I have been writing about performance measures for more than 20 years. In all that time, I have only witnessed minimal advances in the way companies go about using them. All too often, the assessment of measures are treated as an afterthought.They are regarded as a box-filling exercise to demonstrate that we have achieved a […]
There is a major problem with reporting. The writers often do not understand enough about the science of reporting. In addition, too many reports have been prepared monthly, which is far too late for prompt action. The reporting framework used in an organization must accommodate the requirements of the different levels in the organization board, […]
Many organizations that have operated with key performance indicators (KPIs) have found the KPIs made little or no difference to performance. In many cases this was due to a fundamental misunderstanding of the issues. Organizations often begin to develop a KPI system by immediately trying to select KPIs without the preparation that is indicated in […]
The accounts payable team is one of the most important in the accounting function. However, many APteams are stuck in the dark ages, which means:* monthly accounts cannot be prepared promptly, as AP is buried under a tsunami of invoices* budget holders are unnecessarily tied up in authorising and approving all transactions– no matter how […]
Many performance measures are created from a flawed process. Frequently the task of finding measures is carried out at the last minute by staff members who do not have a clue about what is involved in finding a measure that will create the appropriate behavioral response. Chapter 12 looks at common reasons why organizations get […]
The average cost of a whole purchasing cycle is estimated at £30 to £40 per transaction. This cost is horrific when you realise that a high portion of your transactions is for minor amounts. The diagram to the right shows a typical profile of accounts payable(AP) invoices. Read More
The one sure thing about annual planning is that it will be wrong – its underlying assumptions have been flawed since LucaPacioli invented double entry bookkeeping in 1494.This article completes my look at the foundation stones of rolling planning, a more useful alternative. Read More
It is vital to generate realistic forecasts rather than forecasts that the board or senior management wants to hear. The board might want a 20 percent growth in net profit, yet management might see that only 10 percent is achievable with existing products, customers and capacity constraints. If the forecasting team reports what the board […]
Many companies are working with the wrong measures, many of which are incorrectly termed key performance indicators (KPIs). I believe it a myth to consider all performance measures to be KPIs. From my research over the last twenty five years I have come to the conclusion that there are four types of performance measures:
1. Key […]
To what degree has your finance team embraced the LEAN movement? – Invitation to attend a webcast run by ICAEW.
Join David Parmenter for a webinar on 9 October, 2014 at 9:00 AM (GMT). There is a small cost of non-members.
LEAN has now been embraced by accounting functions around the world. LEAN has not only re-engineered […]