It is easy for inefficiencies to become the norm, especially during periods of growth. During these times, it’s common to focus on growing revenue, which is important to support your programs; however, there are many processes in your organization that eat up that revenue, and if they aren’t performed efficiently then they can take away from your programs and mission. Do you feel like you have a handle on all your processes, and they are operating efficiently? If the answer is “no” then opportunity exists for you to streamline your processes, increase program effectiveness, and get control of your organization so that you can focus on the things that make you successful.
There are three steps that you can take today that will set you on the path towards process optimization:
Before process optimization begins, you need to understand and document all the processes that make your organization tick. This can be accomplished by creating a procedures memo that walks through the various aspects of your organization. For instance, document your accounts receivable process from the moment the sale or service takes place all the way to the collection of the funds. The procedures memo should document who is involved, the controls in place, the software used, and any timing expectations. It can also be helpful to put this into a flow chart if you like to see things in a visual layout.
You might be asking, “what will documenting my accounts receivable process help me achieve.” It won’t necessarily help you with your gross revenue; however, it may help you with cash flow, which is the lifeblood of any organization. If you are able to bill efficiently and collect funds at a faster rate, you will turn receivables into cash quicker, which may decrease the borrowing on your line of credit, thus decreasing interest expense and increasing funds that can be routed towards your various programs. As you start to walk through all of the various processes in your organization, you will quickly recognize many cost savings opportunities just like this.
Linking Team Members with Specific Tasks
Almost equally important as identifying the processes in your organization is identifying who on your team should carry out the processes that have been identified. Everyone on your team brings a different skillset to the table, and it’s important to match team members with the processes that they are proficient and passionate about. I encourage you to read an article written by a fellow team member called, Are You Getting The Right Tasks Done Each Day?, which will help you and your team identify what you do best, and where your passions lie.
Now that you have identified all of the processes in your organization and have the right people in the right seats, it’s time to focus on optimizing those processes. Start by picking a problematic process, one that you know is a pain point. Next analyze the process, is the process meeting the desired goal? For instance, if you are looking at your accounts receivable process and your accounts receivable collection period is 45 days, and you want it to be closer to 30 days, does your process allow for that? Are there errors in your bills that are causing the delay in payment or is the billing process taking too long so bills are not getting to your customers timely? Once you have identified the goals for each process and redesigned them, it’s time to implement the processes.
The final step is continuous monitoring of the process. In the example used above, the goal was to get the accounts receivable collection period to 30 days, so reviewing this key performance indicator monthly will help ensure that your process is working and operating efficiently.
Settling for inefficient processes does not need to be the norm. Take charge of your organization by identifying your processes, link processes and tasks to team members’ proficiencies and passions, and monitor processes to ensure that they remain on track and are producing the desired results. If process optimization isn’t the highest and best use of your time, consider outsourcing that task. Contact Forge Financial and Management Consulting to lean how we can help you with process optimization.