What you don't know you don't know
Loyalty is great. It's rare and meaningful - and therefore it's valuable. But sometimes it's a liability - particularly in your professional advisor relationships as your company grows and evolves. After all, these are 'experts' who you have engaged precisely for the knowledge and expertise they have in specialized areas of practice.
So by definition if you don't know what they know, then you don't know what they don't know that might create exposure or missed opportunity. And in their defense, they might not either. Often companies select advisors who are convenient, friendly, and inexpensive or a casual referral and who happen to be appropriate for a certain business stage. But as the business grows in size and complexity of activity, often they begin to outgrow the relationship. But what happens then? Sometimes loyalty becomes a liability.
According to the script
Let me pick on accountants for a minute, because I run into this so frequently - and because for the next few days they'll be too tired to hammer me with feisty replies.
There's a script that plays itself out so frequently that I know it by heart. In chatting with the CEO, president or GM of a company that's successfully exporting, I ask them how much they've saved through their IC-DISC. They must have one - it's essentially a 'no brainer' if you have more than $100K in export profits. (Not familiar with an IC-DISC? You'll find more detail here. Short version - with a simple administrative election your export profits will be treated as dividends rather than income. For most 'pass through' entities that equates to a 16.7% reduction in the tax rate...or nearly $17,000 of additional net on every 100K of export profits.)
Here's where the script kicks in.
But it's not just the IC-DISC
The IC-DISC stings because it costs you money. But there are also frequently unmitigated risks and landmines that advisors, expert and familiar with your domestic business but unfamiliar with international work, may miss.
- duty of care for employees
- insurance on foreign receivables
- nuances in INCOTERMS 2010
- export compliance issues of denied party screening and even information you carry internationally on your laptop or "deemed exports" of controlled information on your website
- idiosyncrasies of representative contracts in different markets
- FCPA compliance exposure and D&O cost of defense
- low cost working capital to fulfill export orders
That's hardly an inclusive list, but it's representative of the kind of really important topics that often slip under the radar.
The point is that it's up to you to make sure that your professional advisors can support your international sales. They may not know more than you.....and what they don't know can cost you opportunity and expense.
image - jotopr