There are a lot of buzz words around "business process improvement" that can either excite you or leave you rolling your eyes at another vague jargon term that sounds expensive.
While the Oxford Dictionary defines the meaning of a "Process" to be... "a series of actions or steps taken in order to achieve a particular end", let's breakdown and analyse the broad term of a "process" from a finance and accounting perspective.
The following factors must be considered when creating or reviewing any business process.
P is for... People & Purpose
A process must serve a purpose. Most commonly, a process serves the purpose to gather or action information to achieve an end result. The activity of following and completing a process must generate useful records for the end user of that information. If a process does not serve a purpose, then it is a waste of time.
Processes are established, completed or managed by people. Processes can be electronic, but there will always be a human factor to either trigger the start of a process or the final information going to an end user. When developing a process, always consider when and how people will be involved as well as their skills and capabilities to effectively complete the tasks involved. Managing the people element of a process is the hardest part.
R is for... Repetition
A standard process is often repeated, otherwise it is known as being an "extraordinary" or "once off" occurrence. The higher the rate of repetition the more important it is for a process to be consistent. For less frequent processes, notes, diagrams or a go-to guide can be critical to ensure that staff carry out the process correctly.
O is for... Organisation
A standard business process aims to assist with organisation by being planned, controlled and structured. Processes should be ordered and sequential with no option to deviate from the desired structure.
If processes are followed, then the business will operate more efficiently and effectively. Financial information will be gathered, actioned and stored in a professional, timely and logical manner.
C is for... Control & Communication
Implementing standard business processes aims to create control and prevent chaos, surprises and failure. In theory, if standard business processes are followed, then everything will go smoothly...However, there is a fine line between creating a process that increases internal control, but does not also add unnecessary steps and tasks that create workload burdens.
How do staff (and customers) know that procedures are in place and when they must be followed?
Processes cannot be explained by osmosis and it is unfair to expect staff and customers to just "know" what to do. Clearly communicating the purpose and steps of a process is critical so each person engaged knows exactly what their role is, and how it impacts operations.
E is for... Enforceable
If a process is in place because it ensures operations run smoothly, then surely not following a process will cause disruption to an organisation.
Can you determine if a process has not been followed? How easy is it for a process to be bypassed?
For many organisation, having adequate policies in place to support processes will ensure there are adequate consequences for non-compliance.
S is for... Solution
A completed process provides a useful outcome or solution. The solution it provides can be as simple as getting information from Person A to Person B. If the end result of a process is more questions and more sub processes, then the first initial process has not solved the real problem.
S is for... Simplicity
Keep it simple and straightforward. It is natural for processes to evolve over time from changing staff or operations. It is important to regularly review and refresh processes to avoid steps that are overly complicated or time consuming.
what is "Process Improvement"?
To put it simply, process improvement is enhancing all of the above discussed elements of a standard business process.
Financial Process Improvement reviews payroll, sales, purchasing and reporting to ensure information flows through a finance department quickly and accurately. There are clearly defined processes that are communicated and enforced throughout the finance department and the broader organisation.
Improving financial processes will ultimately lead to better quality financial information that can be generated faster.