Julian Christmas of Cintra Global discusses international hiring, taxes, and payroll

Julian Christmas of Cintra Global - Podcast Transcript

Healy:	Hey, this is Healy Jones, VP of Financial Strategy here at Kruze Consulting, and I want to say thanks to our podcast sponsor ARC. At Kruze, we’ve got a number of clients successfully using ARC to manage their deposits, payments, access, financing, all in one place. One of the things that ARC provides, it’s really great, is over a quarter of a million dollars in FDIC coverage. Their insurance program goes beyond the standard limit, and it secures up to $5.25 million. So, startups that have even more cash than that can go and access treasury solutions to provide yield and safety. If you’re a startup looking for a secure financial solution that can help you scale, please check out our sponsor ARC at arc.tech.
Singer:	So when your troubles mountain in tax or accounting, you go to Kruze, Founders and Friends. It’s Kruze Consulting, Founders and Friends with your host Scotty Orn.
Scott:	Welcome to Founders and Friends podcast with Scott Orn of Kruze Consulting, and today my very special guest is Julian Christmas from Cintra Global. Welcome, Julian.
Julian:	Thank you, Scott. Thank you for having me. Nice to be here with you. And since you mentioned Cintra Global, just worth mentioning that you and I have known each other and worked together for a long time, but our business was until about six weeks ago, it was known as UnaTerra Consulting or just UnaTerra. So, we’ve rebranded now and we are Cintra Global.
Scott:	Yep, that’s how probably the Kruze client base knows you. We refer a lot of clients over to you. But maybe tell us the audience why you got so excited about Cintra and why you joined and what you guys do.
Julian:	Yeah, thanks Scott. Cintra Global or UnaTerra as we were, as a business, our sole purpose is to help our clients with their international operations. And you and I have had many conversations and worked on common clients. Our support is principally, there are objectives around hiring internationally and hiring in other countries, so providing them advice and services around their international hiring, whether it be building big teams with offices, or simply individual hires in other countries. So, we did a lot of work around hiring, legal entity set up, and advice around that: we provide HR support and we do some accounting and compliance work. So, the business provides a suite of services in that international support space. My background, Scott, is I was in public accounting for many years, qualified as a public chartered accountant, I’m from the UK as you can tell, worked increasingly with US tech businesses and supporting them into the UK and beyond, and that was really my ticket out of public accounting. And I worked thenfor a couple of bigger consulting businesses, providing support to specifically to the US tech sector on their international expansion journey. And as a result of several years spent doing that, I founded my own business providing a similar type of service with a very high touch, so a very strong focus on customer service, really. And several years later, we have evolved and become Cintra Global as we are today. And I love the space of what we just call international expansion and support simply because it’s so interesting, and it’s great to feel valuable to our clients
Scott:	And we refer you because you are the expert. We’re focused on the US, but Cintra, UnaTerra, you folks are a very seamless handoff. We actually really appreciate it. And my favorite thing is I know that our clients are going to get treated really well and when they reach out and talk to you. And you folks are really good at just about even sometimes just answering a few questions or making them feel good and relaxed and the world’s not ending, “Here’s what you need to do to fix it. We can do it for you if you want,” kind of stuff. I really appreciate it, and the Kruze team appreciates it. Because not just me, but it’s our account managers and people who are serving the clients are making those intros, and you folks do a really good job on that.
Julian:	Yeah, thanks Scott. Appreciate that. A lot of what we do with your clients and with a lot of the other companies that we talk to is simply have conversations and just provide them with some advice and information. And sometimes, we would work and we get a new client, and sometimes just to be helpful. And we really like to be helpful, we love helping Kruze Consulting and your clients, interesting, and a very sweet spot for us in terms of the types of clients that you work with. And so, we really enjoy that, and I appreciate the feedback.
Scott:	Yeah, thanks man. So, it’s hiring internationally, I think. Do you guys advise on sales internationals taxes too? What’s the product suite?
