In the first part of this three-part series, we summarized the impact shared service centers can have for statutory reporting. In this post, we specify four ingredients that work together to deliver value.
When it comes to handling statutory financial reporting efficiently, the finance operations of multinational firms tend to look for four essential ingredients:
- The right people
- Scalable, repeatable processes
- Strong, flexible technology
- Reliable data
When all four work in harmony, the shared service center generally delivers substantial value, both for the people who work in operational roles in tax and finance as well as to the management stakeholders responsible for risk mitigation and strategy.
Ideally, a finance team already has the right people in place, and techniques used to collect and structure data are sound. The inclusion of a shared service center can address the two remaining needs. They facilitate scalable, repeatable processes and feature strong, flexible technology.
Tax and finance departments are at an existential crossroad. Plowing forward with business as usual means ignoring the potential of modern technology to augment teams, reduce risk, and scale operations. As one C-Suite executive put it in recent roundtable we hosted with Deloitte in Australia, “If we’re choosing to ignore the developments in technology, we risk being left behind and creating a gap that’s too big to bridge.”
But taking a turn towards truly leveraging technology in their day-to-day operations means proactively evolving the role of tax and finance teams to a forward-looking function that centers on strategic advisement. Bottom line: Shared service centers get tax and finance out of the rut of being perceived as a cost center, and into a position to deliver greater value.
“We can no longer be seen as cost centers; we need to be able to show and explain the value we bring,” said another roundtable participant.
Tax and finance can take notes from colleagues who work in other parts of the enterprise when it comes to the value that automation and standardization can deliver, and for empirical evidence of the practical outcomes. Because of both internal and external disruptions, departments such as information technology, sales, marketing, and help centers have all experienced an existential need for transformative efforts that harmonize people, processes, technology, and data. All have experienced the typical issues that arise when technology’s potential replaces human processes, and each area is handling this evolution in its own ways.
The tax and finance leaders we speak with are conscious that, in order to scale, they need some kind of hybrid model that blends internal and external resourcing when it comes to where their statutory financial reporting data is stored, how it can be accessed, and the process used to turn it into compliant reporting. This is particularly so for multinational enterprises that deal with demanding regulatory regimes, unusual regulatory schemes, or specific language requirements.
Typically, a partnership between a traditional shared service center and a center of excellence is a hybrid model worth considering. This generally involves outsourcing some elements of the process to teams or consultants with regional expertise, but has finance in control of technical review and sign-off.
The essential value-add of a shared service center is in achieving consistency and establishing a trusted source of information for tax and finance teams. It is a must-have for any finance team turning towards technology for sustainability and scale.
The third and final post of this series will unveil a forthcoming feature of Thomson Reuters ONESOURCE Statutory Reporting.