Do your business processes make you want to throw up?
I recently had a meeting with a member of the leadership team of one of my clients. During this session we took a look at one of the process guides I drafted for them. This guide provided step by step instructions on how to enter information into the accounting system to generate a customer invoice and then send it out. When we got through it, that same member jokingly told me they were happy to continue the discussion but needed a short break to go and throw up.
Why did they feel this way, you ask? Basically, this process is exceptionally long. To be specific, this process has 30 steps and involves the use of three different software systems. It takes way too long and has resulted in a lengthy backlog of invoices to send out. This means that revenue is delayed in being recognized and customers do not pay as quickly. At the time of this meeting, the lag time from completing the service to issuing and sending the invoice was about 3 weeks. This is on top of the standard 30 day payment terms all customers receive. In all, it means my client is waiting at least 6 to 7 weeks to get paid after delivering their service.
Can you see why this is such a big problem?
This systematic design creates an incredible financial challenge. This company is essentially providing supplemental customer financing for free.
The good news is that now we know. And we know this in a clearly documented form so it can be shown to many people without misconception or discrediting the situation to just the ‘usual employee complaining.’ When we can not just hear about process inefficiency, but see it in front of our eyes, it becomes clearer and more real. It also allows us to begin analyzing where we have gone wrong and what we can do to fix it.
Sometimes there are immediate changes that can be made to shorten the cycle, while other times we may need to make a bigger change. In general, there is always a bit of both. I truly believe that these documents make the operational situation more real and easier to understand. In turn, it drives additional motivation to act. And act is exactly what my client is doing. For this case, the firm is investigating new software to manage the invoicing process. While some improvements could be made without this change, they would provide relatively limited benefit. Thus, the decision was made to look at migrating to something better.
Evaluating the new software options will additionally be made easier as we have a clear picture of what the current process looks like, and we can even provide this documentation to the vendor. We can then challenge them to prove that their system will support a dramatically better workflow. If it cannot, finding that out will be much easier.
All in all, developing this document has already proven incredibly insightful and valuable, and we will be building many more of them together.
