Shared Services and the Evolving Record-to-Report Landscape

We sat down with Chris Skantzaris, BlackLine’s Finance & Accounting Outsource Director, to chat about all things Shared Services. He shared his perspective as an expert on how shared services are transforming the record-to-report (R2R) process, with advice for finance leaders navigating this dynamic landscape.  Chris highlights key themes and transformation events affecting the outsource accounting industry, including:

• The rise of outsourced accounting to manage the full R2R process

• Benefits like faster close cycles, audit readiness, and cost savings

• How technology and automation are standardizing and scaling operations

• Practical advice for finance leaders looking to optimize their approach

Q: “Shared Services” seems like it can encompass a lot of things. Can you give us a brief overview of what Shared Services means for finance and accounting professionals?

A: Well, it's a great question because, as you noted, "shared services" can be a bit of a broad term, covering things like HR or IT. But for us in finance and accounting, particularly with what we do at BlackLine, we're really focusing on outsourced accounting.

What does that mean? It's when a third-party firm (most often an accounting firm, but increasingly non-accounting firms too) takes on some, most, or even the entire finance function for an organization. It's not a one-size-fits-all. The scope truly depends on what the client needs. They might just need help with day-to-day tasks like Accounts Payable, Accounts Receivable, or general ledger entries. Or we're seeing more instances where these firms act as outsourced CFOs, managing the complete record-to-report process for their clients. It's all about augmenting or even replacing aspects of an in-house accounting team to meet specific requirements.

Q: How have shared services models evolved in recent years, and what impact has that had on the record-to-report process?

A: From my perspective, the outsourced accounting model has been on a steady growth trajectory for the last 10 to 15 years. It's certainly not shrinking, and in fact, I'd say it's growing because it directly addresses the increasing complexity and pressures on efficiency that businesses face today.

For accounting firms, this model has become a fantastic "annuity." Traditional tax and audit work can be very commoditized—you're often bidding on price. But when you get into ongoing accounting services, it becomes a "sticky" relationship, and a consistent revenue stream. It also helps firms expand their relationships with clients beyond just finance, like into IT outsourcing or due diligence.

Q: Are companies getting more, or less efficient with outsource accounting?

A: Absolutely much more efficient. The immediate benefit for them is tapping into specialized services without the overhead. They gain access to staff that's already vetted and experienced, so they’re ready to hit the ground running. Crucially, they also get immediate access to the best practices and standard technology platforms that these outsourced firms manage.

Think about it: a mid-market company might not have the resources to implement all the top-tier systems, but by outsourcing, they're instantly benefiting from platform, like BlackLine, that the firm already has in place.

Q: How is increasing complexity affecting the accounting function?

A: Increasing complexity in accounting functions is driving the adoption of shared services. Organizations are grappling with growing operations, more legal entities, and mergers and acquisitions. Outsourcing is an excellent model for this because firms already have the technology and expertise to manage these complexities. If a client needs to add a new entity, the firm can quickly leverage their existing structure and knowledge to copy, lift, and place those processes into the new entity. It makes scaling incredibly efficient, ensuring that as a company grows, their financial processes keep pace.

Q: Why is the R2R process important to the shared service model?

A: The record-to-report process is, quite simply, the core of what outsourced accounting delivers. At the end of every month, what the client wants are their books, their records, their financial statements. So, the R2R process isn't just important; it's fundamental. Its importance is growing as financial reporting becomes more scrutinized, and businesses demand faster, more accurate insights.

Q: What are common challenges when it comes to executing R2R processes?

A: I've seen them all: reconciliation issues, a control breakdown, and let’s not forget the time-consuming headaches of preparing for audits. Many accountants talk about being both preparer and reviewer, and honestly, that happens more often than you'd think in midsized companies and organizations without robust systems. When you think about what I’ve mentioned already, a combination of experience, technology, and control gaps create this perfect environment for risk and breakdown across the R2R process, and for many organizations this can be avoided altogether with an outsource accounting approach.

Q: How does the shared services model address these challenges?

The shared services model helps address these challenges head-on:

• Controls and Automation: We ensure controls are in place. With platforms like BlackLine, you inherently get automation and management controls that lead to fewer human errors. Our platform, for example, won't let you prepare and approve your own reconciliation. That segregation of duties is built in.

• Audit Readiness: CPA firms providing outsourced accounting know exactly what audit firms will look for. So, everything they do—from daily activities to month-end close processes—is built around best practices to ensure audit readiness. This means when you get to the end of the year, it's not a huge lift to provide all the necessary documentation. We track everything.

• Freeing Up Human Capital: By taking on these often-repetitive R2R tasks, shared services allow a client's internal team to focus on more value-added work, like analytics, and truly help grow the business, rather than just chasing transactions.

Q: How has shared services improved visibility, speed, or accuracy in R2R?

A: Shared services drive significant improvements in all three areas—visibility, speed, and accuracy—primarily because of the standardized processes, technical expertise, and technology that is brought to the table.

