The “Backroom” (your finance and accounting department) has always been a vital piece of a company’s framework. I’ve been pushing backroom efficiency since I was with KPMG 30 years ago.
Back then, most internal control and accounting processes were manual and spreadsheets were just coming on the scene. Manual methods were often inefficient, inaccurate, and boring. The larger the company, the larger the accounting department needed to be. We needed enough people just to bill customers and post cash to accounts receivable. Things have changed significantly now; we have automated solutions where we scale differently and efficiently.
Most businesses consider that their value comes from sales and marketing. They are always thinking about how to create customer value. The finance department exists to support the business’s value creation, and we need to operate it as effectively and efficiently as possible.
In my years of work in the turnaround and profit improvement space, I’ve encountered many bloated finance departments that have grown over the years, some because of company growth, but some because of using outdated and inefficient processes.
Companies should regularly evaluate the needed functions in the company’s admin support and backroom. Take the employee’s names out of it, and create lists of what needs to be done and what positions should be accountable for it. You can talk with the employee(s) who currently own the process … they may have ideas about streamlining or automating processes – or even let you know if they’d rather be doing something else!
Evaluation often leads to change, and some people handle change better than others. I’ve worked with several companies where the employee is unwilling to change – they aren’t interested in learning new ways to do things, like their routine, or lack confidence. If an employee just won’t change or isn’t willing to grow, the best way to improve the process may be to change the person who does it.
I’m currently working with a company to create a start-to-finish process manual from the ground up. We are documenting every process. We just finished tweaking the billing process to improve efficiency. Implementing this improved process led to an immediate improvement in cash flow ($200,000!), a reduction in one full-time equivalent, and a much better forward-facing process for the customer.
Change like this is both rewarding and difficult. It’s not an easy decision to streamline staff, yet a healthy company cannot hang onto employees just for the sake of having people around that they like or that they don’t want to upset. Are there other positions that person is a better fit for? Or have they contributed all they can and are unwilling to grow and change with the company? In the long run, it may be healthier for them, too, to find a better fit.
Evaluating, polishing, and documenting your backroom processes can also do the following:
- Improve leadership skills – it makes owners and the leadership team step up and pay attention to what is taking time and money
- Mitigate distractions – a step-by-step process helps employees stay focused, and if they happen to get distracted, be more quickly able to pick up where they left off
- Provide a planning calendar – accounting processes are often tied to a calendar, so you’ll be building a planning tool that will help you in the future
- Create weekly checklists – having these written out will help if the current process owner suddenly isn’t available. It’s a tool for cross-training and prepping new employees to take on this task.
- Encourage discipline – repeated routines help create needed “muscle memory” and could free up mental space for employees to problem-solve
- Build efficiency – who doesn’t want a more efficient company? Comprehensive and documented processes streamline tasks for everyone involved and helps you avoid individuals adding their own, possibly unneeded, steps. (i.e. do you really need to make photocopies of everything if there is a computerized record – and backup – available?)
Does the idea of streamlining your backroom intrigue you? Let’s chat. My experience can help!