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Finance Shared Service Center Transformation

Turn your back office into the backbone of innovation and growth

Table of contents
What is Finance Shared Service Transformation Everything starts from processes Process mining for shared service centers Overview of SSC Processes Accounts Payable Procurement Order Management

What is Finance Shared Service Transformation

Shared service centers (SSCs) are designed to take a specific task that cuts across an organisation and deliver it through a single centralized unit. In the case of finance, this could include processes like accounts payable, procurement, and order management.

Transformation of these services is the strategic undertaking to redesign the systems, processes, and approaches within a company to deliver a superior service for the business whilst optimizing efficiency. Your shared service center can create value, monitor ongoing performance, and align itself with your overall business vision through these changes.

The start to an effective SSC transformation journey is to understand your processes. This gives you insight into where enacting change will have the most significant impact.

Therefore, process mining is the essential first step to delivering cost savings and innovation for your shared service systems. It’s also the gateway to superior process performance monitoring, as well as reducing error rates, ensuring compliance, and improving service quality.

 

Why Financial Shared Services leaders should care about processes

Each process in an organization has variants. In large organizations, there can be millions of different ways that a single process – such as order-to-cash or purchase-to-pay – takes place.

These complex processes, with all their variations, cannot be modeled with traditional process discovery methods. At the same time, making large organizations more efficient and cost-effective comes down to having optimized, standardized, and transparent processes that can be monitored, analyzed, and improved.

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You know there are costly errors and exceptions taking place every day, but how would you know how to improve efficiency, if the starting point is based on gut feelings that reflect only a tiny proportion of the reality?

The biggest hurdle to overcome for many Shared Services leaders is the lack of visibility into the vast amount of process inconsistencies. You know there are costly errors and exceptions taking place every day, but how would you know how to improve efficiency, if the starting point is based on gut feelings that reflect only a tiny proportion of the reality?

Creating a successful plan for growing and optimizing Financial Shared Services requires more than subject matter expertise: you also need insights into the current processes and tools to improve collaboration and get all stakeholders on the same page.

 

What is process mining for Shared Service Centers

Process mining visualizes your processes based on existing data from your IT systems in dynamic flowcharts. You’ll be able to see the real-life execution of your organization's processes: gain objective insight into all parts of the process, drill down to different units or individual cases, or view trends on a high level. See errors, variations, and non-compliances based on how they contribute to business outcomes and easily view which automation opportunities are ripe.

Process mining further supports your decision-making by providing you and other key decision-makers within and outside of your team with mutual and objective process insights.

Forget about countless spreadsheets being shared through emails. With process mining, all of the processes of your shared services - Accounts Payable, Accounts Receivable, Order-to-Cash, Purchase-to-Pay, HR, etc. - are visualized, monitored, and analyzed in one place for smooth decision-making.

Video: Transform your Financial Processes

See how you can improve your Accounts Payable process.

Find out how process mining improves specific areas within Shared Services

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Accounts Payable

Visualize your AP process, pinpoint what you should improve, and monitor how your improvements affect lead times, compliance, and errors.

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Procurement

View automatically generated visualizations of procurement process flows, and identify symptoms of inefficiencies, such as bottlenecks, rework, and Maverick Buying.

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Order Management

Find root causes for inefficiencies and get rid of rework, bottlenecks, and unwanted variations in your invoicing, delivery, and order handling processes.

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Accounts Payable

A smooth and accurate accounts payable process impacts the whole business, enabling better supplier relationships and management of working capital whilst saving on administrative costs. It’s long been seen by many merely as a necessary function, but companies are waking up to the potential contribution it can make to the entire organization.

In recent times, the immediate and classic response is to consider ways to implement finance automation for a large business. However, there are limitations to this approach since, as a single tool, it simply speeds up certain stages of the invoice payment process without bringing insights as to where and why delays occur. If there’s an inefficient step, you’re simply making that inefficiency run faser!

The more complex a process, the harder it is to be sure you are automating the places that will deliver benefits to the overall process efficiency. It doesn’t make sense to automate everything so selecting the right steps is crucial.

