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.

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. Speaker’s Profile
SVP, Business Head – StylusFMS
CFO of Stylus Systems Pvt. Ltd
Specialization
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. 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. 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. 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. 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. 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. 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. 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. Reluctance to Outsource
• SOME CONCERNS
• THE REASONING
(©) Stylus FMS 2011- Confidential & Proprietary.

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. 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. 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. 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. 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. 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. F&A Outsourcing (FAO)
•RECOMMENDED APPROACH
• BENEFITS OF THIS APPROACH
• CURRENT TRENDS
(©) Stylus FMS 2011- Confidential & Proprietary.

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. 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. Recommended Approach To FAO
Governance Structure
Identification of SPOC
Communication & reporting structure
Point of escalation
(©) Stylus FMS 2011- Confidential & Proprietary.

21. Recommended Approach:
To Unleash The Potential of F&A
(©) Stylus FMS 2011- Confidential & Proprietary.

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. Engagement Models
Project based
Process based
FTE based
(©) Stylus FMS 2011- Confidential & Proprietary.

24. Thank You
Contact
Thomas Parackal
E-mail: thomaspm@stylusinc.com
Telephone: +91-9731156368
www.stylusfms.com
(©) Stylus FMS 2011- Confidential & Proprietary.

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. 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.