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How to uncover inefficiencies in your finance organization

Inefficiencies easily creep into your finance organization when you’re looking the other way. New hires, changes in the company’s direction, advances in technologies, the passage of time, and meetings, meetings and more meetings all take a toll on the organization’s ability to run as efficiently as possible. Before you know it, you have redundancies, blocked process flows, outdated systems and employees who are either bored or overwhelmed with their jobs.

Whether you’re new to your role and you’ve been asked by management to uncover inefficiencies or you’re taking initiative to find them on your own, consider taking the following steps. You have some hard questions ahead of you, plus some homework, but the results will be rewarding.

1. Know the status quo

Your routine may be so tied up in meetings and issue resolutions that you may have lost a hold on what all your employees do for their day-to-day activities. It’s understandable—passing time, shifts in direction and modifications in roles, plus an increasing number of staffers can make any manager distant from everything that goes on under his or her watch. For the purposes of uncovering inefficiencies, though, you have to figure it out. Learn what everyone in your organization does and how they get it accomplished.

You can go about this in several ways: One approach can be to ask your employees to write out their own job description for you. The caution with this method is that many staff members may not give themselves full credit for all the considerable work they do.

Another, somewhat easier approach is to have the staff interviewed by an impartial third party. That way, you’ll be documenting all the tasks and how they are completed, along with inquiries from the interviewer about why each task is relevant and how it connects to other processes or tasks. You’ll also be getting a sense of the time it takes for each task plus a clear sense of who you are most dependent on. Take the time to also understand the process flow—how exactly all these things get done.

2. Understand your organization’s skill sets

After you have conducted your interviews, you will have a better understanding of what tasks are getting done, what’s working well and what could be improved. It may become apparent to you that you need an analyst with stronger Excel skills or your project manager is not really gaining cooperation from others and consequently a particular project isn’t moving along as quickly as you would like.

As you review the jobs and the staff assigned to them, explore whether some people have room for improvement within their current roles or whether they would be better suited for a different position. Some of the telltale signs that you need to make a change: when a staffer is continually late to work, has a disgruntled attitude, or misses deadlines on assignments or does not complete them at all. Such issues commonly arise when a smaller company grows to a larger size. Some people outgrow their original roles, they haven’t been trained to take on the new skill sets that are required, or they may lack the experience necessary for what has become a global or public company.

3. Get a handle on the systems

Anyone who works in finance lives and dies by their data. But having data does you no good if you can’t access it. If you have lost touch with how your own team deals with and processes data, make sure that you understand the systems that are holding your critical data along with the processes to update it. Check that your process flows are complete and include what systems are used and whether any tasks are getting done manually. If you see that systems are down more than up, this should be an indication that something is not right. Do the users have trouble using the system, and how often?

This is an instance where you don’t need to be an expert yourself. You can rely on outside expertise to advise you on systems for your industry and size (based on the number of transactions). These experts will be able to make you aware of new advances in technology, to ensure your team has access to the most efficient tools that can give all of you the most up-to-date information possible.

4. Record your observations

As you go through tabulating the people, the processes and the technology at your disposal, keep track of anything that could be redundant. Can that redundancy be streamlined with process changes or system updates? You may discover that critical data is held captive in your current system and many work-arounds are required to obtain this data, not to mention manual labor. Or do you need a process change?

Process changes sound easy, but you and I both know that getting people to change can sometimes be a challenge. Be sure to outline goals for any changes that you want to implement, while it’s top of mind, and think about the “what’s in it for me” that you can tell your staff when it comes time to request the change.

5. Make your list of recommendations

Whether you’re making a list of recommendations for yourself or a list you will be sharing with others in management, tier them by most critical, essential and nice to have. This will help you prioritize and give others a clear indication of the impact to the organization.

This entire process is a lot of work and may require some tough decisions. But it’s an opportunity that should be embraced. The types of improvements you’ll uncover will only make the overall organization stronger.

Salena Oppus has been a member of the RoseRyan dream team for over 15 years. Her specialties are system planning and implementation, cost accounting and forecasting.

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Why getting the right finance team in place is essential after your IPO

Look at that new public company over there with its carefully chosen ticker symbol, brand-new source of capital and sense of relief among its senior leaders. They have finally achieved the milestone of going public that they worked months to reach. Take an even deeper look, however, and you’ll see that relief will be short-lived if they do not have a robust mix of talent and resources to handle the rocky transition ahead. They are setting themselves up for a stumble.

For companies that have just gone IPO, staying upright is “about efficient staffing and it’s also about the right staffing,” said Senior Consultant Diana Gilbert, who leads the Technical Accounting Group at RoseRyan.

During a recent RoseRyan-hosted seminar, co-sponsored with Fenwick & West LLP and BayBio, Gilbert laid out the big trouble spots between the first day a company’s stock gets traded and a year or two later when it can claim to be a bona fide, mature public entity. During this transitional period—a time that RoseRyan calls “Day 2”—the company has to adjust to a plethora of new rules, shrunken turnaround times and a stream of inquiries by investors and analysts who are watching every move and reading every 8-K. “You have a whole new audience you have to answer to,” Gilbert said. “You have quarterly filings. You have reporting deadlines. While 45 days to file may seem like a lot of time, when you back into it, it’s not a lot of time.”

