Shared Services Centres: The Key to Unlocking Business Potential

 Shared services centres (SSCs) are central hubs within organisations that consolidate non-core functions like HR, payroll, accounting, and IT support to improve efficiency and allow companies to focus on their core competencies. These non-revenue-generating processes are essential for smooth operations but can be a hindrance to growth. Companies can choose to consolidate all or specific functions into an SSC to streamline processes and free up resources.

What advantages do shared services centres offer?

There are several reasons why a company might want to set up an SSC. The most common ones are:

·        One of the key benefits of an SSC is improved efficiency. By consolidating similar processes into a single unit, businesses can achieve greater efficiency. This means that the shared services centre can complete tasks more quickly and with fewer resources than if each department were doing them on its own.

·         When similar processes are consolidated into one unit, there are often opportunities to standardise them. This can lead to cost savings through things like process improvements and automated solutions. Because the SSC is handling a larger volume of work, it can often negotiate better deals with vendors and suppliers.

·         An SSC can also improve communication within a company. It can be difficult to collaborate across departments when everyone is working in silos. By consolidating non-core functions into a shared services center, you can encourage communication between teams.

·         An SSC can also free up resources, allowing them to be better used elsewhere. By taking over non-core functions, an SSC can free up resources that can be better used elsewhere. This can lead to improved efficiency and increased business agility.

·         By consolidating all of the non-core functions into one unit, you can set up quality control measures to ensure that all processes are carried out consistently and to a high standard. This is often done through the use of standard operating procedures (SOPs). This can mitigate risk, reduce conflict, and make the company a more desirable destination for job seekers looking to find stability in their careers.

Financial services domination

A recent study by Statista reveals that finance is the most sought-after function within SSCs, with a staggering 90% of companies reporting that they offer some level of financial service. Shared services in finance and accounting include managing the supply chain and vendor relationships, creating invoices and issuing customer statements, processing customer payments, managing risk and approving credit lines, reviewing financial data to make recommendations, ensuring compliance with local, state, and central tax regulations, and managing cash flow and business loans.

SSC setup process

The process of establishing an SSC is comprised of several key steps, including:

 

• The initial step is to determine which functions will be included in the SSC, taking into account those that will likely benefit the most from economies of scale and increased efficiency.

 

• Once you have identified the services that will be a part of the SSC, you must decide on the ideal location for the center. It is common for businesses to opt for low-cost countries.

 

• To operate as an SSC, it is essential to establish a separate legal entity to safeguard your business from any liabilities associated with the SSC's activities.

 

• The next step is to recruit staff for your new SSC, carefully assessing the skills and experience needed to ensure the SSC's success.

 

• To enable effective operation of the SSC, it is crucial to implement the appropriate technology infrastructure, including HR software solutions and CRM systems.

 

• Once all the necessary components are in place, it is important to establish the processes that will be used by the SSC, such as order processing, invoicing, and payments.

 

• Once all necessary steps have been completed, your new SSC is ready to go live.

It is important to note that additional steps may be necessary depending on the specific requirements of your business. Nevertheless, these are the key steps to take to set up an SSC.

Typical errors to prevent

As you embark on the journey of implementing a shared service center accounting within your organisation, it's crucial to be aware of the common pitfalls that businesses may encounter. To ensure a successful implementation, it's essential to avoid the following mistakes:

·         Before proceeding with an SSC, it's crucial to evaluate whether it aligns with your organization's goals and objectives. Failure to establish a clear business case may lead to a misallocation of resources.

·         An SSC requires a significant change in the way your organisation operates. Failing to plan for and manage these changes can lead to resistance and, ultimately, failure.

·         As with any major business change, there are risks associated with implementing an SSC. It's essential to identify and assess these risks to minimise their impact.

·         Once your SSC is up and running, it's crucial to establish governance structures to ensure its smooth operation. This includes defining roles and responsibilities, setting key performance indicators, and creating a communication plan.

As your business continues to expand, it's important to keep the concept of a software for compliance management services in mind as a viable strategy for growth. By taking the time to properly evaluate the business case, manage organisational change, assess potential risks, and establish clear governance, you can effectively consolidate and scale your enterprise while avoiding common pitfalls. By keeping these considerations in mind, you'll be well-positioned to make informed decisions about the future of your business.