At one of my clients a number of items that we have been trying to simplify for some time have recently come together. The difference on the administrative side is amazing. We operate with very light staff levels yet we had someone clamoring for “more work”. How often do you hear that?
By simply changing our expense reporting, a task that used to take a full day is now being done in a few hours. What is the value of freeing six hours of time? Some might argue that it is zero because you can’t reduce a full time employee’s salary by six hours and put that money in the bank. Others might take the hourly rate for that employee plus employment taxes, fringe benefits, etc. and multiply by six and argue that is the value. I would look at it completely differently. Those six hours are extremely valuable because it is like rolling a log down a hill. Once you get it going there is a certain momentum that builds. We used (invested, if you will) those six hours in other process improvements.
Next we tackled our invoicing processes and with the help of others in the company, made big improvements. Monthly customer invoicing which used to get completed over several weeks is now 95% complete on the first work day of the month with some minor follow up needed to complete the process. Not only did we reduce the hours used to produce invoices, but because they are sent to customers sooner, we get paid sooner thereby accelerating company cash flow!
Those improvements along with others released enough hours that we were able to spend a few days resolving a customer issue. We used an administrative resource for a project that would have otherwise been completed by services delivery staff that were already over committed. While they couldn’t find a couple of days to fix the customer issue due to other priorities, they were thrilled to find a couple of hours to provide oversight and direction. The result was that we resolved an issue which was causing a delay in payments. The customer was delighted since the root cause was an error on their part and it was actually their responsibility to fix the issue. While they knew they should have fixed it, they just didn’t have the knowledge and time to get it done. They appreciated that we “stepped up” and did more than our fair share. They cut checks for the back payments within days of the matter being resolved. The amount of those checks was at least 20 times the hourly rate calculation mentioned above.
But, of course, it gets better. The hours that we were applying to that on-going problem were now available to deploy elsewhere. I personally moved two monthly tasks off my plate to someone else in the organization now that they weren’t as busy. While the tasks are necessary, the processes were well established and they no longer required someone at my level to complete them. I had been doing them only because there wasn’t time elsewhere in the organization. Anyone who knows me well knows that I hate doing anything routine more than a couple of times in order to perfect the process. This freed my time to work on more strategic issues with the CEO.
Whenever you have the opportunity to simplify a process or remove complexity in your organization, I recommend doing so. Not only will you capture the benefits you were anticipating but you are likely to find hidden benefits as well. The results just might surprise you.
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to
your cash is flowing. know where.®
Ken Homza
Copyright @ 2011 Homza Consulting, Inc.