Some newer facts about shared services centers:
- Over 40% of SSCs in Europe have been operating for more than three years
- 72% of SSCs employ less than 500 people
- Nearly half of all SSC functions are transaction-based
- There is a rise in Centers of Excellence that centralize knowledge across groups
- Almost 80% of SSCs achieved cost savings of more than 20%
- Large firms, especially those with over 50,000 employees, see even higher savings
When a typical business scales up, more variables are pushed inadvertently into the equation.
With more variables in any equation, problem-solving becomes exponentially more complex and takes more time to arrive at a “good enough” solution.
This is why growing global businesses fight so hard (and invest a lot of money) to keep things as simple as possible. And SSCs do just that.
It just saves them a lot of complicated headaches.
Coming up:
- Why did so many businesses move to shared services in 2024?
- What does maximum efficiency look like?
- The make or break of general accounting in shared services center: People
- The tech that drives this efficiency
- Is all of this compliant?
- CICD? Or fire-and-forget?
- Is this for me?
- Next steps
Why did so many businesses move to shared services in 2024?
In 2024, we saw over 12,000 businesses move permanently to a shared services center. 8,000 captive centers and 3,000 outsourced centers globally.
The adoption of Global Business Services (GBS) models, which offer a more comprehensive approach by managing multiple functions across regions, is also on the rise, with 84% of organizations now operating to transition into GBS models.
But why?
Economic pressures are driving companies to rethink their operations. SSCs offer a proven way to streamline processes, centralize operations, and reduce overhead. For many, cost reduction is the main driver. The shift allows companies to achieve significant savings; almost 80% of SSCs report cost reductions of 20% or more.
The move is also helping firms make progress on their digital transformation.
Businesses are integrating automation and analytics more easily by consolidating back-office functions. This is improving productivity significantly. Additionally, SSCs enable better data management, allowing businesses to capture insights in real time for making better and more effective decisions.
Lastly, with the rise of such Centers of Excellence, organizations can now centralize knowledge and improve service quality.
This transformation helps companies remain competitive in fast-moving markets like banking and manufacturing. As labor shortages and geopolitical tensions persist, the shared services model proves to be an essential strategy for long-term sustainability and growth.
What does maximum efficiency look like?
- 100% automated data entry. Utilizing advanced AI technology to automate the entry of data from invoices and financial documents to reduce human errors and processing times drastically. See how it works.
- Real-time reporting. Implementing systems that provide instant financial performance insights enables quick and informed decision-making. Too many businesses make decisions based on outdated information, which is ineffective at the least, if not dangerous.
- Streamlined AP. Standardizing the invoice approval process to reduce cycle time by 80% to ensure fast and accurate payment processing.
- Centralized vendor management. Maintaining a single database for vendors reduces redundancy and improves compliance with procurement policies.
- Optimized cash management. Using cash flow forecasting tools like Exela R2R for precise cash management. Because funds must be available when needed, and excess cash holdings must be minimized.
- 100% automation of reconciliation processes. Using an army of robots to automate daily reconciliation of transactions with bank statements to identify and address discrepancies in real time quickly.
- Standardized accounting policies. Creating and enforcing uniform accounting procedures across all departments to ensure consistency and compliance with regulations.
- Robust and automatic internal controls. Developing clear and documented processes for financial reporting, including segregation of duties and regular audits to reduce the risk of fraud.
- Employee cross-training. Implementing training programs that allow employees with knowledge across various accounting functions. This allows flexibility and removes bottlenecks.
- Continuous improvement practices. Regularly reviewing accounting processes to identify inefficiencies, applying methodologies to streamline operations, and eliminating waste.
- Performance metrics tracking. Establishing Key Performance Indicators (KPIs) to monitor efficiency and guide improvement efforts, such as cost per processed invoice and error rates.
- Customer service. Focusing on internal customer satisfaction by ensuring timely and accurate financial reporting and addressing queries proactively.
- Regular stakeholder feedback. Actively seeking input from users to make necessary adjustments that align with business needs.
The make or break of general accounting in shared services center: People
The success of general accounting in a shared services center hinges significantly on its people. This aspect is often the make-or-break factor that determines whether an SSC thrives or fails.
First and foremost, skilled personnel are essential.
The complex nature of financial processes requires individuals with a strong grasp of accounting principles and relevant technologies – both.
The lack of adequately trained staff can lead to errors, inefficiencies, and compliance issues. In fact, research indicates that organizations with a robust talent development program can increase operational efficiency by up to 20%.
The cultural fit of employees also plays a crucial role.
SSCs often serve multiple departments, requiring a team that can communicate effectively and collaborate across functions. A culture that encourages teamwork and adaptability can continuously improve service delivery and reduce friction among departments. Conversely, a misalignment in culture can lead to resistance against shared services, stifling innovation and hindering productivity.
Employee engagement also cannot be overlooked.
When employees feel valued and invested in their work, they are more likely to take ownership of their tasks, leading to improved performance and better financial outcomes.
SSCs that prioritize employee well-being and maintain an environment of continuous learning tend to outperform those that do not. Furthermore, organizations that implement regular feedback loops and training opportunities see a notable increase in employee satisfaction and retention rates.
The effectiveness of general accounting in SSC is deeply intertwined with the people who execute these functions.
Organizations that recognize these core people principles are better positioned to drive long-term growth in shared services centers.
The tech that drives this efficiency
Tech drives big gains when it comes to general accounting services in SSCs.
Cloud systems are critical. They let teams work from anywhere. Data is always up-to-date. This cuts errors and saves time.
