Everyone remembers those moments when you work and work and in the end, you feel like you were not able to add some real value. In this post, we have a close look at the topic of lean finance. What can be done more efficient? Are we even working effectively? What can be completely left to have more time for other things?
Management accountants have a broad range of tasks and they are certainly an important knowledge resource of a company. So you may think it could be difficult to identify possible areas for improvement. Below I produced a list with 4 tips to a hassle free start with your lean finance:
#1 Optimise numbers of reports
As a management accountant, you produce many reports. Take the time to go through those reports and ask yourself two questions:
- Is this report important for steering the business / unit / department?
- How much time do I need to prepare it?
Prepare a list showing the results of all your reports. Reports classified as unimportant you either stop sending (my favourite. Just try it out and see what happens. If people complain, you can always find an excuse and send it again), tell the receivers you are currently over busy and you can’t produce it anymore (and never send it again) or try to figure out what the receiver really wants to know with the report and then find out how to improve it.
When going through your list, start with the reports using most of your time. If you can skip only a few you already gain valuable time. You can’t believe how many reports are produced just because they were important 1, 2 or 3 years ago. I’m sure you find some lean finance potential here.
#2 Automatization in finance
Automatization is about producing the same or nearly the same output as before but you drastically reduce your own time needed. Say you have a report where you add values together from different sources. You spend valuable time doing that but technically it could be done by a system or a script.
Get back your list from the first point of lean finance. Now have a look at those reports that consume much of your time and are important.
I recommend that you try automatization even when you now there is an initial effort needed. I personally, for example, wrote VBA Script in excel formatting my variance analysis reports I use on a monthly base. My initial effort was 1-2 hours but every month during the reporting time (when I am very busy) I save half an hour formatting and preparing my Excel files.
The matrix below summarises the first two tips.
#3 Clear and smooth budgeting process
Another area you can apply lean finance to is the budgeting process. In a previous article, I already highlighted how budgeting can be optimised. Here I would like to tell you how I save my own resources but still produce a good result.
- Make yourself familiar with the budgeting schedule in advanced
- Read guidelines, make sure to clarify if needed
- Plan backwards from handing in the budget to the current date
- Reserve time for yourself for last minute adjustments just before handing in
- Leave enough time for yourself to consolidate or type in figures to the planning system
- Arrange a budgeting meeting with every single responsible cost or profit centre manager. Make sure when you walk out of every of these meetings, that you nailed to budget with them.
- Write a clear message to invite the managers for the meeting and ask them to properly prepare. Make clear that the aim of the meeting is to finalise the budget. I personally already add a draft budget to this message.
- Make sure you have an easy to use budgeting tool. So you can record and present the results during the meetings
The graphic shows how I plan the budgeting process.
Take my way to lean finance budgeting and adapt it so it suits you. I am sure you are able to save yourself time and lots of hassle.
#4 Lean means accepting the gap
Finally, we should have a look at a topic that is hard to mentally implement but is very powerful. Accept the gap. As a management accountant, you are likely to strive for perfection, you are the person who knows about the cost and revenue, you are the one staff ask about finance topics. A major step towards lean finance is that you accept, that you can’t do everything, know everything, control everything. Simply accept the gap.
I am sure you know about Vilfredo Pareto and his distribution law (also called Pareto law). Adapting his view to your work, we can conclude that you need 20 % of the time to reach an 80 % result. Set your mind and try to strive for the 80 % right solution and you are able to be way more efficient. This will free up the time to go after other important topics or alternatively reduce your overtime balance.
Lean Finance Conclusion
In this post, we had a look at four tips to implement your personal lean finance. It is surely a good start to implement the tips but should not forget that lean finance is a continuous process and not a one-time action.
Let me know how it goes for you. Please share.