How process improvement can boost your finance function?
Businesses today are operating in a world where increasing productivity is key for success. We’re often told that for a business or organisation to be successful it needs to be continually reviewing, analysing and improving their processes in order to deliver a higher quality product or service, faster and at a lower cost. But what does streamlining your business processes actually mean? How can you do it? And what benefits could it have for your business?
What is Process Improvement and why does it matter?
Generally speaking, process improvement is the idea of taking a step back, reflecting on the way in which your business does things and asking yourself, can I do this better? And if so, how?
Objectively assessing your business’s operations can help you to spot opportunities to improve efficiency and reduce costs. While a growing business is always welcome, it is not uncommon for process inefficiencies to accompany growth. Increases in size and scale can often bring additional complexities especially as supply chains, staffing and distribution channels grow. As such, process improvement can help you to fix operational efficiencies reducing costs, time and wastage as well as helping you design new processes which use your growth in scale and size to your competitive advantage.
However, one area of business that is often overlooked when it comes to process improvement is the finance function. As businesses and organisations grow, so do the administrative and compliance burdens. Increases in production, staffing and sales mean increases in payroll and HR processing, reporting requirements, inventory management and more. Inefficiencies in your finance function can lead to delays, additional costs, pressure and frustration as once ‘good’ processes may no longer be able to effectively manage the growing administrative burden.
This is where support from a skilled business advisor to analyse and improve your financial processes can really help. Working collaboratively with your finance team, they can design and implement tailored and sustainable processes which can not only meet your business’ needs now but also can grow to support your business’ future growth, allowing you to focus on your core activities.
How have we helped organisations improve their processes?
Recently, we worked alongside a growing not-for-profit organisation to design and improve their management reporting and board reporting. As they had continued to grow and deliver more services than before, the board wanted more relevant and timely information. Management, however, wanted to spend less time preparing and analysing information and more time delivering their core services.
Our first step was to run an initial scoping exercise with their key stakeholders. Our Sydney business advisors gained an understanding of their role and business objectives, their issues and roadmap some of the processes surrounding them. The challenge then was to distil the issues to those expected to have a significant impact as opposed to trying to tackle all of them at the same time.
As such, our work focussed on timely and accurate month end financial close processes which needed some standardisation of procedure. Our Sydney accountants examined campaign costs and their management by, identifying which costs are controllable by campaign managers and redesigned the management reporting. While this provided more relevant information to the manager it also needed to be easily accessible and timely.
We also included aligning board reporting needs with key activities of the business which in this case centred on programs and campaigns with the aim of providing more insightful information. Some of these improvements included, changes to financial performance reporting and budget measurement. The above required implementing more user-friendly accounting software able to meet the financial reporting and evolving needs of the organisation for the CEO and the Treasurer.
Finally, our business advisors also explored alternative solutions to address needs that were not attended to in-house and provided a report to the CEO with our recommendations and scheduling of priority process improvements and issues to be addressed. Overall, we were able to considerably improve the quality of the organisation’s reporting while reducing the administrative burden it had on management, allowing the organisation to focus on its charitable work.
To discuss how process improvement can improve your business or organisation, please do not hesitate to contact your engagement partner or ESV Sydney business advisor on 02 9283 1666.
Article by Tim Valtwies