unleash the potential of the finance and accounting department
TRANSCRIPT
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Can FAO unleash the potential of the F&A department of Small and Medium
Enterprises?
Webinar
BY
Thomas ParackalSVP & Business Head, StylusFMS
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Speaker’s Profile
SVP, Business Head – StylusFMS
CFO of Stylus Systems Pvt. Ltd
Specialization
Process Management frameworks – Six Sigma,Balance Score Card exposure in previousorganizations
Requirements Analysis of medium size businessesand packaging services with cloud based applicationsfor maximizing efficiencies of cost and productivity is
a focus area
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AgendaIntroduction
● F&A at SME’s: Current Scenario
● Challenges Faced by SME’s Today ● Management’s Expectations From CFO
● How Can These Expectations Be Met?
Reluctance to Outsource
● Some Concerns● The Reasoning
How to Unleash the Potential of Your F&A Department
● How Well Can Your F&A Serve Your Business?
F&A Outsourcing (FAO)● Recommended Approach
● Benefits of This Approach
● Current Trends
Questions & Answers
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● F&A at SME’s: Current Scenario
● Challenges Faced by SME’s Today
● Management’s Expectations From CFO
● How Can These EXPECTATIONS Be MET?
Introduction
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F&A at SME’s: Current Scenario
Handled by in-house team
Outsource individual accounting functions tolocal CPA or accounting firms e.g. Book-keeping,
Payroll etc.
Outsource to local BPOs
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Business Challenges Faced by SME’s Today (1/2)
Challenge #1:
● Managing top-line and bottom-line growth i.e.
▪ How to grow revenue
▪ How to improve profits
Challenge #2:
● Inability to manage growth, due to:
▪ Lack of:
o Robustness of financial processes & systems
o Breadth of skill-set of F&A staff
o Cross-department interaction - Inability to overcome silos
o Robust and precise decision support system
● Upfront Capital Investments in technology and
capabilities
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Business Challenges Faced by SME’s Today (2/2)
Challenge #3:
● Inability to manage risks because of lack of ▪ Systematic statutory compliance process
▪ Timely accounting cycle closures
▪ Reliability, predictability and accurate financial information to drive
business decisions▪ Many hats worn - Fear of dropping the ball
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Expectations From CFO
CFOs of small and mid-sized businesses are too
caught up in day-to-day transaction activities.
Ideally they should :
● Play advisory role concerning entire business agendainstead of an informer .
● Work towards improving efficiency of finance and
provide an enhanced business insight
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How Can These Expectations be Met? Finance & Accounting Outsourcing (FAO) is the
answer:
● Provides you the access to a wider pool of skills
● Helps you leverage global pool of resources
● Enables you to increase or decrease the team size
without hiring full time skilled resources
● Helps you optimize the F&A systems and processes
● Provides you the access to cutting edge technology
without upfront capital investment● Achieve cost advantage on resources and technology
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• SOME CONCERNS
• THE REASONING
Reluctance to Outsource
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Some Concerns (1/2)
I am happy with the current set-up.
My business model is unique, change is risky.
Accounts have to be in-house and right under my nose.
Is it risky exposing financial and transactionalinformation to a external entity?
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Some Concerns (2/2)
It will be too bothersome to make adjustments to
my current system set-up to take advantage of outsourcing
It is difficult to work with people from a differentculture? I work with a local CPA & that should serve me best
Being a small business, I expect my staff to wearmultiple hats and deliver what is required
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The Reasoning (1/2)
Outsourcing is for large enterprises
Ideal outsourcing candidate - Processes that can be
‘lifted & shifted’
Loss of control
Not much of cost advantage for a small businessF&A department
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The Reasoning (2/2)
Too cumbersome to work with external resources,
requires lot of management time
Lack of technology sophistication
Lack of sophistication with regards to businessstrategies
Lack of understanding of benefits of outsourcing/offshoring
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HOW WELL CAN YOUR F&A SERVE YOUR
BUSINESS?
How to Unleash the Potential of Your F&A Department
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How Well Can Your F&A Serve
Your Business?
•
Financial Accounting• End-to-end processes
• Taxes• Financial Reporting
• Management Reporting• Dashboards
• Instituting & managing
performance frameworks• Business process mapping
• Technology transformation
• Planning & Analysis• Treasury and Cost
Management
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• RECOMMENDED APPROACH
• BENEFITS OF THIS APPROACH
• CURRENT TRENDS
F&A Outsourcing (FAO)
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Current Trends
Historically SMEs outsourced single accounting
function
Now several small businesses are considering
their accounting outsource providers as thestrategic partners.
Current trends for outsourcing/offshoring are:● End-to-end accounting processes
● Higher value accounting tasks
● Financial accounting business processes integration
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Recommended Approach To FAO
Identification of the process
● Identify gaps in the F&A department output and assessimpact on business
● Organize internal competencies to focus on selectedprocesses. This may involve releasing them from routine
transactional work ● Remaining areas could be outsourced selectively
● As the relationship grows, enlarge scope to cover strategic
objectives of the F&A department
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Recommended Approach To FAO
Governance Structure
Identification of SPOC
Communication & reporting structure
Point of escalation
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Recommended Approach:
To Unleash The Potential of F&A
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Benefits of Recommended Approach
Minimally invasive
Lower risk
Compliments existing competency pool
High cost benefit
Increased alignment to business objectives
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Engagement Models
Project based
Process based
FTE based
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Contact
Thomas Parackal
E-mail: [email protected]
Telephone: +91-9731156368
www.stylusfms.com
Thank You
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Factors Impacting FAO Adoption By SMEs
Enhanced perceived value of FAO by SMEs.
Increased confidence in outsource providersskills.
Technology advancement and availability of
tools and technologies. Improved accounting process standardization
achieved through FAO
Verticalized FAO services - more comfort to theSMEs.
FAO introduces innovation and efficiency in
their F&A business process
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FAO Penetration
In large organizations ($500 million plus) isestimated at:● 30% to 40% percent for AP & AR for Global 2000
companies.
● Even higher for payroll, except in companies of 25,000-
plus employees, they have their own in-house payrollservice.
In the mid market, under-penetrated, under-
served marketplace:● About 15% to 20% percent penetration of F&A in the mid
market, even on a single-function basis.
● In contrast, payroll has a higher adoption rate-35% to 50%.