Learn How Your Finance Department Can Inspire Growth

Almost all departments within all companies have an untapped 'cognitive surplus'. A 'cognitive surplus' is the difference between the specific tasks an employee is assigned to do and what they actually are capable of doing - the actual versus the potential work.

It seems obvious, but to tap into it the 'Cognitive Surplus' can make a huge difference.

Companies such as 3M, Dell and Google have all implemented what is called '20% time' or 'innovation time' - one day of their working week, dedicated to whatever projects they like... provided it benefits the company in some way.

Does it pay off?

One might wonder: Does it pay off? Well, at Google this has resulted in successful projects such as Gmail, Google News and AdSense, and according to ex-employee, Marissa Mayer, as many as half of Google innovations are a result of '20% time'.

But, while this approach might be considered something market leaders can utilise, many finance departments perceive they barely have the time to complete all the necessary work at present, never mind crafting new and innovative ideas, supporting procedures that aid business growth.

Yet finance departments really do need this 'innovation time'.

In this slow and sometimes contracting economy, the next two years will be critical for businesses. It will fall largely on finance departments to walk the thin line between productive spending and managing a dwindling pool of resources. Additionally, with a host of new financial regulations coming into place in this two-year period, financial departments will be instrumental in helping businesses to remain compliant without losing their current standing.

This extra pressure and workload will make it difficult for finance to inspire new talent whilst holding on to the employees they already have. Finance professionals require stimulating challenges without being overloaded with extra work - they need '20% time' to effectively tap-in to their expertise, and not have their time consumed by lengthy, repetitive tasks - that can be automated.

How to make time for tapping into 'Cognitive Surplus' in the finance department

One way in which businesses can help free up some of their finance department's time to complete tasks, is by automating the tedious and time-consuming tasks that turn prospective talent off finance work. Reconciliation is one such set of tasks that finance professionals find particularly tiresome and time consuming. Fortunately it is now possible to automate account reconciliation, processing hundreds of thousands of transactions in just minutes rather than hours or potentially days.

While significantly reducing reconciliation errors, automation also frees up large chunks of time that could be dedicated to maintaining compliance, providing strategic insight in this tough economy.

How to Evaluate Your Finance Department

Nobody knows your business better than you do. After all, you are the CEO. You know what the engineers do; you know what the production managers do; and nobody understands the sales process better than you. You know who is carrying their weight and who isn't. That is, unless we're talking about the finance and accounting managers.

Most CEO's, especially in small and mid-size enterprises, come from operational or sales backgrounds. They have often gained some knowledge of finance and accounting through their careers, but only to the extent necessary. But as the CEO, they must make judgments about the performance and competence of the accountants as well as the operations and sales managers.

So, how does the diligent CEO evaluate the finance and accounting functions in his company? All too often, the CEO assigns a qualitative value based on the quantitative message. In other words, if the Controller delivers a positive, upbeat financial report, the CEO will have positive feelings toward the Controller. And if the Controller delivers a bleak message, the CEO will have a negative reaction to the person. Unfortunately, "shooting the messenger" is not at all uncommon.

The dangers inherent in this approach should be obvious. The Controller (or CFO, bookkeeper, whoever) may realize that in order to protect their career, they need to make the numbers look better than they really are, or they need to draw attention away from negative matters and focus on positive matters. This raises the probability that important issues won't get the attention they deserve. It also raises the probability that good people will be lost for the wrong reasons.

The CEO's of large public companies have a big advantage when it comes to evaluating the performance of the finance department. They have the audit committee of the board of directors, the auditors, the SEC, Wall Street analyst and public shareholders giving them feedback. In smaller businesses, however, CEO's need to develop their own methods and processes for evaluating the performance of their financial managers.

Here are a few suggestions for the small business CEO:

Timely and Accurate Financial Reports

Chances are that at some point in your career, you have been advised that you should insist on "timely and accurate" financial reports from your accounting group. Unfortunately, you are probably a very good judge of what is timely, but you may not be nearly as good a judge of what is accurate. Certainly, you don't have the time to test the recording of transactions and to verify the accuracy of reports, but there are some things that you can and should do. 

• Insist that financial reports include comparisons over a number of periods. This will allow you to judge the consistency of recording and reporting transactions.
• Make sure that all anomalies are explained.
• Recurring expenses such as rents and utilities should be reported in the appropriate period. An explanation that - "there are two rents in April because we paid May early" - is unacceptable. The May rent should be reported as a May expense.
• Occasionally, ask to be reminded about the company's policies for recording revenues, capitalizing costs, etc.

