Corporate Services for International Clients an evolving service offering
Corporate services initially started as a service which mainly included bookkeeping and tax compliance services. Over the years this service evolved into a much wider offering and now includes support in various business areas, resulting in corporate service providers (CSPs) perceived to be more as business partners rather than mere back office support.
Forward looking corporate services firms have increased their services to offer a wider spectrum and include: accounting, payroll, transfer pricing, legal support, detailed in/direct tax review, directorship services (executive or non-executive), administrative assistance, payment processing and other bank related services. Some corporate service providers have also ventured into offering other services such as office space and IT infrastructure. These services are being offered in response to an increase in demand by international clients who are requesting services that are tailor-made to fit their overall business strategy. This evolution in CSPs service offering, has mainly been driven by a number of changes, namely:
- Changes in the fiscal and regulatory frameworks;
- Changes in business strategy;
- Advances in technology.
- Changes in fiscal and regulatory frameworks – this has enabled CSPs to offer a wider array of services to enable their clients to operate within the expected frameworks and directives. For example, helping clients to determine their Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) status, leasing office space, and offering employee and directorship services to their clients.
- Changes in business strategy – organisations are increasing their focus on delivering their core product and are resorting to outsourcing the financial and legal aspects of the business to a trusted CSP. This enables the organisation to focus its human and financial resources on its core business, with the peace of mind that all statutory requisites are met, also saving on costs. CSPs are offering an extensive service in this respect whereby all the financial, legal and statutory requirements are met with great expertise and knowledge and at a fraction of the cost if the organisation had to set up these departments internally.
Advances in technology – Technology is also becoming a central feature of the corporate service offering where clients expect to access their accounting data and documents remotely and on a 24/7 basis, with less human resources. Services offered by CSPs include (but are not limited to):
- An online platform which caters for a dashboard on past and present requirements of the client’s organisation – this may include updates on whether: the financial statements have been submitted and date of submission, direct tax and VAT return status, FATCA/CRS reporting status, etc. This information is relayed to the client in real-time whereby the client can simply log into the online portal for a fast and efficient update, giving the client more time to focus on his/her core business;
- A robust online file sharing platform – In the case of clients that are frequent travellers, all mail that is sent/received can be scanned and uploaded immediately onto this platform which is then relayed in real-time to the client. This platform could also be used to share the company’s files with third parties (such as auditors).
The above changes in the business environment automatically also bring about changes within organisations offering CSP services. Traditionally when the services offered consisted mainly of accounting, tax compliance and back-office work, most service providers had a dedicated team/department for each of the service deliverables. The teams usually consisted of an accounting team, a tax compliance team and an administrative/back-office team. The traditional set-up is however no longer applicable, in view of the fact that CSPs are offering a wider range of services. Should the traditional set-up be maintained, it would result in the client having to contact various people working within different departments.
CSPs offering a wide range of services are nowadays resorting to “Vertical Integration”. This practice entails that each client refers all queries to one engagement team, whilst receiving all the required services from different departments. Vertical integration, however is possible only by a very dynamic engagement team, as the team must have the right knowledge to cater for the clients’ needs and act as the client’s “one-stop shop”. For example an international client requiring services linked to funds, holding companies and SPVs, would require the integration of two vital departments; the funds and corporate services departments. In this case the integration and harmonisation of the two departments would be entrusted to one engagement team.
Nowadays international clients are conducting business in markets which are evolving on a daily basis, consequently their needs are also evolving at the same pace. The corporate services provider has to be able to cater for these needs and adapt to changes in the market. This entails having the required IT infrastructure, backed by the required training and development.
The bottom line was and remains, that CSPs should always offer a service of high quality. Quality is a tough mountain to climb at times due to the fact that a wide range of services are required which need to be tailor-made to clients coming from varied industries such as: private equity, real estate, high net-worth individuals, shipping companies, yacht/aviation leasing structures, pharmaceuticals, iGaming and other industry-specific organisations. However it is the only benchmark of what sets the standard between one service provider and another (on a micro level) and the efficiency and effectiveness between one jurisdiction and another (on a macro level).