FSN: Costly finance and accounting departments impacting the bottom line

Costly finance and accounting departments impacting the bottom line

14th November 2005
Almost half of large organisations believe that their in-house finance and accounting (F&A) services are burning too much cash, according to new research carried out by NelsonHall in conjunction with outsourcing and technology expert Xansa. 47 percent of organisations said the high cost of F&A was a cause for major concern, according to the survey of 320 senior UK executives across a wide range of public and private organisations.

Despite the huge expense, more than a third of respondents (38%) were also worried about the accuracy of in-house accounts departments because of a reliance on archaic methods of record keeping such as the manual input of data. Surprisingly the high levels of dissatisfaction have failed to prompt many organisations into tackling the problem. While 28% of organisations have already experimented with outsourcing by handing over a few selected accounting processes such as credit and collections, accounts payable and ledger processing, only eight percent have transferred multiple processes.

The research found that discontent with in-house accounting delivery methods has prompted growing interest in outsourcing. Just under a third (29%) of respondents said they would evaluate or adopt outsourcing the F&A function by the end of 2006. This interest is likely to accelerate as 39 percent of organisations are prepared to adopt a shared multiple-organisation delivery model for F&A within five years. However those that have already implemented in-house shared services or some sort of outsourcing are failing to realise the full benefits. Perhaps this is because only 25 percent carry out some form of external benchmarking to monitor performance, the survey suggests.

The top three business drivers for outsourcing the F&A function are: reducing costs, business growth and a need for rapid change. However organisations often struggle to make the business case. Other inhibitors include: loss of control and fear of risk."

About Us