Centralizing accounting processes: A case study on the challenges and benefits

Abstract

The organizational choice of centralizing finance and accounting functions is growing ever more common among practitioners. However as this is such a new development the research in the area is slim. Through an interview based case study of a multinational corporation that has recently transitioned to a centralized accounting function we explore the benefits and challenges of this way of working in the early stages after the transition. We problematize around the challenges and benefits presented by the outsourcing and knowledge sharing literature from the perspective of three hierarchical levels. We find that the increased distance to operations and the lowered distance between accountants both lead to several challenges and benefits. Challenges include a lack of understanding of accounting processes, market specificities and the need of maintaining formal knowledge sharing methods. While benefits include better opportunities for process harmonization and informal knowledge sharing as well as consolidating the firm's expertise. The inclusion of three hierarchical levels in our study allows us to draw more nuanced conclusions and present the different attitudes such as the role of relationships, how to combat challenges and the extent of knowledge sharing necessary.