Finance Shared Services: A Step by Step Guide

It’s not a new revelation that sharing resources can improve efficiency within organisations and between partners. Having a centre of excellence rather than multiple siloed departments working on the same thing and duplicating effort makes a lot of business sense.

Consolidating and standardising processes delivers benefits such as improved operational efficiencies and reduced administrative costs. But as well as improving efficiency, sharing resources also creates valuable opportunities for revenue growth. Tim Vine, Global European Head of Finance & Risk Solutions at commercial data and analytics firms Dun & Bradstreet, explains how this beneficial coordination can be achieved.

Although finance shared services are often the focus during challenging times to reduce cost or outsource operations, businesses can deliver operational efficiencies and increased productivity by moving to a shared service model.

Historically, “back office” finance functions have not been seen as growth drivers or sources of innovation. However, there is huge potential to transform the management of processes such as invoice-to-cash processes and deliver significant value to the business, rather than just being seen as a function where costs can be cut.

Steps to Implementing Finance Shared Services

To create an effective shared model, there are three recommended steps to help deliver maximum value and tangible results for the business, regardless of company size or industry.

  • Define. Before embarking on the implementation of a finance shared services model it’s important to ask some key questions to ensure you have well defined the business goals and desired outcome. Things to consider include asking internal (and external) stakeholders what processes are considered suboptimal or are incurring significant cost to the business. It’s also important to have full visibility of any duplication and type of tasks completed manually vs. automated processes.
  • Analyse. Conducting a full analysis of your current processes is also important, as well as benchmarking them against best practices. Assessing the ‘current state’ will allow you to examine where improvements can be delivered by introducing a more centralised and standardised approach. It’s important to validate this analysis both internally and externally and seek the support required for successful implementation.
  • Measure. When considering a finance shared service model, it’s important to understand your current costs, structure and processes to help measure your performance against recognised best practice and measure any improvements. If you operate across multiple locations or have siloed teams then processes may be duplicative, too decentralised or too manual. If your infrastructure is fragmented there is unlikely to be much successful information sharing taking place. Establishing a robust governance model will be key to addressing any deficiencies, ensuring a central point of control and creating synergies.

When considering a finance shared service model, it’s important to understand your current costs, structure and processes to help measure your performance against recognised best practice and measure any improvements.

Gap Analysis

Once you have evaluated the current situation and collected feedback from various parties, further analysis is required to inform the implementation strategy. This analysis will identify any gaps between what is actually being completed versus what people believe or perceive is being delivered. Bridging these gaps between actual performance and best practices will help you establish what needs to be done to drive improvement, reduce cost and create opportunity for growth. Gap analysis is a good way to manage expectations and provide evidence to key stakeholders on what a shared services model can deliver.

Scaling Shared Services

Best-practice governance models help finance teams gather the right information for each market a business operates in to understand the legislative landscape and identify similarities (and differences) between countries or region. Where legislation is similar, there is an opportunity for a more centralised and standardised structure.

Global policies can bridge gaps across business segments, units, markets, and regions and drives consistency across finance operations planning. To perform in the most efficient way, you can scale processes so that it doesn’t matter where the teams are based. Processes from credit, collections, billing, dispute management, disbursement, or transactional accounting can be managed consistently around the world.

Auditing Technology

To support effective implementation, it’s important to have a full view of all the systems used across the business including customer relationship management (CRM) system, general ledger platform, collections management, enterprise data management (EDM) and a business intelligence (BI) or reporting tools. A technology audit can reveal which solutions should be kept, which have global capabilities, and which are potentially no longer required. Crucially, an audit can identify which systems should be integrated or combined across functions.

The End Game: Finance Shared Services

Initiating change and gaining buy-in from decision-makers can be challenging, especially if the change impacts people and resources. The steps outlined are designed to help with the successful implementation of a finance shared services model, to increase efficiency, reduce costs, but perhaps most importantly to add value for the business and its clients.

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