Julian:	Yeah, we do that. I guess the one service that is common to all of our clients is that we provide payroll support. That’s really the cornerstone of the business, that we provide payroll support. Very closely linked to that is the HR support that we provide, so if a client needs to hire in another country, yes, they need payroll, but of course they need employment contracts and various other things in order to allow that to happen. So, that’s the cornerstone of what we do, Scott, but there’s a lot more to it than that: in some countries, a legal entity is required. It’s quite a complex bit of a project, so we do some legal entity setups for our clients. Legal entities bring with them new compliance requirements. And this takes usdown the path, Scott, of tax support, advice around things like VAT and GST and how they are similar or not to sales tax. And there are similarities, but there are also big differences. So, as I say, payroll, HR are the cornerstone of what we do, but really if you wrap our service suite up, it gives our clients everything they need in order to affect what I would describe as light touch international expansion, which is really headcount-driven.
Scott:	Yeah. And for our client base, international’s been a huge growth driver. People are really growing internationally. It was interesting though, before we turned the mics on, you were saying you’re seeing a little bit of retrenchment there, right?
Julian:	Our business has its roots in the US tech sector, and we’ve always done a lot of business with the US tech sector, and its outbound expansion. We’re less focused on tech specifically. Now we do a lot of work with tech, but we do a lot of work with non-tech, but specifically what we see from the tech sector or the businesses that we work with is I think everyone knows that there’s been a lot of reductions in headcounts across lots of the tech sector or various parts of the tech sector, and it looks to me that that is felt disproportionately by the international hires that have been made in the past. So, we have clients who are regrouping, they’re shedding some of their international heads, and in fact in some cases closing down their international operations altogether. I don’t mean they’re closing international lock, stock, and barrel, but some of their international locations are closed as I think people reformulate their plans.
Scott:	It’s so interesting because it was a mega growth driver, and then now it’s starting to slow down. Are you seeing a different industries? The Kruze client base is a lot of software, a lot of health tech, e-commerce, but it was overwhelming, to be totally honest. Everyone was hiring everyone internationally, and doing what you’re talking about, either hiring and making sure they’re compliant or setting up a subsidiary, doing that the correct way. But it’s interesting that you’re seeing it slow.
Julian:	It’s quite difficult to tell what the trend is because our work was also boosted unfortunately by the whole COVID situation, so our client base and the amount of work that we do was boosted by the quirky situation we had with COVID, when everyone was talking about international barriers disappearing altogether. So, part of it was, “Hey, if you’ve just learned you can hire in the next state, then an extension of that is you can hire in the next country, and in Europe and beyond,” so that there was a lot of that and there was also a lot of relocation of employees back to home countries. We scooped a lot of work during the lockdown period, we did really well out of that, and so I think that might’ve masked some of what was really going on there. It may have felt like international was booming more than it really was. So, a little bit difficult to say.
Scott:	Are there some common mistakes you see startup founders… By the way, you also talked about VAT: maybe a quick definition of VAT because that’s a very common question we get that we turn over to you, but maybe what’s that? And then, maybe we can transition into some of the common mistakes you see people doing.
Julian:	Okay, let me help you with that then. Because VAT is a quirky one. And VAT in some countries is referred to as GST. So, VAT is value added tax, GST is goods and services tax. They call it GST, for example in Australia, and throughout Europe, it’s known as VAT. And it’s similar to sales tax in that you apply VAT to your company’s invoicing in certain situations. It’s different in that, as I understand sales tax, you incur sales taxes a cost to your business: there’s no concept of recovering it. The point of VAT-
Scott:	Oh, yeah.
Julian:	Yeah, and the point of VAT is that if a business charges VAT to another business, then that business can recover that VAT, and it’s not a cost of the business. The only person or the only situations when you can’t recover VAT is if you are a private individual. So, the idea is that it’s a tax that’s only borne by the end consumer. So, private individuals or certain types of businesses which aren’t able, and one of them is actually financial services, so things like insurance and banking, they can’t recover VAT. And that’s-
Scott:	It’s usually physical stuff, right? Isn’t it usually physical?
Julian:	It could be physical stuff, it could be services, but a lot of-
Scott:	[inaudible] services?
