Cost to Sell + Support
Shared Services Costing + Chargebacks

Companies have optimized the cost of business support services like human resources, legal, finance and information technology by pulling them out of individual business units and consolidating them into large, shared services centers. This has proven to be win-win-win approach yielding initial cost savings achieved through scale, improved service levels best practice adoption and reduced risk through standardization. However, these benefits can be short lived when shared services cost recoveries (chargebacks) lack an explanation of the recoveries and associated calculation logic. These missing elements cause inefficient shared services consumption leading to higher costs and create mistrust with the business partners leading to non-value add chargeback analysis and circular management conversations.

An effective shared service chargeback approach provides visibility to the individual services provided and the logic behind the cost charged to supported business units. Whether you assign costs based on cost centers, fixed rates, volumes, market prices, or a cost-plus approach, the goal is to create accountability and encourage departments and teams to make smart decisions that improve overall performance. ImpactECS provides the tools and capabilities required to create transparency and trust with supported business partners reducing the time spent debating charge amounts and instead focusing conversations on what business actions can be taken to reduce them.

Deploying this approach requires a combination of change management and business process re-engineering but at its core, the foundation is created through the following steps:

Establish a shared services catalogue that identifies each service provided and the business activity that drives it

Associate a measurable business driver(s) volume(s) with each defined service that will be used to calculate and proportion the chargeback to each business area

Map general ledger cost centers and accounts to the defined services to calculate their costs

Source required business driver volumes by business area and use to proportion shared service costs to each business area

Create a shared service invoice for each business area that includes the services provided, the amount charged for each and factor(s) used to calculate the charge

ImpactECS creates transparency in shared services costing processes

  • Establish a Shared Services catalog:┬áDefine and document each shared service provided in ImpactECS to establish a single source of the truth capable of reflecting your present-day reality and evolving as your business changes.
  • Define chargeback logic: Configure chargeback calculation logic that fits your needs including driver based (single or multi), rate based or direct assignments.
  • Combine relevant data sources: Automate the extraction and import of data from source systems or deploy distributed data gathering capabilities that support individual user inputs.
  • View chargeback performance: Enable dashboards and reports to provide a self-service reporting environment for business partners.
  • Create budget and planning scenarios: Leverage historical chargebacks and business volumes to create forward looking chargeback scenarios to inform shared services budgeting activities.
  • Improve general ledger close process: Extract chargeback detail at a cost center level to generate a booking file mapping the debits and credits amounts required to move expense from service provider cost centers to service receiver accounts.
  • Generate shared services invoices: Provide a shared services invoice to business partners that explains charges in the context of the services provided and the logic behind the charge received for each service.
  • Determine sales organization costs: Calculate detailed costs for each activity and assign them to specific business units, products, or customers to create transparency in shared services spending.
  • Evaluate customer service and shared services costs: Align support and shared services costs to the right customers and products and build Service-Level Agreements (SLA) based on accurate cost data.
  • Enable continuous improvement programs: Gain insights into the non-direct activities and costs associated with products and customers to identify improvement opportunities.

Resources

It Starts with Costs

Download the eBook >

Get Quick Insights and Best Practices

Watch the CostTalk Minute Series >

Cost Allocations: Gaining Actionable Insights

Read the Article >

Guide to Implementing Cost Systems

Watch the 30-min Q+A >

Daily News for Finance Leaders

Read The Ledger >

Role of Cost Systems in the Age of Digital Transformation

Watch the Discussion >

Ready to see ImpactECS in action?

Get a glimpse of how we help companies
understand their costs and profits