Beyond Monthly Financial Reports

You should expect to get information from your accounting and finance groups on a daily basis, not just when monthly financial reports are due. Some good examples are: 

• Daily cash balance reports.
• Accounts receivable collection updates.
• Cash flow forecasts (cash requirements)
• Significant or unusual transactions.

Consistent Work Habits

We've all known people who took it easy for weeks, then pulled an all-nighter to meet a deadline. Such inconsistent work habits are strong indicators that the individual is not attentive to processes. It also sharply raises the probability of errors in the frantic last-minute activities.

Willingness to Be Controversial

As the CEO, you need to make it very clear to the finance/accounting managers that you expect frank and honest information and that they will not be victims of "shoot the messenger" thinking. Once that assurance is given, your financial managers should be an integral part of your company's management team. They should not be reluctant to express their opinions and concerns to you or to other department leaders.

Finance - More Than Number Crunchers

If you were to dissect the culture of a business, and you ask various people in an organization what the real roles of each department are, you'll find the well-known dichotomy between "front office" and "back office" operations.

Front office staff are the people who deal with customers. They might be the customer service department, the sales department, and sometimes the marketing department (depending on how involved the marketing department is in the sales cycle). Back office staff are usually the admin assistants, HR, and the killjoy of all businesses - the Finance department.

In businesses I've observed, Finance departments often face silent derision or disrespect. Part of it is an us-versus-them mentality that comes out of the front office staff who feel their jobs are more difficult because they deal with customers (compared to Finance, who deal with numbers). And no one from the front office sends memos to the back office saying "please spend less time crunching the numbers" but it can feel like the back office is constantly memo-ing the front office with "watch this expenditure" or "spend less on client lunches".

Unfortunately, this view is supported by management at all levels that give Finance the nasty job of accounts receivable, the inputting-heavy job of accounts payable, and the dull job of budget forecasting. Compared to the highly creative marketing department and the edge-of-the-seat, in-the-trenches feeling of the sales department, finance is like the broccoli side dish on a plate of steak and fries.

But it doesn't have to be this way! Finance departments shouldn't be relegated to the back office in the hopes that their sharp pencils won't poke a customer in the eye! Finance departments can and should play a far more important role in the organization. Here are some ideas:

• POSSIBILITY 1: Finance should be more about business strategy than number prophecy. When the Finance department hounds the sales managers to get in their budgets and then turns them around for a final target budget for the year, their role is reduced to mere numerical interpreter. But what if Finance sat down with sales and talked to them about how their numbers connected to expected outcomes? And then, what if Finance sat down with the executives of the company and actually worked out a forecast that was tied to what the market was anticipating! Imagine a world where Finance's numbers were more than just a spreadsheet that gets pulled out at every quarterly review.
• POSSIBILITY 2: Finance should be more about opportunity. Many sales managers have some limited view into which customers are sending business. But the view isn't always perfect. Or complete. Finance should get involved to show how a customer is really impacting the business' bottom line. If Finance and Sales talked to each other, Sales might be shocked to discover that their biggest client is actually less valuable than expected because of the amount of work involved in keeping them as clients, or they might discover that a seemingly profitable client isn't profitable at all because their receivables get very, very old. Imagine a world where the Finance department can relate true business impacting information to Sales to tell them which opportunities are truly the most profitable.
• POSSIBILITY 3: Finance should be selling, too. When Finance gets the job of following up on accounts receivables, they can potentially do more harm than good. Finance people are highly skilled at numbers, and they might be good "people-oriented" staff, but they are rarely trained in the art of sales. However, when a Finance person, tasked with accounts receivables, gets adequate training in receivables AND customer service AND sales, their success rate at getting the receivables paid can increase, but so will their success rate at winning more business.

There are so many more opportunities, too. Businesses should be using their accounts payable list as a prospecting list. They should be temporarily swapping roles between Finance and Sales for brief "see-how-the-other-side-does-it" days to enable new appreciation and new connections. Finance should sit in on sales calls to see why Sales sometimes feels like they need to bend the rules to close the deal (and Sales should shadow the work of Finance so they know what work needs to happen at the back-end if they don't assess risk adequately during the sale).

The bottom line for businesses should not be derived from a cloistered Finance department. Instead, a business can uncover new and exciting opportunities when it makes its Finance department an integral part of the entire business.

