By Joseph Neu
Rapid economic growth and market and regulatory change demand changes to the way SSCs work.
NeuGroup’s Asia CFO group met October 19 in Shanghai and discussions about finance and business team cooperation dominated. Close finance-business partnerships are needed to meet the challenges of rapid economic growth and market and regulatory change in China, both of which require fast-paced business transformation. And to support close finance-business partnerships, MNCs need a new kind of shared services center (SSC).
The need for strong SSC was underscored by presentations over the course of the meeting. One, by a CFO and his shared services center head, detailed a project to insource its SSC activities, including the business process outsourcing (BPO) of a recent acquisition. They found that bringing SSC activities in-house facilitated better end-to-end coordination of processes from the business end as well as finance. This also illuminated several shadow costs that often remain hidden in BPO arrangements and creates opportunities to “harvest” value-added activities.
One example shared was allowing the SSC to take the lead on collections, which had been traditionally left to sales. Sales managers are often more inclined to close the next contract and not want a collection conversation to get in the way. The payments team in the SSC can also share knowledge on forms of payment, creating a center of excellence.
According to the CFO of the company presenting, the decision to shift collections to the SSC has already improved cash flow and DSO significantly. Moreover, banks and other providers offering solutions to improve the situation further now have a central point of contact to make this happen.
Other examples shared involving SSCs and finance-business cooperation include the use of Robotic Process Automation to retrieve point-of-sale data and relieve finance teams of confirmation calls and store managers from having to stop caring for customers to field their calls. Some companies are also distributing dashboards and other data visualization-intensive reports to line managers via WeChat, so they can receive and process important data from their smartphones without retreating to their office desks.
A well-functioning SSC is so important that many members noted initiatives to create a global SSC head to boost efficiency and spread business value-enhancing best practices across centers globally. The talent level and experience required to scale finance support to fast-growing, transformational businesses in a highly regulated market like China means that SSCs based there often set the global standard.
And thus, the heads of China-based SSCs serve a very important role even if they are not the global head. “My SSC head is who really helps me sleep at night,” one FO said.
That comment underscores the importance of people in effective finance organizations and even more so in effective finance-business partnerships.