Lean management practices can supercharge the benefits brought by automated software, as Ann Furlong explains.
Closing the books is stressful and time-consuming. When things such as old data or out-of-date reports are discovered, the hunt to uncover errors that never should have happened in the first place begins. Not only does this waste your time and energy, but it also raises concerns over the quality of your company’s data.
If there are pain points in your closing process, it’s likely that something is missing.
Automated financial software relieves the pain, making financial processes clear and accurate. However, to maximise efficiency, software should have lean management practices built in. Otherwise, automation will simply speed up the creation of waste and reduce profitability.
What is lean management?
Lean management, created by Taiichi Ohno with the Toyota Production System, minimises the time, effort, and cost in business processes. Lean management practices recognise waste in eight key areas, including transport, inventory, motion, waiting, over-processing, defects, and skills. The purpose of lean is to reduce those wastes. Many businesses worldwide have incorporated lean practices to maximise efficiency and profits.
Now, lean business practices can be applied to finance departments with lean automation.
Automated financial software may be the future of record-to-report, but not all software is created equal – you need the right support for your R2R processes. Look for a solution which innately minimises time, effort, and cost and eliminates four key areas of waste recognised by lean management: waiting, transportation, over-processing, and errors.
Waiting is one of the largest areas of waste for Finance departments, especially for Shared Service Centres. While moving processes to Shared Service Centres (SSCs) is cost efficient and remains a strong business practice, SSCs have made the record-to-report process incredibly time inefficient.
For example, accounts receivable often communicates between different time zones for approvals, notifications that processes are complete, or questions. Operating in different time zones is challenging, but the process itself also causes waiting as work is transferred between employees across several days, if not weeks. This workflow creates process bottlenecks and can easily lead to errors in your information, resulting in poor decisions or audit trouble.
Solutions which reduce waiting with automation can support achieving optimal process speeds.
Speed and accuracy are essential for Finance departments. Transporting information from diverse systems and independently owned spreadsheets within each Shared Service Centre to headquarters for reporting is an essential part of every company’s closing process. Spending excessive time retrieving this information is a waste and leaves little room for analysis or other value-adding activities.
Leading Shared Service Centres are now using solutions to automatically collect data from multiple places and transport all necessary information on an automated schedule.
Finance departments are often guilty of repetitive work and long task lists that add no value and waste accountants’ time. This is over-processing, and it can also be found in the multiple spreadsheets that are independently owned and used by employees during the record-to-report process.
Independently owned spreadsheets not only cause over-processing by generating multiple recordings of the same information, they also create confusion in the numbers and cause delays to verify accuracy.
What’s needed is a focus on eliminating redundant documentation and reducing workload through the automation of tasks to bring further efficiency to Shared Service Centres.
It’s essential for a business to have an error-free record-to-report process. The success of a business depends on it. Look for solutions which establish clear processes and template-driven workflows and drastically reduce errors. What’s needed in reality is live data, any time it is needed.
Lean management practices emphasise clear processes and eliminate non-value adding activities to simplify and standardise value-adding activities within R2R processes. The finance team can support these practices with strategies which release cutting-edge process improvement and achieve continuous improvement in Shared Service Centres – significantly impacting the bottom line and creating a true competitive advantage.
Ann Furlong is director, operations APAC, for BlackLine. This article is sponsored by BlackLine.