The Criticality of the Intercompany Global Process Owner

Across industries, more and more businesses are hiring global process owners (GPOs) or expanding their roles. The GPO can be instrumental in helping organizations remain viable and be better able to compete, especially for large enterprises.

In the past, GPOs typically worked within a shared services model, but today, they are taking on broader responsibilities, essentially “owning” global end-to-end processes. According to Deloitte, GPOs have the potential to deliver strategic value by “helping global business services grow as a partner to the business.” This trend aligns with numerous business strategies such as:

• Managing multiple global business services as a single organization

• Operating within a service-delivery model with fewer global locations instead of regional ones

• Creating synergies and significantly reducing costs through the aggregation of transactions to build scale

Large corporations that hire GPOs don’t need a quick fix to improve processes; they’re making sizable investments as part of a long-term, financial transformation strategy that revolves around a Center of Excellence. According to Deloitte, GPOs play a key role in the company’s vision for where to play and how to win in the global business services game.

Given that intercompany transactions make up 70% of the global economy, intercompany GPOs can play a critical role in improving key organizational functions. With their vast, global networks of connected and disconnected systems, multinationals are struggling to combat macroeconomic headwinds and changing regulatory environments, leaving these enterprises in dire need of streamlined processes, reduced tax leakage, and streamlined M&A integrations.

“There’s never been a bigger need for a GPO to gain visibility over, assess, and optimize intercompany accounting systems,” says Minhaz Lakhani, an intercompany leader with GPO experience at a global company. “It’s critical that multinationals look to GPOs to guide them through their intercompany accounting transformation.”

When given proper support, GPOs can improve efficiencies and establish essential intercompany financial management (IFM) practices for multinationals. They’re able to take on these responsibilities because they directly report to supportive leadership and align with key stakeholders, giving them a front-seat view of an enterprise’s goals, culture, and strategies. Furthermore, they enjoy visibility throughout the enterprise. This allows them to serve as the “glue” in what is typically a multi-function, multi-entity ecosystem with many siloed operations. To put it simply, GPOs keep the business done between entities and supporting services humming and connected, regardless of geography or function.

Within those strategies, intercompany GPOs can maintain a Center of Excellence, institute IFM practices, and improve such key functions as:

Record-to-report. Multinationals can’t afford to waste time duplicating efforts, such as executing the same journal entry process multiple ways. GPOs find ways to coordinate and streamline these tasks.

Labor arbitrage. A company can shift its workforces to different countries to take advantage of lower labor costs, but if operations are inefficient, a multinational will always be chasing to catch up. A GPO can determine the best path forward by reflecting goals against global cost analysis.

Tax compliance. A GPO can leverage end-to-end visibility to verify that a company’s data flow is optimized for speed and accuracy and that it is complying with tax laws while not overpaying.

Shared services. Multinationals must adopt technology solutions that use shared services efficiently and automate and centralize processes where optimal. A GPO can determine which services can be centrally managed and devise the most effective shared-services strategies.

Mergers & Acquisitions. A GPO can guide multinationals through M&A activities by sharing insights into corporate synergies and disconnects. One Harvard Business Review article reports that companies spend more than $2 trillion on acquisitions every year, yet the M&A failure rate is between 70% and 90%. Although some of that absurd waste can be attributed to placing bad bets, “value destruction, poor communication and integration, and cultural differences are some of the most common reasons” for failures.

One of the first things a GPO does is to take inventory and assess what’s working and what isn’t in all intercompany functions and regions. This involves asking such key questions as:

• Is there visibility available to finance leaders and accounting teams so they can monitor processes in real-time?

• Is the shared-services model organized to achieve the maximum cost savings?

• How can accounting teams minimize write-offs and tax leakage?

• Are intercompany accounting processes set up so that they flow with the fewest possible bottlenecks?

• Which teams are struggling to close on time? What’s the root cause for these delays, and what are the negative impacts?

• Where can communications be centralized to reduce time to close and the likelihood of conflicts?

• What policies are outdated and in need of an overhaul? Which ones are effective?

• What processes are working efficiently and could serve as a model for other teams and entities?

Throughout the inventory process, the GPO makes note of pain points and opportunities for improved efficiencies, better tax compliance, and improved employee morale. The GPO can also find areas where IFM practices should be employed or strengthened.

In addition to improving on-the-ground processes, Lakhani says that the GPO’s assessment process adds value to the enterprise as a whole: “This process brings heightened awareness to the organization’s financial processes to determine just where things stand. Some team members are even amazed to learn just how big the enterprise is and how much intercompany commerce it does.”

Once GPOs gain an understanding of the landscape, they can hit the ground running to work with corporate leaders, stakeholders, and cross-functional committee members to develop effective finance strategies.

To ensure a GPO’s success—and by extension the success of the enterprise—multinationals must invest in resources to support the role. But it starts with leadership’s commitment to embracing a financial transformation, says Lakhani. “This has to be a top-down approach where somebody at the top sets the tone.”

In addition, finance leaders, stakeholders, and managers should:

• Be open and prepared for change. Finance leaders must be ready and committed to make holistic changes to the enterprise that will likely occur across all domains and finance disciplines.

• Give GPOs appropriate authority and visibility. GPOs must have visibility into all intercompany processes and authority to investigate issues, recommend operational changes, and influence the Center of Excellence.

• Provide direct lines of communication. GPOs must directly report to leadership and communicate with all stakeholders and functional committee heads.

• Foster career development. The organization should make available GPO training programs that complement the person’s growth in that role and within the organization.

As multinationals continue to expand in an exceedingly complex and unpredictable global landscape, GPOs will gain even more opportunities to positively impact intercompany financial operations. With the right level of support, they have the potential to make significant improvements across the entire enterprise, resulting in a financial transformation that can achieve such far-reaching positive impacts as strengthening corporate culture and morale and improving an organization’s ability to compete in global markets.

Download this guide to identify the top 10 signs that you may have intercompany challenges and ways for you to address them.