Julian:	… the clients… Yeah, but a lot of the Kruze clients that we talk to are invoicing for services or like you said, software, or certain digital assets or services they’re providing. And a lot of the questions are around, “Do we need to charge VAT if we’re selling into Europe?”, and the answer is often dictated by whether it’s a B2B or a B2C sale. Because if it’s B2C, then a US vendor should be charging VAT to European consumers because if they don’t, they have a competitive advantage over the local vendors who are charging VAT on all their sales. If it’s B2B, thenrule of thumb is no VAT needs to be charged because you don’t get a competitive advantage and the business customer can recover it anyway. So, simple rules there. I’m happy as always, Scott, to extend to your client base the invitation, I’d be happy to-
Scott:	Simple rules.
Julian:	Yeah, exactly. It’s very simple at the first level a bit. If you want to take it down another level, it explodes into a very big and complicated area. So, as I say, I can’t simplify it too much, and always happy to talk to your clients about this.
Scott:	What do you see as the major mistakes people make when they’re expanding internationally? What are they doing wrong?
Julian:	Yeah, good question. So, what we deal with a lot is when companies have a propensity to try and do things simply and to cut corners and do things inexpensively in the short term. And what that does is that further down the track, it can be much more difficult to unravel and much more complex, particularly when we’re talking about hiring employees in other countries. And there’s always a tendency to say, “Hey, can’t we take that person on as an independent contractor?”, or, “Can’t we try and do it a different way?”, and the answer is, “Well, look, let’s have a discussion about it because that works for now.” I’ve dealt with many situations where subsequent efforts to convert a contractor to be an employee have become very difficult. We deal with all sorts-
Scott:	Oh?
Julian:	Yeah, we deal with all sorts of stuff, Scott. We deal with companies who have, rather than invest in properly compliant local employment contracts, for example, they engage their international employees using a US offer letter, which is very quick, and it doesn’t cost anything, but the ramifications further down the [inaudible].
Scott:	So, they’re basically saying representing they’re hired in the US entity or something like that, and-
Julian:	Exactly.
Scott:	Oh, got it.
Julian:	And you know what? If you don’t have an employment contract that observes all the different employment laws in that country, then as an employer you don’t really have a leg to stand on if you end up in litigation with that employer. So, I’m from the UK, it doesn’t happen very often, but we do a lot of support in countries like France, and Spain, and some support in also countries like Brazil where they have a much higher propensity for engaging in a bit of litigation with their employer or ex-employer because they haven’t followed the rules.
Healy:	Hey, this is the VP of Financial Strategy at Kruze. Jumping in to thank our sponsor of this podcast ARC. At Cruz, we have a number of clients who are successfully using ARC’s fintech tools to store deposits, manage payments, get financing, earn yield, all in one place. But another thing that’s important about ARC is that they have a heightened security and safety feature. Because they partner with globally recognized banks, they’re able to offer an FDIC coverage over $250,000. In fact, they offer up to $5,250,000 in FDIC coverage. And if you have more cash than that, they have treasury solutions: they can provide yield and safety for even more money. So, if you’re looking for a comprehensive financial solution that can help you scale, check out ARC. Go to arc.tech. Thanks again to our sponsor, ARC.
Scott:	Makes perfect sense. Oh, gosh.
Julian:	Yeah, so it makes her interesting. And I’ve seen some big checks written to ex-employees when, to save money, things have been done in a very simple way at the outset, and then to try and bring it back from that can be complicated and expensive.
Scott:	Yep. The Kruze clients are seed series A, series B, but is that the stage you focus on with startups or is it later stage? Where are you guys mostly entering?
Julian:	Scott, we work with companies all the way from the real foundation stage. We’ve worked with an out-of-the-blocks, two-person, two-founder business all the way through to publicly-listed companies that we also work with. So the size and type of activity that they engage with is very variable, but what they have in common is that they typically are launching into some sort of program of internationalization, or hiring other countries either to take advantage of commercial opportunities in that country, and the classic one at the moment is trying to take advantage of lower costs of, for example, software engineers and trying to build engineering functions in other countries where costs are lower. And so, there’s an obvious advantage there to the company.
