Finance benchmarking webinar final feb 17

1. Optimizing your Finance & Shared
Services Operations in 2021
through Real-World
Benchmarking
Eric Liebross
Senior Managing Director of
Business Transformation
WEBINAR February 17, 2021

2. 2
There remains significant uncertainty amongst Finance
Executives when looking forward in 2021…
Sources:
- CNBC Global CFO Council Survey, Q4 2020
- PwC CFO Pulse Survey, January 2021
- Deloitte CFO Signals Survey, December 2020
- Gartner CFO Survey, October 2020
42% of CFOs say their firms will be in hiring
mode next year, but 33% indicated that more
layoffs are coming.
Almost 2/3 of CFO’s do not expect pre-crisis
operating levels until at least the second half
of 2021 and 26% do not expect to get there
until Q1 2022
In the area of corporate spending, only 5% of U.S. CFOs said capital spending will decrease
over the next 12 months, while an equal (47%) of respondents said spending will either increase or
remain the same.
75% of CFO’s plan to allocate
more resources to digital
transformation in 2021
82% of Finance Executives indicated that
advanced data analytics and tools
were a top priority but 78% expected it
to be difficult to successfully
achieve their goals

3. 3
How Can Benchmarking Provide Insight and Help
Drive Performance Improvement?
The introduction of digital
technologies have helped these
organizations further reduce their
operating cost by another 15-20%.
World-class organizations
traditionally have maintained
an operating cost that was
40-45% below their
industry peer groups.

4. 4
How Can Benchmarking Provide Insight and Help
Drive Performance Improvement?
• How can you align benchmark data to your business demographics?
• What is the “right” level of benchmarking performance for your business?
• Which metrics provide good insights into the various F&A functions (General Accounting, Accounts Payable,
Accounts Receivable, etc.)?
• How have other organizations used benchmark data to drive their finance transformation & optimization
programs?
• Which operational strategies (shared services, business process outsourcing, RPA, digital transformation, etc.)
will help drive performance improvement?
Key Questions You Need to Answer:

5. 5
Most benchmarking organizations break down their metrics into some variation of:
Aligning Benchmark Data to Business Demographics
Median
Performer
(50%)
Top
Performer (75
% and Above)
Bottom
Performer (25
% and Below)
Complexity is often driven by the various business characteristics, such as
industry sector, revenue size, public vs. private sector, even geography
Where you are situated
compared to those
benchmarks is based
strictly on quantifiable data,
and doesn’t necessarily
account for additional
complexities within your
operation.
”It’s Just Math”

6. 6
Even Within Industry Sectors,
Business Complexity Can Vary…
• Consider a $1B healthcare organization with an Accounting
department of 33 people, which was staffed 67% higher than
the industry Median Performer benchmark of 19.7 FTE’s
- According to benchmark data, they were categorized as a “Bottom
Performer
- But is this an “apples-to-apples” comparison?
• The company has more than 70 clinic-type locations across
multiple states that generated their revenue, compared to
other healthcare organizations that were comprised of a
few, large hospital facilities
- The more geographically-diverse organization had additional
operational and regulatory complexities, significantly higher
transaction volumes and overlapping staff at the various
locations, driving additional headcount
• Just comparing the data without understanding the underlying
business characteristics would not be an effective form of analysis

7. 7
What is the “Right” Level of Benchmarking Performance?
Top vs. Medium vs. Bottom Performer
Top Medium Bottom
• The characteristics of a “Top Performer”
- Consolidated, centralized and standardized
business processes and systems
- Limited number of transactional variations and
exceptions
- Simplified business rules
- Implemented automation solutions to reduce the
amount of manual work being performed
• Does this sound like your organization?

8. 8
Polling Question 1
At What Benchmarking Level Would You Place Your
F&A Organization Today?
Top Performer 0%
Medium Performer 73%
Bottom Performer 7%
I’m Not Sure, Need More Information 20%

9. 9
A Balanced Set of Key Performance Indicators
Effectiveness vs. Efficiency
EFFECTIVENESS EFFICIENCY
• Total cost includes both the Personnel Cost as well as
the cost of the systems infrastructure needed to run
the function
• Quality can include the accuracy of invoice processing
and payments for AP, or DSO for AR
• It is important to compare organizations based on their
industry and revenue size
• The assumption is that higher revenue companies will
have a larger number of transactions being performed,
necessitating more people to manage them
Metrics that focus on the number of FTE’s (“full time
equivalents”) performing the work and the
productivity levels of those resources
Metrics that focus on the operating cost and quality
for the various functions

