Optimizing Your Finance Function

Transcription

1 Optimizing Your Finance Function Presenter s Tuesday, Name September 20, 2011 Presented By: Sharon Hubiak Director, Finance & Accounting Jeffrey Creech Director, Finance & Accounting Audio and Tech Support This meeting is being broadcast, and you can listen through your computer speakers by choosing Use Mic & Speakers (figure 1) To turn up your computer s volume, please select: Start My Computer Control Panel Sounds and Devices Or Please select Use Telephone option on the GoToMeeting Control Panel and a number and ID will be generated along with a PIN number associated with you. (figure 1) PLEASE NOTE All lines will be muted during this presentation. If you would like to ask a question, please use Questions (figure 2) function and your question will be addressed. Experis Finance Tuesday, September 20,

2 Earning CPE Credit To receive 1 CPE credits for this Webinar, participants must: Attend the Webinar for at least 60 minutes on individual computers (one person per computer) Answer polling questions asked throughout the Webinar At the end of today s presentation, a link to our CPE Learning Event Survey will be posted in the chat box in the control panel Please take a few moments to complete the survey as we appreciate your feedback Experis Finance Tuesday, September 20, Optimizing Your Finance Function Presenter s Tuesday, Name September 20, 2011 Presented By: Sharon Hubiak Director, Finance & Accounting Jeffrey Creech Director, Finance & Accounting 2

3 Agenda What is Financial Process Improvement (FPI)? What is the impact of FPI on an organization? Why improve financial processes? How is FPI performed? Keys to successfully implementing FPI Benefits Final Thoughts Experis Finance Tuesday, September 20, What is Financial Process Improvement? Process Activity or a series of activities that bring about a result Financial Process Improvement Analysis and modification of processes to enhance their ability to better meet their objectives,for the benefit of the company and its stakeholders Performed at the operational level Process Metric Defined measure to assess the performance of a process Comparative measure for process tracking Metrics need to drive the process to the desired result SMART Specific, Measurable, Actionable, Relevant, Timely Experis Finance Tuesday, September 20,

4 The World of Process Improvement Total Quality Management (TQM) Kaizen/Continuous Improvement Six Sigma Master Black Belt Black Belt Green Belt Process Improvement vs. Re-Engineering Quality Control/Internal Control Quality Assurance Helix-powered facilitation Other Experis Finance Tuesday, September 20, Potential Effects of FPI All of an organization s business processes and, therefore, improvements to those processes, directly or indirectly impact a financial accounting and/or reporting process Likewise, improvements to financial accounting and/or reporting processes can have a direct or indirect impact on other business processes Revenue Stream Procure-to Pay Operations HR and Payroll Finance and Accounting Treasury Financial Reporting Experis Finance Tuesday, September 20,

5 Polling Question #1 Which of these processes do NOT affect financial reporting? Treasury Management? Production Scheduling? Purchasing? None of the above? Experis Finance Tuesday, September 20, Why Improve Financial Processes? Accurate data delivered to the correct audience at the right time Provide short-term and long-term solutions to shrinking profits Enable sustainable cost reductions Generate new revenue through service optimization Meaningful information required by department leaders to understand their performance against corporate goals Standardized approach to monitoring information and strategic decision making Improved efficiency Experis Finance Tuesday, September 20,

6 How is FPI performed? Five-Step Problem Solving Guide Experis Finance Tuesday, September 20, Symptoms Problem Categories Information/work is inaccurate and not timely The status of work is not known Work is being re-visited multiple times Customer satisfaction is low Employee/organization moral is low Process is not in control Real-World Examples Monthly Close is consistently a struggle to complete on time Vendors are being over paid/under paid Backlog of work exists and or is growing Customer bills are frequently challenged as wrong Confidence in fixed asset/inventory is lacking Sarbanes-Oxley has slowed down your financial operations New system implementation has not gained the expected benefits Experis Finance Tuesday, September 20,

