Through the survey conducted by AddValue, Itella Information identified how Finnish CEOs and CFOs understand the outsourcing of financial administration, future outsourcing needs and outsourcing benefits. For the survey, CEOs and CFOs from Finnish companies with more than 200 employees and more than EUR 10 million in annual turnover were interviewed.
All 138 respondents represent large companies from different fields, and are potential users of the outsourcing services.
The survey was conducted as qualitative theme interviews and quantitative telephone interviews throughout 2009. According to the results, the most significant share of financial administration is spent on routine tasks, such as purchase invoices, ledgers, nominal ledger accounting, travel expense reports and salary calculation. Companies wish to have more time for operational development, result monitoring and budgeting.
CEOs assessed that the implemented financial administration outsourcing processes have standardized the operating methods and made it possible to focus on the company's key tasks. As a result, they are also more prepared than CFOs to outsource their entire financial administration. CFOs emphasized cost savings and shorter turn-around times for processes as the most important outsourcing benefits gained.
This is how financial administration has been outsourced
Of the companies studied, 90% estimated that their financial administration is more centralized than decentralized. The most centralized financial administration is in the trade industry. The entire financial administration personnel has been centralized into a single financial unit in 28% of the companies, and 45% of the companies are using a financial administration service center.
Debt collection is the most outsourced financial administration function. Clearly more than half of the companies have outsourced the function at least partially. Less than one-third of the companies have outsourced purchase invoice scanning, salaries, travel expenses and expense reports, and sales invoice sending. Of business fields, the public administration has advanced the most in outsourcing financial administration duties.
A minimum of one-third of all companies with outsourced processes assessed that the majority of the outsourced processes have succeeded very well or excellently. According to the survey, the most successful outsourcing areas include debt collection, purchase ledger and the receipt of purchase invoices. The least successful areas were assessed to be payment traffic, salaries, and travel expenses and expense reports.
Financial administration focuses on routines - the management wishes to have tools for planning
According to the survey, half of the working hours in financial administration are currently spent on maintaining routines. The objective is that the routines take up only one-third of all hours. The companies studied wish to spend more time on monitoring the profitability of the organization's operations, management reporting and planning, budgeting, strategies and creating conditions for implementing the strategy decided on. CFOs, in particular, would spend more time on planning and strategic work. However, financial administration experts can spend only one-fifth of their working hours on operational development.
"The material shows that the financial administration of companies is facing hard challenges in transferring from financial administration routines to planning, budgeting and strategic work. CEOs aim at using all measures possible for supporting key operations. However, CFOs also need to consider the purchase invoice process - which is an important function but simply a routine stage in financial administration. The wishes of CEOs and the means of CFOs do not meet," says Heikki Länsisyrjä, Director of Itella Information.
CEOs and CFOs regard reporting and the development of forecasting tools as the most important areas of development in financial administration. Other central areas include the conversion of purchase invoices into an electronic format and the increase in cost-efficiency. However, the ideas of CEOs and CFOs of the importance of these areas differ. Above all, CFOs wish to standardize financial administration systems and processes, convert purchase invoices into an electronic format and strengthen the role of financial administration in the company's strategic planning process. CEOs do not regard these reforms as important.
For further information, contact
Heikki Länsisyrjä, Senior Vice President, Itella Information, tel. +358 50 558 7801
Kari Elkelä, Research Manager, Itella, tel. +358 400 406 822
Satu Linkola, Communication, tel. +358 400 967 836
Itella Information enhances the efficiency of financial information flows and leads the way in electronic invoicing in Europe. Services comprise solutions for the efficient processing of incoming invoices within the organization, and for cost-effective sending of invoices, electronically or on paper. Itella Information operates in 15 European countries with a staff of about 2,000 professionals. Net sales in 2008 amounted to EUR 247 million. The Itella Information business group is part of Itella Group. Further information www.itella.fi/informaatiologistiikka