Drive Growth Through Innovation in Your Finance Department

Cognitive surplus has been recently proven to be a gold mine for a collection of different departments. Don't you think it's about time you learnt to benefit from this within your finance department as well?

Go beyond the apparent and obvious 

All of the typical financial processes that most companies will utilise to drive growth are fairly obvious these include: cutting into the bottom line, maximizing revenues at the top line, and calculating the return on investment (ROI) for any new investment opportunities.

But if you can make 'innovation time', in conjunction with financial analysis, you will find that you are given a chance to look at less traditional levers to drive growth within your department.

Not a very exciting task 

Ensuring that you are given real time away from the stress of daily tasks will eventually prove to be an invaluable exercise. Real time allows you and your department time to reflect and allow you analyse the performance of your finance department within the past versus the demands, your deliveries and performance of today. By reaching into and exploring your cognitive surplus, you and your colleagues could discover areas that are limiting, and which could limit your financial performance tomorrow. By taken a look at these limits you and your department can explore alternative solutions to help drive growth and increase the overall innovation of your company.

With your financial performance analysis in situ and a collection of innovative ideas in hand you'll be able to better forecast and set up departmental budgets, whilst providing a firm foundation from which you are able to review any innovative concepts to vary the business structure serving to help alter the performance/cost ratio in a positive direction.

Want a push towards the right direction 

Want a sensible push towards the right direction, which will help you greatly improve the performance of your finance department?

You probably have an identical gut feeling that was brought to our consciousness by an accounting survey of the financial close process: only 28 % finance employees trust the reported numbers within the month end financial close making historical account analysis an even more arduous task.

Financial Reconciliation software can make the whole financial close process quicker and more economical by the complete integration of automatic account reconciliation with automated approval workflows. With the utilization of summary dashboards, account reconciliation software makes strict compliance the quality standard for your team, whilst at the same time executives are often accurately kept within the loop with drill-down reports at the press of a button.

You can conjointly do away with binders and build your historical analysis faster and easier with a completely digital archive. Although storing all monthly close reports in binders may provide that old-fashioned feel of security, however that feeling can be misleading. Using binders to archive can in the long run prove more of a hindrance than a help. Problems that can arise are: 

Which binder is all the information archived in? This issue can further be compounded with the problem of physical space required to store all of your company binders.

Where in the binder is it? Generally binders over time become too hefty to go through. So whether you're working with binders or spreadsheets maintaining that control and overview are a top priority. At any moment, you need to have all documentation in place and to understand the status of every person and every task. Financial Reconciliation software can help you to streamline and digitize your monthly financial close process. Whilst allowing you to replace cumbersome spreadsheets and full binders with an up-to-date real-time overview of the entire balance sheet reconciliation process.

Taking all of the above into account what's more, due to all of these efficiencies financial reconciliation software will actually help you facilitate to make 'innovation time' within the financial department, serving to create a virtuous cycle of enhancements and innovations with in your department.

With all of these helpful features and more it isn't hard to ascertain how using financial reconciliation software will greatly utilise your cognitive surplus and help streamline your finance department helping your business grow.

Involving Finance in Six Sigma - Do it Early and Fully

By involving the finance department from the early stages of the project, you can have appropriate data at all stages to ensure that the project is on the right track.

Involvement of Finance

Throughout the project phases, the finance department works with the various teams to identify the benefits of the project. Teams benefit from the additional input by the finance expert's participation. They agree upon the calculation of benefits upon implementation of the project. Before transferring the ownership of the solution to the process owner, a second review of the expected benefits is done using the gathered data.

The Belts do not have to take care of this function, which would be done by the finance personnel. After the project is executed, a final review is done to verify if the expected benefits are being achieved. If there is a deviation, it is discussed with the process owner, the reason for its failure identified, and areas of improvement marked. 12 months after the implementation, the company finds and reports the benefits. After that, a baseline is calculated using the improved key performance indicator (KPI).

Only those benefits beyond that baseline are reported. If there seems to be any improvements needed, a new Six Sigma project is generated. Some benefits are also achieved during the DMAIC process. All benefits, as well as key performance indicators, are reported every month in a prescribed format.

The KPIs that need to be improved are then taken care of. A comparison of both with the target set is done to find any improvements.

Here are some of the advantages of full involvement of the finance department:

Reliability

The finance department will be calculating the benefits honestly. There will be no misrepresentation of the data for the sake of records. Rather, they will report correctly, as savings and cost reductions are a matter of importance for them.

