Finance ‘Just in Time’!
A couple of weeks ago I read Robert Kugel’s article The Office of Finance is a Numbers Factory. Like many of his other great articles I have read it triggered my thoughts around what I have seen in my many years working with Office of Finance organisations. He describes his analogy really well and so I am not going to try to better it – I am just going to quote it!:
“Yes, it’s an easy metaphor, but a worthwhile one to consider. For the Office of Finance, figures are its raw material. They are transformed and assembled into financial statements, forecasts and reports. Like a factory, there are blueprints (accounting standards, models and forms) that show how the parts are to be pieced together. There’s quality control in the form of internal audit. And there are final inspections — external audits — to ensure the end product has been assembled properly.”
I thought of all those times I have seen financial accounts and financial reports delivered ‘just in time’! Not because that was what was planned but because there were so many poor processes involved it was all the organisation could achieve! Too much time was spent on low value tasks like finding and manipulating data before financial accounts or reports were even assembled. This meant that just the numbers were delivered. There was no time left for meaningful analysis or any reasoned suggested courses of future action.
How often does your organisation extract figures from one source only to manipulate them manually or in spreadsheets and then put them into another system and then to maybe repeat this again? Manufacturing would grind to a halt if it took this approach. It has been focused on integration for years ensuring that the boundaries between processes and departments never slow down getting the product made. In fact, they have gone even further back up the supply chain to integrate their suppliers, and their suppliers, fully into their processes. That is how they achieve ‘Just in Time’ manufacturing.
So, how does this relate to the Office of Finance? It is about where it focuses. There are two things that in my opinion that really matter and if these are given priority there is the opportunity to make dramatic improvements:
- Boundaries are where errors happen and where time is lost. These can be between systems or departments or even just between two colleagues. Remove them, automate them, document them, train the participants. There are many ways to make them better and in my experience every time you do it will make a big difference.
- Automated processes are faster, more consistent and are much more likely to be error free. Removing human involvement in low value processes like payment processing or account reconciliation has multiple benefits even before you have deployed those involved into higher value add tasks. Factory automation has been around since Henry Ford and vital to deliver the sophisticated and reliable products we enjoy today.
The great news is there is a lot of Information Technology around to help the Office of Finance deliver improvements in these areas. The advent of Cloud Applications for Enterprise Resource Planning (ERP) and Enterprise Performance Management (EPM) has driven both the need for better integration, often needed between legacy on-premises systems and the newly introduced Cloud solution, and the simplification and automation of processes to drive out complex software customisation, which does not work with the concept of Cloud Solution delivery. Along with that we have seen many new concepts and the delivery of new technology for integrating systems. We have also seen the introduction of Artificial Intelligence (AI) into process automation to help reduce time and human involvement.
The opportunities are there for the Office of Finance to become a much more efficient and effective ‘numbers factory’ and join manufacturing in the 21st century. It could be delivering financial reports and financial accounts ‘Just in Time’ because that was how it was planned rather than by necessity!
Please contact me if you would like to discuss this further or have your own thoughts on the subject. I am always happy to debate and learn. If you want to know what we do at Brovanture then please visit or website www.brovanture.com or give us a call on +44 (0)1483 685450.
Until next time