Expanding your business outside of the United States' borders is exciting. But, it can also be a challenge. Set your company up for better success by planning for common challenges of expanding into Mexico. Every international market has unique challenges. Stay ahead of the three below by standardizing your company accounting practices and doing your due diligence.
Following GAAP Rules
GAAP, or generally accepted accounting principles, rules set the standard for how businesses should handle their accounting. If your company is expanding into international markets for the first time, the financial complications can seem overwhelming. Before you start, make sure your current financial and accounting systems are robust enough to handle the shift without incurring any violations.
A global enterprise resource planning (ERP) system can help your company follow GAAP rules while also adapting to national, provincial, and local requirements in Mexico. Executives and VPs put in charge of managing the new international division will need to have clear insight into the finances. This includes the project's financial success and its compliance with good accounting principles.
Avoiding Fraudulent or Corrupt Third Parties
If you're not familiar with the Mexico market, it's easy to accidentally make contact with a bad business. Just like in any international market, fraudulent companies exist to illegally collect imports or funds. Corrupt businesses and organizations may demand bribes or have overt political connections. Even accidental bribery can fall under the Foreign Corrupt Practices Act (FCPA). Search out more reputable businesses through a local legal firm or reliable consulting service instead.
Following Border and Import Regulations
Going through customs is tricky and tedious. Different exports may be subject to wildly different regulations. But, if someone offers a smooth or speedy process, think twice. A lot of fraud and product falsification happens at the border. Not only can that damage your business's reputation, but it can also cost your company a lot in penalties, fees, and lost products. Even errors made from speed rather than intentional fraud are too dangerous to risk. Consider executing an anti-bribery policy and customs compliance training so everyone on your team is well-informed.
How to Ensure Good Market Entry
Good market entry starts by having entirely above-board practices. Your company needs to have business parties and third-party actors you can trust. Avoid "too-good-to-be-true" offers and easy solutions that feel like a perfect fit. Be prepared with a strict schedule of internal audits, even if your company is in a hurry. It's better to go slow, conduct due diligence, and avoid critical missteps.
How to Conduct Your Due Diligence
It's important to know who you're doing business with. Consider hiring a local business consulting firm to research your contact company. A comprehensive profile or an economic report can give you objective information before you sign a contract or ship your goods south.
If your business is expanding, make sure it stays on the right track. Research your associates, double check border regulations, and make compliance one of your top priorities.