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The strengths and weaknesses of a Shared Services Center

Over the past decade, more U.S. companies have adopted a Shared Services Center (SSC), a centralized unit managing specific business processes for multiple entities within an organization. In B2B credit, some companies have an SSC to centralize credit-related functions such as credit analysis, billing, collections and dispute resolution. 

Over the past decade, more U.S. companies have adopted a Shared Services Center (SSC), a centralized unit managing specific business processes for multiple entities within an organization. In B2B credit, some companies have an SSC to centralize credit-related functions such as credit analysis, billing, collections and dispute resolution. 

Why it matters: By consolidating credit tasks into one centralized unit, organizations can streamline operations, ensure compliance and improve cash flow, all of which contribute to a healthier financial position and better customer relationships.

Depending on the company’s policy, size or industry, the ability to centralize credit functions will vary. If you’re considering centralizing credit functions, we’ve gathered the potential pros and cons from credit professionals.

Pros

By consolidating efforts, Shared Service Centers can reduce costs, providing companies with the ability to enter into new markets at lower and more competitive rates.

By streamlining processes, SSCs also improve cash flow of a company. Krystal Daugherty, CCE, director, order-to-cash manager at Acuren Inspection Inc. (La Porte, TX), said that after centralizing collections, her billers now have more time to resolve disputes and address billing concerns more quickly. “Once billing concerns are resolved, the balance is sent to our collection team to follow up with the customer,” she said.

Centralizing credit-related operations can also help maintain relationships with colleagues and customers. By streamlining credit functions, credit professionals have more time to focus on improving their relationships with their customers, coworkers and other departments.

Cons

Shared Services Centers face challenges in training and understanding the customer base when located in different regions. There are cultural and language differences, among other factors, that can complicate this. “We had some issues with it across the time changes and language barriers when using it in different countries,” Horton said. “Business and cultural differences also made it difficult to train others on our centralized processes. Although it’s helpful for some, the SSC can compromise customer service and overall efficiency.”

Without the enhanced technology, the credit department may face a higher risk of errors due to more manual processes or less sophisticated systems, which could lead to issues with data accuracy or compliance. “One of the things we lost that we had to account for when we centralized and walked away from a third-party vendor was they had some computing power that we don’t,” Daugherty said.

Although shared services may be helpful, some credit professionals may resist the change, feeling their role may be replaced. “When interviewing the first two collectors, I mentioned that some colleagues might be upset about losing this activity, while others will be relieved by the reduced workload,” Daugherty said. “We also didn’t force any department to relinquish control of the collection function to the centralized team. My approach was to take it on and learn as we went, but I didn’t want to pressure or take anything from anyone.”

Best practices for credit managers

Communicate. Effectively communicate process changes to your customers and all relevant stakeholders, ensuring that everyone within the company understands their role. At the same time, be adaptable to any changes that may arise. “Before I centralized the collections function, I was clear about the anticipated challenges when interviewing the first two collectors,” Daugherty said. “I shared with them how some colleagues may not be excited about having this activity taken away while some will be relieved for the lighter workload. For the people who had collections experience, I made it clear how our current reporting was.”

Take the time to understand your customer’s needs and concerns regarding an SSC. This will strengthen your customer relationship and ensure quicker payments.

Document. Keep detailed notes throughout the implementation of the SSC for reference and training purposes. “In a previous company, the associates were excellent at documenting the job requirements from the very beginning of their training and sharing them with our business,” said Val Hardesty, CCE, CICP, director of credit and AR at Vallen Distribution (Belmont, NC). “We were able to utilize those Standard Operating Procedures (SOPs) to streamline our U.S.-based processes, which afforded us some additional bandwidth overall.”

Collaborate. Working closely with those involved in the process to collectively build a suitable SSC that meets your expectations. For example, Daugherty had candidates help create and build their SSC and give suggestions on what they could implement to make the process better. “After a two-month test pilot, we rolled it out and phased in different geographical regions,” she said.

How to plan for the transition:

  • What is the scope of work?
  • Is the proposed shared service facility located in a different country?
  • Does the team at the SSC location speak a different primary language?
  • Who will provide the training?
  • What does the reporting hierarchy look like?
  • Do SOPs exist for the activities being transitioned?
  • How will affected staff be notified?
  • Will the activities being transitioned be transactional or relational, high level or basic?
  • Will you adopt a ‘lift and shift’ approach for the activities, or will you develop and carry out a whole new process during the transition?
  • What technologies impact these decisions?

What’s next: Studies show that approximately 50% of Shared Services organizations are exploring generative AI capabilities while simultaneously seeking to enhance their internal competencies in this area, according to a SSON report

“This technology has substantial promise in customer service through chatbots in finance and accounting for tasks such as account reconciliation, data entry and invoice processing, as well as in Sales and Marketing where generative AI can personalize content for customers, offer customized product recommendations, and craft tailored marketing messages,” the report reads.

The bottom line: By consolidating credit operations, an SSC can provide consistency, better control over credit risk and a more standardized approach to managing B2B credit improving cash flow and customer relationships.

Jamilex Gotay, senior editorial associate

Jamilex Gotay, a Towson University alum, holds a B.S. in English. Her creative writing background fuels her success as a writer, journalist and award-winning poet. Fluent in English and Spanish, with intermediate French skills, she’s passionate about travel and forging connections. When not crafting her latest B2B credit story, she enjoys quality time with loved ones, outdoor pursuits and creative activities.