Finding opportunities in finance areas

In many functional areas we find opportunity by trying to determine what the purpose of the function is and then seeing if we can maximize the time people spend performing activities related directly to that purpose. For example, sales people should be selling, engineers should be engineering, mechanics should be doing maintenance, and so on. The idea is then to identify what people are doing when it’s not related to the function’s purpose and try to eliminate or at least reduce that time. In a sense you leave the value-added time alone and eliminate some of the non value-added time. Finance is a little different. While the basic analytical approach is similar, the difference is that we often find that the biggest opportunities lie in actually challenging some of the value-added time. If you look at some of the activities performed by finance personnel with a critical external eye, you can often find people doing things for reasons that may no longer be valid.

Here are a few examples of typical opportunities in finance areas and the corresponding questions that can be explored:

  • The budgeting process is cumbersome. Can the process be streamlined?
  • Reports are created that are not used by management. Can reports be eliminated or consolidated?
  • Accounts payable personnel spend too much time fixing supplier or upstream invoicing errors. Can error fixing be pushed back to suppliers or fixed upstream?
  • Accounts receivable personnel have an inconsistent process in part driven by sales concerns regarding collecting from key customers. Are stated customer concerns really valid?

Finance areas are capacity-oriented processes where work is commonly repetitive in nature and the actual flow of work is fairly predictable. Opportunity can also be found by studying the flow of work and paying particular attention to the bottlenecks and constraints and where work gets “handed-off” to the next person or next department. The department typically has high workload peaks for specific periods of the month and year and tends to get staffed in order to manage these peaks. Opportunity can reside in finding creative ways to move some of the work requirements out of these peak periods.