Do’s and don’ts for credit management in a shared services centre

Do you work with a shared services centre for your credit management or are you planning to set one up? Check the do’s and don’ts for the best results.

Shared services centers (SSC) can reduce costs and increase the quality of internal services. Centralisation of work can offer scale benefits and advantages through standarisation of work. A shared services centre is more than just a centralisation of operations. The shared service centre approach is based on concentrating activities that need similar competence or expertise within a business process. The operation is often partially or fully outsourced.  A shared services centre sounds like the perfect solution! Be aware that not all customers are the same and therefore your approach should be appropriate for your customers. A few important do’s and don’ts to consider:

Do: Create a clear business case

What is the purpose, what are the goals of the SSC? What is the reason to move to shared services? Investigate whether this is feasible for your organisation, support and technical resources. Perform a benchmark study and determine not only the outcome, but also make sure to get insight into the boundaries of the SSC. It is important to know this in advance, so your employees can adapt to this. Setting up shared services is the ideal moment to re-asses your strategic objectives and (re)capture them.

Do:
Compare costs and benefits of outsourcing versus in-house
Cost reduction up to 50% are usually the driver behind the choice for outsourcing or centralisation. Efficiency and cost reduction should not be more important than quality, customer relationships and the speed of processing. Continuity can be a benefit of the SSC design, a less stable team can interfere with this. In low(er) wage areas such as Eastern Europe, employees tend to change jobs extremely quick if they can earn a few euros extra somewhere else. Therefore it pays to invest in a stable management and a solid method to transfer the knowledge internally by, for example, appointing a dedicated trainer. The educational level and the loyalty of employees in low-wage countries such as India is often higher. But does the distance and the time difference result in a suitable situation? It is for you to judge if this works.

Don’t:
Do exactly what your competitor is doing
Companies can feel pressured by competition to outsource their credit management to shared service centres. Shareholders want to see good results and choose SSCs only from the perspective of cost reduction. You are free to choose a different approach and focus on customer contact as your unique selling point. Some buyers are not motivated by cost, but find qualities such as personal contact, help in their own language or nearby presence more important. It is up to you to find the right balance between flexibility and customer-focus or standarisation and efficiency.

Don’t:
Work with an authorisation structure for employees
How many employees does your SSC have? And how well do you know each of them? It is important that the right action is taken on the right moment. A complicated authorisation structure that reserves certain actions for senior employees only, can over-complicate things. Work can be done faster and more effective when you give the SSC staff more freedom. Giving your employees their own responsibilities, such as a customer portfolio, improves the quality of communication towards your customers. Besides, allowing your employees an opportunity to get involved will result in more loyalty towards your organisation.

Do:
Choose process or regional approach
A process focused SSC allows a higher degree of standarisation compared to a regional approach. Complaints, accounts receivables or accounts payable administration can run smooth and efficient. A process based approach makes it difficult to maintain an overview. Therefore a regional approach can be the best choice for some organisations. Employees with a wider range of skills are scarce and this classification does not always match company policies. Especially for relatively small countries or language regions (such as Portugal or The Netherlands) it can be a challenge to find a suitable employee for each process. By segmenting employees into region, country of language, a higher quality of service and customer contact can be achieved. The structure of your organisation and the objectives of SSC determines which is your best approach.

Don’t:
Make language your number one priority
Don’t focus primarily on the language: culture, way of communicating, local traditions and manners are just as important. Local staff ensures you that your customers will be treated appropriately. Using supporting software that is available in multi language, allows your employees to work in the same system in their own language. Using good standard emails and letters in which, for example, only the invoice line needs to be included, brings many benefits. When making a telephone call to a customer it can be more important to know what’s going on and how to approach this client than to speak his language perfectly.

Conclusion
The do’s and dont’s described above, are mainly intended as food for thought. Experience shows that a turnkey approach that guarantees success for your shared services centre, does not exist. The proper preparation and a critical but realistic approach is a good step towards success and results.

Contact or more information?
Do you want to know more about successful credit management and how OnGuard credit management software can help you achieve this? Please contact OnGuard via +31 (0)294 25 6666 or contact@onguard.com. Follow @OnGuardHQ on Twitter to stay up to date.

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