Finance and Accounting Services Outsourcing

Article published in Global Business Magazine (GBM), March 2012. Read complete issue here: www.gbmonline.net As businesses strive to accomplish more from less, there is intense pressure to lower operational and transactional costs. In doing so, businesses can gain from the constrained level of resources, such as global talent, capital and infrastructure, that they are currently operating in. In most companies, there exists an inherent division between the various departments. The chief financial officer (CFO) is, more often than not, viewed as someone who is intent on slashing the marketing budget; while the CFO is of the opinion that..

As businesses strive to accomplish more from less, there is intense pressure to lower operational and transactional costs within departments. Businesses can gain from the constrained level of resources like low cost global talent, reduced capital and basic infrastructure that they currently operate in. In most companies, there exists an inherent division between the various divisions and the finance function.The CFO is viewed as someone who is intent on slashing budgets, creating silos between his department and others. But, the fact is that finance team can be an effective partner to achieve any business goal. Hence, Re-devising Finance and Accounting Services is one of the key drivers of business effectiveness today. Finance leaders need to seize the opportunity and proactively define their change vision. WNS is working with a number of clients in helping them identify and execute the transformation of their F&A functions to become more strategic and aligned with their businesses via its state-of-the-art finance business process management centers.

In October 2001 one of the world’s leading corporations announced that it accrued a USD 618 Million net loss for the third quarter and that it would be reducing shareholder equity. Although this scandal was believed to be an anomaly, another large corporation in the telecommunications space declared an even larger fraud in 2002. The Forbes Corporate Scandal Sheet lists dozens of corporations falling prey to financial accounting fraud. The more recent cases are those of a global financial services firm failing to disclose Repo 105 transactions to investors in 2010, a leading Information, Communications and Technology firm presenting falsified accounts in 2009 and a business and commercial bank’s hidden loan controversy in 2008. This trend demonstrates the need for corporate governance to usher in a regime of greater accountability. Internal controls on financial reporting have been in place for a long time but have taken on relevance in recent times, as risk management has become more crucial. Whether an organization is large or small, public or private, internal controls over financial reporting are important to ensure that the policies, directions and procedures put in place by the board and management are functioning well. A good governance system in place, irrespective of regulatory obligations, is the way forward. This requires a team with technical knowledge, skills and a thorough understanding of the objectives of the organization to set up internal control for financial reporting, while maintaining the cost of compliance in check. WNS, a leading BPO specializing in Finance and Accounting Outsourcing, presents the right set of skills and expertise to chalk out a robust compliance management program such that, even if a new law or regulation is enacted at a later date, the organization needs to make minimal adjustments to their existing risk management and compliance program. WNS advocates in implementing these practices as part of the organization’s DNA.

As credit markets tighten and earnings are squeezed, finance functions are applying ever greater scrutiny to the efficiency of their back-office processes. The financial supply chain, if not managed efficiently, can be a major pain point in optimizing your working capital. Accounts payable constitutes the biggest drain in the working capital management of most organizations. In other words, if an organization can manage its cash, its accounts receivables and accounts payables well, it can rein in the invincible operating costs. If it can improve its processes and free cash from the balance sheets, it can put the working capital to more productive use. Read on to find out what WNS offers in terms of better managing your working capital.

Outsourcing finance and accounting processes can achieve significant savings, but organizations can achieve greater value by outsourcing even their strategic financial processes. Some organisations are now outsourcing critical financial functions as well as their transaction processing. This reflects not just cost cutting, but recognition of the value that a third party service outsourcing provider can bring as part of a strategy to concentrate internal resources on the key areas that create shareholder value. In addition to transaction processes, sophisticated finance and accounting outsourcing providers are capable of taking over much of the higher-level value creation work such as data analytics, decision support and financial management tasks, including planning, budgeting, treasury management, performance management and risk evaluation and assessment.

As companies look for ways to derive more value from their
outsourcing initiatives, BPU (Business Process Utility)
is emerging as an option. By aligning people, process
and technology, the BPU delivery model is most suitable
for transactional processes that are built around standard
inputs with well defined outputs. Under the BPU model,
the service provider offers a turnkey solution comprised
of best-in-class people, processes and technology.
The BPU model lends itself to a unit transaction pricing
(aka 'pay-by-the-drink') model and thereby allowing
companies to move away from their current 'fixed cost'
base to one that provides greater flexibility and
predictability in the current economic environment.