 How we helped a company's finance department operate more efficiently |
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| Training and consulting company with 1,700 employees in Canada and the US |
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| Process issues with invoicing, payroll, payables, receivables, financial reporting, and how IT was being used to support business operations |
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| Review of the key business processes within Administration Services (payroll, invoicing) and Finance (management and statutory reporting, accounts payable, and accounts receivable), as well as an assessment of the organizational structures |
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| More than 80% of recommendations were implemented leading to significant improvements in the areas of working capital, financing reporting and internal controls |
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Company |
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Our client provides quality training and consulting services to its customers, including inspection, quality engineering and training.
Its headquarters are located within the Greater Toronto Area, with approximately 1,700 employees. Regional warehouses throughout Ontario and the U.S. support the operations in each sector.
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Issue |
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After a period of rapid expansion (over 200% increase in gross revenues in the two years leading up to our engagement), our client was facing organizational challenges.
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The fact that the company was profitable only masked the emergence of underlying issues with people, organizational structure, process and technology. |
The CEO identified the Administrative Services and Finance groups as areas of concern. He believed there were process issues with invoicing, payroll, payables, receivables, financial reporting, and how IT was being used to support business operations. Management was also considering international expansion.
Specifically, the client organization was experiencing the following:
- Day sales outstanding were significantly outside the normal range when compared to firms of a similar size, and within the same industry sector.
- Payroll costs as a percentage of revenue, as well as timecard and data preparation error rates, were tracking well beyond acceptable limits when compared to broader industry statistics.
- The financial reporting and close process, including financial statement preparation and management review, was taking three times longer than leading practice benchmarks. Since the bulk of the effort was spent at the transaction level, there was little time for analysis.
- A new enterprise resource planning (ERP) system had been implemented in late 2003, including general ledger, invoicing and payroll modules. However, the implementation consultant was still on site more that ten months after the go-live date.
The scope of the CEO’s concern encompassed all of the dimensions of time (efficiency), cost and quality (effectiveness), as well as the overall control environment.
The objective in undertaking an Operational Effectiveness Review was to develop an action plan to reverse those trends, and to create a solid platform to take the company to the next level as a quality service provider. The review needed to address the following:
- What is best in class for organizations similar in scale and complexity to our client’s level of operations?
- What gaps exist between the client organization’s current state and the best in class state for the Administration Services and Finance function?
- What initiatives are required to address those gaps?
- What is best in class for organizations at the next level, and how can our client move in a measured way toward that goal?
Although management had a number of separate initiatives underway at the time of our review, their objective was to create an integrated strategy for change. PricewaterhouseCoopers’ final report needed to go beyond recommendations and include a suggested timeline for implementation to make this strategy real.
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Solution |
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The primary focus of this engagement was a review of the key business processes within Administration Services (payroll, invoicing) and Finance (management and statutory reporting, accounts payable, and accounts receivable), as well as an assessment of the organizational structures. These were considered as supporting elements to the development of a strategy that would enable better business decisions and drive improved operating results. Since the scope was broad, the depth of the review was consistent with a diagnostic approach, which means it focused on identifying process bottlenecks and control weaknesses.
PwC conducted interviews with the process owners, key stakeholders, and the ERP implementation consultant, and leveraged the benchmarking and best practice resources of Global Best Practices®, PricewaterhouseCoopers’ proprietary knowledge base. Although not directly in scope, the IT function was included in the discovery process, since it was a key enabler to the processes under review.
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PwC took a holistic view of the company’s issues, and examined not just the administration services and finance groups in question, but how they related to the company as a whole. |
We assembled a team with a combination of technical expertise and industry experience, who could understand the issues that were unique to our client and put them into a context that was relevant to where the company wanted to go in the future.
Our strategic methodology is based on our proven global PricewaterhouseCoopers Performance Improvement through Benefits Management (PITBM) methodology. The PITBM methodology has helped many of our clients improve their performance and service levels, and focus organization business outcomes and measures. It guides an organization through the tasks and activities needed to achieve successful process improvement and the realization of planned business outcomes and benefits.
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Benefits |
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PricewaterhouseCoopers’ team of seasoned advisors provided our client with pragmatic and implementable recommendations that the company can and is using, and the tools to take them forward. Based on recent follow-up discussions with our client’s management, over 80% of the recommendations coming from our review have been implemented, with plans to implement the remainder in the near future.
Our client's President and CEO wrote to us after the engagement was completed to provide the following feedback:
"The professional approach of the expert staff assigned to this endeavour played a key role in ensuring detailed information was correctly gathered, reviewed and clearly documented with little or no disruption to daily operations."
"The team demonstrated the ability to grasp the dynamics of our industry in a relatively short period of time. The recommendations as a result of the review were well received and have been extremely helpful."
"It is without hesitation that I recommend the services of this team for a similar Operational Effectiveness Review."