7 Methodology Overview Methodology A documented and proven approach with tools and techniques to successfully and consistently deliver professional services How to use a methodology A starting point for an approach that is specific to the need It is not like a cookbook where all the steps (ingredients) are required Instead, a methodology includes all the possible steps, but they should be assessed and included in the approach and delivery only when they make sense and add value Experis Finance Tuesday, September 20, How is FPI Performed? Identify Symptoms Identify & Scope Improvement Opportunity Identify Root Cause Document Current State Processes (as-is) Design Solution Develop Future State Processes (to-be) Identify Gaps & Prioritize Action Plans Implement Train & Implement Prioritized Improvements Monitor & Optimize Measure & Optimize Process Performance Foundational Components for Success Project Management & Quality Assurance Change Management Experis Finance Tuesday, September 20,

8 Polling Question #2 True or false. A methodology for process improvement is a descriptive guideline rather than a prescriptive set of specific activities. True? False? Experis Finance Tuesday, September 20, Keys to successfully implementing FPI Culture: the company s background and traditions Identifying and addressing political and cultural challenges Organization: the company s structure Leadership support, sponsorship, and involvement Assessing organization s readiness for change Focus on change management People: analytical, documenters, process approach Dedicate sufficient and capable resources to the project Process: understanding how to carry out the project Structured and measurable approach (methodology) Gain momentum on a series of small discrete efforts Be reasonable The solution will rarely be 100 percent perfect Believe in the process Systems: use technology where possible Technology is an enabler, not a solution Experis Finance Tuesday, September 20,

9 Strategic governance Senior Management Functional Leadership Finance Senior Management Sales Ops True Tone at the Top Strategic direction Risk acceptance Cost vs. benefit Enabling Technology Payroll Financial Systems CRM Ops Sys Reporting Experis Finance Tuesday, September 20, Functional leadership Vertical Alignment Process Ownership Efficiency Future intent Data integrity Senior Management Sales Horizontal Alignment Order to cash Procure to pay Plan to produce Record to report Finance Ops Financial Systems Ops Sys Payroll CRM Reporting Experis Finance Tuesday, September 20,

10 Shared accountability 1. True tone at the top 2. Vertical alignment of functional lead and technical lead for process ownership 3. End-to-end process appreciation provides a horizontal understanding of data flow before, during and after functional use Governance structure with roles and responsibilities support strategic, vertical and horizontal alignment Experis Finance Tuesday, September 20, Value of Integrated Team with Consultants Internal Team Knowledge of current environment Wish list of changes Relationships Understanding of the culture Organizational historic knowledge Understanding of roadblocks and political environment Consultant Team Provide a fresh perspective on the business processes Help overcome political challenges Bring industry and/or process expertise from years of differing experiences Skilled in performing process analysis and designing improved processes Focused only on the project Bring proven methods to reach the desired objectives Highly Effective and Successful Integrated Team Experis Finance Tuesday, September 20,

11 Polling Question #3 Your organization s biggest challenge in executing process improvement is: A. Lack of end-to-end process appreciation B. Technology is driving solution C. Management resistance to change D. Insufficient resources to execute E. No seat at the table during the decision-making process Experis Finance Tuesday, September 20, Benefits of FPI Strengthens financial and operational controls Shortens the accounting close cycle Optimizes the ERP systems Supports process integration arising from a merger or acquisition Provides early warning and risk management processes Increases predictability and efficiency of budgets and forecasts Experis Finance Tuesday, September 20,

12 Financial Process Improvement Benefit Examples Employee Expense Administration Process 25 percent FTE savings 60 percent reduction in cardholder expense submission errors Improved cardholder behavior & Procurement Card group environment Internal Customer Satisfaction Improved Financial Close Process 50 percent reduction of close process, from 6 days to 3 days 75 percent savings for Inter-Company close processes (8 hours to 2 hours) Reduced the general ledger closing cycle from 20 business days to 5 business days Experis Finance Tuesday, September 20, Financial Process Improvement Benefit Examples (continued) Accounts Payable and Procurement Invoice processing turnaround time reduced by 75 percent Greater than 50 percent reduction of Accounts Payable processing errors Inventory Management Process Reduction of physical inventory efforts from monthly to annually with periodic cycle counts for a greater than 50 percent savings in effort Inventory adjustments were reduced to an acceptable level Order to Revenue Process Reduction in number of re-billing efforts by 50 percent Reduction of DSO by greater than 25 percent Capturing required information for > $2 million in additional annual billing Experis Finance Tuesday, September 20,

