Webinar

Can FAO unleash the potential of the F&A department of Small and Medium Enterprises?
BY Thomas Parackal SVP & Business Head, StylusFMS

() Stylus FMS 2011- Confidential & Proprietary.

Speakers Profile
SVP, Business Head StylusFMS CFO of Stylus Systems Pvt. Ltd

Specialization
Process Management frameworks Six Sigma, Balance Score Card exposure in previous organizations Requirements Analysis of medium size businesses and packaging services with cloud based applications for maximizing efficiencies of cost and productivity is a focus area
() Stylus FMS 2011- Confidential & Proprietary.

Agenda
Introduction
F&A at SMEs: Current Scenario Challenges Faced by SMEs Today Managements Expectations From CFO How Can These Expectations Be Met?

Reluctance to Outsource
Some Concerns The Reasoning

How to Unleash the Potential of Your F&A Department

How Well Can Your F&A Serve Your Business?

F&A Outsourcing (FAO)

Recommended Approach Benefits of This Approach Current Trends
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Questions & Answers

Introduction
F&A at SMEs: Current Scenario Challenges Faced by SMEs Today Managements Expectations From CFO How Can These EXPECTATIONS Be MET?

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F&A at SMEs: Current Scenario

Handled by in-house team Outsource individual accounting functions to local CPA or accounting firms e.g. Book-keeping,
Payroll etc.

Outsource to local BPOs

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Business Challenges Faced by SMEs Today

(1/2)

Challenge #1:
Managing top-line and bottom-line growth i.e.
How to grow revenue How to improve profits

Challenge #2:
Inability to manage growth, due to:
Lack of:
o o o o Robustness of financial processes & systems Breadth of skill-set of F&A staff Cross-department interaction - Inability to overcome silos Robust and precise decision support system

Upfront Capital Investments in technology and capabilities

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Business Challenges Faced by SMEs Today

(2/2)

Challenge #3:
Inability to manage risks because of lack of
Systematic statutory compliance process Timely accounting cycle closures Reliability, predictability and accurate financial information to drive business decisions Many hats worn - Fear of dropping the ball

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Expectations From CFO

CFOs of small and mid-sized businesses are too caught up in day-to-day transaction activities. Ideally they should :
Play advisory role concerning entire business agenda instead of an informer. Work towards improving efficiency of finance and provide an enhanced business insight

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How Can These Expectations be Met?

Finance & Accounting Outsourcing (FAO) is the answer:
Provides you the access to a wider pool of skills Helps you leverage global pool of resources Enables you to increase or decrease the team size without hiring full time skilled resources Helps you optimize the F&A systems and processes Provides you the access to cutting edge technology without upfront capital investment Achieve cost advantage on resources and technology

() Stylus FMS 2011- Confidential & Proprietary.

Reluctance to Outsource
SOME CONCERNS THE REASONING

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Some Concerns (1/2)

I am happy with the current set-up. My business model is unique, change is risky. Accounts have to be in-house and right under my nose. Is it risky exposing financial and transactional information to a external entity?
() Stylus FMS 2011- Confidential & Proprietary.

Some Concerns (2/2)

It will be too bothersome to make adjustments to my current system set-up to take advantage of outsourcing It is difficult to work with people from a different culture? I work with a local CPA & that should serve me best Being a small business, I expect my staff to wear multiple hats and deliver what is required
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The Reasoning (1/2)

Outsourcing is for large enterprises Ideal outsourcing candidate - Processes that can be
lifted & shifted

Loss of control Not much of cost advantage for a small business F&A department
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The Reasoning (2/2)

Too cumbersome to work with external resources, requires lot of management time Lack of technology sophistication Lack of sophistication with regards to business strategies Lack of understanding of benefits of outsourcing/offshoring
() Stylus FMS 2011- Confidential & Proprietary.

How to Unleash the Potential of Your F&A Department

HOW WELL CAN YOUR F&A SERVE YOUR BUSINESS?

() Stylus FMS 2011- Confidential & Proprietary.

How Well Can Your F&A Serve Your Business?

Instituting & managing performance frameworks Business process mapping Technology transformation Financial Accounting End-to-end processes

Taxes Financial Reporting

Planning & Analysis Treasury and Cost Management

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Management Reporting Dashboards

F&A Outsourcing (FAO)

RECOMMENDED APPROACH BENEFITS OF THIS APPROACH CURRENT TRENDS

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Current Trends
Historically SMEs outsourced single accounting function Now several small businesses are considering their accounting outsource providers as the strategic partners. Current trends for outsourcing/offshoring are:
End-to-end accounting processes Higher value accounting tasks Financial accounting business processes integration
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Recommended Approach To FAO

Identification of the process
Identify gaps in the F&A department output and assess impact on business Organize internal competencies to focus on selected processes. This may involve releasing them from routine transactional work Remaining areas could be outsourced selectively As the relationship grows, enlarge scope to cover strategic objectives of the F&A department

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Recommended Approach To FAO

Governance Structure Identification of SPOC Communication & reporting structure Point of escalation

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Recommended Approach: To Unleash The Potential of F&A

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Benefits of Recommended Approach

Minimally invasive Lower risk Compliments existing competency pool High cost benefit Increased alignment to business objectives
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Engagement Models
Project based Process based FTE based

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Thank You
Contact
Thomas Parackal E-mail: thomaspm@stylusinc.com Telephone: +91-9731156368 www.stylusfms.com

() Stylus FMS 2011- Confidential & Proprietary.

Factors Impacting FAO Adoption By SMEs

Enhanced perceived value of FAO by SMEs. Increased confidence in outsource providers skills. Technology advancement and availability of tools and technologies. Improved accounting process standardization achieved through FAO Verticalized FAO services - more comfort to the
SMEs.

FAO introduces innovation and efficiency in their F&A business () Stylus FMS 2011- Confidential & Proprietary. process

FAO Penetration
In large organizations ($500 million plus) is estimated at:
30% to 40% percent for AP & AR for Global 2000 companies. Even higher for payroll, except in companies of 25,000plus employees, they have their own in-house payroll service.

In the mid market, under-penetrated, underserved marketplace:

About 15% to 20% percent penetration of F&A in the mid market, even on a single-function basis. In contrast, payroll has a higher adoption rate-35% to 50%.
() Stylus FMS 2011- Confidential & Proprietary.