Optimisation of a Finance Department through Lead Time Reduction

Optimisation of a Finance Department through Lead Time Reduction

The company

This multinational with a diversified business portfolio operates in the areas of retail, financial services, technology, shopping centres and communications. It has business operations across all continents, in more than 62 countries and a turnover of more than 6 million euros. The group's corporate centre is responsible for providing support services to several business areas. Within the corporate area, the financial services, with around 400 collaborators, provides accounts payable, accounts receivable, asset management, accounting and consolidation of accounts services for several of the group's companies.

The challenge

The mission of the finance department of this multinational company is to provide the business units with fast and reliable management information, in a coherent way. To take a decisive step towards achieving this mission, a continuous improvement journey was started with the main goal of reducing the account closing Lead Time to the fifth working day of the following month. This goal translates into increased speed in reacting to possible deviations in the financial ratios of the companies. Providing quality information in reduced Lead Times was, therefore, the motto for this transformation.

The approach

The methodology applied to achieve these results was based on three pillars:

Optimisation of the financial processes

One of the attack strategies for the account closing Lead Time was the efficiency of the processes. Thus, to reduce this Lead Time, work began on mapping the critical processes that contribute to the monthly consolidation of accounts. After identifying the opportunities for improvement, the future vision of the processes was mapped. After the implementation of the future vision, time was reduced thanks to actions such as: simplification and automation of tasks using RPA (Robotic Process Automation), tasks integration, reduction of the number of participants or reduction of intermediate stocks of information, for example between consecutive steps of a process carried out by different people.

These measures have also addressed one of the main difficulties of any finance department - the high seasonality of tasks that leads to a lack of workload balancing throughout the month (typically, the end of the month represents the workload peak). By bringing together a multidisciplinary team made up of members from the finance department and the departments that are providers of information, it was possible to improve the cadence and communication and thereby even out the workload throughout the month.

Real-time monitoring of the account closing schedule has contributed to the quick identification of critical tasks that could compromise the target date. Based on this identification, immediate corrective actions can be carried out.

Reduction of errors in account closing

In addition to the inefficiencies addressed through process optimisation initiatives, errors are also responsible for increases in Lead Time as they generate rework. In addition, the goal of closing accounts has underlying demanding standards for error-free work. As such, it has become a priority to implement measures to improve thequality of the deliverables. TheAuto-Quality Matrix enabled the identification of the errors produced and detected by the finance department and by each of the supplier and customer departments. From this mapping, the need arose to create standards to avoid error production (through root cause analysis) and when this was not possible, to avoid its transfer to the next stage.

Organisational transformation

Alongside changes in work processes, the teams' organisation has also been optimised. An organisation with functional units has been transformed into an organisation by value stream. This means that instead of everyone in a team carrying out similar tasks (e.g accounts payable), teams are now made up of members who carry out several different tasks and can thus be held responsible for the entire process. In this new model, teams were organised by companies or business units which were made up of several elements with different skills and whose main indicator was the final result of the accounts consolidation. This new organisation led to greater team accountability as it also increased their motivation.

The change in behaviours is essential to ensure the sustainability of all the implemented improvements. In a team as large as this finance department, it is crucial to establish basic stability routines for the team to grow and become increasingly autonomous. Accordingly, meeting times were established for all teams with a focus on work planning, monitoring indicators and implementing improvement actions. Furthermore, the team standardised the critical processes for the success of its performance which quickly translated into greater standardisation of processes and a more agile, fast and effective onboarding of new collaborators.

The results

The optimisation of the processes and organisation of this department had an unquestionable impact on the quality, speed and consistency of the financial information provided to the business units. The Lead Time of most processes was reduced by half which contributed to the accounts closing being moved from the twentieth to the fifth working day of the following month. The teams' training has enabled them to become more developed, autonomous and capable of leveraging the finance department to improve the performance of the business units.

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