Cross Border Business – Counting All Costs of Offshore Manufacturing

.       Marketing Expenses If the end user is a consumer, the company may decide to seek customers through on line marketing as well as direct sales. A creative on line marketing campaign is both time consuming and costly. The expense is  shown on a profit and loss statement as an operating expense.

• Currency Exchange Rates – This cost has to be considered in a transactional basis.

Non Monetary – Hidden Costs Timing Delays due to quality control issues and shipping issues. Management’s Time spent overseeing importation issues, finding the best manufacturer, developing a good working relationship with that resource, and supervising the importation process and costs. Indirect Borrowing costs – There is an additional indirect cost of borrowed funds; the time needed to shop for the appropriate line of credit and the management of the borrowed funds. Financial Management Proper accounting procedures must be established to avoid a financial crisis. When financial management of borrowed funds is not properly supervised, the company may be forced to seek additional short term funds from credit card companies. (Credit card debt should be avoided if a company wants to maintain its profit margins and its acceptable credit rating.) Expensive short term borrowing impacts profitability. A competent CFO evaluates the company’s capital needs, on a short term and long term basis, and tries to match the loan with these needs and also consider funding needs to meet a planned growth strategy. Related articles: Thinking Of A Opening Cross Border Business? Tackling Cross Border Business Reporting and Tax Planning Cross Border Business- Key Questions for New Enterprises