The three-month goals that a ‘future ready’ Finance team needs to complete by 31 March 2024
Having studied better practices carried out by winning finance teams from across the world and written the best-selling book, “The Financial Controller and CFO’s Toolkit,” I feel particularly well qualified to suggest these goals.
Embracing abandonment
Management guru Peter Drucker could, by some, be considered the Leonardo da Vinci of management – I believe he will be better understood and respected 400 years after his life than now. He said,
“Don’t tell me what you’re doing. Tell me what you’ve stopped doing.”
“If leaders are unable to abandon yesterday, they simply will not be able to create tomorrow.”
From a young age, we carry a fear of admitting that we might be wrong. It affects our personal life, in some cases delaying moving house, staying in dead-end jobs, or continuing to exist in a dysfunctional relationship. We do this partly because we’re scared to admit to the world that we have made a mistake. The longer we stick with something in the hope that it will right itself, the harder it becomes to abandon it. We hope to improve matters so that we can then say, “I told you so” to our family and colleagues.
Action:
Processes that the finance team needs to abandon include:
• Reports nobody reads
• Sending paper-based reports to management
• Processes that have no use, like reconciling to supplier statements
Commence holding a weekly abandonment meeting
One way of embracing Drucker’s abandonment is to earmark one day a week for abandonment meetings at every managerial level. Each session would target a different area so that over a year, everything is given the once-over. The rate of abandonment would also become an important performance measure.
Month-end reporting to be completed by 5 PM Day+3
When I was a corporate accountant, each month's end was a disaster waiting to happen. It seemed to have a life of its own, and you never knew when the next problem was going to appear.
Two or three days away, we appeared to have it under control, and yet each month, we were faxing the result five minutes before the deadline. Sound familiar?
Action:
Quick month-end reporting, a far more efficient system, has been around since the early 1990s when forward-thinking CFOs started looking at the concept of ‘day one’ reporting. Such systems are now capable of giving the CFO a full accrual net result at any time during the month.
Producing a monthly financial pack of less than ten pages
Many management reports are not a management tool, but a memorandum of information. Many monthly reports - prepared by the finance team - include endless detail and are never read. I once saw a pack with 140 full pages.
Action:
Reduce the finance pack to fewer than ten pages. Eliminate the essay and have a small comment box for each statement.
Have a full-screen (like an A3 size) layout for the C-suite that summarises the result.
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If your year-end reporting occurs in the first quarter, introduce strict protocols for adjustments.
Annual reporting, while an important legal requirement, does not create any value within your organization. Accounting functions need to find ways to extract value from the process while at the same time bringing it into a tight timeframe.
How many times has the final year-end audited number been within 5% of the month 12 number? We spend far too much time chasing our tails. There is absolutely no reason in 99% of cases why the first cut of year-end for internal reporting should not be the same as the last cut for external reporting.
Action:
Embrace my rules on having an ‘overs and unders’ spreadsheet. Visit my website for more details.
Have a mantra for the team that we will work smarter, not harder this year
Many accounting teams are characterised by hard-working, serious, and committed staff who, unfortunately, often do not take the smartest option. Why do we open our emails first thing in the morning, at home, on romantic dates? Why do we have morning meetings? Why do we always defer celebrations? Why do other departments have more fun?
Even looking at emails first thing in the day is a destructive habit. It risks losing at least one potentially productive hour as you get bogged down in them. The facts are that nobody dies or is at risk of death because we have not looked at our emails. If you want to be that important to the human race, you should retrain as a paramedic, a nurse in the emergency ward, a surgeon, an anaesthetist, etc.
Action:
Take up an eight-week challenge:
As the manager of staff, invest effort and time into leadership
Not intending to offend the reader I make this observation. In all the finance managers, financial controllers, and CFOs I have met, I have noted that of the many qualities they possess, leadership has been conspicuous in its absence. I believe this is mainly due to a lack of focus in the area rather than a lack of leadership ability.
I would recommend that all readers carefully absorb the lessons from the great leaders I have written about; see www.management.davidparmenter.com.
By practising these traits, you will rapidly improve your leadership style.
Action:
Read a chapter or two every week from
1. Elizabeth Haas Edersheim ‘The Definitive Drucker’, McGraw-Hill (2007)
2. Jack Welch with Suzy Welch, ‘Winning,’ HarperBusiness (2005)
3. Ken Blanchard and Mark R. Miller, ‘The secret: what great leaders know and do,’ Berrett-Koehler (2009).
This article is an extract from a 110-page toolkit (white paper + E-templates) that can be purchased from my website, www.davidparmenter.com.
Quality Assurance Project Manager at IBM
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