Manage currency and tax in new markets

Who this is for

Founder led lower-middle market companies with 5 to 50 million in annual revenue that sell or deliver across borders.

The quick answer

Decide on quote currency and hedge rules. Use natural hedges where possible by matching costs and revenue in the same currency. Confirm VAT or sales tax rules, withholding tax, and import duties. Pick payment terms that protect cash. Close in month end with a simple checklist so multi currency accounting stays clean.

The method in eight steps

Choose quote and invoice currency
Prefer the buyer’s currency only when you can match a good share of costs in that currency or hedge predictably.
Use natural hedges first
Match supplier contracts, payroll, or logistics fees to the revenue currency in that market where practical.
Set a light hedge policy
Name who decides, the threshold for hedging, and the products allowed. Keep it simple and document approvals.
Confirm tax rules early
List VAT or sales tax registration needs, place of supply rules, withholding tax on services, and import duties.
Align payment terms to cash
Use deposits or milestones for long delivery times. Add a small early pay credit only when it lowers cost.
Price for currency cost
Include expected hedge or conversion cost in your country price card so margin stays intact.
Close cleanly each month
Run a month end checklist that covers exchange rate updates, revaluations, tax filings, and reconciliations for bank and AR and AP in each currency.
Review quarterly
Check margin by country after currency and tax effects. Adjust price cards and hedge thresholds if needed.

Example

A firm quoted in local currency but paid key suppliers in the same currency and hedged the rest above a set threshold. They baked conversion cost into the price card and kept monthly closes clean with a checklist.

Pitfalls and fixes

Quoting in a foreign currency with no hedge or natural offset. Match costs or set rules.
Missing VAT or withholding rules. Confirm registration and rates before launch.
Messy closes. Use a fixed month end checklist for multi currency.

Checklist

Quote currency and hedge policy
Natural hedge opportunities listed
Tax rules and registrations
Country price card with currency cost
Month end checklist for multi currency