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Topic Title: Process improvement in Finance
Topic Summary: what can be improved besides time?
Created On: 10/16/2019 07:04 PM
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10/16/2019 07:04 PM
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RalucaDoniga
Raluca Doniga



Hi all.
I have implemented lean six sigma process improvements in Finance but the main resource that can be improved upon is time.
Is there anything else that one can save on as a back office function? (assuming we are already in a paperless environment so no need to reduce paper / space for filing etc).
10/18/2019 02:26 AM
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FrancaPugnaghi
Franca Pugnaghi



Have you look at:
Performance management
Customers feedback and complaint
Have you look at your process from the point of view of customers (what tgey would pay), mandatory and waste
10/18/2019 11:26 AM
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ElizabethWavra
Elizabeth Wavra



HI Raluca-
I am curious. Are you finding the time savings to be not significant? How are you measuring the impact of the time saved?
Is the savings customer waiting waste?
Is the savings in more "finance items" being processed per day/hour?
Do you generate revenue or process accounts receivable faster? Are you able to earn on interest on deposits more quickly?

There can be a measure for the value of time. All of that can be measured in terms of ROI and potential unit cost per item. You will have to decide on agreed upon measures for hourly wage cost or other potential metrics to compare before and after change.
10/18/2019 02:18 PM
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AaronOlson
Aaron Olson



Raluca, this is an interesting question.

Some clarification might help with feedback:

Are you specifically looking to cut expenses (actual $$$ that you are spending)? Or would you be happy with improving a metric for one of your "customers" (internal or external)?



For actual $$$:
-Perhaps there is newer technology or software that is at a lower cost?
-Maybe more power-efficient computers, appliances, etc. to reduce electricity costs (very hard to verify)?
-Use Time-savings to free up your people to do other things you outsource (cleaning, hiring, etc.) May not be accepted by your employees and therefore may not be worth pursuing



When discussing any improvement (manufacturing, transactional, finance, quality, etc.), I now emphasize that there's two ways to actually capitalize on an improvement with real $$$:
-Spend Less money (actual labor paid - job cuts *not recommended* or reduce overtime paid, avoid an "imminent" expense, create less wasted material - supplies like paper, find cheaper material or equipment to operate, find ways to use less electricity, etc.)
-Earn more money - more sales, etc. (presumably by using the extra capacity from a time-savings project or finding a way to earn more interest)


Trying to come up with a magic formula to estimate the value saved without changing the amount of money coming in or going out seems like it would be dishonest to an organization whose actual need was to affect $$$ to make ends meet.
Working to meet a customer need or key metric is another story and is absolutely worth pursuing.
10/19/2019 02:29 AM
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FrancaPugnaghi
Franca Pugnaghi



Good comments.
It could be worth to understand the cost of service by aligning staff salary to the process. Based on the data, ask if you have aligned the correct staff / salary to how critical demanding is the step. If you have an unbalance cost of process, realign cost of staff to the process steps. I used this approach in the finance and the outcome was reduction of cost of process and therefore more incomes
10/21/2019 09:29 AM
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NickKatko
Nick Katko



Originally posted by: RalucaDoniga

Hi all.

I have implemented lean six sigma process improvements in Finance but the main resource that can be improved upon is time.

Is there anything else that one can save on as a back office function? (assuming we are already in a paperless environment so no need to reduce paper / space for filing etc).
10/21/2019 09:31 AM
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NickKatko
Nick Katko



I would recommend the following:
1. improving quality if finance is correcting errors
2. daily lean management practices - prioritize demand, balance work flows and measure performance
3. create flow in entire order to cash and procure to pay processes
10/21/2019 11:54 AM
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JeanC
Jean Cunningham



In additional to time saving, there can also be great savings related to collecting money faster by eliminating quality issues of the processes.

I have also seen great results in improving payments to vendors to make sure proper amounts being paid.

I have seen using the time freed up to check into contracts to see if right amounts being paid, is equipment still being used, are there new contract rates available.

I have seen improvements by using the defect information we see in accounting transactions and then working upstream to first those defects (examples of evidence of defects might be things like expedite charges, allowances, lack of considering options etc.)

In The Value Add Accountant, you may find some good info to help.

In general lean improvements affect all 5 levers of financial value, including in finance/accounting. To learn more about the 5 levers, again check out The Value Add Accountant.

Last of all, I would say I am NOT a fan of putting $$ to time saved unless money is actually reduced (over time, for example). But I am a huge fan of looking at the trend of the cost to the accounting (or any other resource time) as it relates to the demand from customers (often as Sales $$). We should look to see if we are able to convert this capacity to value add time, and one way is to hold the size of the team to a growth rate less than the demand growth rate, by converting capacity (time) created to more value creating tasks.

Jean
10/23/2019 01:34 PM
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Dikshit
Shyam Dikshit



For finance you should work with VSM tool. That will throughout muda in your process.
Use VOC to understand improvement area.
12/08/2019 04:10 PM
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Leaneffi
Evelyn Dijkstra



I would also look at the following things:
- defects
- delivered/finished on schedule (they usually have a clearly defined planning)
- reducing surprises in planning
- waste (in finance usually overprocessing delivers a lot of insights)
- delivery from suppliers (usually internal process)
- delivery to (internal?) Customers

Since finance brings all insight from the company in a scorecard or financial statement, they also tend to see a lot of room for improvement in other processes.
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