Are Your People Engaged in Your KPIs?

KPIsExecution is everything. You may have the best strategy in the world, but without execution, it dies where it lies. One of the problems that companies of all sizes have is communicating that strategy throughout the organization in a way that makes sense and captivates employees.

If people don’t share a single, sharply focused vision of the desired outcome, any effort to measure that result will be a waste of time.

Many times employees feel disengaged from corporate strategy, or do not have a clear line of sight into how their function or, more specifically, their daily tasks play a role in achieving these overarching goals.

The Individual Aha Moment

The solution lies in cascading Key Performance Indicators (KPIs). This is a method of taking high-level strategic organizational objectives and then translating those into down to indicators at the department level and finally down to the individual level. You need to first cascade business goals, and only then find relevant indicators for each level.

Why is this so important? It helps bring the whole organization into alignment through better communication of the end game and the role that every department plays. When F&A understands their role in moving the needle, as does HR and Sales & Marketing, there is a deeper synergy between these functions.

But it can’t stop at the departmental level. In business journals everywhere you hear about the importance of engaged employees. One of the causes of disengagement is when people don’t see their role as important and don’t understand how they play a bigger role in company objectives.

Our Process

At Sutherland, we use to cascading KPIs to drive discipline, efficiency and quality. We identify high-level strategy and goals, like cost-per-transaction goals. These tend to be very top-line KPIs; many times desk-level personnel don’t have a firm understanding how these indicators apply to their area of activity and daily routine.

To correct that, we cascade these goals down to every level of management. If a desk-level person knows exactly many errors made on a daily basis have a direct impact on the cost-per-transaction goal, the KPIs become tangible.

An interesting side effect is that even if processes are best practices and don’t have to change, there can be substantial efficiency gains simply through performance management. At Sutherland, we post the specific desk-level KPIs that drive process improvement. All staff members can instantly see the desk-level KPIs that are driving larger, more abstract KPI goal.

As a result, it’s one highly engaged team rowing in the same direction toward a common goal.

If you’re interested in learning more about how we approach business transformation and can help deliver outcomes on strategic objectives, schedule an appointment today.

Escaping the Transaction Time Trap

marketing-board-strategyAsk any finance leader how much time their people spend on transaction processing and the answer will be “Too much!” Regardless of organizational size, a recent APQC survey shows that about half of finance teams’ time is spent on transaction processing.

In the last 15 years, more than 50% of Fortune 500 companies have been gobbled up by competitors, gone out of business or simply vanished. The cause? Digital disruption. The “Fourth Industrial Revolution,” characterized by new technology and digital connectivity, is upon us.

Executives and managers understand that in today’s rapidly changing world, excellence is not defined by the throughput of transactions. Keeping pace with change and deliver on outcomes are at the top of everyone’s list. In short, the finance department needs to be faster and more accurate in predicting threats and opportunities. They need more time spent on decision support and analysis.

The Feast or Famine of F&A

Yet, the feast-or-famine cycle of F&A continues to negatively impact an organization’s ability to get the most out of their teams. Highly skilled talent is often underutilized during non-peak times. (It’s not uncommon to see well-paid FP&A analysts performing many manual tasks and rekeying in data.) And, when the quarterly peaks hit, they are often overworked and heading toward burnout.

The staff follows processes and practices that have been in place for years. While these processes may not be “broken,” there are new approaches that can be employed. A recent whitepaper from Blackline predicts that while only 25% of F&A talent is spending time on analysis in 2016, by 2020 that figure will rise to 75%.

Automate for a Productivity Boost

It’s a matter of unleashing the chains of manual accounting work that consumes so much time currently. When mid-market as well as Fortune 500 companies can automate many of their current manual processes, it puts more thinking time — as well as time for creativity and innovation — into the hands of their people.

Automation reduces costly errors caused by overworked staff members and labor-intensive work like rekeying data. Digital technology, workflow tools and smart automation, also enforces a move away from paper-based administrative tasks that show F&A processes to a snail’s pace.

Digital technologies, when combined in tandem with process transformation, have the possibility of automating much of the transactional work that F&A talent are paid to perform. Isn’t it time you got more from your people?

To find out how Sutherland can work with your teams to bring smart automation and better processes to your organization, we’d be happy to advise you and offer an expert assessment of your current practices.

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Don’t Automate Inefficiency

“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” Bill Gates

We sit at a tipping point. Technology is changing the way companies operate and interact, with their customers and within their own internal operations. CFOs are looking to flip the ratio of transactional work vs. strategic work. They are steering their organizations away from manual work and spreadsheets and are championing the use of progressive automation to increase their people’s amount of time spent being a forward-looking asset to the company.

