Last week, risk assurance was on the menu at the More Than Money Blog. And while it’s an excellent process for showing you where the business landmines are, you will need financial process reengineering, or FPR, to get you through them. Let’s examine what FPR is, why it is important for your business, and how to implement it.
What is Financial Process Reengineering and why does your business need it?
FPR is simply redesigning business financial processes to reduce costs. For example, maybe multiple parts of your invoicing process are done manually. This could easily lead to bottlenecks, delayed payments, and customer complaints. But FPR can help your business by standardizing workflows, reducing manual steps, and leveraging technology. Then, the invoicing system becomes a value-added proposition, increasing cash flow that positively impacts other business areas.
In a nutshell, FPR improves the reliability of financial information, reduces costs, and utilizes resources in a way that has a positive ripple effect on a business.
How does a business implement financial process reengineering?
Okay, at this point, maybe you are thinking about some processes in your business that could use an overhaul. But where to start?
First, identify an area in need of improvement. Now, you must analyze existing processes and workflows. This part is more difficult because, unless you are a solopreneur, it will involve working with other stakeholders.
From there, develop a roadmap to reengineer the process. Just ensure you have a handle on where the inefficiencies lie. Take your time on this part.
Finally, implement the changes and monitor progress. Like any undertaking, there are bound to be false starts and the need for further refinement. But that’s part of the entrepreneurial process, so don’t get discouraged.
Best practices for reengineering finance functions and workflows
None of the four steps mentioned above is possible without following a few best practices. And the main one is to involve your employees and stakeholders in your process. Keep them informed when you have a concern about a process. Ask their opinion and gain their insight. Ultimately, it will make them feel like they have a voice in your business. And it will help overcome any resistance that always comes with change.
Also, be sure to budget for FPR. Change costs money. There may be long hours and disruptions to your normal business processes. Plan for those in your budget.
Next, get some outside help. Valued mentors and financial process professionals have probably seen similar problems. So, leverage their wisdom and experience. They can tell you how much your wanted changes will likely cost, how to get your stakeholders involved, and even how to leverage technology to make the needed changes.
The Bottom Line
Change is hard, and it can be expensive. But reengineering your financial processes is an investment that can help build a positive team culture, make your business more profitable, and enhance your reputation with current and potential customers. And most importantly, it can strengthen the foundation upon which your business depends. For more information on FPR and how it can help, contact a CPA.