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A lean, (not so) mean, finance machine

A lean, (not so) mean, finance machine

By Fran Ali

ENC’s finance team tries to apply lean thinking and lean accounting to our work every day. What is lean thinking? It’s all about improving productivity, enhancing flexibility, creating better value for customers, and raising profits and cash flow. Applying lean thinking to finance and accounting processes can help companies save money by eliminating waste and inefficiencies.

A couple months ago, we decided to upgrade our job costing system. We analyzed different systems and found some were good, but not a good fit for our company size and needs; others were not cost effective. We chose one that is an add-on to our current financial system, which means less training and cost and is easier for our employees to use. The system is less wasteful and more efficient by providing automatic reporting, which eliminates many transactions, reports, and reconciliation we used to do manually. Last but not least, the system is less expensive.

Lean accounting leads to better decision making by providing accurate, understandable, and actionable cost and profit information. It enables companies to make more money by identifying the potential financial benefits of lean improvement and developing profit strategies. For example, we recently developed a simple but comprehensive pricing template for job proposals. Instead of different account directors and managers using a wide variety of pricing formats, everybody plugs in their labor amounts in this template and the report generates automatically. This saves account managers and directors time and provides a uniform approach to communicating financial information throughout the organization.

Old habits die hard. Companies can invest a lot of time and money in lean efforts or other improvements, but if people eventually go back to their old ways, the gains won’t endure and improvement stalls. A big part of implementing lean thinking relates to company culture. Without employee support, it is impossible to make sustainable changes in an organization. Embracing lean culture also encourages everyone to contribute ideas and to respond quickly to suggestions for improvement. Lean culture keeps everyone learning and lends itself to excellence in a company’s products, services and processes. It’s something we strive for daily at ENC.

Image courtesy of Flickr user kenteegardin

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