10. 10
Best Metrics to Track
General Accounting & Reporting
Key Efficiency Metrics
Number of FTE’s Performing the
Function Per $1B Revenue
Number of GL Accounts Managed
Per FTE
Top
Performer
Median
Performer
Bottom
Performer
5.7
10.9
21.1
Top
Performer
Median
Performer
Bottom
Performer
321
50
8
• Other good Efficiency metrics include the Number of Journal Entries Processed Per FTE or Cycle Time to Close the
Books
• Use the FTE metric to see where you stand overall from an efficiency perspective, and then use a secondary Efficiency
metric to measure where people are spending their time
• If your headcount is high, and there are certain activities where more FTE’s are focused, and the performance levels
are low, you have identified an area of opportunity within the function

11. 11
Top
Performer
Median
Performer
Bottom
Performer
$410,000
$740,000
$1,460,000
Top
Performer
Median
Performer
Bottom
Performer
2%
3%
5%
Personnel Cost to Perform the General
Accounting and Reporting Process
Percentage of Journal Entry Line Items
Processed With Errors
• Other good Effectiveness metrics can include Manual Journal Entry Line Item Percentage or the Number of Accounts in the
Chart of Accounts
Best Metrics to Track
General Accounting & Reporting
Key Effectiveness Metrics

12. 12
• There is a significant disparity between Bottom and Top Performers, using these metrics
- This gives you a good idea of the impact of automation on AP invoice processing, as the more “touchless” your invoice processing is,
the more productive your organization will be overall.
• Other good Efficiency metrics can include Number of Invoice Line Items Processed Per FTE or Number of
Disbursements Processed Per FTE
- Some metrics, such as Invoice Processing Cycle Time or Days Payable Outstanding (DPO) may not be truly reflective of AP
performance (only)
Number of FTE’s Performing the Function
Per $1B Revenue
Number of Invoices Processed Per FTE
Top
Performer
Median
Performer
Bottom
Performer
Top
Performer
Median
Performer
Bottom
Performer
3.3
6.8 14.5 9,437
5,000
20,534
Best Metrics to Track
Accounts Payable
Key Efficiency Metrics

13. 13
• Other good Effectiveness metrics can include Percentage of Disbursements that are Processed First Time Error Free,
Percentage of Invoice Line Items Received Electronically, or Cost Per Invoice Processed
Personnel Cost to Perform the Accounts Payable
Process Per $1B Revenue
Percentage of Invoice Line Items Matched to a
Purchase Order
Top
Performer
Median
Performer
Bottom
Performer
Top
Performer
Median
Performer
Bottom
Performer
$250,000
$440,000
$730,000
90% 85% 55%
Best Metrics to Track
Accounts Payable
Key Effectiveness Metrics

14. 14
• As with AP, there is a significant disparity between Bottom and Top Performers, using these metrics
- Automation helps, particularly if you are processing transactions electronically (e.g., EDI), but you are also subject to
the customer’s own limitations and processes in this area
• Other good Efficiency metrics include the Number of Adjustments, Adjustments Processed Per FTE, Number Customer
Accounts Managed Per FTE for Collections, or Days Sales Outstanding (DSO), which may also have external
dependencies (such as a global pandemic!) that you cannot control
Number of FTE’s Performing the Function
Per $1B Revenue
Number of Cash Receipts Processed Per FTE
Top
Performer
Median
Performer
Bottom
Performer
4.5
10.7 19.4
Top
Performer
Median
Performer
Bottom
Performer
20,153
7,696
2,600
Key Efficiency Metrics
Best Metrics to Track
Accounts Receivable

15. 15
• Other good Effectiveness metrics can include Percentage of Customer Receipts that are Processed First Time Error Free,
Percentage of Customer Receipts Received Electronically, or Percentage of Receipts Automatically Matched to Open
Items
- As you can see from all of these metrics, reducing manual activities, streamlining processes and limiting exceptions will have a
significant impact across all of these functions.
Personnel Cost to Perform the Accounts
Receivable Process
Total Cost to Process Accounts Receivable Per
Customer Receipt
Top
Performer
Median
Performer
Bottom
Performer
$430,000
$760,000
$1,250,000
Top
Performer
Median
Performer
Bottom
Performer
$3.93
$11.47
$42.37
Best Metrics to Track
Accounts Receivable
Key Effectiveness Metrics

16. 16
Polling Question 2
After Reviewing These Key Benchmarking Metrics,
Where Would You Now Place Your F&A Organization?
7%
Medium Performer 60%
Bottom Performer 13%
I’m Not Sure, Need More Information 20%
Top Performer

