Is Your Accounting and Reporting Lean?
“Lean” can describe more than just ground beef – it is also a style of accounting. And, it can provide your business with a lot of benefits.
Would you like to see any of these in your business?
- Increased profits
- Reduced costs
- Increased value felt by customers
- Faster, more efficient production
- Satisfied employees
If you said “Yes” to any of those, then you are a candidate for Lean Accounting.
Where Did Lean Accounting Come From?
Lean accounting is most widely recognized because of Toyota and the Toyota Production System (TPS). Toyota’s business skyrocketed through focused efforts to streamline processes, eliminate waste, and by following the target costing approach. This is a structure many other businesses and departments (of all sizes and industries) have looked to emulate. While many have spent years attempting to integrate “Lean” into their business, we are focused on integrating “Lean” into accounting processes. There are some key takeaways that every accounting department should look to implement right away:
1. Understand the Value of Accounting & Reporting
Do you know what end users’ value in your accounting reports and reconciliations? It could be anything from customer service (think Nordstrom), quality (Starbucks) or innovation (Apple). Once you know what your end users’ value, the idea is to create this value very efficiently; and in a way that the end user fully appreciates and can use! In order to provide the most value for the least amount of effort, it is essential that all accounting and reporting processes are automated and streamlined.
2. Eliminate Waste
Every accounting and reporting process, ranging from recording transactions to reconciling accounts to preparing monthly board reports, can benefit from analyzing day-to-day work flow and looking to cut out procedures that do not add value. This is a task every accounting employee and finance department should be involved in. Accounting and reporting procedures should be mapped out from “cradle to grave” to show what it takes to produce a fully functional set of records and results. Look at routine tasks with complete scrutiny and, if the end user is not benefiting, the process should be eliminated. This whole review process should be tied back to the value provided to the end user (step 1). Eliminating waste = streamlined processes = better information provided at a lower cost = better bottom line for the company.
3. Continual Improvement
Lean is not a state that is ever final – there is always room for improvement. Technology is continually advancing, people come and go, accounting needs and reporting requirements change, regulators and accounting standard setters can change the landscape. Therefore, you need to always be alert and diligent to truly be lean with your account processes. This constant focus also means you are always changing, making your accounting and reporting functions more flexible and agile. No benefit is too small and every little bit counts. There is always something ready to be improved.
And, you should expect similarly lean practices from your accounting providers – including your auditors! At Hauser Jones & Sas we focus on lean accounting (I personally have been to multiple trainings on the topic) and we are continually working to improve our offering to our clients. We also can perform evaluations of some business practices to help you ensure your business is as lean as possible. If you are taking 10 steps to send information that could be done in two, rest assured we will let you know. We care about your bottom line – and a lot of that benefit is found in saved accounting, processing and reporting time.
Want to know more about how we can help your accounting functions be lean (or what we do to be lean at HJS)? Let’s chat.