Webinar      Can FAO unleash the potential of the F&A         department of Small and Medium                   Enterprises...
Speaker’s Profile     SVP, Business Head – StylusFMS     CFO of Stylus Systems Pvt. LtdSpecialization     Process Manageme...
Agenda   Introduction   ● F&A at SME’s: Current Scenario   ● Challenges Faced by SME’s Today   ● Management’s Expectations...
Introduction       ● F&A at SME’s: Current Scenario       ● Challenges Faced by SME’s Today       ● Management’s Expectati...
F&A at SME’s: Current Scenario      Handled by in-house team      Outsource individual accounting functions to      local ...
Business Challenges Faced by SME’s Today                                                   (1/2)    Challenge #1:   ● Mana...
Business Challenges Faced by SME’s Today                                                   (2/2)    Challenge #3:   ● Inab...
Expectations From CFO    CFOs of small and mid-sized businesses are too    caught up in day-to-day transaction activities....
How Can These Expectations be Met?     Finance & Accounting Outsourcing (FAO) is the     answer:        ● Provides you the...
Reluctance to Outsource                                         • SOME CONCERNS                                         • ...
Some Concerns (1/2)     I am happy with the current set-up.     My business model is unique, change is risky.     Accounts...
Some Concerns (2/2)      It will be too bothersome to make adjustments to      my current system set-up to take advantage ...
The Reasoning (1/2)      Outsourcing is for large enterprises      Ideal outsourcing candidate - Processes that can be    ...
The Reasoning (2/2)      Too cumbersome to work with external resources,      requires lot of management time      Lack of...
How to Unleash the Potential of         Your F&A Department                   HOW WELL CAN YOUR F&A SERVE YOUR            ...
How Well Can Your F&A Serve                   Your Business?         • Instituting & managing         performance framewor...
F&A Outsourcing (FAO)                             •RECOMMENDED APPROACH                           • BENEFITS OF THIS APPRO...
Current Trends      Historically SMEs outsourced single accounting      function      Now several small businesses are con...
Recommended Approach To FAO      Identification of the process   ● Identify gaps in the F&A department output and assess  ...
Recommended Approach To FAO      Governance Structure      Identification of SPOC      Communication & reporting structure...
Recommended Approach:            To Unleash The Potential of F&A(©) Stylus FMS 2011- Confidential & Proprietary.
Benefits of Recommended Approach      Minimally invasive      Lower risk      Compliments existing competency pool      Hi...
Engagement Models     Project based     Process based     FTE based(©) Stylus FMS 2011- Confidential & Proprietary.
Thank You                                                   Contact                                      Thomas Parackal  ...
Factors Impacting FAO Adoption By SMEs  Enhanced perceived value of FAO by SMEs.  Increased confidence in outsource provid...
FAO Penetration  In large organizations ($500 million plus) is  estimated at: ● 30% to 40% percent for AP & AR for Global ...
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Webinar on "Can Finance & Accounting Outsourcing (FAO) unleash the potential of F&A department?

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The industry is abuzz with trends showing the movement of small and medium organizations embracing F&A outsourcing. Experts feel that F&A outsourcing is a significant driver of growth and success for small and medium businesses.

CFOs of SME organizations are under immense pressure from management to make strategic contribution to the business. CFOs generally work with a skeletal team and lean cost structure. Many in-house finance personnel at SMEs lack the capability, training and knowledge to accomplish diverse and complex financial and accounting tasks that are called for time to time. Moreover recruiting the right talent and ensuring optimum utilization of internal resources is a difficult task requiring constant monitoring and management time. In these circumstances can F&A outsourcing come to the CFO’s rescue? CFOs of small and medium businesses are aware of FAO success stories of large enterprises, but they are not sure if small businesses can also achieve the same benefit. SMEs have lower appetite for risk and generally are averse to change. Moreover they associate outsourcing to cost arbitrage. They generally do not consider F&A outsourcing as a tool that will help them contribute strategically towards the growth of the business.

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Webinar on "Can Finance & Accounting Outsourcing (FAO) unleash the potential of F&A department?

