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Lean Finance Department

by Chris Cooley

Like any other business area Finance provides a service to others – the service provided by the Finance team is multi-faceted and for each customer distinct. The key to achieving performance excellence is customer satisfaction, whether internal or external customers.

Whilst the requirement for each customer may be distinct, the processes involved are invariably inter-connected. The key to any lean implementation is to understand the customer, their needs, and their perception of value.

What is service ?

Service is anything that has a customer and doesn’t deliver a physical product that the customer can take away, but creates something that its customer needs, desires, requires or demands, and therefore places a value on it.

Applying Lean in service

Lean can be applied to any process, whether manufacturing or service, whether in technical,finance or any other organisation area.

The key elements of applying lean are the same regardless of the organisation or area:

  1. Who are your customers ?
  2. What is customer value ?
  3. What is the current state of processes ?
  4. How to remove waste and non-value added processes ?

Lean in service

For more information on Lean in Service click here

Lean Finance department example case study

Identify customers

Customer satisfaction is the goal and a crucial step towards achieving performance excellence.

Finance department roles

The table below is by no means exhaustive, and there may be different roles dependent upon the organisational structure.

Finance Dept Role


Monthly management accounts Group owners / shareholders
Senior management
Middle management
Government bodies
The organisation goals
Pay suppliers Suppliers
Purchasing department
Collect money from customers External customers
Sales department
Safeguard company assets Group owners / shareholders
Senior management

Identify customer value

So if we now consider just one of the finance department roles, providing management financial information.

We have already identified the customers for monthly management financial information above. We must now break down their needs and if necessary the priority of the needs.

This is done by reviewing the requirements with each customer (internal and external) and agreeing the level of service that is achievable and applicable.

Monthly management accounts information – example only – your organisation may be very different !

Customer Needs
Group owners / shareholders –          Within 10 workings days from period end
–          95% accuracy
–          Standard corporate format
Senior management –          Within 5 workings days from period end
–          90% accuracy
–          Clear format including analysis
Middle management –          Weekly updates
–          80% accuracy
–          Clear format – 2 pages
Employees –          Quarterly updates
–          80% accuracy
–          Clear format – 1 page
Auditors –          6-monthly
–          98% accuracy
–          Statutory format
Government bodies –          Annually (strict timescales)
–          100% accuracy
–          Different statutory formats
Bankers –          Ad-hoc review
–          90% accuracy
–          Cash-flow based
Organisation goals
Consider what does the business need from the information provided to contribute to the achievement of its stated goals i.e. how can the information directly add more value

The challenge is to satisfy everybody. Each customer has potentially different needs in terms of timing, accuracy and presentation.

Essentially in terms of the organisation goals, what additional value from the information provided can and should be added ? In this example the accountants role should be to interpret the information and use it in reference to daily activities to directly help the organisation achieve its goals.

Map current state

  • Genchi genbutsu – “go and see” the process and what is really happening
  • Look at how information is pulled
  • Review the whole process
  • Visualise the linked chains of the process
  • Identify and highlight waste
  • Start to visualise the improvements for the future state

Current state example

Click on image to review larger size

Current state VSM Finance

Improvement actions

  1. Review and counter-measure despatch process (saving 2-5 days)
  2. Review and counter-measure stock update and reporting process (saving 2-5 days)
  3. Review and cost justify semi-automated stock data transfer process (saving 1 day)
  4. Prepare main accruals and prepayments in advance ( saving 1 day)
  5. Review error problems and counter-measure to reduce errors from 20% to 10% (saving 1 day)
  6. Schedule manager reviews and develop review back-up plan to cover absence (saving 1 day)

Map future state

Click on image to review in larger sizeFuture state VSM Finance process


  1. Finance should understand their role as a service to a variety of customers.
  2. Understand customer needs and therefore the value placed on this service by each customer.
  3. Map current state – consider waste affecting lead time , errors and cost
  4. Consider other areas within finance and how the whole finance process can be streamlined.
  5. Map future state.
  6. Most lean implementations fail due to failure to deploy – ensure that actions are carried out and results checked using Plan / Do / Check / Act (PDCA).
  7. Follow the cycle again – in the above example lead time was reduced from 14-23 days to 10 days, but further improvements were identified to achieve the target of 5 days (customer requirement).

Lean QCD provide training and lean finance support services, please feel free to contact us to find out more.

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