Technology can improve both the speed and quality of your internal processes throughout the F&A function. This means engaging technology like Robotic Process Automation, which can act as a virtual workforce that can be scaled up or down as required, doesn’t require performance reviews and perhaps more importantly, will never leave to go work for the competition.

RPA has attributes and capabilities that go far beyond those of traditional automation. It’s important to use it fully. It can stitch together disparate systems without requiring direct integration. It can pull and manipulate data between legacy systems, giving companies better transparency and a much better understanding of their operations.

Not an Equilateral Triangle

Traditionally, the “business triangle” has been represented by an equilateral triangle with People, Process and Technology sitting at each side. The trend today is to assume that technology is starting to take up more of that triangle’s real estate. However, technology alone does not solve business problems.

It can be easy to simply view robotics as an accelerant for the as-is processes. While this typically leads to slight improvements (especially in terms of labor costs or data quality), the real value of RPA is the ability to use it to transform business processes. This means casting a critical eye on the process part of the equation to avoid the old adage of “garbage in, garbage out.”

Organizations need to step back and analyze the new capabilities RPA can provide in order to design a future “to-be” state. From Order-to-Cash to Record-to-Report, it is critical to assess each aspect of every process that exists within those functions. Focus on the outcome first and then focus on how your people, processes and technology can support those outcomes.

Standalone Technology? Or a Partnership?

As a standalone product, RPA is an effective way of automating repetitive tasks and manual intervention. But when combined with F&A service delivery from a process transformation partner, RPA has the potential to deliver much greater impact.

At Sutherland we provide advisory services, to help clients identify where they can optimize processes and eliminate existing exceptions. Whether the exception relates to order entry, invoicing or collections, non-standardized practices cause slowdowns, manual labor and errors. An end-to-end perspective is the catalyst for maximizing straight-through processes. From transition to continuous improvement, we take a long-term view to be able to plan and execute on the “future organization.”

If you are looking for a trusted advisor, one that has extensive experience in new service delivery automation technologies, and understands how and where to apply them, contact our F&A and RPA experts for an assessment of your processes.

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7 Signs Your Accounts Payable Isn’t Optimized

TemplateAccounts Payable (AP) is an important factor in a company’s working capital, and a key indicator of overall operational effectiveness. If you see any of these signs, there’s a strong possibility your AP organization and its policies and processes need a second look.

1. Late Payments to Vendors

Did you know that best-in-class companies have a 90% capture rate for early payment discounts? If there are inconsistent AP practices in your organization, there’s a good chances that invoice processing is taking longer than it should. The real problem here lies not only in unhappy vendors but also in late payment penalties that are easily avoidable.

2. You Don’t Know Your Costs

According to research from the International Accounts Payable Professionals (IAPP) on the cost of invoice processing, 31% of AP professionals did not know their costs. That worrying number shows a lack of emphasis on the strategic value of AP cost control within their organizations. A best-in-class AP organization knows their costs per invoice processing transaction. Continue reading

As Treasury Goes Virtual, Can Forecasting Keep Up?

money-forecastingAs businesses continue to expand their global footprint, and new technology changes the way we work, the success of the treasury department is contingent on how well it operates in an increasingly virtual setting.

That’s the latest from PwC’s Global Corporate Treasury Benchmarking Survey 2017, which captures the views of over 220 treasurers and Chief Financial Officers (CFOs) from around the world.

With a full two-thirds of people involved in treasury processes are no longer reporting directly —or even indirectly—to the treasurer, the function is no longer a “department” but rather a process. In fact, many treasurers are handing over more treasury tasks to third-party providers or internal shared services.

In a statement, Sebastian di Paola, Global Corporate Treasury Leader at PwC, said, “Treasury is becoming increasingly virtual and treasurers need to be jacks of all trades by collaborating more with the business, shared services and banks and raising their game in IT security, valuation and financial risk management.”

Top of the Agenda

The solution, says di Paolo, is a strategy that takes a consultative approach, integrates other business processes and is heavy on automation. Treasurers are being asked to step up and become stewards of liquidity and better cash flow management.

A top priority for both CFOs and treasurers is cash flow forecasting, with 42% ranking it as a priority and 80% of these people rank it as high or of critical importance.

Yet, as the report points out, forecasting has been ranked as a priority for the past two decades, and in the 2017 report, over half of respondents cite concerns like accuracy of data, data collection, mapping and proper tooling. Despite huge technological advances, treasury is still a manual, spreadsheet based function. Plus ça change, plus c’est la même chose, it seems.

For treasurers to truly attain better cash flow forecasting and reporting, they must first embrace digitalization, process transformation and predictive analytics. The report points to the importance of attaching KPIs to data accuracy. (Be sure to download the full report here.)

