The client was a major energy company with a new CFO who wished to gain a better understanding of the strengths and weaknesses of the existing Finance & Accounting organization. The CFO was looking for opportunities to reduce back office processing costs, while at the same time finding ways to increase senior management confidence in the effectiveness of financial processes, systems, organization and staffing.
Specific goals related to increasing senior management confidence included assuring that:
- Finance requirements were met in a timely way.
- Numbers generated were perceived as rock solid and totally substantiated and verifiable.
- Finance and Accounting management and support staff gained increased ability to interpret these numbers in a meaningful business context.
The purpose of the project was to determine how best to improve the effectiveness of the Finance & Accounting functions in both the business unit and corporate organizations for the overall benefit of the enterprise performance.
The objectives for this phase of the project were to:
- Conduct an independent assessment of the Finance & Accounting functions
- Define performance improvement goals
- Establish strategies and plans to realize improvements
The intended benefit of this exercise was to:
- Better equip Finance & Accounting across the enterprise to be able to deal with the company’s current and future business challenges
The full range of accounting functions to be examined included: Business Planning, Budgeting, Forecasting, Capital Budgeting, General Ledger Maintenance, Journal Entries, Period End Closing, Revenue Accounting/Unbilled, Accounts Receivable, Miscellaneous Accounts Receivable, Accounts Payable, T&E Reimbursements, Fuel Accounting, Purchased Power Accounting, Payroll, Fixed Asset Accounting, Bank Reconciliations, Cash Management, Balance Sheet Reconciliations, Corporate Finance, Internal Management Reporting, Earnings Release, Financial Statements and Tax Compliance.
All of these accounting functions were in-sourced, and the company was open to exploring alternative sourcing opportunities as well as internal actions that could be taken to improve the cost effectiveness of the processes, systems and structure.
Our approach to this project was to systematically examine the three fundamental resources required for the organization to meet the project’s goals and objectives: the finance and accounting processes, the information systems that supported this work, and the finance and accounting organizational structure and staffing.
Methods included management interviews, process mapping and improvement analyses, an outsourcing feasibility analysis, an employee survey focused on morale and motivation issues, and a review of roles and responsibilities clarity and the effectiveness of coordination mechanisms used to align the activities of different work units with each other and corporate goals.
Key recommendations developed included:
- Replacing the existing, internally developed core financial systems with an Integrated Application suite in order to achieve more efficient operations and more dependable results.
- Establishing an organizational development program to identify and groom the Finance and Accounting leaders of the future.
- Considering the opportunities to achieve cost savings through outsourcing certain Finance and Accounting processes.
- Retaining certain other Finance and Accounting processes as internal operations, which were considered strategic, sensitive, or which provided the company with critical skills and knowledge.
Successful Business Solutions
The client received:
- Process documentation and assessments for each of the Finance & Accounting functions.
- An information systems capability assessment and defined requirements for improved systems support.
- An outsourcing feasibility analysis.
- A road map for internal correction of certain identified process inefficiencies before initiation of outsourcing actions.
- An assessment of the effectiveness of the current partially centralized, partially decentralized organizational structure, with recommendations for improved linkage among units.
- A cost/benefit analysis considering the potential cost savings implications of implementation of each of the consultant recommendations.