Keeping an Eye on the Money: Streamlining Data & Departments

Who has a hand in your company’s financials? Do you know where the money goes? Even though accounting departments are not revenue-generating, their work can be done more effectively with increased visibility and processes that are designed to streamline the flow of data and information among the field, office, and project management.

Rather than looking in the rearview mirror to identify what has happened in the past, this article introduces a means of increasing company-wide visibility to improve the future by allowing more time to detect anomalies, recognizing explicit processes and procedures, and understanding where time is spent and if it’s transferring value to the customer before moving to IT solutions.

Review Processes to Prevent Risks

It’s important to frequently evaluate “what you do” vs. “what you should do” to help prevent future risk. Consider companies that require two signatures before sending checks to prevent any one person from signing an unauthorized check. While this process has been in place for years, electronic banking has changed how companies transact payments via automated clearing house (ACH) — two “signatures” are no longer needed for approval. So, how do the two signatures make sense when electronic payments are more common in the same company?

In one recent example, vendors were emailing invoices to a contractor that was assigned to a job-specific purchase order (PO), which was not tied to an ending dollar amount or bill of materials. This PO was increased unilaterally by the accounts payable person, who was also responsible for reviewing the monthly invoices, reconciling the statement, and then paying the vendor online — without any additional checks or balances. Often, the approval step was time-crunched and occurred later in the process, so pressure to pay timely trumped ensuring the correct payments were being made.

The situation came to light when the project manager (PM) noticed that there was a double payment for fixtures during a review of material cost overages after the job ended. An evaluation of processes revealed that this gap needed to be corrected.

Exhibit 1 shows the key premise in Agile Construction® where increasing the speed of detection allows the organization or function more time to correct.1 Waiting until the check is written — or the moment when electronic payment must be made — is too late in the process and doesn’t allow for time to correct issues found in the payables process. Moving reviews closer to the time of spend/commitment helps detect errors quickly and provides sufficient time to adjust invoicing errors.

This company used a deployment flowchart to investigate its internal process. The steps of the process were written down, the roles of who performed those steps were documented, and, most important, “swim lanes” were used to evaluate the workflow and information in the current process (Exhibit 2). By using these lanes to evaluate the workflow within the initial deployment flowchart, the team could quickly see that the approval of the invoices was happening too late in the process.

As a result, a weekly check of material spend on the job was implemented as well as approval by the PM before the invoice was added as input against the PO (Exhibit 3).

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