2. Standing by rigid accounts receivable structures that do not reflect local market realities
It has always been challenging for multinational technology companies to maintain consistent accounts receivable standards while being flexible about local deviations. The bigger the global footprint of a technology company is, the more complex the standardisation of accounts receivable processes tends to become. The need to maintain control over this complexity could manifest itself in rigid processes and excessive layers of bureaucracy.
The biggest problem of inflexible accounts receivable processes is that they are designed primarily for advanced markets' specifications and not the actualities of collecting receivables elsewhere. The structures that worked previously in a few markets may not work at all in new markets where not only the customers but also the staff have completely different methods of operation. An unduly cautious or one-size-fits-all approach may not work either in local instances where nuances and subtleties are required.
For example, following hundreds of pages of accounts receivable guidelines may not be a problem for most advanced markets, but likely be a major stumbling block to conducting accounts receivable activities in emerging markets. This unnecessary complexity can render accounts receivable operations in local subsidiaries unproductive and leave them in limbo. Other consequences of inflexible accounts receivable structures range from ineffective communication with debtors, inadequate responses to debtors' circumstances, to write-offs or abandonment of accounts receivable that can still be collected.
To avoid survivorship bias, technology multinationals should look at local accounts receivable that were written off or ignored for a long time. By examining what went wrong and assessing what could be done better, they can ascertain the exact processes or approaches that should be localised to enhance their accounts receivable. They can also assign the accounts receivable processes in question to the four groups above and judge if it is worth sustaining them. Processes that fall into the first two groups (mandatory or highly valuable), such as compliance with local and international laws or transparency in default risk, should be streamlined with a low degree of standardisation. Global technology companies could end up with distinct processes per country, but that is not a problem as long as they all work towards the same goal.
The trade-off between global accounts receivable structures and their local variances can differ significantly amongst countries and regions. Therefore, it is essential to strike a balance between what has to be congruous with headquarters and what could be flexible in reflecting the accounts receivable realities of local subsidiaries. Multinational technology companies need to adapt their accounts receivable operations accordingly to capture the full value of their global organisations.