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How much value does your credit and collections shared service center add?
February 23, 2017
Cost efficiency to working capital optimization, seventy percent of companies are satisfied or very satisfied that their shared service center has allowed them to achieve their objectives, according to a recent FIS survey. While that would tend to suggest that corporations are reaping the rewards of shared services, there is still a large group for whom the promise has not resulted in demonstrable success. So how can those who have achieved only partial success improve?
One of the first steps may be to determine what demonstrable success looks like. Two factors are key to satisfaction in the performance of a shared service center: internal culture and the ability to measure performance. Issues with culture can result in unreasonable expectations, which hamper a shared service center in fulfilling its responsibilities. Inability to measure performance, meanwhile, prevents the value from being quantified; It also inhibits actions that can identify limitations and improve performance.
Credit and collections shared service centers and business units need an objective, documented service level agreement (SLA) on which to operate. This outlines each party’s obligations as well as the contribution it needs from others to fulfill them. In addition, there needs to be an objective mechanism for monitoring performance against the SLA.
While this may seem obvious, the reality is that many shared service centers struggle to achieve an objective way of monitoring and evaluating performance. As a result, evaluations can become subjective, often based on individuals’ or departments’ vested interests.
Instead, a clearly documented SLA – with regular monitoring of performance based on quantifiable, system-produced metrics – can be a valuable way of measuring performance. It also provides a benchmark on which improvements can be based.
This is a valuable way of building relationships between a credit and collections shared service center, as well as the business units it supports. It demonstrates value, and it prompts discussions and actions to further improve the process.
Measurable performance against key indicators and a clearly documented SLA can be a vital steps that build confidence and deliver value.