By David Parmenter
The 20 steps to creating a lean finance team revolve around fixing the major blunders finance teams make, year-in and year-out.
1. Having over 80 account codes for the P/L – use the rule that you only have expense codes where the annual expenditure is over 1% of total annual expenditure
2. Only forecasting to year-end- forecast out six quarters ahead
3. Breaking down the annual plan into twelve before the year starts- replace with rolling quarterly planning
4. Giving budget holders an annual entitlement to spend – fund quarterly through the rolling quarterly planning regime
5. Budgeting at account code level – budget at category level where the annual expenditure is over 10% of total annual expenditure
6. Taking months doing an annual plan –when it can be done in 10 working days or less!
7. Producing numbing monthly financial reports – introduce a one page finance report on an A3
8. Reporting on the wrong performance measures – split your measures into four types (KPIs, PIs, KRIs an RIs)
9. Not producing daily/ weekly decision based reports – produce more month-end reports
10. Selling change by logic – sell change by the John Kotter six step process
11. Allowing month-end reporting to go past three working days – it is easy to get your month-end to 3 days and then more it eventually to Day one.
12. Using Julius Caesar’s calendar as a reporting tool – move to closing the month-end on the same day by having 4 or 5 week periods
13. Spending months on the annual accounts – a fast 3 week close is possible
14. Investing in a complex G/L and upgrading unnecessarily – leave complex G/Ls for rocket scientists
15. Letting Excel dominate the finance system – remove all spreadsheets over 100 rows
16. Working Hard but not Smart – develop smart wok habits
17. Not investing enough in Accounts Payable – focus on bring your AP systems into the 21st century
18. Not adopting the purchase card – a free AP system!
19. Not investing effort and time into leadership – become a servant leader to succeed
20. Not celebrating enough – if you do not celebrate something every month you and your finance team are missing out
Buy my toolkit as these fixes are covered in ‘How to avoid the twenty major mistakes corporate accountants commonly make every year – Toolkit (110 page Whitepaper + e-templates)’