Magazine article CMA - the Management Accounting Magazine

Benchmarking the Finance Function - First Results!

Magazine article CMA - the Management Accounting Magazine

Benchmarking the Finance Function - First Results!

Article excerpt

Some good base-line measures from this study can prevent you from re-engineering the wrong things.

Right now, we are in the midst of business process re-engineering to become more cost effective. If we don't get a .good handle on our costs and processes, we may end up changing the wrong things. Some of our senior executives are enthusiastic about the Balanced Score Card and we are trying to revive a stalled ABC project."

Sound familiar? These were the scene-setting words from Larry Hofmeister, CMA, senior financial policy officer with the Farm Credit Corporation in Regina, Saskatchewan. His was one of the first organizations to complete the CMA Finance Function Benchmarking study. This study, a collaborative effort between CMA Canada and The Hackett Group, includes an extensive 750-question survey covering 29 processes in the finance function. Answers to these questions are compared to a database of like responses from 1,100 North American organizations This provides useful insights for participants about whether there is room for improvement in a range of areas from core transaction processes, to control and risk-management, or decision-support processes.

There are very clear process best practices that are worthy of emulation. Some common characteristics among the top performing organizations include:

* Simple finance processes utilizing best practices.

* Consolidated routine processing, maximizing scale economies.

* Streamlined systems infrastructure.

* Elimination of duplicate data capture and reporting.

* Team-based finance organization structure.

Farm Credit Corporation (FCC) is a federal Crown corporation that provides financing and specialized financial services to Canadian farming operations, including family farms and small- to medium-sized agribusinesses. It is Canada's largest agricultural term lender, and has some 27 CMAs, CMA candidates and students on staff. FCC was one of five organizations to participate in the first Canadian Finance Function Benchmark Study kickoff meeting in Toronto last October.

"Completing the survey took a lot of effort from a lot of people," said Larry Hofmeister, "but we're proud to say that we were the first to complete the process. We found that the hardest part came in reconciling our view of our organization to the definitions that are a necessary part of the Benchmarking Study. Because we are a lending organization, many of the processes we view as a part of finance are treated by the benchmarking definitions as being part of operations. Once we got our heads around that, the rest of the process was relatively painless. …

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