There’s no going back now
Within that time crunch are layers of reviews that didn’t apply when the company was privately held. The audit committee, the company’s lawyers and auditors all get a say on what the finance team prepares. This will slow down the process and adds to pressure on finance to be even more buttoned up than before. The stakes are higher. “You can’t compromise the quality of what you’re doing,” Gilbert said. If you do, she noted, it could result in a restatement. As it is, about 31 percent of new public companies restated their financials between 2004 and 2012, according to Audit Analytics data. That is a woeful statistic.

To take on the higher load of compliance requirements, post-IPO companies should have access to technical accounting expertise, with people who are on top of the latest changes and leanings by standard-setters and regulators. And they need people who have actual public company experience. Most new companies do scale up in some way: Nearly 85% of CFOs surveyed by PwC said they hired one to five staffers after going IPO solely to meet the new reporting requirements. It is essential to have the right team in place.

Additional help is more than just handy to have—it can be a necessity in the eyes of the auditors. Even though companies that are considered “emerging growth companies” (those with less than $1 billion in revenue) do not need their auditors’ signoff on their internal controls over financial reporting just yet, auditors do want to know that management’s review is occurring. And they want evidence that it’s happening.

Fortunately, most companies wending their way through the early part of their post-IPO life have “relaxed” rules until they lose the ECG status, noted Dan Winnike, a partner at Fenwick & West. The longest a company can have these looser restrictions (including fewer compensation disclosures and no say-on-pay votes) is five years, but that could be shortened if it becomes a large accelerated filer or meets other criteria.

For companies going through the tough transition from getting public to being public, any break surely helps.

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What every good controller should be up to this December

As the temperatures start to cool (even in California), the leaves on the trees are turning beautiful colors. And we’re also turning the corner to the new year. I believe December is our most important accounting month of the year. It’s a fast-paced, in-between month where we all have a short window for getting retrospective while also setting up goals for the year ahead. This is especially true for small businesses.

No matter how resource strapped a company may be, there’s a need for finance and accounting teams to pile on thoughtful planning this time of year. And they have to do it while also keeping a tight ship and taking care of routine tasks. Any cracks will show: The smaller the organization, the more of an impact each person has. After all, the accounting departments in smaller companies set the tone and structure for the rest of the organization to follow.

Hit all the must-do activities below, and you’ll be able to leave the year behind with a clean slate. Then you can toast to the finance team’s move toward a successful run next year.

1. Huddle with other department heads

This is the time of year when you need to get a grasp on budget management and plan accordingly. It’s that tense time when what has been spent or not spent comes to a head. Have a meeting of the minds with other leaders in the company after running reports that reflect actual expenses thus far, review the results, and see what the immediate plans are for keeping within the budget.

Most companies still have a “use it or lose it” approach to their budgets, which can lead to a mad scramble by anyone who has been slow in launching their programs until this point. If you get the sense that anyone is madly spending money just to spend money before the year closes, consider offering to freeze the unused budget so the funds can be used wisely next year. Consider sending out a reminder to employees to submit expense reports on-time, too—that’s a surefire way to spur an increase in activity.

Also ask all key vendors for up-to-date statements to see that you have accounted for all the billing activities. Nothing is more depressing than having a department head hand you a large invoice in January that you should have received in December. Make this time even more efficient by double-checking that you have all W-9 information from vendors that will receive a 1099 from your company—why wait until the next year if you’re contacting them now anyway?

2. Get in cleanup mode

It’s time to dust off all those maintenance projects you meant to do as the year progressed. The time for excuses is long gone! Turn your files upside down and shake them around until the cobwebs fall out. Are there old customer accounts clogging up your system? Dormant bank accounts? Redundant information for vendors? Before you close the year, you’ll also need to review your chart of accounts. And you’ll want to put any finishing touches on the annual budget and any strategy you have for how your team will carry it through in the new year.

3. Touch base with your auditors

We know it is tempting to procrastinate, but anything you can do to prepare for your upcoming reviews ahead of time will save you grief later on. All too often, auditors arrive expecting to see the schedules and files they expected and requested but their client is still in the process of completing schedules and gathering information. Be an exception and start the audit off on the right foot. Check in and see if you can get the client assistance schedule ahead well in advance and mutually agree to fieldwork dates. Also take a look at any deadlines you may face for reports that are due to lenders. (For more about prepping for your year-end audit, check out this blog by my colleague Monica Zorn.)

4. Review your staffing levels

December tends to be a rather inactive month for hiring, but it’s a time of year when finance could certainly use some extra hands. Who has time for sorting through résumés right now? With the holidays looming, hiring managers and potential employee candidates have a tough time getting on each other’s schedules, and most just aren’t into it at the moment. For now, plan for the holes ahead, including the busy times and vacation periods, by looking to outside consultants to help fill the gaps. You don’t want to burn anyone out and have to look for yet another job candidate when the new year rolls around. That wouldn’t be a fun way to kick off 2015.

5. Love the ones you’re with

December is filled with holidays and the natural push and pull between work and family life. As employees reflect back on where they’ve been and where they’re going in their professional and personal lives, take a moment to thank them for their hard work and their dedication. The majority of employees—nearly 80 percent—said they would work harder if they got the appreciation and recognition they think they deserve, according to a survey by Globoforce, a human capital management company. Another reason to extend recognition this time of year (or anytime for that matter): It’s the right thing to do.

Get through this list, and you’ll be starting 2015 off right!

Steve Jackson, a member of the RoseRyan dream team, has expertise in the areas of revenue recognition, SOX, systems implementation, budgeting, financial analysis, and process improvements, among others. He has worked at public accounting firms and corporate finance departments for over 30 years. 

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