Improving your finance function Kate Sayer and Vivien Ma 15 September 2016

Four steps to improvement Diagnose Plan Do Monitor

Common challenges

Where does the time go? How do you spend your time? Think about your own work – what steals your time? Think about your whole team – what are the things that take up their time?

Where does the time go? Importance Urgency VAT review Budget Preparation for audit Board papers Data protection Processing payroll New chart of accounts Recruiting new finance officer VAT return Urgency Processing Gift Aid Payment run Transferring surplus cash to treasury account Checking new contracts Investigate wrong postings in management accounts

Work of the finance function Decision support Control Reporting Transaction processing Transaction processing – essential, but work we want to achieve as efficiently as possible. It is important to try to find ways of reducing the time taken and cutting out unnecessary aspects. So consider a review of processes, standardising and better use of electronic processes.   Reporting – needs to be useful and relevant to managers and support them in their work. We can also reduce the time spent on producing regular reports by improving transaction processing so that reports are produced straight from the system. Managers should also be able to access information themselves and obtain tailored reports. Control activities - essential work to ensure compliance with regulatory requirements and activities to manage risks. Here we are balancing the risks against the cost of control activities, but need to ensure that adequate controls are in place to ensure completeness and accuracy of records, as well as the prevention of errors and fraud. Decision support – work on information and analysis that helps the organisation to make good decisions adds value. It is easy to ignore this area of work in the short-term, but it damages the longer-term future success of the organisation.

Diagnose Understand where your time goes Get feedback from others Run a survey Talk to team leaders Ask your boss and trustees ‘what’s important to them’ Establish a baseline Number of transactions and efficiency Satisfaction levels from survey

Diagnose Delegation Software upgrade vs change Identify training needs Beware of segregation of duties and line of authority Software upgrade vs change Identify training needs Can we do things differently?

Transaction processing Remove the need to re-key data Scan documents – e.g. purchases Make it easy for others to get it right first time Simplify the nominal ledger – more codes just creates more work everywhere Simplify and standardise Consider outsourcing

Processing transactions Membership fulfilment Outsourcing Processing transactions Whole functions Service Membership fulfilment Finance function Payroll Reasons to outsource Cost savings or at least fix the costs Transfer risk Improvement in service Access to specialised skills and equipment Manage peaks and troughs in workload Thinking about outsourcing Clarify your objectives What problem are you trying to resolve? Will outsourcing solve the problem? Consider where the activity is along the spectrum – where do you have skill gaps? A spectrum – and you can decide where along this spectrum it is appropriate to be, and it may be different for different services. At the end – whole functions – we are saying here that the outsourced function does form part of management and does engage in management decisions. At the transactions end of this spectrum, there is no involvement in decision-making, but simply the execution of tasks.

Reporting Focus on relevant information Spreadsheets – pro or con? What do managers need quickly and regularly? Tailor more to their needs Relate to their responsibilities What happens if you stop producing a report? Spreadsheets – pro or con? Speed vs. accuracy

Control Look at your controls – what risk are they managing? Re-visit authorisation checks – change to test checking Manage by exception – don’t overcheck because of the 1% who get it wrong – work on the assumption that people will try and then crack down on offenders Controls – we often just carry on doing something without thinking about the risk that we are managing. So – think of some control activities – e.g. salaries reconciliation, bank reconciliation, reconciliation between database and nominal ledger for donations income. What’s the risk? Test checking – think about something like expense claims – low value, risk of errors high but each error will probably be low value – so overall risk? Combine with internal audit – visit off-site centres – gain overall assurance

Staffing issues Performance Review roles and responsibilities One to one Feedback Appraisal Review roles and responsibilities Clear job descriptions New roles vs restructuring HR may need to be involved

Plan Involve your team Make it visual – communicate to others too Workshop or awayday Goals, reality, options, way forward Make it visual – communicate to others too Prioritise things that are important to internal customers Set clear goals and action plan

Where do you want to make improvements? Discuss the areas to improve What are your goals? What are the obstacles? Where to start?

Plan Research Discussions with HR Systems changes New software or upgrade Outsourcing Cost vs benefits Discussions with HR

Do Execute action plan Clear communication Project manage system changes/ outsourcing Develop performance measurements Restructuring/rescruitment

Monitor Collate feedback for new ways of working Regular review on action plan

Transaction processing Goals Decision support Control Reporting Transaction processing Work on information and analysis that helps the organisation to make good decisions Essential work to ensure compliance and manage risks. Balance risks against the cost of compliance. Relevant to managers. Reduce time spent by producing reports straight from the system. Managers access information themselves. Essential, but work we want to achieve as efficiently as possible Transaction processing – essential, but work we want to achieve as efficiently as possible. It is important to try to find ways of reducing the time taken and cutting out unnecessary aspects. So consider a review of processes, standardising and better use of electronic processes.   Reporting – needs to be useful and relevant to managers and support them in their work. We can also reduce the time spent on producing regular reports by improving transaction processing so that reports are produced straight from the system. Managers should also be able to access information themselves and obtain tailored reports. Control activities - essential work to ensure compliance with regulatory requirements and activities to manage risks. Here we are balancing the risks against the cost of control activities, but need to ensure that adequate controls are in place to ensure completeness and accuracy of records, as well as the prevention of errors and fraud. Decision support – work on information and analysis that helps the organisation to make good decisions adds value. It is easy to ignore this area of work in the short-term, but it damages the longer-term future success of the organisation.