What’s it to have a lean finance function?

When the boss of a leading Company quoted that ‘It’s not the strongest or the most intelligent that survives but the most adaptable’, he summed up the lean, adaptable mood of most 21st century companies. Against this backdrop, an increasing number of finance directors are being asked, “How does your team really add value to rest of the functions in the company?”

Clearly, the mission is to create a forward looking agenda, one which needs to be rigorous, planned and disciplined. In fact, going by a survey conducted by KPMG, more than 50% of respondents felt that the first step towards finance transformation starts with a lean approach to increase value. “Extensive use of data analytics” and “highly optimized finance processes” is seen as the most important enablers towards achieving a lean operating philosophy for the finance function.*

What is the core outcome of employing lean finance principles to an organization?

  • Move lower-end transaction processing work out of the finance function to instead concentrate on activities within shared and/or outsourced service providers
  • Automate routine procedures to increase efficiency, reduce the potential for error and improve quality
  • Streamline finance function roles and responsibilities, processes, and controls for better functional productivity
  • Standardize data flows and underlying IT architecture to automate the transfer of data inputs and better integrate systems

A disciplined finance process uses reports to drive planning and forecasting; and finally financial expertise to interpret results and guide sound management decisions for future. It can be achieved by following four potent tenets of a disciplined finance function:

  1. Automation + Business intelligence tools = Enhanced efficiency

CASE: When a US based national insurance company was challenged to automate their processes, their AP organization was 100% paper based. They were looking to Automate Expense Reporting as the first step in AP Automation. They were concerned that as an organization that does not embrace change or technology readily, will be seen as a company that will not be able to ensure a smooth transition to their end users.

SOLUTION: They chose to let go of the manual processes and automate travel, expense and reporting by adopting Concur’s cloud-based products and services. This in turn also benefited the company with drastic reduction in errors and resource wastage which meant, increase in employee productivity and efficiency.

  1. Integrated platforms * Functions = A consolidated view

CASE: A major multinational publication was in need to immediately curb reckless spend. They wanted to ensure all incurred expenses were within company policies. However, to drive such changes it was first imperative that they got a detailed insight in to not just the employee spend pattern but also vendor pricing.

SOLUTION: Concur travel, expense and intelligence provided this publication with just the right tools to ensure they had enough control and visibility in to every spend incurred by the employees. With the implemented processes, all items outside policy get flagged immediately; hence they are now able to see that the number of exceptions has reduced since implementing Concur solutions.

  1. Lesser paperwork = Lesser risk of error

CASE: Taking up case of another non-profit organization that used to process expense reports through excel. Miscalculations, erroneous entries and no visibility were some challenges they faced in their manual process. Needless to say, this couldn't have worked for them for too long, in fact they realized too. They could save even more if their employees were policy compliant and they had more visibility in to the company’s spending pattern.

SOLUTION: Concur’s travel and expense solutions, after implementation, reduced their expenses by 15% in the first year alone. As per a spokesperson from this firm, automatic mileage calculations, increased accuracy and compliance are what helped shape their T&E department. With greater visibility into their entire spend; they were able to update their T&E policy as well, which in turn helped their compliance and resource wastage issues.

  1. An efficient and disciplined finance function drives business

CASE: What happens when a leading insurance company looks for solutions to simplify their invoice payment process? Not only do they need a solution that fits their company policies in its system but also ensure that the proposed process/es are capable of increasing employee productivity and efficiency. So what does it take to move from a manual process of looking up the PO and invoice in different systems, then printing and submitting supporting documents, followed by scanning and getting them approved?

SOLUTION: This is an interesting case of how an insurance company simplified their invoice payment processes by leveraging their employees’ familiarity of the Concur platform and the intuitive nature of the invoice functionality. The company was invited into our early adopter program which provided them the ability to preview content, provide feedback, and influence the future product road map for Invoice functionality. This is how the company gained efficiency with Concur Invoice. All that they need to do now is attach the supporting documentation to the Invoice Request and then everything they need is integrated in to that one request thereby eliminating all of the searching, printing, scanning, tracking, and archiving they were doing earlier.

An experienced co-pilot

The finance function as a collective and distinct entity in many companies seems to have become slightly less defined in many ways. While it walks the middle path between two different dimensions of scorekeeping and scoremaking, the reality is that it requires a more dynamic process. The process itself needs to be partnered by a flexible expense management system with the skills and capabilities that help support growth and innovation. As businesses increasingly look for analysis and data to support strategic decisions, the CFO’s role is likely to embrace the principles of performance and risk management more than we currently see today.**

Contact us if you are amongst those companies that recognize the need to adapt a future-ready platform to ensure their business builds better bottomline. Talk to us for your T&E and related concerns.

SOURCES

* Being the best: Inside the intelligent finance function – KPMG International

** Finance matters Finance function of the future: PWC

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