Adopt a culture of continuous improvement and you will have an optimized financial close.
In a recent Institute of Management and Administration survey on improving the financial close, “continuous improvement” was the best practice most CFOs, controllers and accounting managers cited as the number one priority for improving the close.
Continuous improvement is about making small incremental changes over time, based on constant measurement and analysis of your own best practices done by your own staff. It is about adapting a culture in your organization that is constantly seeking to find more efficient and effective ways of completing the close.
Often, when seeking to improve a process, companies will reengineer the process, implementing industry standard best practices, and locking down the entire process using software. In many cases, this approach works well. When re-engineering an accounts payable process, or an order management process, a one-time, large scale one time project may well be the right answer.
But the close is different. It is a dynamic process that is constantly changing as your business grows and changes. A close that is optimized in January may not be effective by August.
Also, large scale re-engineering projects tend to be disruptive, and high risk. Sometimes this is necessary, but is it really what you want for your close?
We think a better solution is to adopt a culture of continuous improvement. Small changes, made continuously have a dramatic effect over time with lower risk and less disruption. One key to making a continuous improvement effort effective is to choose a methodology that uses data to guide you.
The Lean Six Sigma methodology fits the bill. Lean Six Sigma is a continuous improvement methodology that is “customer facing” and data driven. The key elements of Lean Six Sigma are:
And do it again!
By adopting a culture of continuous improvement, you find the best way of permanently improving your close.