New finance and business models accentuate the longstanding challenge for GCR — how to sustain access to local expertise.
Summary: Companies all face the same challenge — how to access resources with local expertise. This has led many companies to consider new or refined relationships with external service providers to complement and support their in-house GCR resources and operating model.
GCR processes result in inherently local in-country filings and submissions. The challenge for multinational companies is that competitive pressures and finance transformation tend to decrease the number of in-country resources. This includes those supporting broader R2R processes and, therefore, GCR.
Additionally, companies expanding into new markets face important decisions about how to meet local country GCR needs.
Case Study: Ensuring quality through local expertise
A Forbes Global 2000 company that operates in more than 50 countries has developed a finance operating model that focuses their in-house finance and tax function on specific core competencies and locates them in a relatively small number of key countries.
This leaves a large number of countries around the world without in-house finance or tax resources, many of which are in emerging markets. Aware of the need for local experience and expertise, they have developed a sourcing model that relies on a global service provider to provide the local expertise they require to undertake tax compliance, tax provision preparation and return to provision reconciliations.
This ensures that they are supported by local specialists in their locations around the world. This model enables the company's finance and tax teams to focus on core operations and governance without sacrificing the quality of its local GCR coverage.
Barriers to globally or regionally managed GCR models
Companies recognize it may not be efficient to build full finance and accounting capabilities in every country and it is often difficult to keep qualified resources efficiently utilized due to the seasonal nature of many GCR processes.
On the other hand, companies must embed the appropriate level of local expertise to ensure quality.
Eighty-two percent of respondents indicated that the lack of availability of skilled resources to deal with specialized local-country reporting and compliance requirements has been a barrier to moving to a more globally or regionally managed GCR model.
Trends towards Shared Services Center
Multinational companies utilize a variety of finance operating models. Some still operate a traditional country-based model, but the trend is for companies, particularly those that have been through a finance transformation, to adopt the use of Shared Services Centers (SSCs).
For those that have adopted SSCs, some contract the operation of the center to a third party, while others prefer to operate it entirely with internal resources. In either instance, this still requires that companies find a way to address the need for local expertise, particularly for GCR.
Some address this by training resources in the SSC — often with mixed results. Others prepare local data and related adjustments in the SSC and use local-country resources for final review and completion of the related filings.
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