Introduction
When you consider the different components of Accounts Receivable (AR) [1], according to Peeriosity’s Process Design Survey 45% of member companies have the Billing process in Shared Services, 41% include Credit Administration, and 59% include Customer Payment Processing [2] and Cash Application [3] as part of that structure, making the AR process one of the most likely to be within scope. Even so, many companies continue to have numerous locations in which they do business that are carrying out Accounts Receivable related activities.
While the benefits of a consolidated AR operation can be obvious, the challenges (both actual and perceived) of carrying out this type of consolidation effort can be daunting, including disparate or inadequate systems, regulatory compliance issues, the risk of losing key knowledge workers, and perceived risks with concerns about negatively impacting customer relationships.
iPollingTM Results Review
A recent Peeriosity poll created using the iPollingTM technology looks at the current status of Peeriosity member companies for consolidating the AR function to fewer locations, and also the greatest challenges expected or encountered when doing so. The results indicate that 41% of member companies have a high level of consolidation into fewer locations and another 11% with a moderate level of consolidation. Of the remaining companies, 9% have approved the consolidation of AR into a few locations and an additional 18% are evaluating the idea, with only 5% indicating they had considered the opportunity and decided not to. Here are the details:
When considering consolidation challenges, 29% of member companies indicated that the lack of a single ERP was the biggest challenge, with another 29% indicating that difficulty in standardizing processes across locations was the biggest challenge. Other responses included the potential of losing key knowledge and resources at 14% and the potential of impacting key customer relationships at 9%.
Poll comments from Peeriosity members on this topic include:
- Each subsidiary runs independently of Corporate and has different ERP systems.
- At first, when we were centralizing the AR functions, I would have said that the loss of key knowledge regarding external customers was our hurdle. But as we have migrated many businesses, I feel the lack of a standard ERP system impacts the consolidation of the AR function greatly. My team works on 4 different instances of SAP – slight variations in how they work in applying cash. We also work on 6 other ERP systems – JDE, Glass Trax, BPCS, Epocor, Great Plains, and Quick books [4]. My team is cross-trained on all, but it can be confusing when challenges arise.
- Driving towards consolidating to one central Finance ERP to drive single process. This will be a multi-year process.
- Regional systems and a requirement for local language support currently dictate the need to maintain a regional approach.
- Issues with local language, relationships, legal and regulatory requirements.
- All of the listed challenges have been issues to overcome, not sure any one of them is greater than the other, but we are making good progress at overcoming each of these as we move forward.
Closing Summary
Moving work processes to a common systems platform, standardizing work processes, and achieving greater scale by performing processes from a limited number of locations, has been a strategy that has enjoyed great success at many companies around the world. While there may be greater attention paid to Accounts Receivable processes because of how they potentially impact end customers who purchase the company’s goods or services, they are, nonetheless, excellent candidates for either centralization or consolidation into Shared Services, where the delivery of the processes is performed for either one or, for global companies, a limited number of regional locations.
What components of the Accounts Receivable process do you have in Shared Services? To what extent do you have AR processes consolidated into fewer locations?
Who are your peers and how are you collaborating with them?
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“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.
Peeriosity members are invited to log into www.peeriosity.com [5] to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here [6]