  1. 1. Webinar Can FAO unleash the potential of the F&A department of Small and Medium Enterprises? BY Thomas Parackal SVP & Business Head, StylusFMS(©) Stylus FMS 2011- Confidential & Proprietary.
  2. 2. Speaker’s Profile SVP, Business Head – StylusFMS CFO of Stylus Systems Pvt. LtdSpecialization Process Management frameworks – Six Sigma, Balance Score Card exposure in previous organizations Requirements Analysis of medium size businesses and packaging services with cloud based applications for maximizing efficiencies of cost and productivity is a focus area(©) Stylus FMS 2011- Confidential & Proprietary.
  3. 3. Agenda Introduction ● F&A at SME’s: Current Scenario ● Challenges Faced by SME’s Today ● Management’s Expectations From CFO ● How Can These Expectations Be Met? Reluctance to Outsource ● Some Concerns ● The Reasoning How to Unleash the Potential of Your F&A Department ● How Well Can Your F&A Serve Your Business? F&A Outsourcing (FAO) ● Recommended Approach ● Benefits of This Approach ● Current Trends Questions & Answers(©) Stylus FMS 2011- Confidential & Proprietary.
  4. 4. Introduction ● F&A at SME’s: Current Scenario ● Challenges Faced by SME’s Today ● Management’s Expectations From CFO ● How Can These EXPECTATIONS Be MET?(©) Stylus FMS 2011- Confidential & Proprietary.
  5. 5. F&A at SME’s: Current Scenario Handled by in-house team Outsource individual accounting functions to local CPA or accounting firms e.g. Book-keeping, Payroll etc. Outsource to local BPOs(©) Stylus FMS 2011- Confidential & Proprietary.
  6. 6. Business Challenges Faced by SME’s Today (1/2) Challenge #1: ● Managing top-line and bottom-line growth i.e. ▪ How to grow revenue ▪ How to improve profits Challenge #2: ● Inability to manage growth, due to: ▪ Lack of: o Robustness of financial processes & systems o Breadth of skill-set of F&A staff o Cross-department interaction - Inability to overcome silos o Robust and precise decision support system ● Upfront Capital Investments in technology and capabilities(©) Stylus FMS 2011- Confidential & Proprietary.
  7. 7. Business Challenges Faced by SME’s Today (2/2) Challenge #3: ● Inability to manage risks because of lack of ▪ Systematic statutory compliance process ▪ Timely accounting cycle closures ▪ Reliability, predictability and accurate financial information to drive business decisions ▪ Many hats worn - Fear of dropping the ball(©) Stylus FMS 2011- Confidential & Proprietary.
  8. 8. Expectations From CFO CFOs of small and mid-sized businesses are too caught up in day-to-day transaction activities. Ideally they should : ● Play advisory role concerning entire business agenda instead of an informer. ● Work towards improving efficiency of finance and provide an enhanced business insight(©) Stylus FMS 2011- Confidential & Proprietary.
  9. 9. How Can These Expectations be Met? Finance & Accounting Outsourcing (FAO) is the answer: ● Provides you the access to a wider pool of skills ● Helps you leverage global pool of resources ● Enables you to increase or decrease the team size without hiring full time skilled resources ● Helps you optimize the F&A systems and processes ● Provides you the access to cutting edge technology without upfront capital investment ● Achieve cost advantage on resources and technology(©) Stylus FMS 2011- Confidential & Proprietary.
  10. 10. Reluctance to Outsource • SOME CONCERNS • THE REASONING(©) Stylus FMS 2011- Confidential & Proprietary.
  11. 11. Some Concerns (1/2) I am happy with the current set-up. My business model is unique, change is risky. Accounts have to be in-house and right under my nose. Is it risky exposing financial and transactional information to a external entity?(©) Stylus FMS 2011- Confidential & Proprietary.
  12. 12. Some Concerns (2/2) It will be too bothersome to make adjustments to my current system set-up to take advantage of outsourcing It is difficult to work with people from a different culture? I work with a local CPA & that should serve me best Being a small business, I expect my staff to wear multiple hats and deliver what is required(©) Stylus FMS 2011- Confidential & Proprietary.
