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Why You Should Consider Process Before Product

May 15th 2018
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Whether we’re looking at our own internal workflows or the handoff of information with our clients, we’ve been trained to leap straight from problem to the software that claims to be a solution without any consideration for the most important step: process.

As the industry grapples with the promise (or threat?) of disruptive technologies like artificial intelligence and blockchain, it feels as if we know at least one thing for certain - technology, in some form, will be critical to the survival of our firms.

One of my partners loves to remind me that our problems are never software problems, they’re always process problems. At its most fundamental level, every workflow must have three things to operate efficiently:

  • clear expectations among all parties
  • explicit divisions of responsibility
  • a working communication and feedback loop

That’s all. Process. Technology is highly effective at taking an existing process and automating or streamlining it to eliminate steps and save time. But without process, the smartest, most advanced software on the planet won’t do your firm an ounce of good.

So, before you start searching for your firm’s next software tool to implement, ask yourself: have I solved this workstream’s process problem, first? If not, consider starting with these steps Before making a product decision:

1. Draw the Diagram

Seriously. Process flow diagrams are the clearest way to communicate the steps in a workflow. They eliminate confusion and ambiguity in a way that merely having a conversation about a process cannot.

Some of the best ‘process accountants’ I know start every client engagement by physically drawing process diagrams to illustrate how workstreams operate on Day 1 and they use these flows to make recommendations for process improvements going forward.

To illustrate the point, assume you’re working on a bookkeeping or consulting engagement with a small business client and you want to streamline the accounts payable workstream. Jumping straight to a technology-focused solution, you might suggest such popular tools as Hubdoc and or something similar that you know. However, if you’ve not done the work to truly understand this client’s payable workflow on Day 1 it will be impossible to know how to implement these solutions and unlikely either will have the kind of impact you’re expecting.

Ask how many vendors does your client work with? Are they large, national vendors or small, local vendors? How do vendors submit bills to your client today? How are they reviewed? Approved? Paid? Stored? Who is involved? What segregation of duties exist to prevent misappropriation?

Drawing the steps in sequential order makes answering these questions easy and once these questions have been answered, when, how, and whether to implement technology becomes a much clearer decision.

2. Streamline and Consolidate Steps

Once you’ve drawn out the steps in a process, the inefficiencies or fail points become obvious. Let’s return to our accounts payable example. Does this client, for instance, have vendors submitting bills in multiple ways - e.g. in person, by email, by fax, and by mail? If so, consolidate.

Remember, one of the key elements to an effective process is establishing clear expectations, so in this case, set expectations on how bills are to be submitted to your client. At my firm, we create an accounts payable inbox for each one of our clients that we instruct all vendors to use. This inbox enables us to consolidate items in one central location and it forces those items down the assembly line of subsequent steps we’ve created in our process.

Perform a similar analysis on every step so that you have a sequential process of repeatable steps with designated action owners at every stage.

3. Exception Handle

Now that you’ve got a diagram of the shiny, new, improved process you created for your client’s payable worksteam, you’re ready to start adding software, right? Not quite.

Almost counterintuitively, one key to a great process, at least in a service business, is understanding it’ll never be a perfect process. And so while your solution for each stage might handle eighty percent of situations, you must be sure to design proper exception handling for the remaining twenty.

Returning to our situation above, what will your client do when one of the vendors circumvents your new process and submits their bill by physical mail? Is there one person responsible for sorting the mail, processing the item, and inserting it into your process flow? If so, what are the steps, frequency, and checks?

And then, Technology

Designing a robust process that standardizes and streamlines the ‘average’ transaction while accommodating for edge cases is not an insignificant exercise. But doing so is simply a prerequisite to earning any real return on your software investment.

Once you’re ready to begin implementing technology, approach it with the same level of care and diligence you devoted to the process. Understand how data flows, stage your roll-out in pilot groups, and document clearly the expectations and divisions of responsibility among all users of the software.

The pace of technology in accounting is accelerating, and with it so too is the temptation to blindly adopt the latest shiny tool to stay ahead. By applying a process-first approach to workflow, you position your firm to take advantage of those tools best positioned to drive growth while maintaining the discipline to ignore those that aren’t.

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By Saurabhcloud64
May 16th 2018 06:53 EDT

Thanks for sharing your knowledge

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