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Ask 4 questions to identify Finance’s biggest inefficiencies

From CFO Daily News: Amid the daily grind, it’s easy for finance staffers to fall into certain routines. They may push through inefficiencies and forget to think about improvement.

Plus, given the pandemic, staffers may be more focused on getting things done and slapping on Band-Aids rather than closely assessing problems and finding long-term fixes.

But as companies forge on through 2020 – whether it’s at home or in the office – you know ignoring inefficiencies isn’t sustainable or cost-effective.

Fact is, every finance department has inefficiencies. The key is to set aside some time to really delve into them. And that means involving all your finance staffers to hear what bottlenecks they’ve noticed or innovative ideas they have.

A group exercise

To kick-start your efforts, the experts at AccountingWeb have highlighted four areas where inefficiencies hide and corresponding questions to ask.

As CFO, you can share these four areas with each finance function (Payroll, A/P, A/R, etc.), so they can start thinking about how to improve their daily operations.

To go a step further, you can ask each group to brainstorm and write out answers to the corresponding questions. After, discussion can follow – whether it’s within their individual functions or with you and other finance leaders. You may even want to bring everyone together at the end to talk about overarching improvements for the whole finance department.

4 areas to assess

Consider these four areas where finance inefficiencies exist:

1. Data management: How much time is spent looking through files for documents, correspondences, emails and other related items?

While your finance staff likely has an organization system, maintaining it consistently – especially if everyone’s dispersed – is another story. Have them consider how all types of files are stored and whether there are better, easier ways to access what they need quickly.

2. Processes: What aspects of your financial processes require the most “good judgment” – and are hardest to teach or learn?

In Finance, you know all too well that inefficiencies and uncertainties often lead to errors. Have your staff determine which process steps are hardest to carry out. Also, have them figure out which steps are the most difficult for others they work with. Then they can think about what concrete actions they can take to make the “hardest stuff” a little easier (e.g., procedure tweaks, more policy education).

3. Communication: Where do you see communication inefficiencies, both internally and externally?

Poor communication costs companies big – on average, $420,000 each year for those with 100 employees and $62.4 million each year for those with 100,000 employees. So, your staffers should think about who they struggle to connect with the most (e.g., approving managers, road warriors, trading partners). Then they can delve deeper into their communication process (e.g., methods, frequency, any silos, organizational charts) and decide if there are better alternatives.

4. Overall outlook: If you owned the company, what parts of the work or environment would you change?

Inspire your finance staff to think big picture about inefficiencies and act as strategic partners. Encourage them to mull over what aspects of your company, from finance tasks to office culture, could be updated to create a more effective company overall.

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