The community for leaders in finance shared services
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Finance shared services deliver numerous benefits for businesses, particularly in times of economic uncertainty when pressure to reduce costs and do more with less is high. The private sector is currently leading the way on the adoption of shared services, but increasingly public bodies are making a move towards centralised finance, motivated by cost savings and efficiencies.
Shared services differs from outsourcing, whereby processes that were previously carried out internally are handed over to an external third party outside the organisation. With shared services, a separate body within the company is established to do the work.
Processes are first of all centralised, with the shared services centre treating the rest of the business like a customer, charging individual offices or factories, for example, a fee for its services. Processes are then standardised, systems are consolidated and finally everything is automated, so that processes become streamlined, more efficient and less costly to run.
Working through all these steps can take many years, but with each step the cost of running transactional finance decreases. At sharedserviceslink.com we can assist you through each stage of your finance shared services venture, from selecting technology and solution partners to ultimately transforming your shared services organisation into a value-adding partner to the business.
We can help you understand the finance shared services options available to you and formulate an approach that works for your business. We provide monthly webinars on shared services, as well as white papers and reports, video interviews, newsletters and interactive conferences, all designed to help you improve the performance of your finance shared services ventures and, ultimately, your business.
The problem with decentralised finance and the benefits of shared services
When finance operations are decentralised, particularly in large organisations, the margin for error can be great and processes can be extremely inefficient, costing time and money. This in turn can lead to disputes with suppliers, lack of control internally and problems with cashflow forecasting.
In a decentralised model there is a lack of visibility. How much money is owed to suppliers? Who is procuring what? How often are suppliers being paid on time? If orders are still being made over the phone and transactions are not properly tracked, these questions may be difficult to answer.
What's more, when finance is decentralised and processes are not standardised, different factories, offices, stores and other units within the same organisation may start following their own processes, which can lead to inconsistencies, errors and unnecessary complexity.
Shared services is essentially the better-performing sibling of centralisation, involving full collaboration between different parts of a wider organisation or group of companies and full automation of processes. Efficiency is the core benefit of finance shared services, which in turn can result in large cost savings. Business typically report cost reductions of around 50 per cent, although they can be as high as 70 per cent.
But adopting a shared services business model is about more than just cost cutting. Another big advantage is higher and consistent standards based on best practice norms. Shared services can also free up time from routine processes that can be spent on value-added tasks, and it can help to ensure continuity and resilience of service as well as improved visibility across the entire finance model. Economies of scale can be created through shared services too, giving businesses greater influence with suppliers and helping them gain a competitive advantage over their rivals.
Common shared services obstacles
To make finance shared services work, companies need to secure support from across their organisation. Switching to a shared services model requires a dramatic change in mindset and management, and this can be one of the most difficult challenges to overcome. Resistance can come from all areas of the business, so communication and education are key to get everyone on board and ensure transitions are made as smoothly as possible.
Disputes could arise regarding ownership of certain processes and activities, while there may be issues with trust, as well as cultural and political differences to take into account. Involving all parties that will be affected by the shared services model is the only way to ensure that projects are launched successfully and have the intended outcomes.
There may also be problems with the technical infrastructure and work may be required to ensure that IT systems are fit for the challenge. Companies need to think about how a shared services centre will operate alongside other elements of your business model and how the various roles will be defined.
Make the most of shared services with sharedserviceslink.com
Companies recognise that, when properly implemented, finance shared services can be highly effective. However, it's important to get it right, as a poorly planned model or a rushed-through project could backfire. At sharedserviceslink.com we can help you overcome the challenges you face in convincing your teams of the benefits of centralisation, choosing the best partners to work with and communicating with your suppliers.
We act as the place where end users come together, share ideas, learn from one another and find answers to common problems. We are the business community for shared services leaders, providing members with informative resources such as white papers, reports, video interviews and newsletters. We hold regular events such as conferences and webinars with key industry speakers which are designed to inspire and educate.
Joining sharedserviceslink.com is free. All you need to do is complete our online member registration form and you'll receive ten issues of our newsletter and free access to our downloadable content and presentations archive. To find out more about finance shared services and how it can help your organisation, or to ask about our conferences, webinars and online resources, simply get in touch with sharedserviceslink.com.
Download your must-have guide for 2013
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