Financial Shared Services is a business practice that involves an organization consolidating its financial functions into a centralized internal hub. Theoretically, by leveraging economies of scale Financial Shared Services can reduce overhead, eliminate redundant activity, and improve accounting team performance as well as deliver on common finance team KPIs
In essence, the goal of Financial, or Accounting Shared Services is to act as a value-added accounting service provider within an organization. Utilizing well-defined infrastructure, processes, and technologies enables a business to focus on its core objectives and drive sustainable growth. The issue is that there are often barriers that hinder these objectives.
Let’s take a closer look at both the benefits of Financial Shared Services as well common pain points.
Accounting Cost Reduction:
Accounting Shared Services help to reduce accounting efforts and book-keeping costs by utilizing accounting software for multiple companies to standardize and consolidate financial processes reducing the need for multiple resources.
Centralized accounting teams using multi-entity accounting software allow businesses to be more agile, going from data to concept to implementation with ease. This agility translates into the ability to scale up or down quickly as needed.
Better Customer Service:
Accounting Shared Services can enable a better customer service experience by creating a single point of contact for financial services internally as well as delivering better AR Services (Customer Services) and AP Support Services (Vendor Services).
Improved Cash Management:
With a centralized finance department, multi-entity organizations gain more control over AP processing and AR billing frequencies. By implementing the use of accounting software for multiple entities they can increase cash flow and streamline other financial processes resulting in the ability to optimize working capital.
Shared Services Integrations Difficulties (aka lack of standardization):
Often organizations can run into issues due to a lack of standardization when attempting to streamline financial processes across multiple entities. This creates redundancies, and inconsistencies, and adds difficulty to consolidating financial data in a timely manner for monthly and quarterly financial close processes.
The allocation of resources to different business entities within an organization is a complex and often time-consuming task. When not handled appropriately it can lead to disagreements, lack of trust, or even resentment within a multi-company organization.
Loss of Control:
Difficulty in managing multiple legal entities and locations especially when those locations span across multiple countries. Issues can arise due to language barriers and regulatory differences that negatively impact the effectiveness of their Accounting Shared Services. In a Shared Services Center, these issues affect the entire business, not just a single department.
Financial data visibility is imperative for successful business operations and growth. With a lack of standardization data accessibility and visibility can suffer making it difficult to make intelligent forward-thinking business decisions.
Financial Shared Services are often hindered by inefficient processes that are not measurable, properly managed, or optimized for a Shared Services Center model. This can lead to costly bottlenecks and overall ineffective workflows.
Inadequate communication in an organization with accounting shared services can lead to a myriad of issues. From misunderstandings and delays in financial processes to conflicts between departments and stakeholders. All of which can hinder a company’s growth and even damage its reputation.
Resistance to change:
It is human nature to resist change and transitioning to shared services for financial operations can often fall victim to such resistance. Employees who are accustomed to certain processes or “ways of doing things” can be reluctant to embrace changes to their methods and the technology that they use.
When confronted with any of the above Financial Shared Services hurdles within your organization the inevitable question arises – How you can mitigate the challenges of Financial Shared Services while still reaping the benefits of a consolidated finance department across your multi-entity company?
Avantiico has helped several companies grapple with this question and it led us to create the best multi-company accounting software on the market today, our Accounting Automation for Multi-Company Businesses IP for Dynamics 365 Finance.
Built specifically for Shared Service Centers using Dynamics 365 Finance with key features such as Expedited Multi-Company Integration, Multi-Company Journals, Rapid New Legal Entity Creation, and Multi-Company Inquiries and Reporting, this software allows you to reduce manual data entry while increasing your reporting power.
Discover how Avantiico helps you improve business processes, provide customers with a seamless experience and transform the way you do business.