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How do I plan for internationalization as my business expand globally?

Overview

We have found that many of our customers launch their business with a focus on one country, and soon after receive requests for the service from users in other countries.

Launching an international business is not a small decision. You need to understand legal and tax implications for your business, along with the overall amount of effort required to make sure your service can support local requirements in those countries.

Once you complete that process, it's time to monetize your service internationally.

From day one with Zuora, we built multi-currency into Z-Billing and Z-Payments. This article discusses how multi-currency can work for your business, and how you might think about internationalization options in Zuora.

Solution

Zuora recommends that you visualize the end state and work back from there.

With an international business, you are pricing your service, generating invoices, collecting payments, and loading accounting information into your general ledger.

Launching an International business means that you have to sell in the local currency. If you want to sell in your home currency, then you have an international consumer to your current business. With that in mind, this topic will focus on selling in other currencies.

If you cannot collect payments, the rest of the items are not as important. With that in mind, let's start with payments.

Payment Processing

The easiest way to collect payments is to send an invoice to the customer and they wire money to your bank. You can then record the external payment in Zuora. This approach primarily works in a low volume and typically in a B2B scenario, but it is always a fast way to collect money.

Setting up the ability to accept electronic payments requires additional effort, but is a must-have activity if you have more volume than you can handle manually, or if the wire transfer approach is too burdensome on your end customers. For example, a B2C (business-to-consumer) end customer is much less likely to send a wire transfer for service.

One of the fastest ways to accept International payments electronically is to accept PayPal. Zuora supports Express Checkout (using PayFlow Pro, Website Payments Pro Payflow Edition, and Website Payments Flow) and Adaptive Payments. PayPal has varying adoption rates in countries, but it is a quick way to have customers that want to buy your service make payments.

Depending on your current payment gateway, accepting credit cards may be extremely simple as well. We have additional information about gateways, but be aware that some gateways will require you to have a legal entity in that country or region to be able to sell in the associated currency.

Finally, region-specific payment methods are another option. Zuora supports a number of bank transfer / direct debit payment options that are region-specific (for example, ACH in the US and SEPA in Europe).

Generating Invoices

In many countries, an invoice is a legal document that has to follow very specific rules. In some cases, you have to buy the invoice paper from the taxing authority, so you should confirm the rules for each country. When countries have extensive legal requirements for invoice presentment or delivery, there is often a local service that will help bridge that gap.

Zuora recommends that you simplify your invoice presentment. We believe it is best to not use the invoice as your primary means to communicate with your customer. Implementing a customer self-service portal where you can slice-and-dice usage data or run comparisons is typically a better investment than investing in invoice presentment.

Pricing

How to price internationally can be a huge topic. All of the pricing and packaging complexity that you face domestically will exist internationally, and the wrong choice can lead to an undesired product rate plan explosion.

As you sell your service, we recommend that you avoid creating region-specific products in Zuora. Doing this just creates additional work, and more products to track. Instead, sell the same product in all countries, but use Zuora's multi-currency charge support to define the amounts you want to charge currency by currency.

The powerful thing about this is that it helps you prevent a product catalog explosion that becomes unwieldy. 

Also, you can set the "price on the street" that you want, instead of having to express the "base price multiplied by the currency exchange rate" price. Older systems would price in multi-currency by this simplistic approach. Because your product might have different values in different markets, the lost business opportunity can be significant. Your product needs to be priced for the unique characteristics of those markets. 

Accounting System Integration

There are two key approaches to accounting system integration:

  • Have a single accounting system that manages foreign currency rollups
  • Have a separate accounting system for the international business

With Zuora, you can summarize and pull data by customer, product, currency, or other data. Because of this, it does not matter whether you have one or two target systems as long as you can identify how you separate your transactions (for example, by customer type or currency) for each accounting system.

Now go build a great International subscription business!

Last modified
06:09, 22 Feb 2015

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