation of transformational gains is prevented.
  • Companies tend to use outsourced support to gain localised efficiency and expertise.
  • Technology will play an increasing role in improving the efficiency of local compliance.
  • Future convergence of accounting and taxation standards is unlikely to remove the need for local expertise.
  • Four models that companies are using for local compliance were identified. These are:
  1. In-house, in-country (the traditional business model)
  2. Local outsourcing (typically used when a company is first entering into a new territory)
  3. Centralised outsourcing, central delivery (most effective when a business operates in larger countries only)
  4. Central outsourced, local delivery (BDO's recommended model)

Please contact david.lewis@bdo.co.uk or your local BDO advisor for further information.

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