By function: finance
Kaizen for finance and accounting teams
In short
Kaizen for finance teams is the habit of removing small, recurring wastes from accounting work, such as payables, expenses, reconciliations and the month-end close, one change at a time, made by the people who do the work and checked afterwards to see whether the change held.
Finance work repeats on a calendar, which makes it a good place to start: the same friction returns every week or every close, and the next close shows whether a change worked. This page lists the frictions finance teams meet most often, names the waste behind each using the 8 wastes of Lean in office work, and works one of them through a 5 Whys to a countermeasure.
Eight recurring frictions in finance, and the waste behind each
| Friction | Waste | First question to ask |
|---|---|---|
| Supplier invoices arrive without a purchase order number and wait while someone finds out who ordered | Errors and rework | What would have to be true for the invoice to arrive complete? |
| A journal entry waits for a second approver who is out until Thursday | Waiting | Which entries does the second approval change, and which never? |
| Sales figures are exported from the billing tool and loaded into the ledger by hand every Monday | Handoffs | Why does this work live in two tools, and does it have to? |
| Unmatched bank and card transactions pile up until the last week of the month | Backlog | What stops each one being cleared the day it arrives? |
| Nobody is sure which budget file is the latest, or who owns a cost centre | Searching and switching | Where is the one place this lives, and who keeps it current? |
| A weekly cash report is still prepared although the people it was for now read a dashboard | Work nobody uses | Would anyone ask for it if it stopped for two weeks? |
| A new customer's details are typed into the billing tool and again into the ledger | Extra steps | Does anything downstream need the second copy? |
| A qualified accountant spends close week chasing colleagues for accrual confirmations | Skills not used | Which part needs their judgement, and which part is chasing? |
The label matters less than the question beside it. A friction usually shows more than one waste; pick the one whose removal would make the others disappear, then ask why it happens.
Where a finance team should start
- Pick a friction that returns on a fixed rhythm (every payment run, every close) and that one or two people carry. It will come round again soon enough to test a change.
- Follow one real item, not the procedure: one invoice, one claim, one reconciliation, from the moment it arrived to the moment it was done, noting where it sat. The lesson on lead time vs process time shows how.
- Write the problem as expected against actual, with a fact and no built-in solution, as in how to write a problem statement.
- Ask why until the answer is a process, a policy, a tool or a missing owner. Then ask whether the step should exist before improving it.
- Change one thing, and judge it at the next close and the one after. A month-end is a ready-made check.
A worked 5 Whys from accounts payable
The chain below takes the first friction in the table from symptom to cause. It uses four whys, not five: the number is a habit, not a rule, and the chain stops when it reaches something the team can change. To run your own, the free 5 Whys template has the same layout.
Illustrative example, not a real company.
Problem. Supplier invoices should be paid within the agreed terms. Over the last two payment runs, eleven invoices were paid after their due date, and nine of the eleven had arrived without a purchase order number.
- Why were they paid late? An invoice without a purchase order number cannot be matched to an order, so accounts payable emails around to find who bought it, and the invoice waits for the answer.
- Why do invoices arrive without a number? The purchases were ordered by email, with no purchase order raised. All nine were small, one-off purchases.
- Why were they ordered by email? For a small purchase, raising an order takes longer than the purchase itself: the form asks for a ledger account and a cost centre, which the person ordering does not know.
- Why does the form ask the requester for accounting codes? It was built when only finance staff raised orders. When ordering was opened to every department, the form stayed as it was, and nobody is responsible for it.
Root cause. The purchase order form asks requesters for codes only finance knows, and the form has no owner. People who cannot fill it in go round it.
Should this step exist? The team first asks whether small purchases need a purchase order at all. The controller confirms that they do: the order is what an invoice is approved against. The step stays, and the form changes.
Countermeasure.
- The requester picks what they are buying from a short list of categories; finance maintains the account and cost centre behind each category, per department.
- The order confirmation sent to the supplier states the purchase order number and asks for it on the invoice.
- One named person in finance owns the form and the category list, and reviews both twice a year.
Check. Before the change, the team writes down what it expects: at each of the next two payment runs, fewer than three invoices without a number. It counts those, and invoices paid late, at both runs.
Notice where the chain did not go. "People do not follow the purchasing process" would have been a true statement and a dead end: it names a group, not a cause. The lesson on 5 Whys mistakes covers that trap, and 5 Whys examples from office work has more chains to compare with.
A control is not waste, but not every check is a control
Finance has more steps that exist for a reason outside the team than most functions: a second signature, a segregation of duties, a document kept for audit. Lean calls these necessary but non-value-adding: the customer of the work would not ask for them, yet they must be done. The lesson on value-added and non-value-added work explains the three kinds of step.
The practical test is to find the written requirement. Sometimes the policy asks for less than the team does: a review, where the team performs a line-by-line check; one approval above a threshold, where the team asks for two on everything. The gap between what is required and what is done is where the waste is, and the requirement itself is not yours to remove.
- Ask who owns the control (the controller, internal audit, the external auditor) and agree any change with them before trying it.
- For a step that has to stay, the options are to combine it with another, change who does it or when, limit it to the items that need it, or simplify it. ECRS gives the order to try.
- Do not automate a check to make it bearable until you know it is needed. That is the point of eliminate before you automate.
Templates and lessons that fit finance work
- 5 Whys template: one chain on one page, with a column for the evidence behind each answer.
- 8 wastes checklist: follow one invoice or one reconciliation and tally what you see.
- PDCA template: write the prediction before the close, and the result after it.
- Standard work template: once a change has held for two closes, write down the new way on half a page.
- Lesson: did the fix hold? on what to do when the answer is held, partly or reverted.
- Lesson: measure improvement honestly, on keeping an estimate of time lost apart from time a colleague confirms was saved.
Questions
What is an example of Kaizen in finance?
A small one: suppliers are asked to quote the purchase order number on every invoice, and the order form is changed so that anyone can raise an order without knowing accounting codes. An invoice can then arrive ready to match, instead of waiting while accounts payable finds out who ordered.
Is Kaizen the same as automating the finance function?
No. Kaizen asks first whether a step is needed, then whether it can be made simpler, and only then whether to automate it. Automating a step nobody needs makes the wrong work faster.
Can a finance team remove an approval step?
Only with the agreement of whoever owns the control, and only after reading what the policy requires. Often the requirement is narrower than the habit, and the change is to apply the approval where it is required and nowhere else.
Try it on your own work
Pick one task that wastes your team's time every week. Describe it in a sentence; KaizenProof names the waste, asks why until you reach the cause, and writes the fix. No account is needed to start.