There are millions of students spread across thousands of education institutions Australia-wide, with well over half a million of these coming from more than 200 different countries abroad.
These statistics are not unique to Australia, and are similar for most countries around the world that are large exporters of education.
Despite the commonality of international education as a growing sector, financially managing a business that supports such a high volume of geographically diverse customers can be challenging from a financial standpoint.
Having many customers and suppliers is a challenge that most businesses are faced with, but in this piece I hope to focus on the additional complexity that can arise from the international element of the education sector.
The power of partnerships
The first challenge is one of geography, with students based in many countries, holding cash in their domestic currency and wanting to pay their education provider or their suppliers in the receiving country’s currency.
Whilst it is possible to set up a bank account in certain countries for this purpose, it’s simply not possible (or cost-effective) to do it in every country where your customers are based.
At Cohort Go, we established bank accounts and sought partnerships with reliable and cost-effective payment partners in order to assist us with the transfer of funds.
This enabled us to not only develop networks that would assist us in the future, but was also a crucial way for us to start building our business on a global stage.
Local insights trump Google Translate
Understanding local regulations for each of your client countries is the next step.
Whilst having a means to transfer funds is great, there are many countries, particularly in emerging markets, that have strict rules about what can and can’t leave the country, in what currency and with strict documentation attached to them.
Language skills in key markets is a useful addition to your business when crossing international borders. There is only so far you can get with Google Translator.
Dealing with customers, suppliers, banks and producing documents in the local language can be a real bonus and can be well worth the time.
Factoring this into your team hires will enable your business to benefit.
Work to global market timelines
Understanding the impact of global timelines on your finances will ensure you don’t end up stuck for cash.
Funds moving around the world do not, sadly, move instantaneously.
As they say, cash is king, but when you have that cash in many different locations and currencies, it adds a further layer of complexity to managing your finances.
Understanding the speed at which funds can be moved and building this into your business payment cycle and customer expectation management is important.
When dealing with different currencies and different markets, the volatility of the foreign exchange markets can quickly impact your bottom line. Having someone in your business that understands this and manages this foreign currency exposure will minimise the likelihood of unexpected losses.
Finally, contingency planning is critical. Setting up activities and partners can be a lengthy process.
Things change, partners change direction or go out of business, regulations change, and there are many reasons why your stable process can suddenly be broken.
Your reputation can be swiftly eroded if you can’t quickly switch to an alternative contingent arrangement.
Andrew Fuller is the chief financial officer and chief operating officer of edtech company Cohort Go.
This article was first published by FinTech Business