and Finance Systems
Unlocking the Hidden Value
MARCH 2008 - Many
organizations find that their accounting and finance systems have
failed to live up to expectations. While processes are significantly
better than ever, they still seem to take too long, and employees,
vendors, and customers continue to complain. Issues arise because
information is often not easily accessible, workarounds continue
to be needed, too much paperwork is required, and the much-anticipated
return on investment does not materialize.
solution is perfect, but many offer major improvements in various
areas. The key to getting the most from a system is to marry process
with technology and apply best practices. Best-in-class organizations
know that technology alone cannot solve every problem.
that technology works best when aligned with process.
For a variety of reasons, systems often fail to achieve the efficiencies
envisioned by the software’s designers. It may be easy to
blame the system, but the reality is that many problems stem from
how the system was implemented. The good news is that most implementation
issues can be resolved without the upheaval and cost of a new
System Implementation Issues Occur
issues can be caused by a number of factors. Many projects are
managed by external consultants who have a limited understanding
of a company’s business. Projects often run into unexpected
issues and consultants are forced to cut corners and redeploy
resources to resolve the problems. Consultants’ expertise
usually lies in installing software, not in improving business
processes, which means they often focus only on technical issues.
In addition, because IT departments usually manage these projects,
consultants often view IT, rather than the process owner, as their
caused by end users often compound the problem. Rather than have
full-time staff on the project, most accounting and finance departments
run lean and have limited time to spend with system implementers.
Users’ system knowledge may not extend far beyond their
old systems. Often, they do not know what to ask for or what to
demand out of a new system. This results in inefficiency when
system functionality is misused or goes unused while old, inefficient
processes are forced to work with a new system.
Treasure Trove of Opportunities
owner who knows what a system is capable of and understands best
practices can uncover a treasure trove of opportunities for improvement.
Solutions to system problems may be as simple as restructuring
payroll’s reporting system to rely on employee last names
as opposed to first names. Or the solutions may be more complex,
such as turning on the system’s workflow functionality so
documents can be routed directly for data entry and approval.
often hear the dreaded claim: “The system can’t do
that.” In many cases, the problem is simply that the system
has not been set up to perform a particular task, but would be
able to with the proper work and insight. Consider the following
example. A purchasing manager had become displeased that his staff
manually faxed purchase orders to several vendors. In one case,
it was the only way to effectively work with a local, but critically
important, hardware store. A process review recommended he automate
faxing by using the system’s fax-on-demand functionality.
The IT department had the new functionality up and running within
a few days. The purchasing manager estimated that this simple
change saved his department 200 hours of work per year.
understanding of delivered system functionality is easier than
most people realize. It is not necessary to be a system expert
or to know how to implement software. Instead, it is important
simply to understand what the vendor included as delivered functionality.
This knowledge can be obtained from vendor-provided documentation
or by purchasing an inexpensive book on the topic.
knowledge of system functionality with an understanding of best
practices can help accounting and finance departments become more
efficient. Understanding best practices may require more effort
but is still easily accomplished. Individuals can learn about
best practices through a variety of sources, including conferences,
professional organizations, internal and external auditors, other
companies, web searches, books, and consultants. The same way
addressing functionality issues improves the system’s performance,
combining applicable best practices significantly improves the
efficiency and accuracy of the department.
knowledge of system functionality and best practices, an individual
is ready to perform a process walk-through. Meeting with the process
owners and gaining an understanding of how their work gets accomplished
will uncover many opportunities for improvement. It is most important
to gain an understanding of the steps needed to complete the process.
This can be accomplished by speaking to all process owners, regardless
of their department. In some cases, this may require several sessions
with an individual; in others, only a brief meeting may be needed.
will be a surprise to both the process owner and management. Recently,
while reviewing an accounts payable department’s check disbursement
process, the author made a startling observation: An employee
was making a copy of every check and related advice before mailing
them out, because the staff had not been instructed on how to
properly access the information. They continued to use the old
process from the legacy system and referred to the copy when a
a process, the following areas should be addressed:
The staff must receive appropriate training. Showing
collections employees canned reports and teaching them how to
write a database query is not nearly as effective as gaining an
understanding of their needs and then helping them access the
information. For example, having all relevant customer data available
in one place can be invaluable when calling a customer regarding
a collections problem.
and data access. All staff must know what data are
available, how to access it, and how to use it. Simply knowing
how to access a report or write a query is not enough. Users should
understand how data are useful to them.
Wherever possible, make sure each system’s self-service
functionality is being used. Examples include allowing employees
to order common parts and supplies from an online catalog, and
providing vendors with query access so that they can check the
payment status of their invoices.
input. Data should be input only once, ideally electronically.
Electronic invoices are preferable whenever possible, especially
if the volume of transactions is significant.
The use of paper should be eliminated wherever possible. Challenge
the need for each piece of paper that is used. Question whether
data can be accessed or input electronically. In addition, the
effective use of imaging technology and an electronic workflow
can significantly reduce the need for a physical piece of paper
and the associated file storage.
A business should take advantage of any system integration features,
both internal and external. As an example, a travel card vendor
should provide an electronic feed to the company’s travel
and expenses reimbursement module. This reduces the amount of
data an employee must key in when preparing an expense report.
In some cases, integration is already in place but simply needs
to be properly used. For example, the accounting department can
reduce the adjustments required to record new fixed assets in
the fixed asset module when the appropriate procedures are put
in place to ensure that the proper data is collected when the
purchase order is created.
distribution and receipt of data. Every effort should
be made to send and receive data electronically, specifically
with high-volume transactions. For example, many organizations
have FedEx bill them electronically, which eliminates the onerous
task of allocating overnight shipping charges to individual departments.
manuals, policies, and procedures. Documentation
should be created with the end user in mind. Instructions should
be process-oriented and not purely technical. Teaching an employee
how to access and manipulate a report may be ineffective without
proper instructions on how to use the data.
initial implementation of a system has to be about the big picture,
over time, improvements can be made by focusing on functional
areas on an individual basis. If it is not possible to implement
system changes throughout an entire organization at once, it may
be a good idea to start with one functional area (e.g., billing).
After proving the methodology works, staff can then address other
functions. At that point, it should be easier to get the actual
system work performed, as most experienced IT departments can
manage the changes in-house or, where staffing is limited, hire
hourly contract consultants.
remains debatable whether a company will attain a positive return
on investment for its initial system investment, there is little
doubt that significant return on investment can be achieved from
any improvements made. Organizations that have applied this methodology
have reduced costs, increased productivity, shortened cycle time,
and improved data accuracy. The costs related to improving an
accounting system and its related processes are insignificant
when compared to the benefits they provide.
Sonde, CPA, is a principal with SilverRoad Solutions, a
firm specializing in business process management, in Manasquan,