Scott:	The arbitrage. Yep, makes sense.
Julian:	Yeah. And actually, Scott, we do continue to do a lot of this first sort of stepping stones of internationalization work. Increasingly, because we’re very payroll and HR-focused, we’re also working a lot with companies who have already expanded and they may be present in three, four, five, 10 countries. And they’ve done that organically, and they get to a point where they realize they’re working with multiple payroll providers in multiple countries who work with different platforms, and everything’s done to a totally different process, and that can become very time-consuming and resource heavy from the client’s side. And at some point, they will have an appetite to consolidate all of those payrolls into a single service provider who is a single point, with a single process, and a single platform, and a single calendar of activities. And that’s exactly where we come in, and are able to essentially consolidate all of that disjointed and complex payroll activity and make it super smooth and joined up.
Scott:	Yeah, that’s nice. I’m sure you have the very satisfied, happy customers at that point because of just simplifying all that.
Julian:	Yeah, we do. And we try to do it in a cost-effective way. You would understand that if you are consolidating 10 payrolls through a single team, which is what we do, usually it works out a little more expensive than working with the individual providers all separately. But there’s a big saving in time and effort on the client’s side. And so ultimately, there is a little bit of extra cost, but usually when you take everything in the round, it actually works out very well for them.
Scott:	Yeah, that’s amazing, man. And how big are you guys now? How big is Cintra?
Julian:	Cintra, we are the international business now of a larger business, and hence the rebranding from UnaTerra to Cintra. So, we have a sister company specializing in UK payroll. And as a group, we’re about 250 people.
Scott:	Wow, that’s amazing for you.
Julian:	Yeah, on the international side, we’re about 50 people, and the vast majority are based in the UK. So in essence, our clients deal with our UK-based team, and then we support our clients all around the world and interact with our service providers and teams in multiple different countries.
Scott:	I’m so happy for you. That’s amazing growth. That’s really cool.
Julian:	No, I appreciate that. And we went under private equity ownership about three and a half years ago, so that’s also an important part of our journey, and that’s when we came together with Cintra, and hence the rebranding to be more joined up with our UK business.
Scott:	That’s really cool. I love it. And it gives you scale too because, especially internationally, there’s so many different countries to handle, and I can see how that’d be very beneficial to the business.
Julian:	It’s been really helpful. And we have a lot more tech firepower now, so we are able to deal with a lot more of the sort of quirky tech requests we get from some of our bigger clients who want to, for example, automate between our payroll platform and their HR platform. So, our ability to deal with the higher demands of those more sophisticated clients and more complex situations is enhanced, and it’s made a big difference to us actually as a business.
Scott:	I love it. Well, Julian, this has been awesome. I’m super happy for your growth. That’s very strong. Maybe you could tell everyone how to reach out if they want to work with you, where to go, and maybe just reiterate all the problems you can solve for these startups.
Julian:	Yeah, thanks Scott. And to reciprocate, I know that Kruze has grown really strongly as well, and I’m pleased to see that too. And it’s great working with you and Vanessa and the rest of the team. So Cintra Global, my email if anybody wants to get in touch with me directly J-U-L-I-A-N @cintraglobal.com, and Cintra is with a C-I-N-T-R-A, so julian@cintraglobal.com. Our website is cintraglobal.com. Yeah, and I would invite anybody to get in touch either directly with me, Scott, or through the website with the wider team. Very happy with that.
Scott:	Love it. Love referring clients. Like I said, you’re super nice, you’ll talk to people. Even if it’s not a huge subject, you’ll answer their questions and we really appreciate that and our clients that work with you are very happy. So Julian, thanks you so much. Thanks for coming by and we’ll catch you later, man.
Julian:	Yeah, really good to talk to you Scott. All the best. Take care.
Scott:	All right, bye-bye.
Julian:	Bye.
Singer:	So, when your troubles are mounting in tax or accounting, you go to Kruze, Founders and Friends. And it’s Kruze Consulting, Founders and Friends with your host, Scotty Orn.

Julian Christmas of Cintra Global discusses international hiring, taxes, and payroll

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