VWA projects changes in order-to-cash business, develops customizable new tool to meet new market realities.

by Peggy Cope

Research firms EquaTerra and IDC Research have gone on record as believing that the outsourcing of F&A will only increase in the future.

“Outsourcing in the financial services industry will grow as buyers seek to reduce operating costs, avoid investments in new systems and capabilities, shift focus to more strategic activities, and leverage their growing supply of skilled global resources,” said Stan Lepeak, EquaTerra’s managing director of research. “This trend in financial services illustrates that outsourcing as an industry has become ‘recession-proof’ and that outsourcing is a tool buyers use in up markets to improve performance and in down markets to reduce costs and remain competitive.”

And according to its recent research, IDC estimates U.S. spending on F&A BPO services amounted to $9.4 billion in 2006 and expects this market to grow to $19.4 billion by 2011, a five-year CAGR of 15.6 percent. (IDC, “Worldwide and U.S. Business Process Outsourcing 2007-2011 Forecast: Market Opportunities by Horizontal Business Process.”)

Based on feedback from its clients, partners and industry experts, Vengroff Williams and Associates has identified some trends of is own.
With a credit squeeze in full swing, VWA expects to see a tightening in the credit management function and a push for more scrutiny over credit-worthiness across all industries. In addition, the company says cash is once again king, and CFOs will stress making sure their financial supply chain is optimized to ensure they are able to ride out the anticipated tough economy. The pressure will be on to shake up the accounting process, VWA executives noted, focusing on transparency and efficiency.

Rob Sherman, president of VWA, said recently in an interview that his company is working to keep up with the changes in demand and expectation. Although typically VWA has focused on such Fortune 100 and 500 clients as Kodak and Yamaha over the past 15 years, it is adding offerings this year to service the middle market, as well as the behemoths. “Our big initiative for 2008 is to grow the middle market component, so companies of all sizes can use us for order-to-cash,” Sherman said.

Middle-market companies are growing at a fast rate, according to Sherman, but don’t have the dollars to invest in technology, hire correctly, or leverage best practices to keep up with their growth. And although the large BPO opportunities are still out there and on VWA’s radar, the traction is focused on middle-market, multi-process deals. And business is good. “We manage over $22 billion in receivables, in a number of different verticals,” he added.

The firm’s proprierty platform, WebCollect, deals with multi-process transactions. The flexible tool is customized to fit each client engagement, with modules to turn on or off or even leverage across a shared-services environment. “It will fit the majority of any industry or vertical and customize the workflow and processes,” Sherman emphasized.

The company built in talent management and knowledge management applications in WebCollect to cope with certain traits in the next generation of workers, connected with work ethics and attention span. The intuitive systems track everything at desk level for the individual associate. Beyond analyzing performance gaps, it gives a balanced scorecard on productivity.

The future seems bright. “We see growth as inflation rises, and the costs of doing business for the middle market and even Fortune 100 to 500 levels go up. They will keep looking for ways to keep pricing down. Where we typically saw new outsourcing engagements at a rate of 10 or so [contracts] for a year, we see double that now.”