For a few years I ran an Accounting & Control shared service. It supported several business areas with a combined turnover of billions of euros and more than 100 legal entities to report for. This article is about the operating model we put in place, what it changed and what is still left to do.
When we started, a lot of the accounting work was spread out in the entities, done in different ways and presented in different ways. More than 100 people were involved, and some of them spent less than 5% of their time on accounting. Balance sheet reconciliations were a good example, since they were prepared differently from one entity to the next and it was often hard to tell who had reviewed them. Nobody can keep up a consistent standard on work they touch a few hours a month.
So the job was to find out who did what, make it standardised and move it in.
In my last article I wrote that many process owners have the title but not the power to use it. Here I will compare our achievements with those insights.
How the model was put together
We had a mandate from the finance harmonisation programme to reduce variation and centralise recurring period-end tasks. Around the same time the organisation started working by process rather than by department, and a digital service portal was introduced where requests could be logged and tracked.
Several teams had already fixed problems in their own areas, for instance gaps in reporting or steps in the close where work tended to pile up. Instead of starting a new programme, we documented what was working, connected it and added what was missing. People recognised their own improvements in the result, which made the model easier to accept.
The model covers Record-to-Report from subledger close until validated data is handed over for group consolidation (consolidation isn’t in it, and neither is system ownership). Agreeing on that boundary early saved us many discussions later about whose task something was.
Roles and governance
Delivery is organised around five roles. Controllers check that the figures are correct and make sense for the business, while Accountants do the recurring, standardised work across the entities. Quality and process improvement sit with the Subject Matter Experts (SMEs). A Reporting Responsible (RR) coordinates the reporting flow and explains what the numbers mean for the business, and governance, collaboration and the escalation paths belong to the Shared Service Representatives (SSRs).
The same person can hold more than one role, so a Controller may also be an RR and an Accountant may also be an SME. We did this on purpose. It gives cover when someone is away and lets people develop, and we can take on more volume without another management layer.
SMEs, RRs, SSRs and team managers meet once a month, mainly to pick up problems before they grow. Delivery issues are escalated from the RR to the team manager and then to the department head. Process issues follow a different route, from the SME through the SSR to the Process Owner, and on to the finance leadership team if they cannot be resolved there.
Close cycle time, reconciliation coverage, reporting accuracy and stakeholder feedback are followed up regularly, with case data from the portal showing the trend over time. Capability-maturity assessments are run now and then to find out where more automation or standardisation would be worth the effort.
What it gave us
The most important change concerns timing. Every balance sheet reconciliation is now reconciled and approved before the close, whereas many of them used to be approved several weeks after the books had been closed.
We can also follow the entire R2R process, and the reconciliations look the same regardless of which entity they come from. Our first estimate for the centralised work was around eight FTE, but three turned out to be enough.
With documented roles it has become possible to base resource planning, succession and coaching on what people actually do. The teams depend less on a handful of key persons, and the quality of a reconciliation no longer rests on people for whom accounting is only a small part of the job. Among the roles, the RR has done the most for the relationship between finance and the business, since the RRs sit between the business units and the shared service and help each side understand the other.
What was difficult
Complexity and quality were the two concerns we heard most often. People who had done the work locally for years worried, with good reason, that it would suffer once it moved further away from the business it described.
What helped was a series of workshops in which every stakeholder group could see the model and change it before it was finalised. Senior management also made its support visible, which mattered as much as the workshops did. Harmonisation was slowest in the business areas that had least in common, where different processes, systems and reporting needs made a single way of working harder to justify.
The three questions
In my last article I suggested three questions for testing whether a process owner can actually own a process. The Process Owner for R2R in this model is a senior finance leader on the control side, and none of the three conditions is fully met yet.
Does the process owner receive integrated performance data from all contributing functions?
Not yet. The metrics are followed up team by team, and putting together an end-to-end view for the Process Owner is the first priority.
Can the process owner approve a cross-functional change without the approval of each function head?
The mandate is being discussed. Until it is settled, changes that affect more than one team or business area go to the finance leadership team.
Is the process owner evaluated on at least one KPI that covers the whole process?
Not today. Linking the evaluation to an end-to-end R2R measure is planned for the next phase.
The ZHAW/BOC study of 299 organisations that I discussed in the previous article found that few organisations get further than establishing the roles. Our model fits that pattern, and seeing it in our own work was one of the reasons I wrote the article. The roles, the scope and the governance are working and have delivered results. Data for the Process Owner comes next, followed by the mandate and then the incentives, since a mandate and incentives achieve little without reliable data.
For anyone building a comparable model, I would start by documenting what already works and agree on the scope early. Concentrating the work in a small team gave us more consistent reconciliations and a larger efficiency gain than we had planned for. I would also give the workshops plenty of time and ask senior management to state its support openly. The one thing I would change is to decide at the start how the Process Owner will get data, a mandate and incentives, because we postponed those questions and they have taken a long time to resolve.
If you are working on something similar, I would be glad to exchange experiences.