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Designing successful processes for Shared Service Centers and/or Outsourcing

Introduction

Corporations continue to be under relentless pressure to reduce Finance costs and strengthen internal controls. For many, these seemingly opposing demands have been the major catalyst behind the transformation of Finance operations from decentralized divisional staffing models with disparate processes and systems to a new highly efficient and global model. In this new order, core financial operations such as Accounts Payable (AP) are centralized in one or more Shared Service Center (SSC) locations with a single set of streamlined processes and a single technology solution to serve a region or even an entire corporation. For other organizations that aren’t able to transform their own operations or that have a pressing need for immediate access to new capabilities, Outsourcing is a viable alternative that simultaneously delivers dramatic improvements while achieving cost-reduction goals.

The ongoing drive to reduce Finance costs is fueled by the belief that there are significant savings to be extracted from Finance. The Hackett Group, a strategic advisory firm specializing in best practice research, benchmarking, and business transformation services that enable world-class performance across selling, general & administrative (SG&A) and supply chain activities, confirms that belief. In their February 2011 research of Accounts Payable costs, they found that leading or “first quartile” firms, on average, carry an AP Process cost per invoice at $1.14 per invoice compared to a non-top performer at $3.90. These figures vividly illustrate that the disparity among companies’ finance costs is tremendous, and the opportunities for cost savings represent millions of dollars per company.

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