Shared Services Centres for increased cost efficiency
Many companies today have a strong focus on improving cost efficiency. The goal is to streamline the core business to achieve higher margins. Also, internal support functions are reviewed to reduce the workload and cut costs. It is a natural step in a company’s development and in many cases takes the form of outsourcing the company’s support functions to a Shared Services Centre (SSC) – a joint management unit for multiple operations’ finance and administration.
The SSC’s primary task is to streamline internal administration and also to standardise and enhance the quality of functions and processes. The support functions that are usually handled in an SSC are financial administration, IT and human resources.
The first and most obvious benefit gained by establishing an SSC is indeed cost efficiency. This is followed by increased control over the core business and improved quality, which may help the company to expand both nationally and internationally.
“Many companies run into challenges in their efforts to improve efficiency by outsourcing to an SSC.”
Challenges on the road
Many companies run into challenges in their efforts to improve efficiency by outsourcing to an SSC. Below, I describe four common challenges:
1. Multiple routines and file formats
If the business has companies registered in multiple countries, an SSC often has to use different service providers in different countries (for example, scanning, banks, e-invoicing portals, ERP systems), because most providers cannot offer a global service. One effect of having different service providers is that personnel at the SSC are faced with different routines in the different companies, for example, supplier payments or invoicing, where different formats are required depending on the ERP system or country in question.
2. Varying regulatory requirements and standards
More and more countries in Europe are introducing legal requirements with regard to e-invoicing. How these legal requirements are formulated differs in the different countries and the e-invoicing process is also subject to different local regulations. For a company which processes e-invoices in several countries, it is difficult to find a single solution for the entire e-invoicing flow. As regards payment files, there are also standards to comply with, such as SEPA, which entered into force at the end of 2016.
3. Difficult to attain an overview
The fact that different companies in the SSC use different ERP systems makes it difficult to attain an overview of the consolidated statistics. The company is often forced to bring in an external system to compile data and generate reports.
4. Inadequate data acquisition systems
Many companies make use of a scanning service to gather information, which requires significant resources in terms of time and personnel to generate the quality desired. Incoming invoices are often scanned manually and much time is spent on getting the scanner to recognise the template that the various providers use. Despite the time-consuming work, it is only possible to gather the information at the header level and not at the line level. In doing so, the company misses out on valuable information that can be used for further analysis and decision support, such as in cost analysis.
Pagero can help!
Pagero offers services for the entire purchase-to-pay and order-to-cash flow for international markets. We have extensive experience and have helped many groups around the world in the pursuit of cost efficiency.
By making use of a combination of our services, you can avoid the problems I have described above. Please contact us for further discussion on how we can help your business to streamline your SSC!