The Subsidiary Paradox – A Startup Saga
Working on international expansion?
Before you set up any subsidiaries, create a virtual bank account for the parent company. It can support a range of international funding options quickly and cost effectively, filling the gaps before local bank accounts are set up…
Resources
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John the CEO greenlights a new US subsidiary.
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Janice joins as VP North America. Her customers are ready to buy…
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But the US bank has to run KYC checks on every UK board director…
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Until there is a US bank account they can’t invoice US customers.
The UK company tries to fund the overheads, but the US payroll company can’t receive funds from overseas banks…
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John ends up funneling tens of thousands of dollars to Janine’s personal bank account… while she is still on probation!
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What should happen?
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Look into Virtual Banks…
If the UK company already has an account with a virtual bank it can often set up a linked account for a wholly owned subsidiary without going through additional KYC.
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Virtual banks have limits; they may not have the same deposit insurance and banking licenses as a regular bank.
But some can instantly approve an account for a subsidiary if you are already a customer.
And even after a local bank account is set up, a virtual bank may still be the cheapest and fastest way to transfer funds to and from the parent company.
But some can instantly approve an account for a subsidiary if you are already a customer.
And even after a local bank account is set up, a virtual bank may still be the cheapest and fastest way to transfer funds to and from the parent company.