Accounts Payable Geographic Design and Structure
Most companies aspire to find the optimal balance between global scale and local flexibility. From an efficiency view, a single global payment-processing center may be optimal, but depending on any number of factors, may not be practical. Member companies within Peeriosity for Shared Services recently completed a benchmarking exercise, which included information on their current Accounts Payable function.
Accounts Payable Geographic Design
Our results indicate that very few organizations are running a single Accounts Payable center for their global operations. The most prevalent models are a multi-regional model in which more than one of their business unit regions receives service from a common center and the country-specific model. Language, cultural issues, and statutory requirements were mentioned as the greatest barriers to a more globalized approach.
Accounts Payable Sourcing
While there are many excellent outsourcing providers, especially as it relates to Accounts Payable, the vast majority of our members remain primarily onshore captives. “Lift and Shift” has not been replaced with “Improve and Move” but instead “Improve, Improve Some More, and Consider a Move”. As many mature Shared Services organizations have made great strides in removing much of the labor from Accounts Payable (through end-to-end procure to pay process initiatives), outsourcing is no longer a strategic decision as much as it is a tactical decision as to who and where to perform the remaining rules-based processing.
Shared Services organizations have made great progress in improving their end-to-end Procure-to-Pay processes. It has led to increased standardization in both processes and technology within their global operations. While some barriers may remain in moving to a single global Accounts Payable center, a value-adding scale is being created by migrating to regional and multi-regional Accounts Payable structures.
For more mature Shared Services, sourcing is a tactical decision following process improvements and realization of benefits. There is a reluctance to leave significant opportunities for a provider to realize future benefits by sharing a contract negotiation point. Formal methodologies have emerged that assist global process owners to ascertain exactly what services and at what maturity points, an activity is a candidate for outsourcing. For others, realizing some immediate payback from an outsourcing arrangement is a priority that best meets their current circumstances, and choosing the correct partner can lead to a beneficial relationship.
Peeriosity members can access full details (including quantitative benchmark correlation of Key Practices performed by member companies) and perform custom research in the Accounts Payable Research Area.
How is your Shared Services organization collaborating with peers and gaining insights?