As a business grows, its systems and processes tend to evolve gradually.
A spreadsheet is introduced to solve an immediate problem. A manual check is added following an error. One employee develops a workaround, and before long that workaround becomes part of the standard process.
Each individual decision may be reasonable at the time. However, over several years, the business can accumulate unnecessary steps, duplicated information and disconnected systems. The result is often a way of working that no one would deliberately design today.
Imagine a process in your business that happens regularly.
It might be raising invoices, approving purchases, preparing management information or processing payroll. As you read on, keep that process in mind and consider whether it still works as effectively as it should.
The cost of doing what has always been done
Inefficient processes do not always appear as a clear cost in the financial statements. Instead, the cost is hidden in the time employees spend:
- Entering the same information more than once
- Producing reports manually from multiple sources
- Chasing approvals, information and updates
- Reconciling records that should already agree
- Correcting avoidable errors
- Maintaining spreadsheets outside the main systems
- Searching for the latest version of a document
- Answering questions that better information could have prevented
A task taking a few hours each week may not initially appear significant. Across a full year, however, it can represent a substantial cost.
There is also a wider opportunity cost. Time spent maintaining an inefficient process is time that cannot be used to analyse performance, support customers, develop employees or plan for growth.
In some cases, businesses recruit additional people to manage increasing workloads when the underlying problem is not a lack of resource, but an inefficient way of working.
Consider your chosen process
How much time does it take each week, and how much of that time is spent entering information, chasing others or correcting problems?
Are your processes still fit for purpose?
Processes that worked when a business was smaller may become less effective as transaction volumes, employee numbers and reporting requirements increase.
The warning signs can include:
- Management information taking too long to produce
- Limited visibility over outstanding work and capacity
- Unclear responsibility at handover points
- Heavy reliance on individual knowledge
- Multiple systems or spreadsheets holding similar information
- Teams spending increasing amounts of time on administration
Introducing another system is not necessarily the answer. Existing technology may be underused, systems may not connect effectively, or the underlying process may simply be too complicated.
The important question is not whether a process is visibly failing. It is whether it remains the best way to support the business as it operates today and where it wants to go next.
Now think about how the work moves
How many people, spreadsheets and systems does it pass through? Where does it tend to slow down?
Creating the space to challenge established practices
The people closest to a process often understand its frustrations better than anyone.
However, day-to-day deadlines can make it difficult to step back and question why each stage exists.
Over time, teams become skilled at working around problems rather than addressing their underlying causes.
An independent review can provide the space to look at the business differently. It can bring together people from across the organisation, make the current flow of work visible and identify where time, information or responsibility is being lost.
The outcome does not need to be a major transformation programme. Some of the most valuable improvements may come from relatively small changes, such as clearer ownership, fewer handovers, better use of existing systems or the removal of duplicated activity.
If you were designing this process today, would you design it in the same way?
How we can help
We review how finance processes work in practice, speaking to the people involved and following information from the original transaction through to accounting, reporting and payment.
This helps us identify where:
- Data is being entered, transferred or reconciled manually
- Spreadsheets and workarounds have developed around the core systems
- Approvals and handovers are causing delays
- Processes rely too heavily on individual knowledge
- Existing system functionality is underused
- Reporting requires unnecessary manipulation
- Controls could be strengthened without adding more administration
Our recommendations are specific to the business. Recent reviews have resulted in practical proposals to:
- Reduce manual transfers between operational and accounting systems
- Improve purchase invoice capture, coding and approval
- Automate or streamline bank reconciliation and debtor collection
- Redesign spreadsheet-based reporting and reconciliation models
- Introduce clearer month-end, payroll and reporting timetables
- Improve the use of existing software before investing in additional systems
- Assign clear actions, owners and priorities through a phased implementation plan
We do not assume that new technology is the answer. We first assess whether the existing process can be simplified and whether current systems can be configured or used more effectively. Where further investment is appropriate, we help the business define what is needed and how the change should be implemented.
Think again about the process you chose at the beginning. If it involves repeated data entry, manual workarounds, delays or unclear ownership, it may be costing more than is immediately visible.
If you’d like to discuss how a focused systems and process review could help quantify that cost, identify its causes and show where change would have the greatest impact, please contact one of the team below.
Head over to our business page to see how else we can support your business.