So, how do you identify process improvement ideas for accounts payable? It’s crucial to have confidence in changes being implemented in this core business function, and this can only be achieved through a holistic understanding. This is where process mining for accounts payable comes in.

Visualize your accounts payable process

The sheer volume and ever-changing list of invoices a business has to pay mean it’s hard for a finance leader to have an overview that gives them actionable information.

Process mining takes the data already in your systems and generates an easy-to-understand map of what is happening, when, and why. Since it has been created from data taken from your ERP, CRM, and other relevant solutions, you can have complete confidence you’re being presented with a true picture upon which you can rely and take decisions.

The power of this shouldn’t be underestimated. It allows bottlenecks and opportunities to be identified, leading to more efficient processes and cost savings at the same time.

Consider each stage an invoice has to complete before payment is released in your company. Every one of those can cause unwanted delays, which can impact the opportunity to make payment at the optimal time.

Reducing labor in accounts payable

A common challenge for a finance department is how to automate effectively and reduce the manual labor required, whether for matching documents or dealing with exceptions.

A finance leader can see where automation rates can be improved and reduce human error by having an end-to-end process overview.

There’s also a huge labor overhead in investigating delayed payments, invoices without POs, or finding duplicates. In fact, they may not even be realistic prospects unless you implement a solution like process mining which will give you instant access and insights to all of these using the data from your ERP.

Figuring out why payments were delayed, finding the ones that lacked POs, or locating duplicates will be near impossible and extremely time-consuming unless you have a defined process combined with access to comprehensible real-time data about your AP process.

Invoice payment cost savings

The ideal payment scenario is not too soon, not too late, but the perfect point somewhere in between. That moment where you can take advantage of any cash discounts but aren’t paying so soon that it impacts your working capital. 

Timely payment keeps suppliers happy whilst cash flow is maintained in better shape. Having that complete process understanding allows good data-based decisions to be made here. Get it right, and it can lead to a competitive advantage from accounts payable.

There can also be issues around duplicate payments that may slip through the net. This is a pure cost if it is missed, but there’s a staff time overhead in fixing the issue even if it is noticed. It all boils down to having a defined and complete process with appropriate monitoring in place.

 

Compliance and accounts payable

Maintaining control over your invoices and ensuring your process adheres to your compliance requirements is vital. It can even have a regulatory dimension, which is why detection and prevention detection and prevention of compliance issues in accounts payable can save you not only time but broader problems, and even potentially from fines.

Finding a way to identify non-compliant invoices and understanding which part of the process fell down is key to resolving and averting repeat events. Shining a light on the process using a tool like QPR ProcessAnalyzer gives you the insights you need.

There may also be accounts payable audit findings that need further investigation. For example:

  • Check which users are violating your four-eye policy
  • Find SLA violations and the root causes for them

 

Process mining gives you the insights to reduce fraud and errors, whilst ensuring policies are being followed.

Procurement

With the remit of finding goods and services to be delivered on time at the best price they can negotiate, a superior procurement process can be an opportunity for a business. It can lead to, for example, saving money or, if a faster delivery time is agreed, increased efficiency.

A well-structured process can mean the amount of procure-to-pay challenges is reduced. However, there will still be times when purchases fall outside the agreed guidelines. It’s possible to stay informed when this happens by using a monitoring system that gives ongoing feedback on exceptions to the process against a set of KPIs.

Process mining can be utilized to discover the location of any bottlenecks in the procurement process or the reason behind so-called maverick buying. This allows the root causes to be addressed, decreasing potential future problems for the business.

Procurement process visualization

One of the challenges for procurement is that, because its impact reaches across the whole business and involves multiple internal and external contributors, it can be tricky to have a clear view of how everything fits together and is operating.

One solution to this is to let process mining automatically create a visualization of your procurement process using your data. It turns the black box of, for example, SAP into an easily accessible and understandable form. Opening up this information in a single, simple-to-view format means you have an objective view of how efficiently and effectively procurement operates

A process mining solution like QPR ProcessAnalyzer has a range of pre-built dashboards that give instant insight to many of the most popular processes, or you can access create your own using the simple, intuitive interface.

More than that, though, the visualization is the first step in finding and prioritizing improvements for the business that you can be confident will make a material impact. 

