The Art of Cost Efficiency - Intelligence in Financial Processes

Why cost saving is an art. Refreshing an older post. Sometime ago i was sent a refund cheque by AT&T (see picture above) that got me thinking again about one of my pet peeves with financial processes - they lack intelligence. In fact if one were to ask anyone if financial processes in their company were flexible enough to adapt to circumstances and the answer will be a resounding no. In fact most financial process are so far removed from any intelligence response that asking them to adapt to any changes is an uphill task. Many of us would have encountered financial processes that did not make any sense at all , but yet they were being applied in a manner bereft of simple commonsense.

Banks, financial institutions, utility companies and public / government departments are some of the places where most people commonly encounter the robotic, rigid and outdated examples of processes.

Why did the receipt of the cheque above drive me nuts ? Well, the wastage of resources !!!! This single cheque for the princely sum of $0.01 would have cost AT&T in excess of $30 once all costs are tabulated correctly. In a study that i was part of some years ago , the all inclusive cost of issuing a paper cheque was in excess of $60 for some companies. Extrapolating this example across the organisation and we are looking at avoidable costs of over $5 Million annually. 

Unfortunately most companies lack the in-depth understanding of their own cost structures that could help them avoid such issues and it looks like that AT&T is one of them. So without going into more anecdotes about the silly and redundant processes out there , how do we incorporate intelligence into our processes ? Here are some suggestions .

• Business Acumen : One of the most under appreciated skill set in business today is business acumen. The term is a broad one and encompasses a number of skill sets that complement each other to drive value. One critical component of business acumen is the ability to estimate the financial impact of each and every process and decision. Ensuring that your team builds business acumen is a long term process and pays dividends in more ways than one.
• Outsource transactions - NOT oversight: The presence of outsourced services and processes are a reality of business today. Every company wants to devote its resources to the most important activities while outsourcing anything that they deem as low value to. The key to effective management of outsourced services is to outsource the resources and not the oversight of the actual process. Effective oversight and understanding of the outsourced process and its fit with the current organisational model will drive efficiency and ensure that redundant processes are removed timely.
• Periodic review of financial processes : Business processes need to be reviewed periodically to ensure that they are still applicable and add value to the business in the current economic and business environment. Lack of active introspection leads to redundant processes that become roadblocks to efficiency. Processes that work when an organisation is small and centralized will not work when it grows and become decentralized.
• Cross functional linkages : One of the biggest issues effecting large corporations are the silos that build up over time in various functional processes and service groups. These functional groups tend to overlook the various synergies and dependencies that exist with other groups and tend to work on items that are important only to them. This encourages a myopic view that contributes to overall process inefficiencies and folks furthering personal agendas at the expense of the overall organisation's efficiency.
• Rewards and recognition : Recognizing and rewarding employees who challenge convention and become change agents sounds easier than it actually is. Most organisations are not well equipped to handle such folks and at times the management in these organisations end up discouraging change. An appreciative and adjusting management culture can greatly encourage change.

Speed , simplicity and fit for purpose are small words but can make a tremendous difference to an organisation's work processes.

If you would like to share your experience with nonsensical processes , please do so in the comments. Would love to hear more examples of ridiculous processes in other organisations.