With so many different areas of regulation, both financial and non-financial regulations, a regular topic of discussion with managing agents ...
How effective are your processes?
29 April 2021
As businesses grow and evolve, the processes they follow, often don’t keep pace with the changing business and technological landscape. Processes can start to become cumbersome or ineffective and we often find the controls a business believed were in place to avoid errors or even fraud, aren’t actually as robust as management would like.
We often get asked to support organisations in documenting and reviewing their current financial processes to ensure they’re efficient and fit for purpose.
A common painpoint
One of the regular frustrations we hear from business owners is concerns over delays in receiving meaningful financial information. If management information’s slow in being received, then how can decisions be made quickly to take advantage of that information or to prevent a problem becoming worse?
Where to start?
The month-end close process is often a key starting point. Many of the other financial processes feed into the ability to complete the monthly accounts – payroll, sales, purchases, amongst others. By understanding the relationships, timetable and obstacles to a speedier month-end close, then steps can be taken to improve the issues that are noted.
One such example would be the Sales to Cash Process. At a high level, most businesses would follow a similar process – a sales enquiry, conversion, provision of goods or services, raising of invoice and collecting cash. But, even for a fairly simple business, there can be many complexities along the way. How are the enquiries captured? Who then deals with that enquiry? Is it logged into a system and is there a check for stock levels or production capacity? How is the enquiry costed? Who deals with the dispatch, delivery and customer sign off? What steps are there in raising the invoice? Is there a system for checking overdue accounts and raising reminders?
Often what may appear to be a simple process at fist glance, in fact, has many moving parts, numerous stakeholders and various interactions between computer systems, spreadsheets or even physical paper. All of these interactions can cause delays, manual error or even the risk of a fraud. So, as you can see, there’s a number of questions that need to be answered in order to work through to a satisfactory solution.
Options for a solution
By reviewing the process end to end, the inefficiencies can be ironed out, and solutions put in place to reduce manual error or duplication of effort. Making better use of automation can also reduce risk and free up staff time for more value-added activities.
We often see businesses where the same information’s logged in several locations, rather than a single central place – having ‘one vision of the truth’ reduces the risk of incorrect or incomplete information being used.
As part of designing the ‘future state process’, we work with organisations to ensure they’re producing and reviewing the correct levels of information, whether that’s summary reports to the owner or detailed reports to a sales manager. Producing meaningful information’s as important as it is being accurate and timely, as is the need for it to be at the right level for the audience it’s aimed at.