Part 1 of our Shared Services blog series. Read Part 2 here.
You’d be forgiven for being cautious about moving financial accounting to a Shared Service Centre (SSC). It can be a risky business.
Any time you move data from one place to another, from one application to another, there’s a risk something could change that impacts the integrity of the accounts and the reputation of the business.
Maintaining control and trust are issues that have held the finance function back for decades. While other parts of the enterprise have successfully migrated to a shared services model as part of its digital transformation, Finance and Accounting have been slow to adapt.
Not If, When
Loss of control, accountability of service providers, and quality control are all valid concerns that need to be managed effectively, but the judges and juries returned their verdicts a long time ago: the Shared Service Centre is here to stay. The cost savings alone are too compelling to resist.
So the issue is no longer, ‘Should we migrate to a SSC model?’ but ‘How do we centralise and standardise Finance and Accounting within the SSC and still achieve a reliable, single view of the truth?’
Jumping Into The SSC Model
The hardest part of any financial transformation is taking the first step. In this case, it means nailing down a plan for your service centre engagement. And it’s a plan worth spending some time on. McKinsey believes the most effective finance and accounting SSCs run over 40% more efficiently than their peers.
The main challenge is finding the path to improve manual and repetitive processes within the SSC so the finance department can get on and become a more strategic partner to the business. Admittedly, that’s easier said than done, but the four main steps to concentrate your efforts on are usually Trust, People, Process, and Controls.
Look for the Signs
If processes are still being duplicated and the integration points between financial systems and the SSC are manual, it’s unlikely that business heads will be able to trust the numbers.
It’s that simple. Modern accountants within the business and the SSC expect automation to improve the reliability of the accounts and to relieve the burden of transactional activities. If manual activity remains oppressive, the business will lose trust and talent.
Significant manual effort around intercompany, reconciliation, and reporting activities is another sign that processes are failing. And collaboration between shared services teams and the business subsidiaries needs to be seamless. If it’s not, control is lost.
Ask for Help
If you’re embarking on a shared services journey, don’t be afraid to ask for help. Learn from the experience and expertise of others.
Challenges are often overcome by reducing transactional workloads within the SSC, centralising and de-duplicating processes, creating stronger controls, and improving visibility into their operating performance.
If you can reduce the time spent in error-prone spreadsheets within the SSC, you’ll decrease overall risk throughout the month-end close process and still achieve the cost and efficiency benefits the SSC model has to offer.
But don’t wait another year or five years, start now.
An efficient SSC operating model requires a transformation of culture, people, and processes (not processes alone). It all takes time, but when the business is pushing for the close, time is one luxury the finance team doesn’t have.
The smart advice is, learn to share. Quickly.
Read this Shared Services Playbook to discover strategies for building your organisation’s path to SSC modernization.