Mark Harrison, Founder & CEO, Callisto Grand
Sam Dhingra, Director Solution Engineering, HighRadius
Buying and Implementing Technology for Treasury Professionals
that are customized to their business requirements. General strategies to enhance the performance of SSC include:
Some focus areas for the SSC leaders while following a best-in-class approach are (as per SSON Survey, 20204):
Building Operational and Location Strategies: The concept of SSCs is more than two decades old, and over time, multiple players have joined the pool of providing ‘cheaper’ shared services. To stand out, leaders should understand, re-evaluate, optimize, and strategize:
For building an automation roadmap, leaders need to develop a sound understanding of the underlying processes and tools required to automate them. Given that there are layers of processes and sub-processes or components, every component needs to be considered and automated independently
For example, in the credit management process, having insights on average time to review blocked orders, new applications, existing customers, and approval of existing applications is tied directly to workforce productivity, which in turn impacts the efficiency of making a sale to a potential customer and the overall customer on-boarding process
datasets residing across different systems. For example, running a cash application over cloud can result in straight-through processing of payments by analyzing and processing information from emails, attachments, and banking websites. While nearly a third of businesses (~35%) have adopted cloud-based applications in SSCs, a similar share is expected to shift to cloud-based applications (~30%) in the near future. However, due to security concerns, lack of infrastructure, and data accessibility and integration issues, SSCs are struggling to move to the cloud
Collaboration and Real-time Visibility: Better insights can be generated only if there is agility and visibility in cross-functional interactions. When the workforce has real-time visibility of the processes, issues can be resolved much faster, often without escalations. Processes such as O2C and A/R generate a lot of data and require complete visibility over all other peripheral processes, due to the direct impact of these processes on customer satisfaction.
Further, partnerships with business decision-makers add value to the services. Cloud-based applications such as Financial Close solutions provide better collaboration between SSCs and business units, facilitating complete visibility to the decision-makers over every transaction and helps SSCs to build a strong partnership with the business. Moustapha, OTC Market Focal Point Manager at BMS, highlights that technology has helped to shape the meaning of productivity and worthiness of departments. Different departments are no longer required to process a large quantity of information. It can be handled by a single department working from any location, by having access to technology and real-time data.
Below is the recommendation for benchmarking as suggested by Bryan DeGraw- Associate Principal, Finance Advisory Services, The Hackett Group
The value of business benchmarking is more than just knowing how well you perform – the true value lies in realizing quantifiable performance optimization benefits.
To ensure continuous development and innovation, benchmarking the back-office operations and processes is an essential first step towards performance improvement. How you perform the performance evaluation and to who you draw comparisons is equally important. The best approach is to compare performance of your Shared Services Center with that of your peers and with cross-industry top performers. Peers should not only be drawn from an immediate list of competitive organizations. When comparing performance, it is equally important to consider the size and complexity factors among organizations to draw relative performance levels. Without having a baseline of performance, it is very challenging to determine the set of initiatives that will deliver optimum performance improvement in SSCs. A simple analogy is that it is nearly impossible to chart a course to a destination without first knowing the starting point of your journey. With changing business standards and customer expectations, it is critical that organizations can adapt and deliver services to those constantly changing demands. Traditional benchmarking standards such as cost, expertise, quality and speed remain important measurements. In addition, businesses demand more control, efficiency, scalability and visibility over their processes; and technology is certainly a key enabler to achieve this evolving concept of Digital Transformation in your Shared Services Centers. It is then important to consider the parameters required of the business leaders. A few of the benchmarking parameters that can be considered:
analytics and insights. For instance, transactional automation in the O2C process can save up to 25%5 of the accounting department revenue. Hence, a clear, quantified, and robust set of KPIs would be a differentiating factor. Some of the metric parameters might be integrated to show the amount of visibility, cost-saving and speed, automation level, ability to enable cross-team and cross-organizational interactions (partnerships), etc. For processes such as O2C, a balanced set of measurable KPIs driving the business value could be Average Days Delinquent (ADD), Days Sales Outstanding (DSO), Perfect order performance, and On-time delivery performance
Too many metrics spoil the scorecard and make it difficult to focus on the big picture. Limiting the number of metrics focuses the organization on those areas that are most important.
Analytics’ skill deficit among its existing staff. In the same survey, 52% of SSCs accepted getting ‘data in order’ as their biggest hurdle in automation
SSC is a very competitive market wherein process owners are seeking opportunities to revamp the process or bring the next change in the market dynamics. General strategies to enhance the performance of SSC can be:
For a successful digital transformation initiative, it is required to continuously monitor the business performance on pre-defined parameters. It has been observed that several digital transformation projects have failed, and some of the observations on the failures of digital transformation are:
Post implementing the digital transformation initiative, the transformation performance should be tracked and monitored at every stage of the business, starting from new technology adoption and end business results from the use of these products. They are explained below:
Defining KPIs makes sure that they make an entry in sale or in some way affect sales. For example, the time taken to onboard a customer in a B2B setup is dependent on analyzing the creditworthiness of the customer to make sure that the customer will be paying on time. This process involves several stages, such as getting information from the third-party credit rating agencies, such as Moody’s and DnB, and assigning a credit rating to the customer. The longer it takes for a credit analyst to process the information, the longer it takes to onboard a customer and make a sale, which is measured by the KPI ‘Average Time to Review New Applications’.
To better understand how dotOne performance simplifies the work for a business with its real-time visibility and goal-setting framework, consider an example of a multinational wine chain recollecting the cash from a geography-based business, on certain KPIs. The dotOne approach provided visibility across pending payments and the relevant KPIs for selecting the defaulters. Based on the analysis, Europe was performing below the set targets and further analysis identified regional businesses having the largest outstanding dues. Once the largest defaulter was identified, the collection team evaluated the business performance with the dotOne approach and compared the performance against targets such as deductions, credit performance, etc.
Whirlpool has more than 77,000 employees and its operations have expanded across 59 manufacturing and technology research centers globally. The acquisition of Indesit, a major domestic appliances company based out of Italy, added to Whirlpool’s existing scale and complexity of operations across locations. In view of this, it decided to undergo a complete digital transformation for the O2C process and the overall journey included 10-phases, spanning from the initial planning, to the identification of the process to be transformed, business case evaluation, deployment strategies, and tracking the business performance based on certain KPIs, after the transformation.
After the acquisition of Indesit, Whirlpool decided to consolidate the EMEA finance operations from four shared services into one shared service facility. The major operating model for the Whirlpool account receivable is O2C with operations including Customer Master Data, Credit Management, Cash Collection, Cash Application, Disputes Management, and Trade Partner Incentives Reconciliation (Customer Bonuses). The implementation challenges in front of Whirlpool were:
Whirlpool executed a 10-step digital transformation approach in which they assessed certain parameters based on a set of questions:
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HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.