Any Finance and Accounting Professional has a set of primary concerns – optimizing expenditure, lowering costs and getting the maximum benefit for the expense made. Transformational Finance and Accounting solutions are the order of the day. With F&A solutions offered today, you can reduce overall cost, optimize the use of resources and technology for the company benefit, manage cash inflow and outflow in the best manner possible and also adhere to the necessary compliance while you do this.
Whether you need to streamline, optimize or transform your organizations Finance and Accounting function, you need access to world class processes and technology in the perfect blend to achieve this goal. Best F&A Outsourcing offers services methodology, not only help in identifying gaps in your current process, but also ensure a smooth and risk-free transformation. F&A Outsourcing must also consider best solution by using the well-defined operational metrics like productivity, turn-around-time and accuracy that keep you in control. You also have access to a 24/7 Helpdesk that makes certain that you have complete and comprehensive support.
This study gives you better insights into your processes that leverage Analytics and giving you a holistic yet deep view of the processes and fosters decision making. Moreover, it covers the best solutions of complete Procure to Pay (P2P), Order to Cash (O2C), and Record to Report (R2R) processes including solutions for Accounts Payable, Accounts Receivable and General Accounting.
II. Facts of the Case
Procure to Pay
Procure-to-pay processes involve all stages of a business’ transactions and are integral to overall enterprise efficiency. Organizations face a number of challenges with these processes that can affect profitability, compliance, and efficiency, including profit recovery, process automation, and process optimization.
Business processes most vulnerable to fraud, waste and errors
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Furthermore, the 2012 Global Fraud Study conducted by the Association of Certified Fraud Examiners (ACFE) found that 24.9 percent of reported occupational fraud cases were due to employees causing their employers to issue payments by submitting invoices for fictitious goods or services, inflated invoices, or invoices for personal purchases, with a median loss of $100,000.
And the risks aren’t just limited to fraud. When companies, don’t have enough visibility into their procure-to-pay controls and processes, they can incur unexpected or invalid expenses. The global edition of the 2012 Governance of Enterprise IT (GEIT) Survey, conducted by the Information Systems Audit and Control Association (ISACA), revealed that 47 percent of enterprises have incurred an unexpected cost due to an IT-related problem or incident in the last year.
Order to Cash
The order to cash cycle is the financial lifeblood of any organization. Not only does it determine how quickly an order from a customer is translated into cash in the bank, it also determines the customer experience and perception of the service provider. This is further compounded by challenges such a price pressures, cost pressures, increasing stakeholder value that are often seem contradictory in nature. All these aspects make it imperative for an organization to focus on having a best-in-class Order-to-Cash Cycle.
Moreover, financial loss due to fraud and error is a growing problem for organizations. A recent survey by the Association of Certified Fraud Examiners (ACFE) estimates that the average organization loses 5% of its revenues to fraud each year. Applied to the 2011 Gross World Product, this figure translates to a potential projected annual fraud loss of more than $3.5 trillion. However the costs to an organization due to fraud and error are not just financial; there are intangible costs as well, with potentially far greater consequences, such as negative goodwill, loss in public confidence and brand value. One of the business processes where there is considerable potential for fraud and error is in the order to cash cycle. Order-to-cash is a set of business processes that involve receiving and fulfilling customer sales for goods or services. An Order-to-cash cycle consists of multiple sub-processes including: customer order is documented, order is fulfilled or service is scheduled, order is shipped to customer or service is performed, invoice is created and sent to customer, customer sends payment/collection, and payment is recorded in general ledger.
A challenging economy is partly to blame. Steady reductions in headcount have stretched workforces already under pressure to work harder and faster with limited resources – increasing the possibility of error. Reduced headcount can also lead to fraud through excessive access to data. With limited resources to complete processes, appropriate segregation of duties (SOD) is not always possible. With fewer employees to segregate access, the remaining employees are likely to have excess access to data, resulting in higher exposure for fraud to be committed. Financial pressures on individuals have added to the risk of fraud as previously exemplary employees succumb to temptation. An ACFE report says that approximately 87% of occupational fraudsters had never been charged or convicted of a fraud related offense. Rampant growth in transaction volumes compounded by increased business complexity has also made organizations more susceptible to error and fraud as they struggle to cope with the workload and fraudsters exploit loopholes in systems, safe in the knowledge that massive transaction volumes will potentially mask their activity. Finally, increases in cross-border trading, together with the lengthening of supply chains has introduced greater risk of fraud and error as companies struggle to maintain visibility to core financial processes and to implement sufficient business controls in remote locations. It is clear that if left unchecked, fraud and error in the OTC cycle may pose a significant cost and risk to the business. This can manifest itself in several detrimental ways, such as the inability to respond confidently to compliance challenges, the impairment of profit margins, a reduction in cash flow and operational inefficiency.
Record to Report
Finance and accounting professionals who manage corporate financial reporting and disclosures are well aware of the amount of time and effort it takes to do the job well. Pressure to meet deadlines to prepare quality financial statements and reports and to satisfy regulatory reporting requirements—the Sarbanes-Oxley Act of 2002 (SOX), 2009 XBRL (eXtensible Business Reporting Language) Reporting Mandate of the Securities & Exchange Commission (SEC), and the Dodd-Frank Act of2010—means that finance and accounting departments are constantly overloaded. Anyone who works in the field, or knows people who do, has heard the war stories about how much work it takes to complete the reporting.
There is no firm definition of the Record-to-Report process, but it is widely acknowledged to encompass the sequence of activities surrounding the ‘period close’ in subsidiaries; the collection of year-to-date balances (or monthly movements) at a summary level; their consolidation according to merger or equity accounting rules and subsequent reporting to a variety of internal and external stakeholders, in a mixture of manual and electronic (e-filing) formats.