Association of Credit for Central and Eastern Europe

Transforming the credit profession

The only organisation in CEE region dedicated to raising the professional profile of O2C

Professional Membership

Best Practice development and Accreditation

O2C process audit

Training and workshops

Benchmarks

Connecting business with service providers

Leading the Order to Cash community in CEE from students to directors - from Analysts to Z-scores

www.creditcee.eu We are one team

The Shared Service Centre

Journey to Efficiency

Mark Harrison

BA (Hons) FCICM (grad)

Founder, CEO

Association of Credit for Central and Eastern Europe

a) Administration / reporting/process

efficiency/improvement

b) Take over more work from other areas /

centralize function with the same resources

c) Reduce DSO’s and overdue

d) Most or all of the above

a) b) c) d)

20%

46%

26%

7%

What are your main departmental objectives ?

What are your main roadblocks or obstacles to achieving objectives?

a) Budget restrictions

b) Lack of management leadership & support

c) Staff inexperience

d) Limited functional power to create central

policy/revised SLA

a) b) c) d)

45%

20%

11%

25%

If you had unlimited budget and possibilities to influence the future ,

where would you invest??

a) Technology

b) Staff development

c) More centralized functions and responsibility

d) Management and leadership skills development

a) b) c) d)

37%

14%

10%

39%

The journey to establish a sustainable

Shared Service Centre is a long and complex one

Move the SSC up the value curve whilst improving

efficiencies and making cost reductions

20th century 21st century

Expanding Business Boundaries

Silos Networks

COST

EFFICIENCY

ENTERPRISE-

WIDE

EMPHASIS

ENGAGED,

MOTIVATED

WORKFORCE

EFFECTIVE,

EFFICIENCY

EXECUTION

BETTER

LEVERAGE

TECHNOLOGY

OPTIMIZE

ASSETS AND

RESOURCES

COST EFFICIENCY SUPPORTS

Right sourcing Definition IN HOUSE

THIRD PARTY

SERVICE

PROVIDER

IN-SOURCE OUT-SOURCE

Choosing the correct source

Which do you think is more cost-effective,

Outsourcing , Insourcing , Combination?

An interesting approach to

implementation

Case study

Seagull and Swans

The seagull has

landed

We’ll set up where

we‘ve got a factory there

Lets save a load of money & set up an SSC

Debtors - y’ know the single biggest asset !!

We’ll move all our AR functions from UK & Italy

The migrating

seagull

New People

New System

New Location

New World Record

Seagulls are not the most considerate!!

System not fully tested nor fully paralleled .

Few reports or controls

High volume and value unapplied cash

Little or no experience of UK/US work culture no benchmark

Location – over a factory , poor air con,

factory canteen, no shops, 10 km from city –

45 min journey each way – at least 2

connections

High turnover, deteriorating results,

blame culture

For 2 months new staff frequently left alone

poor practice ensued

Resentment of UK leavers and local HR dept.

Implementation team in UK had new projects

Credit Manager resigned replaced by interim

manager

The seagull

calling

card…

Stalled Implementation

Lost of revenue – DSO/

Overdue increases = Bank

charges

Loss of confidence internal &

external

Extra subsistence in Italy

Paying Credit Insurance

premiums but couldn’t claim

Interim diverted – not developing

other teams & needs

Interim manager contract

extended

Extended leavers finish dates

Other projects were parked and

delayed

COST

EFFICIENCY

ENTERPRISE-

WIDE

EMPHASIS

ENGAGED,

MOTIVATED

WORKFORCE

EFFECTIVE,

EFFICIENCY

EXECUTION

BETTER

LEVERAGE

TECHNOLOGY

OPTIMIZE

ASSETS AND

RESOURCES

COST EFFICIENCY SUPPORTS

More than 12 months of repair work and extra cost

And only then slowly stabilized, expanded and prospered

Swans to the rescue Language dependent teams

must be a min of 3

Management must be

committed, supportive &

experienced

Communication, training,

product knowledge, bring all

together

Timelines to be agreed in

advance by all stakeholders

Include standardization and

automation at planning stage SSC are for long term

Clear strategy 1 for 1 headcount is most likely

not necessary

Plan a career path /

development programme

Be generous with the training

and travel budget

Maximise Technology

Technology

Process

Improvement

Operating Model

Operational Excellence

Organization

People

Communication

TRANSFORMATION

Location

Technology

Process

Improvement

Masterclass

Organization

Education

Communication

People

Best Practice

Strategy

+ 600

SSC

STOCK ACCOUNTING 64% CREDIT VETTING AND SCORING 63% EXTERNAL REPORTING 62% TAX FILING AND REPORTING 60% CUSTOMER BILING 55% PAYROLL 52% ORDER ENTRY 34%

% of companies that have implemented the process in their SSC

ACCOUNT PAYABLE 99% GENERAL ACCOUNTING 92% INTERCOMPANY SETLEMENT 90% ACCOUNT RECEIVABLE 88% TRAVEL AND EXPENSES 86% FIXED ASSENTS 84% DEBT COLLECTIONS 74% CASH MANAGEMENT 65%

Global Business Services

Operational Excellence

Location Optimizing

Scope Extension

Operating Model TRANSFORMATION

Your centre can absorb more work, and without

increasing headcount enabling you to fulfill the

role of true business partner

Credit Check Business

Administration

Credit Management

Credit Management

Credit Management

Order to Cash overview

Order Invoice dispatch Collecting Payment Reporting

Credit Check

Order to Cash overview

Order

Do you measure the quality of your customers? Risk Management

How often do you revise the ratings and with what tools or methods ?

