March 26, 2019

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4 reasons financial shared services leaders should care about visibility

Connecting your documents, data and processes eliminates gaps and ensures payables and receivables staff have the information they need, whenever they need it.

Danielle Simer

Marketing portfolio manager

Two people in suits use a laptop in a conference room.

Centralized operations. Standardized systems and processes. Efficiency gains.

Lower costs!

With promises like that, it’s no surprise that more and more organizations are transitioning to shared services environments for finance functions like accounts payable and accounts receivable.

A shared services organization or “center” is a separate group within an organization that’s set up to perform services such as invoice processing, billing, payment processing and purchasing for the entire organization, even across regions and business units. In a shared services model, organizations centralize these tasks and benefit from standardization and economies of scale.

In fact, 24% of accounts payable departments are part of regional or global shared services operations, according to the Institute of Finance and Management (IOFM). When you look at the manufacturing industry specifically, that number jumps to 40%. And one-out-of-five accounts receivable departments are part of shared services.

But amid the promises of shared services and the growing popularity of the model, there are cries in the distance. Can you hear them?

They’re shouting, “Visibility! Visibility now!”

"I can't see clearly now..."

Lack of visibility is one thing that consistently plagues financial shared services centers. It can mean anything from lack of visibility into financial data and operational metrics to lack of visibility into the status of incoming or outgoing payments.

It can also simply mean your staff can’t find the information they’re looking for – be it a physical document or data stored in a core financial system like the ERP. IOFM states that 21% of accounts receivable departments said better cash flow visibility is a priority.

Financial shared services leaders should take heed, especially those overseeing both payables and receivables operations. Poor visibility can lead to longer cycle times for processing, weak control and tracking, poor cash management and other challenges.

4 reasons shared services leaders should pay attention

It that doesn’t convince you, here are four reasons to care about and try to improve visibility across financial shared services:

Your company’s top executives care

Controllers rank cash flow analysis as their most important job function, according to an IOFM survey. But without a clear view into upcoming payables obligations or incoming orders, it creates problems for tracking and reporting on cash flow against current and future expenses.

IOFM also found that 66% of controllers want more effective ways to gain visibility into the overall performance of finance and administrative functions.

The role of finance is expanding

Incredibly, 38% of controllers say that increasing demands for more data and analysis is a big challenge for their finance organizations, according to a KPMG survey. It’s no longer just about paying the bills – finance is increasingly being tasked with identifying primary value drivers and potential business opportunities.

Organizations are also looking at finance teams to influence business outcomes and help management and top stakeholders apply fi­nancial information to strategic decision-making.

Companies with great visibility win

Visibility into accounts payables and accounts receivables information separates the top performers. Best-in-class companies have more than four times the rate of visibility into daily organizational cash flow, compared to average companies, says Aberdeen Group.

They can also strategically plan ahead, prioritizing critical vendors or even taking advantage of early-payment discounts, if available. Savings like that add up, especially if late fees and inability to dispute payment become things of the ancient past.

The time is now

More than 45% of controllers say lack of visibility into invoices and payables information is their top payables challenge, according to IOFM. And fewer than five percent of accounts receivable functions are fully integrated, creating visibility challenges across the order-to-cash cycle.

With so many organizations struggling with visibility on some level, there’s a lot of opportunity to make meaningful improvements that will quickly move your financial shared services center ahead of the pack.

Limited integration and visibility across shared services operations prevents organizations from achieving the objectives and benefits of the shared services models.

That’s where enterprise information platforms like OnBase can help. By connecting your documents, data and processes, you eliminate gaps and ensure payables and receivables staff have the information they need, whenever they need it.