A Shared Service Centre is a phenomenon that has been around since the 1980s. PostNL was one of the first organisations to set up a centralised administration department. This way of pooling facilities is back in full swing. In this article, we will delve deeper into FSSCs: Financial Shared Service Centres.
In a world that is all about efficiency in work processes, optimising your organisational structure is an essential process. By bundling related work, teams keep their focus and are not distracted by all kinds of sideways passing tasks. In the process, you enjoy better service, higher quality and economies of scale. You can build Shared Service Centres in the areas of IT, HR, Supply Chain Management and, of course, Finance.
Benefits of an FSSC
Research has shown that as many as 80% of Fortune 500 companies use Shared Service Centres. Processes in Finance are burdened by ever-changing laws and regulations, making automation often the first challenge on the shop floor. By deploying technology smartly, you not only win in terms of efficiency, but also have higher reliability figures in terms of compliant working. The benefits of an FSSC don’t lie:
- By combining similar processes, you benefit from increased efficiency levels. As an organisation, this enables you to keep a grip on things and reduce cost items.
- When core tasks are bundled into one FSSC, it is feasible for professionals to excel in a particular area. Specialist skills come into their own better, maximising effectiveness figures.
- Use automation to comply with legislation and ethical requirements, but also enjoy another benefit. By deploying tools and automating processes, it is possible to collect important data. Results become measurable and KPIs are tracked and compared to market averages to perform analysis.
- We mentioned it briefly above, but lower costs are a compelling advantage. No accounting spread across the chain and various establishments, but one centrally controlled Finance department. Accounting processes become clearer and more effective as a result, since there is a team that keeps all knowledge and data up to date in the organisation.
Disadvantages of an FSSC
There are many advantages to setting up an FSSC, but there are also some drawbacks.
- To start with, many companies choose to establish their SSCs abroad, which does not always turn out well. Think of an IT department in Asia, which means there is a language barrier and employees are reluctant to get in touch.
- It is a time-consuming task to set up efficient processes. Especially in the beginning, when various departments need to be combined and moved before everything works properly.
- For employees, it can feel like an extra heavy burden on their shoulders, because although efficiency and effectiveness become central, they are suddenly responsible for the entire organisation. No clear records for a department or branch, but consolidated financial statements for the entire organisation. This also means that a small mistake affects the entire organisation.
- Lines of communication with the C-level must be short, wherever you are based. In no time, as a Finance Professional, you must be able to supply requested data so that the organisation does not suffer under the new FSSC.
Credit management within the FSSC?
The credit management department mainly deals with invoicing, in the broadest sense of the word. Although sending, tracking, checking, collecting and forwarding invoices is a core task in itself, this department would still fit well within an FSSC. A Financial Shared Service Centre ensures that accounts receivable management takes financial administration to the next level.
By combining essential business units, strengths can be combined to best serve the organisation and the customer. By analysing payment behaviour, it is quite possible to shorten payment terms, especially for customers who show a history of late payments. The more information available about the customer, the more optimally invoicing can be adjusted accordingly. Think about lowering DSO and reducing risks, thus safeguarding cash flow.
Faster switching is also possible when customers’ wishes and needs change. Think about scaling-up certain services or improving customer loyalty, as you house all relevant information from all processes around the customer in a central place. Does a dispute with a customer unexpectedly arise? That is enormously nasty, but the fact that all necessities are bundled together in a Shared Service Centre saves a lot of frustration and time, for you and for the customer.