Currency Considerations

Due to industries globalization, many business organizations in the world have been able to grow their market arena. Nevertheless, there are several operational and financial risks that are encountered and need to be put into considerations. For this case, a company operating in Canada but has its sales in the United States, there is need for assessing the underlying costs for doing business in foreign currency. These include foreign currency fluctuations which forms a part of doing business in a multinational corporation. Risks that need to be considered include the shipping costs and the differences in the local economies. In addition, geopolitical risks may negatively impact the U.S company due to trade barriers, tariffs, quotas or other additional funds from the Canadian government (Craig, 2007). These may serve to limit revenues to be earned.

There are a lot of factors that come into play when considering payments of foreign employees this is due to geographical differences and disparities in economic and financial factors (Mundell, 2012). There may arise complications in tax remittance and differing employment and payment laws for the two countries. The employees need to be paid legally and properly in line with the Canadian legislature. For this case it necessary to stay abreast of currency fluctuations and exchange rate to help in accurate calculations of payment to be made. In order to pay the employees, the company may consider opening up a payroll account and set up all the relevant the relevant banking infrastructure. However, this may come in with the task of calculating tax deductions.

While working with two different currencies (revenues in U.S dollars and costs in Canadian dollars), it is important that the company records transactions either in the base currency together with the rate at which foreign currency is exchanged with. Through the use od tally ERP 9 it becomes easier to have automatic conversions of the currencies. Thus, be able to calculate profits made.