4 Challenges of Starting Financial SSC & How to Overcome Them
A financial shared service centre (SSC) is often established to streamline and consolidate business operations within one parent company. It can help the business in many ways such as scaling up, decreasing costs, and centralising control. It is estimated that over 80% of Fortune 500 companies have implemented some form of shared service concept, expanding more and more to Asia and South America.
Read more: Getting Started with Financial SSCs
However, as with numerous business ventures, setting up an SSC presents its own unique set of challenges. Here, we will uncover several common obstacles while also adding what you can do about it to set your sails and stay cautious. This is so that you will know what to expect and what needs to be prepared when getting started with a financial SSC of your own.
Challenge No.1 : Task Redundancy
With the growth of multiple business operations and locations, naturally there will be more data collected that needs to be analyzed and recorded accordingly. The main challenge of a young SSC is sorting out clear-cut instructions and procedures over task assignments. As a result of unclear communication and/or structure, task duplicity may happen where different people are doing the same task or having to go through unnecessary steps to get one thing done. Tasks such as invoicing, bank reconciliation and more could end up being messy without any coherent structure.
Documentation is therefore essential when building a new financial shared service centre (SSC). Setting up a workflow, processes, and procedures will reduce redundancy and unnecessary steps. It should be standard operating procedure to have a tight documentation and clarification of employee responsibilities for any new SSC.
Challenge No.2: Supervision & Leadership
Every business unit needs strong leadership and supervision. The leader not only needs to supervise and help the team, but he or she also needs to manage customers, suppliers, and other stakeholders as well. This key employee must have strategic skills to drive the SSC forward while showing resilience and approachability. Hiring the wrong person can damage the efficacy and morale of the whole SSC.
A general manager fits the role, but having someone with expertise and up-to-par of the operating knowledge of a financial SSC is much more efficient. Hiring one full-time will ensure complete focus and responsibility towards the SSC. Ultimately, you would want a good leader who can look beyond short-term success and how they can impact the business on a wider scale. In order to heighten the chances of success, some companies may also engage an experienced professional firm to advise and guide the initial implementation of an SSC.
Challenges No.3: People & Training
There are a few areas that SSCs normally face when it comes to human resources. First, the challenge of retrenchment due to outsourced or relocated departments. Second, finding and hiring talent in the new location of the SSC and most importantly, clarifying the transition with the existing staff and key stakeholders.
Before considering retrenchment of current employees, perhaps look at retraining on new tasks to adapt to the change. Since the SSC will be handling the bulk of the financial services, it could be an opportunity to upskill your current workforce to do something bigger for the company. As for new talents, always study the viability of the new location and how big of the talent pool it has. Malaysia, for example, is a great country for many multinational SSCs due to its well-trained and accredited workforce. Finally, provide a period of transition for the change to happen. When done right, the transition will reduce loss of financial resources and ensure satisfaction from not just the staff, but all your stakeholders.
Challenge No.4: Key Planning
Of course, strategy and planning remains one of the key challenges for many businesses looking to start a financial SSC. Apart from location, there is also the question of system integrations, technology used, service level measurements, local regulations, and so much more. Then there are short and long term strategies to consider as you look to expand or consolidate different business units or regions into the SSC.
Planning how your financial SSC will work should be top priority, listing out all operational concerns and needs and obtaining information from all moving parts of the business. Define KPIs and SLAs early on to maintain client satisfaction so the transition goes without a hitch.
There is also an option to get someone in and help you plan and set up your SSC successfully. You can start with Ledgen for professional advice and consultation to ensure your local financial SSC complies to regulations while ticking off the checklist to an efficient shared service centre.
Success is not a matter of intensity but it is of balance, order, rhythm and harmony. In order to reap the benefits of an effective shared service centre, all possible roadblocks must be anticipated and countered.
At Ledgen, we can help share our best practices when it comes to incorporating a financial SSC. We are a strong team of professionals with vast experience in the industry to help you the best out of your transitioning and adapting period.