Overcoming the Seven Critical A/R Challenges in Finance Shared Services to Thrive in a Turbulent Economy

Order-to-cash shared service leaders today are pushed to outperform with whatever resources they have. On the one hand, this has enabled them to become more adaptive and spontaneous but on the other, it has brought several pressure points under the spotlight, which influences how A/R business decisions are made.

This ebook highlights those seven-different areas vexing GPOs today and provides tips and strategies to enable shared services in becoming value-drivers, by adopting an agile and flexible approach for the next quarter.

1. Inability to meet customer expectations

A/R shared services are not only experiencing higher customer expectations but also a decrease in customer satisfaction. Most global businesses operating under a typical shared services model tend to prioritize cost reduction over customer satisfaction.

According to a Gartner study, 29% of the shared services professionals stated that there was a significant decline in the A/R team’s ability to meet customer expectations due to COVID-19. This could result in decreasing the customer retention rate and ultimately impact the cash flow of the business negatively.

The optimal way to avoid that from happening would be to drive a more customer-centric approach. But the factors that inhibit GPO’s from achieving customer satisfaction within order-to-cash are two-fold:

1.1. Lack of any organizational incentive for A/R teams to be focusing on customer satisfaction

There is a general notion that maintaining customer relationships is the sales team’s job. Hence, A/R teams deprioritize it, as it doesn’t directly fall under their KPI.

1.2. Lack of integrated systems causing limited visibility across A/R teams

A/R teams working in silos with disintegrated systems, often across geographies, are unable to interact and work together in real-time, resulting in poor customer experience in the long run.

2. Failure to deliver on SLAs

Another major pressure point that emerged as an underlying impact of the pandemic was that shared services were unable to deliver on the Service Level Agreement(SLA). As per SSON, almost 43% of the shared services professionals claimed inadequate infrastructure and limited hardware as their reason for failure to deliver during this crisis.

As a result of this, some GPOs were forced to rethink their SLAs since it affected their receivables and overall productivity. Few of them even started moving to third-party service-providers and investing in digital transformation initiatives to comply with the needs of the customers and support their crumbling working capital and cash flow.

3. Increasing competition in the market

Enterprise organizations today have a vision for global expansion – they’re venturing into new territories and even new industries and new business lines.

And with every expansion, order-to-cash GPOs are faced with great opportunities and even greater challenges. The price of expansion is that you have to deal with the competition in the market. This then backfires as another area of stress for finance professionals. Some leaders believe that staying local might help them avoid competition, which is not true. This is because SSCs are continuously tasked with the need to level-up in order to be on par with their peers.

It is significantly more challenging if you’re operating on a legacy platform when these competitors have employed new, more innovative models that might involve technology investment and automation.

4. Inability to implement disruptive A/R operational models

For every shared service center to thrive, it is imperative that leaders keep coming up with innovative models of operation for their A/R processes that set them apart from their peers.

But often it is challenging for leaders to implement new, disruptive models for their order-to-cash operations. One of the primary reasons being that most of the finance executives are skeptical about the success of said operational model. It is harder for GPOs to create an effective business case and get the executive’s buy-in considering the cost, benefit and execution pre-requisites of digital transformation projects.

5. Lack of operational agility

Operational agility is the rate at which the workforce adapts to change- the faster the workforce adapts, the smoother the business flows. This results in improved workforce productivity and optimized working capital.

But managing this rate is significantly difficult if there is a resentment for change in your team. The factor that might lead to this aversion is that the order-to-cash teams are not that well versed with the functional aspect of the technology and automation and they look at it as a replacement for them instead of an enabler or value-driver.

6. Increasing employee attrition rates

A major area of concern for shared services leaders is the number of employees who are leaving their positions in search of something more “secure” in this turbulent time. This leads to an increase in employee attrition rates, which affects the overall team productivity.

But some GPOs face a significant challenge to provide incentives with fractured cash flow and working capital. It is even difficult for them to keep their order-to-cash teams engaged and motivated, due to all the manual work they put in. This is also one of the reasons why employees decide to be in a team that already leverages technology in the workplace.

7. Managing non-performing business units

More than 50% of A/R shared services leaders are concerned about continued global business delivery operations, as per SSON. To cut down on additional operational costs of running shared services and ensure an optimized working capital, GPOs are tasked with the dilemma of making these critical decisions for their business-

• Should they continue operating with all the business units or are there some of them which would not be able to cope up with the impact of this pandemic and would thus need to be eliminated?
• For the business units that they choose to terminate, what do they do with their operations- should they be brought back in after things return to normal, or should they look to outsource them to a third party at lower costs?
• In the event that they choose to continue with all the business units, should they let them operate as-is, or instead invest in digital transformation initiatives to improve the long term productivity of the A/R teams operating within them?