How many manual steps are involved in your Ordering process ?

Business Administration

Order to Cash overview

Invoice dispatch

How many of your invoices are magically lost ?

Do you know the reasons why are they lost ? (Visibility of invoicing)

Credit Management

Order to Cash overview

Collection

When do you start reviewing your accounts receivable ?

What visibility do you have about your account receivable ?

Who is responsible for collection and where is he located ?

How do you cover dispute management ?

Credit Management

Order to Cash overview

Payment

Who is involved in the matching process ?

How fast is your matching process ?

How many invoices are matched automatically ?

Credit Management

Reporting

Quality of Reporting

Understanding of the importance of communicating internally and externally

Effect on P&L

DSO Calculation

Order to Cash overview

Cost of Credit

Credit Management

Credit comes at a cost It’s a profession not a process

Credit as a profit center

Process management and technology

Simplify and standardize Become truly lean

Rocket up The efficiency of your working capital and staff

Reduce Your costs

Any questions?

Thank you Dublin

Association of Credit for Central and Eastern Europe Transforming the credit profession

The only organisation in CEE region dedicated to raising the professional profile of O2C Professional Membership Best Practice development and Accreditation O2C process audit Training and workshops Benchmarks Connecting business with service providers Leading the Order to Cash community in CEE from students to directors - from Analysts to Z-scores

www.creditcee.eu We are one team

Regional - Analytical

1. Accounting close 2. Settlement 3. Risk management 4. Budgeting 5. Business Case 6. Reporting 7. SOX 8. Internal audit 9. Pricing

Global - Transactional

1. Accounts payable 2. Travel and expense 3. Accounts receivable 4. Billing 5. Payroll 6. Fixed assets

Other

1. Rebates and inventory accounting 2. Competitive intelligence 3. Risk Management 4. Deal review 5. Mergers and acquisition 6. Workforce management 7. Tech pool management 8. Financial systems

DECENTRALIZATION

HIGHER COSTS

VARIABLE STANDARDS

DIFERENT CONTROL ENVIRONMENTS

DUPLICATION OF EFFORTS

SHARED

BUSINESS UNITS RETAIN CONTROL

RECOGNITION OF LOCAL

PRIORITIES

LEAN, FLAT ORGANIZATION

INDEPENDENT OF BUSINESSES

IDENTIFICATION OF EFFICIENCIES

BETWEEN BUSINESS UNITS

COMMON SYSTEMS &

SUPPORT

EFFICIENT KNOWLEDGE TRANSFER STANDARDS

TOOLS

ECONOMICS OF SCALE

CENTRALIZED

UNRESPONSIVE

NEW BUSINESS UNIT CONTROL OF CENTRAL

OVERHEAD COST

INFLEXIBLE TO BUSINESS UNIT NEEDS

DISCONNECT FROM BUSINESS UNITS

20 minute workshop

5 functions that could or should be insourced

What are the 5 key drivers

?

O2C Insourcing O2C

Outsourcing

Improving efficiency and reducing costs

The ability to Integrate a range of services

Enhanced flexibility

Minimizing risk

Regaining control

Reducing cost and time spent managing contracts

Boosting local engagement and accountability

Greater staff motivation and improved service quality

Maintaining expertise and capacity

To reduce and control operating costs

To improve quality

To change company focus

To acquire external capabilities

To refocus scarce resources for alternative uses

To reduce cycle time

To obtain cash infusion

To reduce risks

To gain flexibility

10 potential benefits in sharing services such as:

1. Continuity and resilience of service. 2. Quality of service 3. Improving the flexibility and agility of existing services. 4. Added-value/customer-facing activities. 5. Improving the scalability of systems. 6. Ensuring improved and more up-to-date systems. 7. Gaining competitive advantage. 8. Ability to offer otherwise unsustainable services. 9. Improved cooperation with other support services. 10.Addressing growing demand for collaborative learning & teaching, research and knowledge exchange.

Main Elements of Efficiency

Resource Inputs Use of resources to produce goods

and services Outputs of goods and services

HUMAN FINANCIAL

EQUIPMENT MATERIAL FACILITIES

INFORMATION ENERGY

LAND

RIGHT QUANTITY RIGHT QUALITY

LOWER COST PRODUCTIVE WORK PROCESS

PRODUCTIVITY QUANTITY QUALITY

LEVEL OF SERVICE