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–– Forecasting: Forecasting of future financial Outsourcing FP&A activities can support substantial
performance based on external market variables operational savings
(inflation, foreign exchange, economic growth, etc.). While there are some risks to outsourcing FP&A
Business forecasts are critical inputs into both activities, the benefits that some companies have
budgets and strategic plans. gained are significant. FP&A is typically a large cost
centre due to the decentralisation, customised nature
• Management Reporting: The creation and updating of these processes and the traditionally high cost of
of management reports is one of the more time experienced labor. However, outsourcing vendors
consuming and high touch tasks within the finance seek to streamline the redundancy through process
organisation and is thus a key driver of cost. standardisation and centralisation. If done effectively,
the number of FTEs required to perform various
• Decision Support and Controls: While there is no FP&A tasks may be significantly reduced.
list of activities that comprehensively defines decision
support, it generally refers to financial analyses that Additionally, the decentralised nature of FP&A
are performed to provide guidance on business functions, with Analysts working in close proximity
decisions (e.g. pricing analysis, M&A analysis, to the business means that many companies are not
activity-based costing and ad-hoc financial modeling). optimising their cost footprint. Labor arbitrage through
centralising headcount in low cost locations continues
to be a meaningful source for cost savings.
Not typical
Key Less commonly sourced Most commonly sourced
sourced
Acquisitions Actuarial
Risk Real estate
and analysis/
Internal Project management management
divestitures reserving
consulting management
The unfortunate result was that the finance Case Study: Leading Minerals Company Realises
organisation could not provide the timely insight to Reporting and Analysis Quality Improvement
support critical executive decisions, despite close
dependency of senior line management on their The situation
decentralised finance partners. The outsourcing A leading global minerals company struggled with
vendor was originally brought in primarily to provide the quality of management reporting, due to the
transactional support. proliferation of ad hoc reports that failed to provide
timely business insights required for executive decision-
The solution making. A particular need was Activity Based Costing
The vendor quickly gained the trust of its client and models that were used to understand efficiency across
rapidly moved up the value chain to perform FP&A multiple business units.
activities including decision support, analytics, and
overall business advisory services. The client’s processes The solution
were moved to one of the Vendor’s offshore CoE’s to The outsourcing vendor utilised an initial team of
facilitate consolidation. The vendor developed a clear 30 people to centralise the reporting function. In doing
strategy for transition, including granular analysis of the so, it was able to implement standardised processes to
individual activities performed by staff, and separated provide real-time reporting. In all, the vendor took over
those that were predominantly transactional (i.e. the following processes for the client:
journal entry) from those that were more analytical in
nature (planning, forecasting, etc.) • Information Systems (Balance sheet and related
reporting).
The vendor also worked with the client to
implement common data standards, and consolidated • Competitor Analysis (Segmentation, SG&A spend
the clients retained FP&A processes into a single CoE. analysis).
This consolidation drove scale and standardisation of
the client’s processes. A “back office- front office” • Audit Support (Preparation of financial reports,
delivery model was implemented, whereby the vendor close package).
drove standardisation and process automation across
all back office work, freeing the front office team to • Activity Based Costing (Implementation of ABC
focus predominantly on the CFO’s agenda. model, cost analysis and reporting).
The benefits Once considered an untouchable part of the Finance
organisation, companies are beginning to realise that
• Reduction in turn-around-time of reports from four there can be significant quality benefits to centralisation
days to two for over 50% of management reports. and standardisation by leveraging a full range of service
delivery options. As such, vendors are playing their
• Automation of 40% of reports. part in the outsourcing space by heavily investing in
FP&A capabilities.
• Introduction of value-add analytics.
Contact information
• Improved report accuracy.
Punit Bhatia
Competitive pressures to reduce costs and improve BPO Advisory Leader
FP&A performance are key drivers leading 020 7007 9466
companies to evaluate service delivery options punbhatia@deloitte.co.uk
The real value from the recent uptick in FP&A Mandeep Gill
outsourcing is the benefit companies are able to Senior Manager
realise from the process of evaluating outsourcing 020 7303 8971
as an option. Digging into a process, understanding mandgill@deloitte.co.uk
and documenting the real business requirements,
Mark Craddock
pain points, costs and resources required to perform
Senior Manager
FP&A activities offers firms a chance to take a total
020 7303 7012
transformation approach. When done right, such a
mcraddock@deloitte.co.uk
transformation can not only increase the bottom line
through reduced costs, as we’ve seen, but also support
top-line growth with better quality/more effective and
faster management information.
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