CFOs require a single view of the balance sheet based on accurate, real-time data. However, many institutions still take a fragmented, departmental approach to reconciliation based on multiple systems and frequent manual interventions. Account certification and balance sheet attestation risks can be mitigated by automating and consolidating compliance processes through an enterprise-wide reconciliation solution, and many forward-looking institutions are implementing this based on a shared services delivery model. With this approach, organisations can centralise point solutions, expertise and best practices needed for efficient reconciliation into a single system.
Consolidation helps institutions lower operating costs, free staff for more value-added work, demonstrate regulatory compliance, and quantify returns on investments to stakeholders. Centralisation of reconciliation processes based on shared services delivery also provides major benefits in terms of increased visibility, releasing information previously held in siloed systems and giving CFOs and other senior managers a current, accurate view of business performance. To build a successful Centre of Excellence or shared services strategy there are a number of steps to consider.
1. Secure Board-Level Buy In
A move to shared services means bringing multiple reconciliation teams and resources into a single, centralised function. This requires significant re-organisation, as well as investments in infrastructure and training, so it is vital to secure buy-in at the board level. A solid business case will be needed to demonstrate the cost-saving potential of shared services, as well as their potential to provide real-time visibility of the balance sheet and reduce regulatory risk.
2. Choose the right platform
Often, specific steps in the reconciliation process are handled by specific systems, such as the general ledger system or trading system. To support a centralised, approach, you need a technology solution that can bring all of these elements together and provide a single version of the truth for senior management. In addition, the best reconciliation solutions support a phased migration to shared services that minimises CAPEX costs and risk. It should be possible to start with basic reconciliation first and build in advanced workflows and reporting features later on to support cost-effective, low-risk deployment.
Finally, reconciliation systems should be scalable enough to accommodate vast increases in transaction volumes, ensuring that the technology underpinning shared services is never a barrier to business growth.
3. Establish future processes
Once an enterprise-strength reconciliation technology has been chosen that brings everything together for the business and provides a single version of the truth, future work processes must be established.
Reconciliation specialists from across the business should work together to standardise reconciliation rules institution-wide and define the standards using comprehensive process templates. The same team responsible for establishing consistent reconciliation processes should also decide which elements of the reconciliation process should be included in the shared service. Decisions should be based on a detailed assessment of each element of the process and its value for the business.
4. Work Together With Your Internal Customers
One common mistake is to think of the shared services function/COE model as just another siloed department, as this limits its value. By building bridges with all departments, and keeping the lines of communication open, it’s possible to identify new opportunities for process improvements, and collectively agree upon changes that add value for internal customers.
5. Demonstrate and Generate Value
Whether the shared services function resides inside or outside the organisation, a standard charging model should be implemented based on per-transaction billing or billing over a specific time period. This makes it possible to quantify returns on investment, engage new areas of the business, improve service level agreements (SLAs) and increase adoption for services.
By centralising the reconciliation process through a shared services model, institutions will see major operational efficiencies in terms of increased visibility and efficiency, providing a current and accurate view of business performance and reducing compliance risk.
By Eric Werab, Director of Financial Control Solutions, Fiserv