Banksareincreasinglywillingtooutsourcetheirso-calledcorefunctions.Inarecentsurvey,Accenturefoundthatnearlytwo-thirdsofbanksoutsourcesomecorporatefunctions,usuallycreditcardprocessing,humanresourcesandIToperations.Surprisinglythough,halfofbanksinterviewedsaidthattheyalsooutsourcesomefinanceandaccountingfunctions-includinggeneralledger,taxaccountingandfinancialreconciliation.Thesurveysampled30U.S.-basedretailandcommercialbanksfromapopulationof197withover$3billioninassets.Mostoutsourceatleastsomeofthesefunctions,includingfinancialreconciliation,consolidation,monthly/quarterlyclose,fixed-assetaccounting,accountspayable,accountsreceivable,managementandlegalentityreporting,andbudgetandplanproduction.Aminorityofbankssurveyeddonotoutsourceanycorporateorfinancialfunctions,usuallybecausetheirstaffsaresosmallthatitwouldnotmakeeconomicsense,orforcontrolreasons,saidAccenture.Butcompetitivepressuremaysoonbrushthoseconcernsaside,itadded.Outsourcingfinanceandaccountingfunctionsstillhasnotcaughtonwithmiddlemarketompaniesinabigway.“Financialinformationhasalwaysbeenkeptclosetothevest,”observesKatherineJones,managingdirectorofenterprisebusinessapplicationsatBoston-basedAberdeenGroup,abusinesstechnologyresearchfirm.“It’soneofthelastthingstheywillturnovertosomeoneelse.”Themostpopulartaskstofarmoutaregenerallyrepetitiveandpronetoeconomiesofscalewhenperformedbyonecompany,andrarelyinvolvespecializedtasksthatrequireinterventionbyaknowledgeableindividual.Payrollhasbeenthetraditionalexample.Thedatachangesverylittlefrommonthtomonth.Complianceiswithstateandfederaltaxwithholdingrules—nothingspecifictothecompany.Scalemakesitcheaperfortheserviceprovider.But,therearesignsthatmiddle-marketcompaniesareslowlybecomingmorewillingtopushbeyondafewfamiliarserviceslikepayroll,taxadvice,andcollectionofdelinquentaccounts,saysJohnHagerty,vicepresidentforresearchatBoston-basedAMRResearch.“They’rewillingtopushtheenvelopebutnotshutdowntheinternalfinanceandaccountingoperation.”Forexample,thelogicthatdrovemanymiddle-marketcompaniestooutsourcepayrollnowisbeingappliedtoaccountspayable.Mostlargebankssellanintegratedpayablesservicetomidsizecompanies.Theirpromise:JustsendusyourA/Pfilewhenyou’rereadytopay,andwe’llinitiatetheACH(automatedclearinghouse)items,sendoutthewiretransfersandcutandmailthechecks.Andsincethebankprobablyalreadyownsthedisbursingaccountoraccounts,fundingcanbepartoftheautomatedprocess.Inaddition,middle-marketcompanieswithsignificantB2BcollectionslongagosignedupforbankwholesalelockboxservicetohavebanksreceiveanddepositincomingB2Bpaymentsaswellascaptureandtransmitselectremittanceinformation.Nowtechnologyismakingitattractivetoexpandthatserviceandoutsourcemoreoftheaccountsreceivablemanagementprocesslikecashapplication—matchingpaymentstoopenreceivablessotheycanbeclosed.Expandingbanks’roleinA/PandA/Rprocessingisincrementaloutsourcing.Businessstaffsstilldotheworkandmakethedecisionstopreparethefilesforaction.Bankstakethehandoffandexecute—i.e.,printandsendinvoices(A/R)orprintandmailchecksandmakeelectronicfundstransfers(A/P).Amoreradicalapproachinvolvestryingtooutsourcebasicaccounting—allthebookkeepingentriesandbalancingandreconcilingthatcreateacompany’saccountingbooks.However,thisisstillnotverypopularsincecompaniesmustgiveuptoomuchcontrol.Whatkindsofmiddle-marketcompaniesaremostlikelytooutsourceF&A?1....