13 Example Procurement Card Supply Chain, Procurement Card Group Operations and Improvement Situation Backlog - Six months of expense report auditing Audit Errors - Approximately 50 percent of all expense submissions Cardholder Information - Tracked manually within each expense envelope and a file folder Audit Process - Inconsistent handling by the P-Card auditors Cardholder Behavior - Defensive and harsh Operational Reporting Management reports unavailable Turnover - 75 percent turnover in Procurement Card group Experis Finance Tuesday, September 20, Example Procurement Card Supply Chain, Procurement Card Group Operations and Improvement Identify symptoms; root causes Process Improvement Approach 1. Identified Problems, Issues, Expectations (PIE) from PCard group and through customer insights 2. Analyzed PIE data to determine where improvement was most needed 3. Proposed action plan to address needed challenges Design Solution Implement; monitor and optimize 4. Refined and developed Envelope Auditing Process, Procedure and Standards 5. Defined and developed an Escalation Process 6. Implemented manual processes and tools to support many of the operational needs and challenges 7. Refined external training materials and created internal training manuals 8. Developed and Implemented database to enable and support the processes 9. Gathered hierarchy information and implemented maintenance processes to update the data as it changes Experis Finance Tuesday, September 20,

14 Example Procurement Card Supply Chain, Procurement Card Group Operations and Improvement Benefits FTE Reduction - Savings of FTE of effort (20 percent) Backlog - No backlog and all Expense Submissions are audited within 2 days of receipt Audit Errors - Greater than 60 percent reduction of Expense Submission errors (down to about 20 percent error rate) Cardholder Information - systematically available and consistent Audit Process - Situations are handled consistently and aligned with the P-Card policies Cardholder Behavior - improved by reduced submission errors and more of a teamwork environment Operational Reporting - Readily available Experis Finance Tuesday, September 20, Example Media Industry Shared Services Standardization and Optimization of Back Office Support Situation Tremendous profitability pressures in declining print industry Independent unit operations; lack of consistency in process No strong, central leadership provided in standardization of activities Corporate Shared Services Center not utilized to fullest extent Experis Finance Tuesday, September 20,

15 Example Media Industry Shared Services Approach Conducted d quick discovery phase of all major locations to gather facts, assess opportunities and understand change management issues Established Project Management group for overall related efforts Designed and implemented changes to optimize and consolidate Process Shared Service Process Re-design New Enabling Technology Application Enhancement Accounts Receivable New X X Credit and Collection New X X X Fixed Assets Enhanced X X Procure-to-Pay Expanded X X Fiscal Period Close and Financial Reporting New X X Experis Finance Tuesday, September 20, Example Media Industry Shared Services Results: 23 percent net headcount reduction Reduced headcount in finance, accounting and purchasing in all locations Transferred and added skilled resources to expanded Shared Service Center Quicker, more accurate cash application to customer invoices Lower Days Sales Outstanding Significantly improved collections Less write-offs Lower administrative costs for credit approval and significantly late accounts Reduced time of fiscal period close process Improved control and accuracy of fixed asset management Purchase price savings on routinely purchased items and services Experis Finance Tuesday, September 20,

16 Final Thoughts Process Improvement is continuous 1. Develop tools and templates for re-use; all project plans, specification materials, policies and procedures should be maintained as living documents 2. Function and technical lead roles should continue to own process development 3. End-to-end process thinking helps to establish single-source-of-the-truth and integration integrity 4. Measure and celebrate success to encourage process modifications that realize value Experis Finance Tuesday, September 20, Questions? For more information please contact: Sharon Hubiak Northeast Director, Finance & Accounting (267) Jeff Creech Southeast Regional Practice Leader, Finance & Accounting (704) Jeffrey. Experis Finance Tuesday, September 20,

17 Webinar evaluation A link to our CPE Learning Event Survey is now located in the chat box in the control panel Please take a few minutes to provide us with your feedback Experis Finance Tuesday, September 20, Experis Finance delivers innovative solutions that help companies create competitive advantage, custom tailoring our project solutions and professional resourcing services to fit our clients needs in the areas of risk advisory, tax and finance & accounting. Experis Finance Tuesday, September 20,

18 More information For more information, please visit Experis Finance Tuesday, September 20,