February 2018 — Stop Wasting Money Doing Unnecessary Financial Management Tasks
Most development of financial management focuses on increasing automation. We are looking for ways an application or robot can perform routine tasks for us. However, before trying to automate everything in sight, we should stop and think why a task is being performed in the first place. If you look at the task and process and find it’s unnecessary, then automation is obviously not necessary. Developing automation costs money – not doing it at all is free of charge.
Everything we do at work should be useful and productive. The same holds true with financial management. If you cannot find a single good purpose for a specific task (and it’s not a compulsory task required by authorities), there is no point in continuing to do it. But stopping doing a task can sometimes be painful. When you’ve been checking something from one month to another, it can be difficult to admit to oneself that the time spent has been wasted. I often speak with financial management experts about their job descriptions and development opportunities, and, all too often, find they don’t really know why certain tasks are on their to-do lists. They are doing them because they inherited them from their predecessor, and though they may have wondered about the usefulness, they never dared to thoroughly question the task.
For example, such unnecessary tasks can be found in various approval processes. I have more than once come across a travel claim approval process where the travel plan has been approved by 3 – 5 different people and then the travel claim has also been approved by 3 – 5 people. The reason behind the approvals is obviously the need to control travel costs, but how much will the travel cost when you add up all the working hours used for the approvals on top of the actual travel costs? Furthermore, do any of the many approvers really consider the relevance of the trip knowing that before and after him/her several other people in the approval chain were supposed to check the validity of the plan? Are all of these approvals adding value? If not, remove everyone who is unnecessary from the approval list except the one that knows why a person is traveling in the first place.
“If you are wondering whether you spend time monthly on a report that no one apparently reads, make a test: skip the report once, and see if anyone misses it.
If you repeatedly use time checking something that does not result in finding any relevant mistakes that affect a report – stop checking. Again, let’s look at the travel claim process as an example: Typically, we use equal time on a small travel or expense claim per claim than on large ones. Errors in travel and expense claims are usually minor both in numbers and in dollars, and dismissing them does not constitute a major error in reporting and/or taxation. It is therefore worth considering, how much time and money is being used to check these small costs and whether we are benefiting enough from the effort. Every claim does not need to be checked. Checking can be focused on the largest 10 percent of invoices with the highest risk for errors. This means 90% of the time can be saved, and still most of the errors will be caught.
You should also be critical about how often certain procedures in financial management should be performed. Starting tasks takes time. If you are currently paying purchase invoices five times a week, you use work time – five times a week – logging into the software, forming the payment batches, checking, approving and sending payments. If you were to send payments only twice a week, the workload is immediately reduced by 60%, but your vendors will still get paid on time and never notice the difference. Why not reduce the payment times right away? Handling a large amount of transactions at a time takes less time per transaction than performing each transaction separately. Again, let’s look at the travel claims process: If the finance team checks a small amount of travel claims every day, this checking probably takes more time than checking a larger number of claims just once a week. It is also easier to plan one’s work when you’ve reserved time for checking once a week and you can then concentrate on other tasks on other days.
So, take some time for critical evaluation before starting to automate or robotize your routines. If you cannot find a good raison-d’être for a routine, stop doing it. This development advice is free-of-charge!
About the author
Sanna Kaarlejärvi is Dooap’s CFO and a leading European process consultant. She has extensive experience streamlining the financial management of large and mid-sized companies. Sanna’s ability to combine the big picture with detailed competence in financial management is reflected in her work and in her writings in blogs and books on digital financial management.