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Lean and efficient

Month-end and management reporting tends to be time-consuming and problematic. Kevin Dilton-Hill looks at reporting trends, and explains how determining the right information, and “lean” methods of producing it, could bring big benefits

Month-end reporting requires substantial finance resources and is fraught with potential problems. Finding efficiencies and raising quality in this area are a constant challenge. There are two broad areas that can help – choosing the “right” information to report, and reducing the time and resources to produce it. This is an approach based on the two main tenets of the “lean” discipline, which are the purpose of a process is to fulfil customer demands and any task in the process not absolutely essential to meet those needs is waste that should be eliminated (or at least minimised).

These two tenets can be usefully applied to the month-end process, which provides information that the customers of finance use to make decisions.

The right information - analysing customers' reporting demands

One of the most salutary things a finance function can do is print out the reports it issues every month and send them to the usual recipients asking them to tick each page every time they look at it and to circle the information in which they are interested. You will be astounded by how much is never read. So you could stop issuing all reports until a request is received for a particular one. Again, you will be amazed by how many reports are produced unrequested. Producing reports that are not used is wasteful and should be minimised.

Finance’s problem is that users rarely know what they want. Probably the best way is to focus on what decisions are made, and then analyse what ‘facts and figures’ add value to such decisions, and when they are needed. True, this approach broadens the topic of month-end reporting out into all the management reporting that finance does. But for most organisations it is the right approach.

The development of different data systems and myriad ways of data gathering, has led to a proliferation of reporting – so the concept of “monthly management accounts” has been somewhat overtaken. It also seems that the increase in reporting is largely of operational, as opposed to financial, figures; and operational figures may well not be collected for, or relate to, a period of one month. Yet managers may need such figures for effective management and for monitoring of KPIs.

This is an extract from the Finance & Management Magazine, Issue 207, February 2013.

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