NBCUniversal is the latest in a long line of companies looking to take advantage of business process outsourcing for some of its finance functions. But the days when banks would handle this work for corporate clients are all but over. Now it is the big consulting firms that dominate the market for BPO (not to be confused with bank payment obligations—the hot new thing in trade finance).
Keeping on top of the shifting rules in the accounting and treasury worlds is a challenge for any global company. But if its bread and butter comes from the media and entertainment sector, it also has to worry about getting royalties to songwriters and residual fees to television actors. And that’s in addition to reporting the proper set of financials to shareholders—always a demanding audience. Hence NBCUniversal’s outsourcing move.
The company has chosen Capgemini to handle general accounting, accounts payable and account receivable for its international operations—NBCUniversal International.
The goal, according to Capgemini, is to help the company accelerate adoption of global finance standards, streamline processes and improve performance of its transactional finance activities, in order to enhance working capital usage and make use of the data gleaned from these processes to drive business intelligence.
Yet it’s not only entertainment companies that are increasingly turning to consulting firms when they want to outsource their back office financial tasks. CFOs and treasurers in all industries are increasingly using consultants as their go-to providers when they want to outsource routine, but crucial, finance and treasury functions.
These back-end tasks can include the basic processing of invoices and simple payments or the complex preparation of financial statements. Or consultants can carry out value-added treasury functions, such as end-order-to-cash and procure-to-pay services.
“Companies often work with consultancies to ensure they are taking advantage of the latest industry best practices and driving innovation,” notes Marty Borcharding, a vice president of business process outsourcing in Capgemini’s media and entertainment unit. In addition to tapping into the best processes for finance, accounting and treasury operations, the company also gains access to technologies and people tailored to their needs, he adds. The global consulting firm, headquartered in Paris, already provides BPO services to three other media and entertainment companies.
Whether involved in film, broadcasting or publishing, media and entertainment companies have specialized accounting practices. Not only must they properly report financials to their business owners and shareholders, but they also have to nail down intricate payouts, such as royalties, participations and residual fees, to the independent creators of each product. These payments are often based on individual contracts with different terms, processes and reporting requirements.
MOST OF THE OLD GUARD IS GONE
In the past, it was the big banks that often provided such outsourced services. But many got out of the business a number of years ago. One, however, continues to provide a full suite of outsourced treasury services: Bank of America Merrill Lynch.
Bank of America Merrill Lynch remains a stalwart in the BPO industry by continuing to offer treasury functions for its clients. The bank views itself as an extension of its customers’ treasury function and uses carefully defined and documented procedures to execute transactions.
Matthew Davies, EMEA head of structured solution delivery, global transaction services at Bank of America Merrill Lynch, says that by handling the noncore treasury activities, the bank lets its clients focus on strategy and policy.
It also helps create sticky clients for the bank—a key goal in the increasingly commoditized world of corporate transaction services.