The purpose of this article is to explain the approach taken by Bolton NHS Foundation Trust's finance department's project to improve its approach to financial reporting. Reducing the time scale for reporting from 15 calendar days to 1 calendar day.
The article looks at how the project was approached both from the technical and cultural change that was required to deliver this innovation in financial reporting. It also reviews and analyses the correlation between the delivery of the project and the improvement in the Trust's financial position, as well as improvements in staff engagement within the finance department.
This paper covers the following areas of this innovative journey to deliver what many thought was an impossible vision: where we started, how the challenge was framed, project approach, supporting mechanisms, audit and assurance, the key to success and the difference it has made, as well as how the learning has been shared.
Reference: B. Roberts, (2016). The difference a day makes: Working day one reporting. Management in Healthcare, Henry Stewart Publications.http://www.ingentaconnect.com/content/hsp/mih/2016/00000001/00000003/art00003
Expert opinion Mark de Poorter
A challenging view
This paper is relevant to (senior) professionals, active at management level within the financial function of medium and large companies, with interest in the latest trends, developments and (technological) capabilities in the field of Fast Close.
Although In daily practice we don’t see much (healthcare) organizations embracing Fast Close and also almost no (profit or not for profit) organization close their books within 1 working day, the claim of the authors is substantiated by an explanation of the approach and the results of the project (see the presentation of the Bolton project).
Delivering a reporting cycle which delivers the full financial statement on the first calendar day requires a strong commitment of the whole organization, and implementation of state of the art ERP and data analytics tooling. Besides the technical aspects it is equally important to change the culture of the organization. Fast Close is not only a financial improvement process; the fundament lies in changing the mindset of all the employees within the organization, starting with those working in the core processes.
Fast Close explained
In my definition Fast Close is the systematic, continuous improvement process that reduces the time span for closing the books and publishing the results of the company. Fast Close can help organizations in optimizing the allocation of resources and satisfying internal and external stakeholders. Key is to not only to focus on accountability (looking back) but also on steering information (looking forward). Many of organizations spend a lot of working days on explaining differences which occurred in the past. Important off course, but to what extend?
This acceleration of closing processes immediately results in high efficiency gains and is often very welcome in an environment where cost reductions are imposed.
By significantly reducing the unnecessary complexity and improving the quality, timeliness and reliability of the delivery processes, a cost reduction of 30% to 50% can be realized. In addition to the direct financial benefits, there are also at least as important "soft" benefits from Fast Close: the financial function is instantly able to deliver provable added value to business departments because less time has to be spent on monthly reporting. There is more time for analysis and customer-specific reports. The image of the financial function and cooperation with other functions in the company improves. In addition, I see that business confidence from external stakeholders such as investors in the business is growing.
Implementing a Fast Close project may seem difficult and time consuming and/ or to be going at the cost of the reliability of the results. A proven change management approach to prevent these adverse effects consists of the use of the 4 aspects of business management which have to be balanced in order to reach the optimum result.
Structuring the closing process as a logistic process, and the use of straightforward principles help to boost the quality of the closing process.
Fast Close tooling
In the last few years we see an immense increase in software which can support the financial function in organizations to optimize their data analytics capacity. It is almost impossible to keep up with the latest innovations and technologies in this area, or to know how to apply these within your organization's financial branch. The latest developments in data analytics, predictive modeling and artificial intelligence have a huge impact on the approach and implementation of process optimizations, like Fast Close.
By using state of the art software and a ditto change management approach, “impossible targets” such as reporting within 1 calendar day, may become reality for every organization.