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Be Less Ambitious and Surprise Yourself

January 1, 2012

The New Year is a time for resolutions and hopeful transformations.  But before setting super ambitious goals to overhaul the close process, consider this 2011 study of finance executives from 150 companies – probably echoing some of your own sentiments around the close process.  General highlights:

  • Finance professionals would like to close twice as quickly as they do now.
  • The #1 factor that continues to make the close process a challenge is the abundance of manual activities and undocumented (or not standardized) processes.
  • Finance professionals spend between 11% and 30% of their time on closing the books now.  But, if they could close faster, efforts would be redirected to strategic planning and process improvement.

This is an incredible catch-22.  As finance professionals, we want to speed up the mechanics of the close in order to win back time for strategic activities and process improvement.  But without first dedicating the necessary resource and technology, the close process will forever remain unchanged.

I am a big believer of making a series of small improvements as opposed to one big ambitious change.  For critical processes like the financial close, small ideas are not only much less risky, but they can be implemented quickly.  On the other hand, so many expectations (and managers and vendors and project plans) ride on a big change that they can paralyze the team into inaction.

So for 2012, look for small ways to start building your own process improvement arsenal.  Whether it’s setting up ACHs to reduce check processing or experimenting with new tools, you’ll soon find those small successes beginning to transform the close process.

If you need more inspiration, here it is — a stunning case study of how one company completely disrupted the retail industry through a mountain of individually small process improvements.

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One Comment leave one →
  1. January 2, 2012 10:08 pm

    Hi Nancy and Happy New Year!

    Great observations above. Starting small is a great way to go, especially if you can identify some key bottlenecks or process drags and knock those down. Automating manual steps (Microsoft Access is a great tool for this) can be a great way to accelerate the process. This in turn can allow time for upstream improvements that may make some of the numerous reclasses that seem to be a part of every close unnecessary, creating additional savings and compressing the cycle further.

    Chris

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