Our Experience

Sutherland has helped many clients contain costs and improve cash management. Finance executives know what has to be done, but internal teams have limited resources for overcoming the obstacles of a lack of centralization and visibility. They struggle with getting real-time information and actionable data.

Optimizing cash management is essential to business success. If you’d like more information on how Sutherland can help you improve cash flow management and significantly reduce your costs, please schedule an appointment today for a deeper conversation with one of our experts.

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Are My Processes Best-in-Class?

Companies that are serious about improving performance and staying ahead of their competition in these volatile and changing times are constantly searching for better ways of doing things. From customer-facing functions like customer support to the behind-the-scenes finance function, best-in-class practices and processes are the hallmark of an industry leader.

High-performing enterprises embrace a culture of continuous process optimization and improvement. It’s not an option, but rather a necessity. As technology changes and continues to disrupt business, what was relevant five years ago seems as old as the dinosaurs now. C-suite executives understand that without top-performing processes they may soon find themselves out of step with their market, regulatory compliance and quickly falling to the back of the pack.

How Do You Know?

But how do you know if your processes are best in class? How do you know if you are measuring the right KPIs? Where do you stand compared to your competitors? Can you get money through the door and into the bank more quickly, or are you lagging behind the industry norms? Continue reading

The F&A Experience

When you see a football player effortlessly pluck the ball out of the air, and in one single move, change the game completely, you understand that days, weeks and years of practice went into the automatic reflect behind that play. When online shopping channels make it easy to purchase (and check out) with the single click of a button, there’s no doubt that thousands of hours of design thinking and GUI coding expertise went into that seamless experience.

It takes a lot of effort to for anything to appear effortless.

The ongoing march of technology, and the intersection of multiple technologies—combined with human ingenuity—make many of these experiences possible.

But how often is the F&A experience considered?

When it comes to partnering with clients, there are two outcomes that should be considered:

  1. How can we improve the client’s employees experience with their own processes and practices?
  2. How can we favorably impact our client’s customers’ experiences?

Inevitably the two are interconnected. Continue reading

Cash Management Not Managed Well Enough?

rising costsIs your company debt going up even though cash on hand is stable? You’re not alone. A recent study by The Hackett Group brought to light some serious challenges in cash management. The study followed 1,000 US-based companies and noted that the cash conversion cycle (CCC) performance declined by 2.4 days, or 7%, from the prior year. The 35.5-day CCC average is now higher than it’s been at any time since 2008.

But averages can hide bigger issues. Consider this: Median companies are seven times slower at turning capital into cash than leaders. Cash is collected more two weeks slower than top performers: 43.5 days (median) vs 25.1 days (leaders). When it comes to paying suppliers the median group shelled out two weeks faster at 41.1 days as opposed to 59.4 days for leaders.

The study says that, by not following the best practices of leaders, this middling group left a whopping $1.07 trillion on the table. Continue reading

Eyes on the Horizon or Rearview Mirror?

rearviewImagine you are merrily zipping along a highway in your car, pulling into the fast lane to pass the slower vehicle in front of you. You’re alert, you check your side and rear-view mirrors and quickly look ahead to watch the road in front of you. Suddenly, there’s a resounding BANG! as your front hood unexpectedly opens, flips back and covers your front windscreen.

Without a clear view of the road ahead, and only a rearview mirror, you are driving blind. In the fast lane.

While no harm comes to our hypothetical driver —who manages to pull off to the side, tie down the broken front hood and drive slowly to the nearest garage—this harrowing tale can be seen as an analogy to F&A departments around the world.

Too many finance professionals are relying on information that stems from backward-looking, often incomplete data. Traditional finance departments run the risk of being hobbled while more agile, digitally savvy competitors pull ahead.

At a Tipping Point

The quality of decision-making information can be a tipping point, one that is critical to organizational success and differentiation. Finance is the nexus of information, pulling in data from all silos—operations, marketing, HR and supply chain, etc. This enterprise-wide overview enables the finance department to partner with a number of diverse internal functions to deliver greater insights and value.

A recent Gartner trend report for 2017 underscored the need for bold innovation, the ability to navigate the fast-paced waters of technological change and the pursuit of higher quality, forward-looking information. Continue reading

Setting Goals, Meeting Targets: KPIs for the Win

qualityIt’s a fierce business world out there. The stakes are getting ever higher, with growing competition and an increasingly integrated landscape. It’s essential that companies have key performance indicators (KPIs) that can help drive operational improvements, accurately assess performance across all levels of the organization and deliver long-term value.

The only way to achieve all that is to have an effective process for selecting and monitoring KPIs.

The KPI Uncovered

These indicators show how a company or group is performing on its goals, measuring specific activities against a set target or benchmark. Remember, if a measurement doesn’t directly influence the achievement of business goals, it’s not a KPI; it’s merely a metric. Continue reading