Outsourced accounting organizations can provide holistic coverage across the record-to-report process, from recording transactions throughout the period, to reconciliations, to consolidation and even reporting.  This comprehensive coverage means organizations can select a single provider to manage their entire record-to-report needs.

Let me tell you about a specific client example that really highlights this. When I was working with a large BPO (Business Process Outsourcer), which is now one of BlackLine's largest outsourced clients, we had a large investment company building renewable energy sites. This was an incredibly complex operation—they were getting money from different private equity groups, and each site had very detailed accounting requirements. They didn't want to get into the weeds of it, so they outsourced a lot of their accounting to the BPO.

The client immediately had access to the technical accounting expertise housed within that BPO organization, ensuring their records were recorded and maintained appropriately. They also used BlackLine to manage their R2R processes, making sure all documents were attached, all journal entries were properly recorded, and all reconciliations were done meticulously. Meanwhile, BlackLine’s deeply integrated control structure ensured accuracy and compliance of the end-to-end process.

By the time this client decided to sell off the business, they had hundreds of sites, each with potentially a dozen or more legal entities under it, all being managed by the BPO. Here's the incredible part: the due diligence process for that sale was made significantly easier because we could give the private equity group access to their books, which meant eight years of BlackLine reconciliations. Everything was right there, organized and auditable. The private equity firm didn't have to scrounge around for spreadsheets; it was all readily available.

What's even more telling is that when that client eventually brought their accounting in-house, they didn't start from scratch. They literally lifted their ERP and bought BlackLine on their own because they saw the value and efficiency it brought.

From our perspective as the service provider, BlackLine gave us that crucial insight into the engagement: how many reconciliations were outstanding, what tasks were left, who was responsible for what. In a hybrid model where we needed information from the client, this visibility helped us track and manage delays. We even allow our accounting firms to give their clients access to BlackLine so they can see exactly where their engagement stands. It's that level of transparency and control that really drives the visibility, speed, and accuracy.

Q: How do technology and automation intersect with shared services to drive continuous improvement in the R2R process?

A: Technology and automation are absolutely critical to the shared services model; they’re two sides of the same coin when it comes to driving continuous improvement in R2R.

First, these firms, including the ones I've worked with, use standard technology platforms—like Oracle NetSuite and Sage Intacct for the ERP and BlackLine for close and consolidation management. This means that when a client comes on board, they're immediately set up on a system that's built for efficiency and scale.

Second, technology inherently builds in controls and audit trails that manual work simply cannot. As I mentioned earlier, a good platform prevents critical control breakdowns, ensuring proper segregation of duties. This isn't just about compliance; it's about building trust in the numbers.

Third, we're seeing the rapid evolution of technology, like AI. Outsourcing firms are constantly adopting these state-of-the-art tools, meaning their clients inherently benefit from the latest innovations without having to invest in them directly.

Finally, these integrated systems provide real-time visibility. We can see exactly what's happening in the close process, how many items are open, and who needs to do what. This allows for proactive management and problem-solving, leading to a faster and more accurate close every single month. It's about taking those insights and constantly refining the process.

Q: What advice would you give to finance leaders looking to transition to or optimize a shared services model for R2R? 

A: Based on my years in this space, here’s what I’d tell finance leaders:

1. Identify Your Goals: First and foremost, understand why you're doing this. Are you doing it primarily for cost cutting, or is it for growth? There's a big difference there. If it's for growth, you can truly build a foundation that's easily scalable. Don't just think about saving money; think about how it enables your business to grow.

2. Assess Your Current State: Look at your own organization. Identify where your current gaps are—in process, technology, or talent. Outsourcing firms often do this as part of their pre-work; they'll analyze your back office and give you recommendations. You can take that game plan and run with it, even if you don't outsource immediately.

3. Choose the Right Partner and Tech Stack: Make sure you pick a firm and a technology stack that makes sense for your industry and your growth trajectory. It's not just about getting a service; it's about acquiring a platform and a team that can truly support your needs.

4. Buy Expertise, Not Just Capacity: You're not just buying someone to do tasks; you're buying expertise. You're getting a team of experts who know what they're doing. If you're a nonprofit, for example, you'll want to go to a firm that specializes in nonprofits. That specialized knowledge is invaluable.

It's about having a platform in place and a team of experts you can trust to help you grow and track that growth, not just financially, but also through KPIs for staff performance.

As Chris Skantzaris highlighted, the evolution of shared services in outsourced accounting, is fundamentally reshaping the record-to-report process. It’s no longer just about cost-cutting; it's about gaining access to specialized expertise, advanced technology, and best practices that drive significant improvements in efficiency, accuracy, and visibility.

Creating an optimized outsourced R2R process involves strategically leveraging external partners and cutting-edge platforms. If you're looking to enhance your financial operations, scale efficiently, and ensure accurate reporting, BlackLine is here to help.  Our comprehensive platform and suite of solutions across Record-to-Report and Invoice-to-Cash processes are used by both in-house teams and outsourced accounting organizations to bring accuracy, efficiency, and intelligence to their clients.

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