Purchase-to-Pay Process

By taking that visualized overview, opportunities can open up for procure-to-pay optimization, which means you get the products you need when you need them at the best possible price. These can have substantial knock-on effects throughout the business, saving time and money.

On the other side, it’s also essential to identify when a supplier isn’t living up to expectations. Gaining end-to-end insights into your procurement process enables you to decide where it would be best to focus your efforts.

An efficient finance department shouldn’t rely on a single snapshot, though. Setting up monitoring and automated alerts when the defined processes aren’t being followed allows your team to recognize and resolve issues before they develop. Meanwhile, KPI performance can be tracked in dashboards to see the impact of improvement projects.

This joined-up approach makes process mining so valuable to the procurement process. It gives insights into the current status, homes in on the best places to make changes, and keeps track of how everything is running.

Reduce maverick buying

One particular issue in procurement may need special attention: how to prevent maverick buying and keep purchases within the agreed range of suppliers and processes, so mystery and unexpected invoices don’t arrive.

A simple maverick buying definition would say it’s an employee going outside the agreed channels to make a purchase, whether that’s goods or services. This doesn’t necessarily mean they aren’t wanted or needed, but they may not be on the best terms possible for the business since the normal procurement process hasn’t been followed.

The challenge for finance with maverick buying is finding out where the invoice came from, who made the purchase, and why it was done outside the norm. This can be a labor-intensive process, meaning the cost of maverick buying can be twofold - firstly, potentially in the price paid, and secondly, in the time and effort it takes to resolve.

This is where taking advantage of your data comes into play. Process mining can give you insight into where the issue lies, how much of a problem it is and how much you can save by reducing maverick buying in your organization.

Recommended further reading on process mining in procurement:

Order Management

Ensuring the order management process is running smoothly is fundamental to the success of any business. Covering from the moment a customer raises a purchase order through delivery to payment clearing and all the smaller steps in between, it gets goods out the door and money in. You could almost say it feeds the core of why a business exists.

The complexities involved can be many, so the challenge is to build an understanding of the various stages and find a way to monitor and improve them. Better order management makes for a more efficient organization and keeps customers happier, leading to more business.

Order to cash optimization is a threefold opportunity; increased reliability for customers, reduced internal delays and related labor implications, and a chance to encourage repeat orders. 

Customer delivery experience

In short, customers want you to deliver on full and in time. More than that, though, they want to be able to see what’s happening with their order. Expectations on what information is available continue to grow, and having access to that data is the key.

Creating an efficient delivery process requires insights at each stage and ongoing monitoring to ensure that everything keeps working as expected.

Order-to-Cash monitoring

Identifying potential improvement opportunities is only one side of giving attention to the order management process. It should also be a set goal to create order to cash process KPIs, so you retain an ongoing view of performance.

The impact of a blocked order management process on the business could be critical. Let down customers and they may move elsewhere. By relying on fragmented reporting from disparate systems, there’s a risk of a delay in noticing a problem or it being missed.

Effective order management leadership can be enhanced and enabled by the insights and monitoring from process mining in the order to cash process. It can even move beyond reactive into predictive so problems can be smothered before they grow.

Automation in Order Management

Looking at order-to-cash transformation opportunities can open up cost reductions and revenue growth through automation. Knowing where to implement such systems is the key to success. Finding the best place to do this requires a view of the entire end-to-end process and an analysis of the impact the changes could make.

Taking your data and creating a visual map that shows the reality of your order management process allows you to identify where bottlenecks exist. A representation like this can also prove valuable and effective at communicating the issues to all stakeholders since it’s a clear and easy-to-understand form. 

Creating this view using process mining taps into your data in a powerful way that shows where an automation solution would be beneficial or why there might be a problem with one already implemented. 

Recommended further reading on process mining in order management:

Book a demo

Do you want to understand the value that process mining and QPR’s solutions can bring to your business, or are you looking for a solution to a specific problem?

Schedule a 30-60 minute online demo meeting with us
and we will show you in practice how we have helped finance shared service process owners to ensure that their transactions are efficient, effective, and compliant - we’d love to help you as well!