SSC-Accounts Receivable

Shared Service Center is a business unit or a physical entity dedicated to providing

transactional-processing services for multiple business units within a large enterprise.
Typically used by MNCs- spread across the globe, SSC acts as an in-house sourcing centre
which focuses on consolidating and standardizing a particular business process in low cost
locations. However, SSCs can bring more to the table than pure cost-savings. If implemented
properly, a Shared Service Center can establish better process controls, provide better service
delivery and improve process and employee efficiency.
SSC for Accounts Receivables:
Receivables and Payables are the major building blocks of a solid working capital for an
organization. While organizations across the globe have taken a step forward towards
optimizing AP processes, service delivery optimizations of AR departments are often kept in
the back burner. For a holistic growth, organizations need to continue to improve and
optimize their process effectiveness and service delivery models. Standardizing and
consolidating end-to-end receivables is the next logical step towards achieving this.
The key strategic objectives for an AR SSC are:
To achieve operational efficiency via standardization, consolidation and automation.
To offer better customer experience through key touch points such as order processing,
invoicing and payment
Workforce optimization via removal of duplication of resources and associated hidden
cost
Optimize key AR processes such as remittance matching and cash application,
collections, reconciliations, dispute management etc. through automation technologies
To achieve organizational scalability & agility for geographic expansions and
acquisitions.
Technology as an SSC enabler:
There is often a gap between SSC as an organizational strategy and SSC as an actual
deployed solution for business optimization. Technology can be leveraged to bridge this gap.
State of the art technological solutions are available to centralize, consolidate and automate
the entire Order to Cash process including Accounts Receivables. For e.g. Companies,
globally are increasing focus on collections and optimizing accounts receivable performance
indicators such as DSO (Days Sales Outstanding). One way to achieve reduce DSO is to
centralize Accounts Receivable into Shared Service Centres or collection factories. By
centralising remittance matching and collections, these organizations can collect cash more
efficiently, standardise performance monitoring and optimize processes for collections and
establish better credit & delinquency analysis.

SSC technology automation need not be limited to Accounts Receivable but can be deployed
across the Order to Cash process as a whole. Process automations in Order to Cash are as
follows:
Customer Order Processing & Validation
Order Acknowledgement
Sales Order Creation
Invoicing & Collections
Remittance matching & Cash Applications
Reporting
For instance, technological tools such as Optical Character recognition, validation checks and
workflows are helping organizations to automate hitherto manual data entry and validation
tasks such as processing paper/email purchase orders to create Sales Orders/Order
Acknowledgements and matching incoming payments to open invoices for clearance.
SSC is not the same as outsourcing:
The key reason why organizations shy away from establishing a Receivables SSC is because
of the level of sensitivity involved in dealing with customer based processes. Receivables as
a business unit often times involves a lot of customer-centric data and correspondence.
Outsourcing of AR can thus involve an external organization handling such sensitive &
regulation bound tasks. Although blurred, there is still a distinction between Shared Service
Centres and Outsourcing. SSC operate as an internal customer service business whereby, it
charges the business units for the services provided and provides services in adherence to
SLAs. Hence organizations can still maintain the desired control and customer centric
regulatory compliance while leveraging the benefits of outsourcing.
Key Metrics:
The following metrics/KPIs can be set in place to monitor the performance of Receivable
SSCs. These include:
Days sales outstanding (DSO)
Cost of remittance
Remittance per FTE
Incorrect invoices
Credit checks per FTE
Customers per FTE
For any organization, efficient cash flow management is a key business objective. Regardless
of the current profitability of a firm, it can still experience cash flow problems because of
inefficient receivable processing. Shared Service Center for Receivables can dramatically
optimize the credit-to- cash process and optimize cash flows within an organization. The
successful implementation and application of SSCs is helpful for companies to improve
service quality, reduce operation costs and enhance core competency. Thus, for organizations
considering to optimize their Receivable, a Shared Service Center with appropriate
automation technologies is the right wave to ride.