17. 17
3 Real-World Examples of Benchmark
Data Driving Operational Strategy

18. 18
$1B Healthcare Organization
A “Vicious Circle” of Transactional Work
• Geographically diverse, with more
than 70 locations in multiple states
• 33 FTE’s in Accounting
• 40-50 GL Accounts per Location
• Total of 3,000 GL Accounts
Reconciled Monthly
• Need to scale and grow the business
• 19.7 FTE in Accounting
• 55.5 GL Accounts Managed Per FTE
• According to the benchmark, they would
need 54 FTE’s to manage this volume
• Accountants were not reconciling every account every month
• Considerable time spent cleaning up issues with unreconciled accounts, generating numerous journal entries
to resolve the variances
• Many errors required re-work and extensive oversight
• The Accounting organization was spending all of its time reconciling, correcting and updating
Business Characteristics Key Median Level Benchmarks
The Reality:

19. 19
$1B Healthcare Organization
Before and After
• Standardize the account structure and
reconciliation process across all locations
• Reduce the number of accounts
reconciled monthly, focusing on the
most material accounts, with other, less
material accounts reconciled quarterly
• Implement an automated account
reconciliation platform (e.g., BlackLine,
Trintech, OneStream, etc.), with the team
focusing on variances and reducing the
number of journal entries to clean up
unreconciled accounts
• Restructure and streamline the
Accounting organization
9.0
3.0
1.0
3.0
3.0
19.0
19.7
Reconciliations
Journal Entries
Fixed Assets
Reporting
Mgmt/QA
Optimized $1B Healthcare…
Median
# of Accounting FTEs
(After Optimization)
• Reduced the number of FTE’s from 33 to 19
(Median Level)
• “Top Performer” benchmark level for GL
Accounts/FTE (321) and Journal
Entries/FTE (688)
Solutions The Results
Restructured
Accounting
Team

20. 20
$600M Consumer Goods Company
Decentralization = Opportunity
• Operating in 7 different
countries
• Each country had its own F&A
team, with each country having
unique regulatory requirements
• 110 FTE’s in F&A (all functions)
• Need to reduce operating cost
• 49.2 FTE in F&A (adjusted for revenue
size)
• More than double the bottom
performer level!
• More than half the team was R2R
(more than 3x the bottom performer
level, 57 FTE compared to 18)
• Typically, you can get from 10-20% synergies just from consolidating geographically diverse
business operations (i.e. Shared Services)
• Implementing various automation tools and technologies can reduce another 20-40% of the staff
needed to perform the tasks
• Is there sufficient ROI to makes these investments?
Business Characteristics Key Bottom Level Benchmark
What Was the Opportunity?

21. 21
$600M Consumer Goods Company
Before and After
• 110 FTE’s currently
• Need to retain in market some F&A
staff to support local regulatory
requirements
- Assume 2 people retained in each
market (14 retained FTE) for local tax
and regulatory support
• The puts 96 FTE’s “in play”
• Assume we can reduce 20% of these
FTE’s (19) through consolidation
• Assume 40% can be reduced through
process optimization and automation
(another 30 FTE’s reduced)
Analysis The Results
10.7
22.6
49.2
47.0
110.0
Top
Median
Bottom
Optimized FTE
Original FTE
• Total reduction of 49 FTE, consolidated team of 47
• While still at “Bottom Performer” level, it makes more
sense given the complexity of the multi-national operation
• Projected annual cost savings of $2.5M (based on fully
loaded cost per FTE of $50k)

22. 22
Polling Question 3
Which Function Within Your F&A Organization Present
the Biggest Operational Challenges? Select All That
Apply
42%
Accounts Payable 58%
Account Receivable 33%
Reporting & Analytics 25%
General Accounting & the Closing Process

23. 23
$2B Global Manufacturing Company
An Opportunity for Global Shared Services…
Business Characteristics Additional Business Characteristics
• 8 locations globally with F&A
teams at each of the
manufacturing plants
• FA teams focused on local
financial operations and
managing the specific
market regulatory
requirements
• Some the locations were in
high cost markets (North
America, Europe, Australia)
and others were in low cost
markets (Latin America,
Africa, Asia)
• The company had non-standard
processes and older, diverse financial
systems across markets
• Was in process of standardizing its ERP
system platform across all markets, but
struggling to get markets to adjust
• Highly tenured teams, with localized
requirements and the systems variances
made process standardization challenging
• Need to standardize processes to support
system implementation, driving scalability
and reduced operating cost