With the finance department involved in finance activities, the responsible team would be free to concentrate on improvements expected of them.

Standardization

Standardizing the calculation of benefits is constructive. By have consistency in the data generated for comparison, the results can be reliable and meaningful.

Incorrect Benefits

A process owner calculating the benefits may not be considering the effect that the process has outside the project. This effect has to be calculated for the overall success and profit of the organization.

Audits

Like other financial activities, the project results and benefits are also available to internal audits and other reviews of benefits.

Budgets

A successful process improvement should be included in the next financial budget. This will ensure that the improved KPIs become a permanent part of the system.

Proactive Finance

As a member of the finance department will be involved in the project, they will be in a better position to understand the business, and the factors and results influenced by the project.

The department will have a proactive approach to overall business improvement.

Accountability

The finance department is responsible for calculating and reporting the benefits of the process changes at various departments in the organization. By using their financial knowledge, they are in a position to ensure that the Six Sigma project has accomplished more than the previous year.

Six Sigma projects can be successful if implementation is linked with quantifiable financial results. By involving the finance department fully from the beginning, companies can ensure that project becomes successful financially.

Getting a Bad Credit Car Loan Direct - Lenders Providing Finance Regardless of Your Past Credit

One of the most frustrating parts about buying a car when you have bad credit, is having to deal with the dealership finance department. It seems that you can get a straight answer and there isn't really any good information advising you on how to get the best deal.

Getting a bad credit car loan direct, allows you to work with lenders without a middleman.

Most people don't realize that the finance department of a car dealership acts as a middleman. They were the salespeople for your auto loan. Being the salespeople for your auto loan, they make a commission based upon the interest rate that you pay.

Car dealerships make money on the sale of finance products such as extended car warranties, gap insurance, credit life insurance and other products, as well as your interest rate. It's typical that a dealership actually makes more money on your interest rate than they do on the actual sale price of the vehicle. The dealership may make $2000 on the sale price, and make $4000 on your interest rate.

You see, when you get a car loan the dealership and are approved by loan company and of particular interest rate, the dealership can add percentage points to your interest rate. The additional monies that you end up paying in finance charges are unnecessary. They are simply to give the dealership and incentive for sending the loan to a particular loan company. The more money that they can make the loan company, the more business that they will send to them.

In summary, dealerships make a commission on the additional finance charges that they can get you to agree to pay. The unfortunate part of this is, the average everyday person has no idea that this even takes place.

There are companies on the Internet that can provide you with a direct car loan. Regardless of your past credit history, even the no money down car loan for bad credit is easily obtainable with some companies.

Involving Finance in Six Sigma Initiatives at the Right Time

Additionally, they would be the best people to put in figures benefits accrued as a result of improvements. They can help coordinate activities across departments that may even be in varied geographical locations. The finance department can prove to be best business partner for successful deployment of such projects.

The Finance Team as a Business Partner

Six Sigma projects help reduce the operational cost based on strategic decisions made from specific data. The finance team is in a better situation to assess the financial implications of any changes in relation to the organization's bottom line.

Finance is often seen as bookkeepers, auditors, etc. However, it is easier for them to utilize software to measure improvements and resulting financial benefits. This data can also be used for further improvements that come as a part of continual improvement initiatives of the company.

The involvement of the finance team has to be right at start of the project. They can assist the Six Sigma team in the selection of projects. They can locate those projects that may have the greatest impact on the financial objectives and ensure that problems that need immediate attention are taken up on priority basis.

They can also keep the project pipeline full.

Once projects are selected, finance team members and process owners can decide how benefits should be calculated upon implementation of the project.

Similarly, after project implementation, they can also put in place control mechanisms to ensure that results are achieved according to set standards. If there is a variation or deviation, it may show up when review is undertaken.

With the Six Sigma team, the finance department can determine the reasons for lack of performance. Even after process ownership is transferred to the process owners, the finance team can keep track of the KPIs that are improved and their impact on the bottom line.

Benefits of Involving Finance

• Integrity of results: A very important benefit achieved with the involvement of the finance team is integrity of results.

If the project team is calculating benefits, there is the possibility to give in to the temptation to record potential benefits instead of the real ones.

This may not point out the drawbacks, and will not help the Six Sigma team to ensure that necessary efforts are directed towards achieving improvements in KPIs.

Standard calculation: They can insist and develop a standard system for calculation of results.

This makes the results comparable and also ensures that efforts are directed towards achieving targets.

