Why CFOs are consolidating vendors for control, not only cost

If you run finance across several countries, the weak points are easy to spot. Three payroll providers in one region. A tax adviser you have never met handling filings in another. Month end slows on questions no one clearly owns. Fragmentation does more than add expense. It clouds risk, delays decisions, and leaves the group exposed when a local rule changes. A Harvard Business Review Analytic Services white paper, sponsored by TMF Group captures the shift many finance leaders are already making. Consolidation has moved from a blunt cost exercise to a governance decision. Standard processes, shared data definitions, and a single escalation path give CFOs a clearer line of sight on obligations and performance. The findings are a useful backdrop, but the practical choices sit with finance.

The case for fewer, accountable owners

When core support work is spread across local vendors, accountability scatters. A payroll grievance in one country or a statutory error in another becomes a multiweek chase through email threads and time zones. Consolidation replaces that tangle with one framework for service levels, one reporting rhythm, and one owner who can fix what breaks. It also forces a clean divide between what should be global by policy and what must remain local for legal or market reasons.

That balance matters more than the headline. At Brown-Forman, the team found that each country had effectively been operating as its own small company. They standardized wherever the law allowed and kept a defined slice for genuine local exceptions. They sequenced the work to protect filings, starting with procure to pay, then expanding into adjacent finance activities once controls held. In short: respect non-negotiable local rules, retire casual variance.

Finance first, payroll next

Most groups start in finance because cycle time, data quality, and control failures show up there first, and payroll should follow quickly. Keep finance and payroll in separate silos and you invite delayed reporting, forecasting noise, and repeat compliance fixes. Bring them under the same operating model and the picture changes. Costs become predictable. Query volumes fall. Close cycles stop slipping. For groups spread across many jurisdictions, you also reduce the odds of local failures hiding in the gaps.

Technology also helps. Automation removes manual keying in pay runs and invoice processing. Cloud platforms provide real-time access to filings and status across markets. AI can flag anomalies before they become penalties. However, none of that sticks if the operating model is fuzzy. The gains last when the service blueprint is clear, the data standards are agreed, and ownership is explicit.

Picking a model that will hold

Not every consolidation design produces the same result. Some organizations appoint a prime vendor to coordinate a web of local firms. Coverage can grow quickly, though lines of responsibility may blur when something goes wrong. Others choose a single accountable partner that delivers on the ground where the company operates. That setup makes it simpler to hold one playbook and one escalation path, and to keep service levels consistent as the footprint changes.

The right answer depends on scale, regulatory profile, and appetite for central control. What does not change is the need for unambiguous accountability and reporting finance can read without translation.

The people side determines the pace

Consolidation is often framed as a systems project, but it is also a change in how teams work. Country managers may have long relationships with local vendors. Centralizing service can feel like a loss of autonomy. Programs that move quickly bring operational users in early, explain the reasons in plain language, and design around moments that matter to employees. Payroll accuracy and timeliness, for example, have a direct effect on trust. If those basics falter during transition, support for the broader program will slip.

There is a risk lens as well. Interviews cited in the report point to familiar failure modes in fragmented setups. Local vendors can miss statutory payments or step away with short notice. Headquarters often finds out late because reporting is inconsistent or language slows the signal. Consolidation does not remove risk. It narrows the unknowns and shortens the path from issue to remedy.

What to measure beyond cost

Boards will ask about savings. Finance leaders who have done this well track a wider set of indicators:

• Time to close and error rates in core finance processes
• Filing timeliness and exception counts
• Payroll accuracy and the volume of employee queries
• Time to establish operations in a new market

These measures show whether consolidation delivered control and reliability, not only a lower run-rate.

How to start without stalling operations

Begin with a clear map of the present. List vendors, contracts, service scopes, true management costs, and the exceptions granted over time. Decide which processes

should be identical by policy and which must vary by law. Pick a first wave that reduces risk and improves visibility fast. Procure to pay and payroll often meet that test. Sequence the rest so statutory obligations and month-end are protected. Set a governance cadence leadership will keep. Then hold it.

Consolidation is not centralisation for its own sake. Local knowledge and proximity still matter, especially where regulation moves quickly. The question is not whether every activity belongs in a shared service or under one external roof. It is whether the current pattern of suppliers and processes gives the company the control it needs at the speed the board expects. If the answer is no, a tighter model is a straightforward remedy.

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