AI and machine learning boost speed. They can scan invoices fast and spot patterns humans might miss. This helps detect fraud and find savings.
Robotic process automation is a game-changer. It does repetitive tasks without mistakes. This frees up staff for higher-value work.
Advanced analytics tools like Athena offer deep insights. They crunch numbers quickly. Leaders can make smarter choices with this data.
Integration is vital. When systems talk to each other, work flows better. There’s less manual data entry. This means fewer errors. Did you know? Exela FAO offers custom data integration and consolidation that connects to any ERP or legacy system. See all your data in one place.
Blockchain is new but promising. It can make transactions more secure and easy to track.
The best tech is easy to use. It should need little to no training. This helps staff adapt fast and realize maximum savings as quickly as possible.
Good tech also scales well. It grows as the business grows. This future-proofs the finance operation.
Finance leaders who use these tools see big gains. Costs go down, accuracy goes up, and teams can focus on strategy, not just tasks.
Is all of this compliant?
Moving accounting to shared services centers boosts compliance across the board. It’s a compliance game-changer.
Centralization creates a single source of truth. This slashes data inconsistencies. No more reconciliation nightmares across units.
Standardization is the secret sauce. Shared services enforce uniform processes. This aligns with GAAP and IFRS requirements. It’s easier to meet SOX 404 controls too.
Automation in shared services is a compliance multiplier. Take the procure-to-pay cycle, for example. RPA bots can flag non-compliant purchases instantly. This improves spend control and audit trails.
Segregation of duties? Shared services nail it. They can easily separate roles for better internal control. This ticks a big box for auditors.
Documentation improves too. Shared platforms create audit-ready paper trails. Every journal entry, every approval – it’s all there.
Risk management gets a boost. Centralized teams can spot anomalies faster. They use advanced analytics to flag potential compliance issues early. Take the example of revenue recognition under ASC 606. Shared services can implement consistent rules across all business units. This harmonizes reporting and reduces compliance risk.
Shared services also enable better tax compliance. They can quickly adapt to changing regulations across jurisdictions. This agility is crucial in our complex tax landscape.
CICD? Or fire-and-forget?
CICD vs. fire-and-forget: Two paths for shared services accounting.
CICD means “Continuous Improvement, Continuous Development.” It’s about steady, small changes. Think of it as always tweaking your car.
Fire-and-forget is more “set it and leave it.” You build a robust system once. Then, it runs mostly on its own. It’s like launching a satellite.
CICD pros:
- Stays current with new accounting rules
- Fixes small issues fast
- Teams keep learning
- Adapts to business changes
CICD cons:
- Needs constant attention
- Can be tiring for accounting staff
- Might feel unstable at times
Fire-and-forget pros:
- Less daily management
- Stable processes
- Accounting staff can focus on other important tasks
- Often cheaper long-term
Fire-and-forget cons:
- May fall behind new practices
- Big updates can be disruptive
- Less flexible for business shifts
CICD works well in fast-changing industries. It’s good for complex accounting needs.
Fire-and-forget suits stable businesses. It’s ideal for standard accounting tasks.
Some centers mix both. They use fire-and-forget for basics and CICD for complex areas.
The best choice depends on your business. Consider your industry, growth plans, and team skills.
Is this for me?
Here are 12 questions for finance leaders to determine if they should move their general accounting to a shared services center:
- Are your month-end closes taking more than 5 days?
- Is your accounts payable accuracy rate below 98%?
- Do you have over 1,000 vendor invoices per month?
- Is your cost per invoice processed above $5?
- Does reconciling intercompany transactions take over 2 days monthly?
- Is your accounts receivable DSO over 45 days?
- Do you have more than 5 ERP systems across your organization?
- Is your accounting team spending over 60% of time on data entry and reconciliations?
- Do you have trouble maintaining consistent accounting policies across units?
- Is your annual external audit taking more than 3 months to complete?
- Are you struggling to comply with new lease accounting standards (ASC 842/IFRS 16)?
- Is your accounting headcount growing faster than your revenue?
If you answered “yes” to 6 or more, shared services might be for you. It could cut costs, boost accuracy, and speed up processes. But it’s a big move. Think about your company’s size, growth plans, and tech readiness too.
Shared services isn’t one-size-fits-all. But for many, it’s a path to leaner, cleaner accounting.
Next steps
Transitioning your accounting process to an SSC can be a smooth journey if you take the right steps. Here’s a simple guide to help you move forward.
Step 1: Request an audit of your accounting people, systems, and practices.
The first step is to request a comprehensive audit of your current accounting setup. This audit will examine your accounting team’s structure, workflows, and technology. It will help identify inefficiencies, such as high invoice processing times or frequent errors. Understanding these areas will provide a clear baseline for improvement.
Step 2: Get a detailed and personalized demo of the plan.
Next, get a detailed demo of the proposed SSC plan. This demo will cover how the SSC will manage your accounting processes. It will highlight features like automation tools, reporting dashboards, and more. A personalized demo will show you how the transition will work specifically for your organization.
Step 3: Set timelines and SLAs.
Once you understand the plan, it’s time to establish timelines and SLAs. These agreements outline expectations for processing times, approvals, and error resolution. Setting clear SLAs ensures accountability and helps you measure the SSC’s performance after the transition.
Step 4: Exela FAO starts moving your accounting to the SSC.
Finally, once everything is in place, Exela finance & accounting solutions (FAO) will begin the transition of your accounting functions to the SSC. This step involves migrating data, training your team on new processes, and integrating systems. Throughout this phase, Exela will maintain open communication with your team to address any concerns.
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DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.