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Can FAO unleash the potential of the F&A department of Small and Medium

Enterprises?

 Webinar

BY 

Thomas ParackalSVP & Business Head, StylusFMS

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Speaker’s Profile

SVP, Business Head – StylusFMS

CFO of Stylus Systems Pvt. Ltd

Specialization

Process Management frameworks – Six Sigma,Balance Score Card exposure in previousorganizations

Requirements Analysis of medium size businessesand packaging services with cloud based applicationsfor maximizing efficiencies of cost and productivity is

a focus area

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 AgendaIntroduction

● F&A at SME’s: Current Scenario

● Challenges Faced by SME’s Today ● Management’s 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

Questions & Answers

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● F&A at SME’s: Current Scenario

● Challenges Faced by SME’s Today 

● Management’s Expectations From CFO

● How Can These EXPECTATIONS Be MET?

Introduction

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F&A at SME’s: Current Scenario

Handled by in-house team

Outsource individual accounting functions tolocal CPA or accounting firms e.g. Book-keeping,

Payroll etc.

Outsource to local BPOs

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Business Challenges Faced by SME’s 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 Robustness of financial processes & systems

o Breadth of skill-set of F&A staff 

o Cross-department interaction - Inability to overcome silos

o Robust and precise decision support system

● Upfront Capital Investments in technology and

capabilities

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Business Challenges Faced by SME’s 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 agendainstead 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 

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• SOME CONCERNS

• THE REASONING

Reluctance to Outsource

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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 transactionalinformation to a external entity?

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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 differentculture? I work with a local CPA & that should serve me best

Being a small business, I expect my staff to wearmultiple 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 businessF&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 businessstrategies

Lack of understanding of benefits of outsourcing/offshoring

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HOW WELL CAN YOUR F&A SERVE YOUR 

BUSINESS?

How to Unleash the Potential of  Your F&A Department

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How Well Can Your F&A Serve

 Your Business?

•

Financial Accounting• End-to-end processes

• Taxes• Financial Reporting

• Management Reporting• Dashboards

• Instituting & managing

performance frameworks• Business process mapping

• Technology transformation

• Planning & Analysis• Treasury and Cost

Management

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• RECOMMENDED APPROACH

• BENEFITS OF THIS APPROACH

• CURRENT TRENDS

F&A Outsourcing (FAO)

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Current Trends

Historically SMEs outsourced single accounting

function

Now several small businesses are considering

their accounting outsource providers as thestrategic 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 assessimpact on business

● Organize internal competencies to focus on selectedprocesses. 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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Contact

Thomas Parackal

E-mail: thomaspm@stylusinc.com

Telephone: +91-9731156368

 www.stylusfms.com

Thank You

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Factors Impacting FAO Adoption By SMEs

Enhanced perceived value of FAO by SMEs.

Increased confidence in outsource providersskills.

Technology advancement and availability of 

tools and technologies. Improved accounting process standardization

achieved through FAO

 Verticalized FAO services - more comfort to theSMEs.

FAO introduces innovation and efficiency in

their F&A business process

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FAO Penetration

In large organizations ($500 million plus) isestimated at:● 30% to 40% percent for AP & AR for Global 2000

companies.

● Even higher for payroll, except in companies of 25,000-

plus employees, they have their own in-house payrollservice.

In the mid market, under-penetrated, under-

served 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%.