24. 24
$2B Global Manufacturing Company
You Can Be Right Staffed and Still Be Overpaying
128.1
75.1
65.0
46.4
Bottom
Median
Company
Top
Number of F&A FTE's Per Industry/Revenue
Size - All Markets
$8,002,050
$5,078,621
$4,028,300
$2,058,500
Bottom
Company
Median
Top
F&A Personnel Cost Per Industry/Revenue
Size - All Markets
The initial analysis showed us that the company was operating at 14% better than the Median
performer level from a headcount perspective (Efficiency), but ran at a 26% higher personnel cost
structure (Effectiveness) than a Median performing peer

25. 25
$2B Global Manufacturing Company
Bottom Performer in both AP and AR Metrics
311
570
767
1,321
0 500 1,000 1,500
Bottom
Company
Median
Top
Number
of
Invoices
Per
FTE
Number of AP Invoices Per FTE
96
217
641
1,679
- 500 1,000 1,500 2,000
Company
Bottom
Median
Top
Number
of
Receipts
Processed
Per
FTE
Number of AR Receipts Processed
Per FTE
• AP related benchmark data, the company was performing at approximately 25% below the
Median performer
• AR benchmark data, the company was performing at 85% below the Bottom performer
• Organizational restructuring was needed due to tenure and span of control issues

26. 26
$2B Global Manufacturing Company
End Result: 12 FTE Reduction and 30% Better Than the Median
• By standardizing processes (required for the systems implementation), centralizing operations and bringing additional automation
capabilities, we were able to reduce 12 FTE’s across all markets (18%), and the resulting organization would consist of 53
FTE’s (30% better than the Median performer)
• As you can see, there is a significant cost improvement (approx. $650,000 lower than current operating cost, but still
operating above the median performer level from a cost perspective
• By adding an Outsourcing option, creating a hybrid model with locally retained staff and a nearshore outsourcer, we were able
to deliver and additional $700k in annual cost savings, bringing them to above the Median level ($1.35M total savings)
128.1
75.1
65.0
53.0
46.4
Bottom
Median
Current Company
Optimized Company
Top
Number of F&A FTE's Per Industry/ Revenue
$8,002,050
$5,078,621
$4,437,397
$4,028,300
$3,717,685
$2,058,500
Bottom
Current Company
Optimized Company
Median
Optimized with BPO
Top
F&A Personnel Cost Per Industry/Revenue Size

27. 27
Polling Question 4
Which Potential Solutions Do You Think Would Have the
Biggest Impact on Improving Your F&A Operations?
Select All That Apply
69%
Automating Manual Activities (e.g. RPA) 88%
Centralization/More Mature Shared Services Model 50%
Outsourcing Non-Core Functions 6%
Process Standardization & Simplification

28. 28
8.
Guiding Principles
Framework for Benchmarking
1. 2.
5.
Align on Your
Key Drivers for
Success
Determine Key
Performance
Indicators
Measure Current
Performance
Conduct a Gap
Analysis
Develop an
Improvement Plan
Measure Results
and Recalibrate
Execute
3. 4.
6. 7. Repeat!

29. Key Takeaways…

30. 30
In Conclusion…
• Benchmark data can provide you with good insights into the current state of your
F&A operation, and serve as a roadmap to future efficiencies
• But benchmarking analysis is not a standalone activity; it can serve as a significant
data point, pointing you in the right direction and indicating IF and WHERE potential
opportunities are available
• It can serve as the first step in a broader analysis, and given the post-COVID
requirements for organizations to contain cost, improve productivity, get more
scalable and shift operational focus, is a good exercise for organizations to
undertake to provide the insights needed to take action
• Key operational strategies to consider will include shared services, process
optimization and standardization, digital transformation, business process
outsourcing and/or a hybrid operating model
• Use benchmark data to highlight were the opportunities are, based on the
efficiency and effectiveness of your operation, and determine if a sufficient
business case exists to warrant investment in the initiative

31. 31
Schedule your Complimentary
Finance Optimization Assessment
What you will get from it:
• High-level benchmark comparison against your industry peers
• “Size of the opportunity” ($$$) - savings + efficiencies
• Recommended actions for 2021
• What strategies make sense for you
• Potential business case
• Estimated timeline & implementation roadmap
To download our new guide on “Finance
Benchmarks: Prophecy or Pretense?” please
head to https://www.auxis.com/finance-
benchmarks-prophecy-pretense-whitepaper

32. We’re looking forward to
speaking with you!
Eric Liebross
Senior Managing Director of Business
Transformation
eric.liebross@auxis.com