Accounts Payable: the case for automation and offshoring
Posted by firstname.lastname@example.org on July 3, 2018
The Australian Benchmark Initiative, the leading Finance benchmark and better practice study in the region, with 100+ participants has from its inception in 2011 highlighted a strong embrace of Shared Services (Accounts Payable: 84% in 2011 / 89% in 2017). The study provides a good cross section of local industry, with participants having a median headcount of around 1200 and revenue of $800 million. The study reveals that on a global scale, Accounts Payable teams are relatively small, with a median headcount of 6, but at a high median cost of $62,500 ($81,250 including on-costs) per full time equivalent (FTE).
Source: Australian Benchmark Initiative (www.australianbenchmarks.com), 2017
It would be natural to think that the high cost the Accounts Payable function would provide a perfect storm for automation and offshoring. While the benchmark data reveals an increase in outsourcing / offshoring from 0% in 2011 to 17% in 2017, automation has barely turned the dial from 23% in 2011 to 24% in 2017. The big question is, why aren’t Australian companies embracing these opportunities? Part of this comes down to the relative size of the teams Australian businesses are managing. While the median Accounts Payable team in the benchmark data is 6, this quickly reduces to 3 for the bottom quartile. The business case question rapidly becomes one of “if we can only save one resource, is it worth the effort / risk”?
The answer of course is for organisations to take a step up from a siloed functional view, and consider the broader context. While point solutions for Accounts Payable processing may not have historically got traction, new approaches to robotic process automation are allowing organisations to conduct rapid projects that are able to address multiple cross-functional pain points. Considering automation as a process improvement opportunity enabled by technology, rather than a technology solution in itself will go a long way to re-framing the problem.
While many will advertise the advent of automation as the death knell for outsourcing, nothing could be further from the truth. The offshoring market continues to evolve, and is an important consideration in the resource efficiency mix. In the case of Australia, the typical cost savings achievable are 70% which is compelling for any Finance professional, and merits further consideration as part of the transformation program.
What should you do to achieve such cost savings? The first step is to conduct a strategic review of core process areas, and to build a business case that considers each step. The following provides an example business case based on a total invoice volume of 37.440 per annum, mapping out the benefits at each step in the transformation journey against the benchmark metrics.
So, while the comment “if we only reduce a headcount of one it isn’t worth the effort” might be an effortless way to stop conversation at the water cooler, a well thought out strategic review that combines process improvement, with automation, and offshoring, can result in significant benefits. While only Accounts Payable has been provided as an example, this logic and thinking can be readily extended to all other parts of the organisation.
So, that only leaves the question - what are you waiting for, the opportunity is there to make yourself a Rockstar?
About the author: Jamie McBrien is a Director optim2 a consulting firm focused on improving finance and back office functions, and optiBPO a business that helps clients plan, build and manage offshore teams in the Philippines. Also being one of the authors of the Australian Benchmark Initiative, he has unique context on process improvement, automation and offshoring.
- How Philippine Delivery Centers are Deploying Success Levers in the Year Ahead
- ESTABLISHING A CENTER OF EXCELLENCE (COE) IN AUTOMATION – 4 Critical Ingredients
- Dummy Blog
- Dummy Blog
- Data readiness – a precursor to realising the true potential of automation
- 3 Trends Confirmed at SSON’s European Flagship Event
- Top 3 Trends in European Shared Services in 2019: How are scope, outsourcing and automation strategies adapting – and why?
- Higher Education Institutions must look beyond implementation challenges of Shared Services
- What’s driving successful Business Transformation in the Nordics right now?
- What does good really look like? Benchmark your SSO against 2 different benchmarking datasets
- Business Continuity Plan alert: Q3 2018 Earthquakes now at a record high
- Shared Services in Deutschland: Fokus auf Produktivität und Working Capital
- German Shared Services Focused on Productivity and Working Capital
- Open for Business: Consistent figures for 2018 US Shared Services jobs market
- How to succeed with Intelligent Automation: what our surveys tell us
- Is "gender" impacting shared services careers?
- Chief of Payroll, UNICEF Global Shared Services Centre
- Is a profitable business necessarily a prosperous one?
- Accounts Payable: the case for automation and offshoring
For media enquiries relating to SSON Analytics or any of our data, please contact Sian Jenkins.
Tel: +65 6722 9361
"Despite having the highest risk of windstorm and flood as well as a high earthquake threat, Manila has the largest SSC concentration in APAC"
Data from 'Evaluating Risk in Asia Pacific Shared Services Hotspots' - Analytics Workbook - SSON Analytics
"We have found the Enterprise Dashboard and the SSC Metric Checker particularly insightful, as both are developed on factual analysis based on quantitative measures such as cost, cycle time, FTE effort, use of shared services, and application complexity."
Paul Bartley - Director, Global Shared Services - BD
"By utilizing SSON Analytics’ data tools/analytics reports BD has been able to benchmark and assess how the company is positioned against world-class performers. Knowing that what we are reading has been provided by practitioners makes it a very trustworthy source of information."
Paul Bartley - Director, Global Shared Services - BD
"SSON Analytics have been a really useful resource in providing Market Intelligence and insight into the shared services industry, giving me new perspectives into the strategic positioning within cities, countries and beyond. I am also encouraged to see incremental improvement to its offerings over time, and the engagements with the analysts and management have been more than pleasant! Excellent overall!"
SSON Analytics subscriber - Research Manager - leading chemical company
"As we measure our operations, we are tapping into the comprehensive metrics in SSONA’s City Cube to benchmark what our peers in the same region and industry are able to achieve. This helps us to identify opportunities to drive continuous improvements."
Thomas Hung - Vice President, Group Finance Shared Services - Shangri-La Group