As organizations navigate through the pandemic, the role of Shared Services Centers (SSCs) – long valued for its ability to save costs – has become increasingly important. SSCs are enabling businesses to focus on reducing finance costs and optimizing working capital in today’s uncertain environment. With the pandemic exposing gaps within existing SSC support models, organizations are faced with the pressing need of accelerating its digitization plans to strengthen finance operations and ensure business continuity.
Based on a survey conducted by J.P. Morgan on global clients who have SSCs, approximately 90 percent of global corporates have centralized at least one finance function into their SSC. The survey also highlighted that 65 percent of clients are focused on finance transformation initiatives and indicated the growing importance of the SSC in their business models.1
Amid a crisis, corporates tend to face an influx of payment inquiries as their cash-strapped suppliers seek early payments to manage tight liquidity positions. These additional requests often translate to a significant increase in workload for Accounts Payables (AP) teams already coping with large volumes of planned and urgent payments. Connecting your enterprise resource planning (ERP) systems and supplier portals to your bank through APIs provides your suppliers with a simple, real-time resolution to access payment information. The API connection enables your supplier portal to automatically extract payment confirmations from your bank statements, empowering suppliers with a self-service tool to track payment status directly on their end and freeing up capacity for AP teams to focus on optimization initiatives like analyzing and rationalizing urgent payments that directly impact working capital.
Asia Pacific’s diverse regulatory landscape can sometimes lead to challenges faced by SSCs in the execution of cross-border and statutory payments.
This is especially true in markets that require additional manual documentation to facilitate transactions, resulting in errors involving incorrect or missing fields or details. A strategic banking platform that can digitize the end-to-end execution and issue resolution can help SSC teams immensely.
The use of virtual platforms has grown substantially since the onset of the pandemic, as companies seek rapid solutions to overhaul manual submissions with digital processes. J.P. Morgan’s Virtual Branch has been rolled out in markets like China, India, Indonesia, the Philippines and Vietnam in varying degrees in each country to help clients digitize processes when making cross-border payments, currency conversions or statutory tax payments.
As the order-to-cash process has a direct impact on the working capital needs of an organization, finance practitioners are looking to increase the level of automation in this process. Particularly challenging is the manual nature of reconciliation, also known as the cash application process that requires staff to manually reconcile multiple payments received against their outstanding customer invoices.
Leveraging the right banking infrastructure can help SSC teams reduce manual intervention and speed up processing times by improving automatic invoice matching rates.
Leveraging the right banking infrastructure can help SSC teams reduce manual intervention and speed up processing times by improving automatic invoice matching rates. For example, J.P. Morgan’s Integrated Receivables platform aggregates fragmented data points across multiple sources and ERP outputs to automatically reconcile receipts with the corresponding invoices. With SSCs now playing a more prominent role in cost optimization, integrating ERP systems into banking platforms can help automate the cash application processes, enabling account receivables (AR) resources to be allocated to activities that provide more value-add, such as resolving disputes, partnering with sales teams to reduce accounts receivables past due in an effort to improve working capital.
Amid movement restrictions during the pandemic, delivering physical documents and securing wet-ink signatures from authorized signatories within the same day for a range of regular banking processes have also become highly challenging. In some cases, bank rationalization initiatives have been deferred, due to heavy reliance on the wet-ink process. Electronic signatures or e-signatures enable clients to digitize the age-old processes of manual bank account opening and other agreements such as physical cash concentrations that require signatories. The simple tool is not only digitally encrypted, but also provides a robust audit trail of all the people who have touched the document, delivering additional layers of information a normal wet-ink signature is unable to accomplish. J.P. Morgan has experienced a significant increase in the adoption of e-signature platforms by its clients across the 26 operating markets around the world. The solution can be just as transformational as it is secure, enabling businesses to continue their rationalization initiatives while complying with due diligence measures. The pandemic may have exposed sensitive gaps within the finance and treasury functions and prompted companies to become agile and adopt workaround measures to reinforce its business continuity plans and emerge from the crisis stronger. Digitizing these key areas of your Shared Services Center can be a fitting response to current challenges.
Please reach out to your J.P. Morgan representative on the availability of SSCs in your market.
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