Risk management Global Financial Risk for Startups

Introduction

Managing the finances of your business is hard enough, and it becomes even more complex when you are operating globally. New companies operate with a default global mentality, which means they operate in at least two countries or more, have bank accounts in each region with multiple currencies, and expenses and payroll in different currencies. However, most of the existing financial management tools only focus on the domestic view. In this blog post, we will discuss the importance of understanding global financial risk for startups and why it’s crucial to have a platform that can view and manage risk across your global accounts.

The Emergence of Default Global Companies

The goal is to create the financial operating system for the new “Default Global Company.” The Default Global approach has become more prevalent due to the acceleration of remote work caused by the COVID-19 pandemic. Companies like Deel, Remote, and Pilot have been leading the “remote-first” movement, and their valuations skyrocketed during the pandemic. However, due to the rapid emergence of Default Global companies, no one foresaw the need for tools designed for them. Almost all solutions in the market today have been designed for large multinational companies with complex global operations. There is no tool designed specifically for the new Default Global Startups.

Global Financial Risk Will Continue to Increase

In the post-pandemic era, we have seen global economies decline by more than 50%, global inflation reaching rates not seen in 40 years, continued interest rate hikes by all central banks, wars, and geo-political instability leading to wild currency fluctuations, continued supply chain strains accelerating the de-globalization movement, and bank failures like SVB, Signature, Silvergate, and Credit Suisse. These issues will put you out of business if you’re not paying attention. Startups need to understand their global financial risk to avoid any significant losses.

The Need for a Platform to Manage Global Financial Risk

Today, there is no global bank connectivity and treasury management solution for small to medium-sized global enterprises. Startups need a platform that can view and manage risk across their global accounts, foreign exchange, and interest rate risks. The platform should provide a consolidated view of all financial data, including cash balances, transactions, and foreign exchange rates. It should also allow for easy reconciliation of accounts and provide real-time alerts in case of any unusual activity.

Conclusion

In conclusion, startups need to understand the importance of managing global financial risk. The emergence of Default Global companies has made it essential to have a platform that can view and manage risk across your global accounts. Global financial risk will continue to increase, and startups need to be prepared for any eventualities. Having a platform to manage global financial risk can help startups avoid significant losses and ensure their long-term success.