  13. 13. The Reasoning (1/2) Outsourcing is for large enterprises Ideal outsourcing candidate - Processes that can be ‘lifted & shifted’ Loss of control Not much of cost advantage for a small business F&A department(©) Stylus FMS 2011- Confidential & Proprietary.
  14. 14. The Reasoning (2/2) Too cumbersome to work with external resources, requires lot of management time Lack of technology sophistication Lack of sophistication with regards to business strategies Lack of understanding of benefits of outsourcing/offshoring(©) Stylus FMS 2011- Confidential & Proprietary.
  15. 15. How to Unleash the Potential of Your F&A Department HOW WELL CAN YOUR F&A SERVE YOUR BUSINESS?(©) Stylus FMS 2011- Confidential & Proprietary.
  16. 16. How Well Can Your F&A Serve Your Business? • Instituting & managing performance frameworks • Financial Accounting • Business process mapping • End-to-end processes • Technology transformation • Taxes • Financial Reporting • Planning & Analysis • Management Reporting • Treasury and Cost • Dashboards Management(©) Stylus FMS 2011- Confidential & Proprietary.
  17. 17. F&A Outsourcing (FAO) •RECOMMENDED APPROACH • BENEFITS OF THIS APPROACH • CURRENT TRENDS(©) Stylus FMS 2011- Confidential & Proprietary.
  18. 18. Current Trends Historically SMEs outsourced single accounting function Now several small businesses are considering their accounting outsource providers as the strategic partners. Current trends for outsourcing/offshoring are: ● End-to-end accounting processes ● Higher value accounting tasks ● Financial accounting business processes integration(©) Stylus FMS 2011- Confidential & Proprietary.
  19. 19. Recommended Approach To FAO Identification of the process ● Identify gaps in the F&A department output and assess impact on business ● Organize internal competencies to focus on selected processes. This may involve releasing them from routine transactional work ● Remaining areas could be outsourced selectively ● As the relationship grows, enlarge scope to cover strategic objectives of the F&A department(©) Stylus FMS 2011- Confidential & Proprietary.
  20. 20. Recommended Approach To FAO Governance Structure Identification of SPOC Communication & reporting structure Point of escalation(©) Stylus FMS 2011- Confidential & Proprietary.
  21. 21. Recommended Approach: To Unleash The Potential of F&A(©) Stylus FMS 2011- Confidential & Proprietary.
  22. 22. Benefits of Recommended Approach Minimally invasive Lower risk Compliments existing competency pool High cost benefit Increased alignment to business objectives(©) Stylus FMS 2011- Confidential & Proprietary.
  23. 23. Engagement Models Project based Process based FTE based(©) Stylus FMS 2011- Confidential & Proprietary.
  24. 24. Thank You Contact Thomas Parackal E-mail: thomaspm@stylusinc.com Telephone: +91-9731156368 www.stylusfms.com(©) Stylus FMS 2011- Confidential & Proprietary.
  25. 25. Factors Impacting FAO Adoption By SMEs Enhanced perceived value of FAO by SMEs. Increased confidence in outsource providers skills. Technology advancement and availability of tools and technologies. Improved accounting process standardization achieved through FAO Verticalized FAO services - more comfort to the SMEs. FAO introduces innovation and efficiency in(©) Stylus FMS 2011- Confidential & Proprietary. process their F&A business
  26. 26. FAO Penetration In large organizations ($500 million plus) is estimated at: ● 30% to 40% percent for AP & AR for Global 2000 companies. ● Even higher for payroll, except in companies of 25,000- plus employees, they have their own in-house payroll service. In the mid market, under-penetrated, under- served marketplace: ● About 15% to 20% percent penetration of F&A in the mid market, even on a single-function basis. ● In contrast, payroll has a higher adoption rate-35% to 50%.(©) Stylus FMS 2011- Confidential & Proprietary.

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