Streamlining Finance Operations: The Power of Finance Process Redesign

Revving Up Financial Efficiency: How Process Redesign Fuels Operational Success

If you agree with this statement...

“Financial operations are critical to maintain our competitive edge.”

...you will appreciate this article.

AI, automation and digital transformation may be all the rage in finance but if the processes they depend on are built on ‘sandy soil’ your investment in those technologies will soon be washed away. 

Over time, even well thought out financial processes can accumulate inefficiencies -similar to a machine that hasn’t had a proper tune-up. These inefficiencies often manifest themselves as unnecessary steps, outdated practices, or habits that have crept into the organization due to changes in the business, for example; new leadership or ownership, a changing business environment or an updated business model.  Such issues not only increase operational costs but they also slow down the entire financial workflow, impacting the organization’s overall performance.

The good news is there are some great techniques to address these inefficiencies that will transform sluggish, inefficient finance operations into streamlined, cost-effective, value creating units.

Three in particular come to mind.  

1.      Process Mapping:  A systematic way of documenting the steps and time required to complete specific tasks which when aggregated ‘maps out’ specific and discrete processes.  The visual the map creates makes it easy to see where bottlenecks, duplication and time create inefficient steps. The visual depiction of a process also helps the company balance a need for controls with the requirement for speed and efficiency.

It’s never the wrong time to get better. Process mapping will improve your bottom line and prepare your business for growth.   Process Mapping - A Great Technique to Streamline Admin Operations

2.      Process Mining: The convergence of data science and AI (machine learning) with traditional process management. It utilizes machine learning algorithms to analyze the digital fingerprint left behind by transactions and events in your ERP and other systems, creating easy to dissect visualizations of your processes.

Whether you’re maneuvering through the layers of a multinational corporation or navigating the paths of an SME process mining is the tool you didn’t know you needed. Embrace it to transform your financial operation into an effective, value-creating group. This CFO Talk:  Process Mining - Revolutionizing Corporate Finance with Tariq Munir will help you on the journey. 

3.      Process Redesign:   Tuning up or overhauling your processes that have accumulated grease, grime and serious leaks in the form of bad habits, extra steps and worn out practices. When applied to finance, a process redesign will help you gain a thorough understanding of your most important Accounting, Finance and Treasury processes. The interim objectives are to create better, faster and less costly outputs from your team’s effort.  The ultimate goal is to drive growth and profitability with more effective allocation of resources. 

Here is another to look at the benefits.   Customers will only pay for products and services that add value for them. By eliminating processes that provide no benefit to customers, your growth and earnings will improve.

In the rest of this article, we will go step by step on how you can anchor your finance transformation with a Process Redesign - which incorporates Process Mapping.  

Identifying and Naming Key Processes

The first step in any Finance Process Redesign is to identify and name your key processes. While this might sound basic, it’s a critical step that ensures clarity and prevents confusion later. By laying out all the processes on the table, you can better visualize the entire workflow and identify areas where steps can be eliminated, combined, or altered for greater efficiency.

Once you’ve mapped out your key processes, it’s important to prioritize which ones to redesign first. Starting with a smaller, high-impact process can provide quick wins and valuable experience, making it easier to tackle more complex processes later on.

Here are some example processes to consider in starting your redesign.

Setting Clear Objectives and Understanding Work Initiators

With a process selected, all stakeholders must agree on its main objective—whether that’s ensuring timely payments to vendors, closing books by a specific date, or complying with banking requirements. Having a clear and agreed-upon objective is crucial before diving into the redesign process.

Next, it’s essential to identify the process owner, the work group involved, and the work initiators—the triggers that start the process and initiate any new ‘work’ or steps in the process. Understanding these elements helps to accurately document the current state of the process and to  make informed decisions during the redesign.

The Power of Process Interviews and Visual Mapping

A thorough process interview is perhaps the most revealing step in the redesign process. It’s an opportunity to uncover every step in the current process, including informal side systems and workarounds that employees have developed for various reasons. These interviews often reveal inefficiencies, such as duplicate steps or outdated practices, that have crept into the process over time.  It’s not uncommon to find ‘surprise’ steps being taken that only the individual doing the work is aware of.   These ad hoc processes can produce significant control risks, in addition to dousing a process with ‘the potion of slow motion’

Creating a visual flow chart or process map further illuminates inefficiencies. The visual representation makes it easier to spot bottlenecks, duplication, and unnecessary time lags. For example, in one company, a simple process map revealed that an employee was making hard copies of all documents—even digital ones—due to a past discipline issue. By addressing the root cause, the company eliminated this redundant step, saving time and resources.

Data-Driven Decision Making

Once all the data is collected, it’s summarized in the Process Redesign Workbook, which provides comparisons on key components such as hours invested, the number of work initiation requests, and the cost per request. This summary data is invaluable in understanding the impact of the redesign on the overall process.

Simplifying and Eliminating Waste

The ultimate goal of Finance Process Redesign is to simplify processes and eliminate waste. Process waste can take many forms, including errors, duplicate efforts, and unnecessary time between activities. For example, one company’s administrative controls were found to be causing significant delays and the reports included many errors. By applying best practices and redesigning key processes, the company was able to cut costs by more than 40% and reduce errors by 27%.

The Process Redesign Workbook is a tool developed to help you get right to the heart of your process redesign. Use it hand in hand with this article and Your Guide to Financial Process Redesign to super charge the accounting, finance and treasury transformation at your business.

The Role of Outside Perspectives

While internal teams can certainly undertake process mapping, bringing in an outside expert can provide a fresh perspective. External consultants or new employees can often spot inefficiencies that insiders may overlook, leading to more effective process improvements.

Transforming Business Operations

By undertaking a Finance Process Redesign, companies can create more efficient, streamlined operations that save time and money, reduce lead times, and produce better decision-making information. The result is not just improved operational efficiency but also a stronger bottom line and a business that is better prepared for future growth.

Conclusion

Finance Process Redesign is not just about tweaking existing processes; it’s about fundamentally transforming the way financial operations are conducted. By following a structured approach—identifying key processes, setting clear objectives, conducting thorough interviews, and leveraging data—organizations can achieve significant improvements in efficiency and cost-effectiveness. The Process Redesign Workbook from CFO.University is an excellent tool to guide this transformation, helping finance leaders create processes that are faster, better, and less costly, ultimately driving business success.  I encourage you to take a few minutes to become familiar with it.  Those few minutes may result in one of the best business decisions you ever make.  

Post Script

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All the Best,

Steve Rosvold

Chief Learning Officer, CFO.University

CFO.University is a convenient, practical and performance enhancing development platform for CFO's, FDs, accounting, finance and treasury leaders.

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