Recording incorrect benefits: If process owners fail to consider processes outside the project scope, the benefits calculation may be incorrect and will not show the true picture.

Audited results and accountability: Like any other finance function, project benefits are also subject to audits.

Budgeting: The improved process can then be embedded into the next budget so that the improved KPIs become as permanent as possible.

Finance department participation should be right from the start to the end of the project, which will help project implementations to be successful.

Low Credit Scores? Auto Financing For People With Bad Credit Can Be Found Online

You have probably been given some terms that you dislike from your local dealer's finance department regarding getting a car loan with a low credit score. In fact, you have probably been turned down as many people are. You don't have to take the crazy interest rates that they most likely have offered you.

In today's hard economic times, online lenders are competing for your business. If you have unsavory credit, it means you will pay more money in interest which benefits the lender, unless you know where to go. The old saying, "it's not what you know, it's who you know", comes to mind. You will pay more in interest than a person who has better credit, but you don't have to pay the highest rate the finance department decides to charge you.

Let me explain.

The majority of Americans are not aware of how much money car dealerships make on your average loan. Let's say the finance company sends your dealership a fax that approves you for a loan with a rate of 9.5 percent. Now you will pay a higher rate thanks to the fact that the car lot will increase your loan. So you will pay a much higher price than you would through an online lender.

If your local finance manager knows you are in a hurry to get through the approval process, he or she may make you believe you need to spend more money than is required. You can avoid this rat trap entirely through using an online loan company.

Did you know there are online companies that specialize in helping people like you? Their approval processes are faster, easier, and have lower interest rates. You may be astonished to know that some of them are close to where you live, yet available online.

Access to Finance Functions - Should Project Managers Have It?

"Nobody touches my accounts!" A statement often heard when planning implementations of integrated job costing and accounting solutions in organisations that previously ran separate systems for these. Finance teams are adamant that nobody outside of their team should be able to trigger any accounts postings.

What on first sight appears to be a valid concern by the finance department is nevertheless in many cases already being overtaken by reality in their current procedures.

It's not an issue where job managers generate job budgets or purchase orders, which don't create postings to the GL. But project managers often have the responsibility already to generate documents like sales invoices and send them out to their clients - rather than just drafting them - with the finance department then only recording those invoices in their financial software. The detail that these project managers don't actually have write access to the financial software doesn't alter the fact that the documents that they send out are legally binding documents and thus have to be recorded in the accounts. If a mistake has been made in any of those invoices, the wrong invoice still has to be recorded by the finance team and be corrected by generating a credit note and amended invoice.

Because of that reality in their current systems it would be paradox to introduce an integrated system with the purpose of streamlining the workflow and reducing the duplication of data entry, but then restrict the functionality job managers have access to, thus reversing these benefits. That is why many companies decide to give their project managers access to functions such as AR Invoicing, having put in place precautions to minimise the possibility for errors:

When the software is set up initially, accounts departments are able to construct the system in a way that postings to the accounts are under the complete control of the software and cannot be overwritten by project managers. Looking again at the example of a sales invoice, it is usually only a case of setting up a link to one GL account for the debit transactions (Accounts Receivables or Debtors) and - depending on the state - one or two for the credit postings (Sales Revenue and Tax*). If the integrated software does not give project managers the option to overwrite any of those codes, there is a good argument for them to be able to enter sales invoices.

If - in addition to the example of an AR invoice - users are also responsible for deciding which job related bought-in costs are covered by this invoice, there is not much to say against giving them access to this part of the accounts posting either. In many enterprises that use separate accounts- and job costing-systems the finance team will ask project managers anyway for details of what is and what is not yet covered by AR invoices (what stays in or comes out of WIP). Therefore again if project managers are restricted from overwriting the system controlled GL accounts for Work in Progress or Cost of Sales, letting them decide on a job level what should be transferred, will increase workflow with the risk of mispostings minimised.

There will of course always be individual cases of users who require - initial - handholding by the finance team and the finance team has to retain overall control and responsibility. There will always be human errors, but mistakes also happen within accounts departments AND mistakes can be corrected.

Companies that have given this kind of access to their project managers have all experienced an increase in work economy. Financial managers can spend more time managing finances rather than inputting data and project managers see an increase in their job responsibility and work satisfaction.

Summarising all the points outlined above, the answer to the question in the title has to be: It makes much sense when introducing an integrated job costing and accounting solution to give users outside of the finance department limited access to financial functions, if they have been laid out in the system and the system has been set up with a strict control over them.