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Accounting and Finance - How Can We Help?


I’ve been thinking about what we as Lean Finance and Accounting practitioners can be doing during this time of “business-as-unusual” and wanted to offer a few ideas that I hope will generate thoughtful discussion, sharing and co-learning as a community.

What’s the customer requirement?

Organizations are responding to and/or planning ahead for changes in customer requirements. Business volumes may have dropped, or the mix of products and services may have changed, or in some cases demand may have increased. What about the “customer” or end-user of our products and services in finance and accounting? How have the current circumstances changed their requirements for what we do? And how could we find out?

How will this impact our financial results?

Perhaps your company needs to get a handle on near and medium-term changes in business results. If you have a rolling forecast process in place, you might run a series of scenarios to test the impact of changes in volume and mix on income statement and balance sheet results. Rolling forecasts are one of the key lean accounting strategies; they generally look 4-8 quarters into the future and are based on the real-time and forward-looking process measures that we use for lean daily management and continuous improvement. A hospital finance team, for example, might run a series of scenarios to make visible the potential impacts of changes in volume and mix due to reduction in elective care offset by increases in acute care. How will those changes impact revenue and expense? What is the impact on balance sheet cash and other financial strength metrics that may have loan covenants tied to them? What range of options for redeploying staff is the hospital considering and how do those impact expenses in the near and medium term? And what about the backlog of elective care that’s building up – what “re-entry scenarios” could the hospital consider to address that backlog once the situation safely allows that? For example, would staffing extended hours in the operating room allow the organization to better address customer requirements around access, and what would the financial impacts be?

A manufacturing firm, or firm in any other industry, could ask a similar series of questions specific to its customer demand and customer requirements, and financial performance goals and targets. The lean finance and accounting team can help the organization look ahead to impacts of the current situation, potential decisions and how to stay focused on delivering customer value in ways that are financially sustainable. If you don’t have a lean rolling forecast or financial planning model in place, this could be an ideal time to develop one, with end-user requirements in mind, so that what you develop is “fit for use.” There are ample resources available through books, articles and on-line to begin or deepen your practice of this lean accounting strategy.

What does this mean for our work?

It’s possible during this crisis that you may have an opportunity to use available capacity to advance lean thinking in your finance and accounting work. Standard work documentation can be a great place to focus available capacity. Do you have standard work documentation in place for financial and accounting workflows using lean/TWI methods? Start with your most common processes and either learn how to create job breakdowns, job aids and other vital standard work documentation, or update existing ones to reflect current best practices. You also may be learning about what it takes to shift from on-site to virtual workflows. Perhaps you’ve worked through challenges in processing payments, receivables, payroll or other key transactions or processes with staff working in a virtual environment. Consider documenting how you would best repeat this transition as a “standard response to an abnormal condition” so that in the event of a future situation that requires a shift from on-site to virtual work, you’re prepared with the learnings from this experience.

In addition to documenting standard work, what other improvement projects might be possible to begin or advance at this time? Do you have staff input on problems and opportunities in the order-to-cash processes, or procure-to-pay, or is this a good time to do the time studies you’ve wanted to do to prepare for improving the month-end close process? This may be an opportunity to delve into the procure-to-pay analysis that would inform the next steps in your lean supply chain strategy. This presumes that you have available staff time and capacity, which may not be the case, but if it is, consider what improvements you can advance to support the company in delighting the customer (often in the order-to-cash family), what process improvements will address staff over-burden and the unevenness of or waste in their work, and what improvements will support the organization in understanding and taking advantage of opportunities to improve financial results.

More and more resources are becoming available online for deepening your lean accounting and finance learning and practice. Consider how you can take advantage of these to support work that is most critical for your organization and its customers right now. If you have a larger team, staff members could pursue different learning content and then deepen their learning by presenting it to their colleagues. Try a series of quick experiments to apply and test your learnings.

I can only begin to imagine the variety of challenges you and your organizations and customers are facing during this time, so if none of these ideas is relevant for you now then I hope this was at least food for thought to come back to once we are all able to return to more typical operations. If you have questions, comments or additional ideas, I invite you to join the discussion on the Lean Accounting and Management LinkedIn Group where this newsletter will be posted as well. In the meantime I hope this article finds you and those around you safe and healthy.

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