(480) 397-0590

Want a Career?

Find a CFO

223 partners in 45 states
     6,745 years experience

Find a CFO by zip code

Find a CFO by name

Free Business Resource

Fill out the form and receive for FREE The Discovery Analysis (a $1600 value)





Privacy policy

The Process Of Process

Jul 30, 2010

Many business owners operate their organizations with processes, some think that they do. They create process which, at times are based on flawed logic. The flaw originates from their experiences as a Technician[1] rather than from learned experiences from professionals whose expertise comes from years of reviewing, creating and implementing process.

Business Owners intuitively understand that without process, sales cannot be processed, product delivered, payroll distributed to employees. However, they do not put much energy and muscle into creating processes that are easy to implement, easy for employees to embrace, flexible when change is required. Instead, they set up processes and forget to review and revise them as needed.

Consider the month end reporting requirements of any business. Typically, various processes must be finalized. Let’s consider the sales, billing and cash receipts processes.

Sales

Sales data is entered into a sales module within the period that the transaction is consummated. Data is reviewed and invoices are remitted to customers. Period sales reports are generated.

Cash Receipts

Cash is applied to customer invoices. Customer remittances are accumulated and deposited into corporate bank accounts. This all must occur prior to the last business day of the month. Cash receipts reports are generated.

Accounts Receivable

This report is the culmination of proper sales and cash process. The idea is for this report to accurately inform management the sum total of outstanding invoices so that metrics can be created and collection activities performed. It is what this example is all about.

Yet, when the financial professionals review the aging report to ensure that it agrees with corporate books and records (general ledger), inevitably they do not agree. This creates inefficiencies because financial staff must dig to find errors and omissions. The errors continue, multiply and become more cumbersome to correct taking valuable time away from everyday tasks.

When this occurs, one would conclude that the process may need review and modification. Yet many businesses don’t and won’t because there is no process to review the process. Owners are not focused on ensuring that the above process (for example) continues to operate efficiently. Instead there is an “out of sight, out of mind” mentality, a pervasive lack of understanding and sometimes, caring.

The best run organizations have leaders who understand that their companies cannot grow without finite processes that allow their staff to efficiently perform their jobs. It is imperative that Companies, Owners and their senior management keep their eye of the process ball. The cost of doing so is minimal compared to the cost of fixing!



[1] Michael Gerber – The EMyth Entrepreneur

Books


A collection of books from B2B CFO® to help any business succeed. Read the first chapter from books, including the Wall Street Journal’s book, for free.

Zoom in using the +/- tools on the left. Click on each photo for more details.