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Situation/Scenario:
A company from Barcelona sold its products and services in the Scandinavian market (Norway, Sweden, Denmark and Finland) through a commercial engineer that frequently travelled to those countries. However, the engineer could only cover part of the sales territory, of the possible number of customers and, at last, of the Scandinavian market.
Then, the company thought in hiring a Norwegian commercial residing in Norway, who would better know the local market and who would have a better cultural and linguistic approach. With the local sales engineer, the sales in the Scandinavian market increased. Nevertheless, the activity of a Spanish company employee residing in Norwegian territory raised up to the Norwegian Tax Department the possible fiscal concept of the “permanent establishment”, concept that means that the company would have to pay taxes in Norway for that profit attributable to the activity of that permanent establishment, and at the same time to do bookkeeping of this activity in Norway.
Performance:
After the appropriated tax and legal studies, even with the possibility to appeal to the Norwegian Tax Department and to avoid the permanent establishment, we planned to directly open a branch company in Norway. With the company name and the adjective “Scandinavia” the new local branch attained a great commercial image which supposed a considerable and permanent sales increase in all the Scandinavian countries.
The legal establishment of a commercial branch in the destination country, with minimum costs, supposed some outstanding commercial effects that the parent company would have never achieved without the branch.
On the other hand, the branch opening was done jointly with the implementation of a financial management control that allows coordinating all the information flow between the destination country and the origin one and establishing a financial reporting system that gives useful information for making decisions.
Situation/Scenario:
A Spanish company sold its products in the Belgian, Dutch and French market by means of an independent commercial agent that covered all the territory. A very valuable professional that the company wished to maintain.
However, the company wanted to improve its brand image in Europe, to motivate its agent and to keep him, with the final goal of increasing the sales rate.
Performance:
We decided to open a subsidiary company in Belgium, using the name and the brand of the company with the adjective “Belgium”. The agent turned into the subsidiary Managing Director and with a bigger commitment and motivation the sales rate increased considerably at the same time as the company image made a big qualitative leap, not only in the countries where it operated, but all along Europe because the expansion trough subsidiary companies always involves a commercial image improvement for the whole company.
The subsidiary opening was done with a very low cost and at the same time, a financial management control was put in place between the branch and the parent company, allowing a total control over the subsidiary company operations, the local legal obligations fulfilment and obtaining a very useful information for the decision making.
Situation/Scenario:
A Spanish company exported its products to Germany by sending frequently Spanish salesmen there. However, they sensed that the possibility of having a local German employee established in Germany would help them to increase the sales rate.
Performance:
After the pertinent analysis of the activity done in Germany we concluded that it was possible to defend that this activity did not mean the fiscal concept of “permanent establishment”; concept that bounds to tribute in the local country for the profit generated for this activity. As taxation for profits was higher in Germany than in Spain, and as the Spanish company was not interested in establish any legal entity in Germany, we decided that the most advisable thing to do was to carry out the necessary steps for hiring someone as a Spanish company employee, even being German resident.
We consulted directly the German Tax Department to be sure that the activity was not constitutive of permanent establishment, registered the employee in the German Social Security and hired a local service firm to calculate and prepare his payrolls.
Situation/Scenario:
A Spanish company wanted to open a subsidiary in India to sale its products in this market, inaccessible without a local action. However, it had some doubts about how the cash generated for the activity in India could be safety and quickly repatriated.
Situation/Scenario:
A Spanish industrial company wanted to be established in China through a production subsidiary in order to be able to produce and to sale its products in the wide Asian market.
Performance:
To get that we carried out the following actions:
- We developed an appropriate business plan with a complete financial plan including the investment to be done, the need for financing it, the future annual projections for the profit and loss account, for the balance sheet and for the cash flow needs, as well as an assessment of the project in expected profitability terms.
This document was not only essential for the company as a road map to follow; but it was also really important for all those stack holders that would be indirectly involved in the project. Especially for the financial service companies that would fund the company.
- We proceeded with the tax and juridical study about the implication of opening a production subsidiary in China, and then we carried out all the legal obligations in order to obtain all the pertinent licenses and registrations and finally to open legally the subsidiary in China.
- We started several conversations, negotiations and information exchanges with different financial entities and finally closed a financing agreement in order to fund part of the investment in fixed assets. The rest of the investment would be done with the own company capital.
In parallel, we negotiated and made an agreement with a Chinese bank for funding working capital during the first years of starting-up the factory.
- We recruited locally the subsidiary’s financial manager.
- Together with the financial manager we implemented the subsidiary’s accountancy, with the goal of, in one hand, fulfilling the legal and accounting Chinese obligations, which needed a specific chart of accounts and some determined Chinese accounting principles, and in the other hand we mapped and prepared the chart of accounts and the reporting needed for the parent company in Spain.
- We designed and implemented the necessary costs model to obtain an analytic accountancy and the unitary cost of the products produced by the subsidiary, and at the same time we designed the necessary configuration of the financial ERP in order to get the appropriate information from every cost centre, work centre, department and product.
- We implemented an appropriate budget control system with special attention to the control of the investment done.
Finally, the Chinese subsidiary began to produce with a good financial control over all its activity.
Situation/Scenario:
An industrial Spanish company had a fast international expansion in the last years by establishing production and commercial companies in South America, North America, Europe and Asia. The subsidiaries were at the beginning set up as incipient core business activities and initially the financial control of them was not as strict as needed. Their reporting was limited to send monthly a balance sheet and a profit and loss account according to every country format. However, the lack of detailed and homogenous financial and accounting information conditioned already the chances of making decisions about the company international development.
Performance:
We designed a financial management control system to control the activity of every subsidiary and, at the same time, have a company international business global vision. In order to do so, we designed and implemented a reporting system that allows to obtain the basic financial data of every subsidiary in an homogenous format, made up by the balance sheet, the profit and loss account and the cash flow situation. This homogenization makes possible to compare information between subsidiaries and parent company, as well as obtaining consolidated data.
We also designed and implemented those reports which could give key information from every subsidiary, even commercial or productive, and we fixed a reporting deadline agenda.
Finally, we designed and implemented the reporting for the annual budget, its follow up system and deviations analysis.