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MONTH END MANIA: TAKING THE PAIN AWAY

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Robert Gothan

Robert Gothan, CEO and Founder of Accountagility

As an event, the month end process is entirely predictable. We know what we have to produce, and we generally know where the raw materials are. Predictability and practice give rise to experience, so we also tend to understand where any potholes lie. It sounds simple, yet month-end, to all but a relative few, remains an enigma. How does a single business process deliver such misery month on month?

It is arguable that the finance function suffers from change overload. With constantly shifting regulation, systems and business requirements, it is easy for every month to feel different to the last. As a result, we risk seeing our processes as isolated events, and of running them as if they had never been done before (re-inventing the wheel each time).

Robert Gothan

Robert Gothan

There is nothing to prevent us from seeing a month end as a manufacturing process, complete with a production line, defect tracking, quality control and formal customer feedback. Ultimately, we all want the same thing – to avoid a “costly” product recall.

So, like every production line, we have to start with the raw materials. The principal feed for our month end is our general ledger (GL), but we will no doubt require detail from other systems.

Quality assurance

In manufacturing, there is always a bad cop with a clipboard who is responsible for quality assurance. If we were to apply manufacturing techniques to our month end, we would always test our process inputs before we relied on them.

As it happens, our month end actually does have quality assurance, but this only tends to happen to the result. The cycle goes a bit like this: the CFO reviews the numbers, spots an issue, the team tries to find the answer, spots the issue, makes a change, and then resubmits. Imagine if a car was developed this way – would you want to drive it?

Some of our reporting problems can be tracked to data issues in our GL or other upstream systems. Obviously it can be time consuming to find and correct these issues during critical path month end time, so we often leave the problem for next month. But having had this experience, the question is: what do we do next?

Some of these issues will recur naturally, while others will disappear. For the latter, we breathe a sigh of relief, and move on. For the former, it can be months before we identify and fix the root cause.

In both cases, however, we’ve missed the point. Our new production line mind-set requires that, instead of waiting for defects to find us, we go and find the defects. Not only that, but we need to track and measure them to determine whether our remedial action is working. It is important to note that a data defect could come back a year later, so these tests must be on-going.

Intellectual Property

Let’s consider that our (considerable) knowledge about the business puts a great deal of intellectual property in our hands. Naturally, we put this to good use during our month end process, but gradually we see the burden of this begin to grow on our able staff, both during information production and review.

For instance, when I review process output, I need to consider whether we checked for all data issues that occurred within the past year (at least). What happens when we take on a new member of staff – what does this mean for the review process?

Consolidations

We should also bear in mind that many consolidation systems now contain “referential integrity tests” within our monthly and quarterly submissions, where, for example, relationships between Income Statement and Balance Sheet account movements are tested.

Our manufacturing process, being completely focused on customer experience, would also aim to detect any defects that may affect downstream dependencies. Fundamentally, the solution to these challenges lies in having an automated diagnosis process that tests your GL data for all previously experienced errors.

Introducing General Ledger diagnostics

A GL diagnostic process should be able to test for a number of standard defects: invalid general ledger codes, for example, product (these may originate from upstream systems), relationships between GL accounts (in other words, did a journal post to the correct accounts?), dimensional combinations (for example, business unit / profit centre combinations) and so on.

There are two groups of tests that are advisable: defect testing and review testing. Defect testing is absolute – it either fails or succeeds. Review testing involves identifying transactions that may not be wrong, yet almost definitely warrant a review. Good examples of this might be postings to other reserves, manual reserve adjustments over a certain threshold, and so on.

Ownership

Tests should be split up into logical units, and should be “owned” and executed by the staff that own the underlying problems, for example expenses, technical processing, intercompany, and so on. We have had considerable success with these processes where they were user-friendly enough for non-technical users to be able to add new tests quickly and easily.

Adding workflow into the mix means that our GL diagnostics can be made an integral part of the month end process. It also goes without saying that if we can automatically spot errors, we can certainly create automated processes to correct them.

An easier month end

With all of this in place, firms are able to run diagnostics at key intervals during the month. By month end, the GL is mostly clear of all known defects, focusing month end critical path time on more valuable activity and reducing the number of reporting iterations.

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Can a leader’s level of enthusiasm and optimism really impact the bottom line?

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Can a leader’s level of enthusiasm and optimism really impact the bottom line? 1

By Mark E. Brouker, Captain, United States Navy, founder of Brouker Leadership Solutions

Can a leader’s level of enthusiasm and optimism really impact the bottom line? We hear of the leader’s ability to influence others in powerful ways in politics, academia, sports, among other areas. However, in business, profitability is where the rubber meets the road.  How impactful is the leader’s level of enthusiasm and optimism in creating a healthy bottom line?

One of the truly remarkable and rewarding tours of duty I had during my Navy career was with a small group of highly motivated doctors and pharmacists from all three services – Army, Navy, and Air Force. These professionals were all hand-picked to join a newly-formed team which was directed to reduce the escalating cost of prescription medications provided for all Department of Defense (DoD) active duty (Army, Navy and Air Force) and family members. Our task was made more challenging because we were to reduce costs without decreasing quality of care. At that time, there were over eight million men, women, and children eligible for prescription medications throughout DoD. The annual cost was over five billion dollars and climbing fast.

Our boss, Dan, was a brilliant, hard-working, and extremely passionate leader who was highly respected by all. Dan cared for us and we cared for him. We were a tight group. We treated each other as family. Dan’s passion was contagious, and he quickly established a culture of caring, hard work and trust. We were poised for success. Because I was senior to other members of the team, Dan selected me to be his deputy.

The idea of creating a small team to bend the cost curve for the entire DoD pharmacy benefit was novel – it had never been tried before. While the team shared a genuine passion for this noble and ambitious undertaking, early wins were few and far between.

After the 6-month honeymoon period ended, enthusiasm was slowly replaced with frustration.  Every morning we’d meet with Dan to share the progress or, more accurately, lack of progress with our respective projects. It was slow and insidious at first, but sarcasm, frustration and pessimism crept into the meetings. A few of the more vocal naysayers would spew their negative venom and Dan and I would make meager attempts to mitigate the damage, or in times of weakness simply join in. These meetings frequently went much longer than scheduled, drained everyone of energy, and were generally recognized to be a waste of time. In short, neither Dan nor I led these meetings. We attended them. One could feel the energy, passion and trust dissipate like air leaking from a balloon.

Mark E. Brouker

Mark E. Brouker

It was clear that Dan and I needed to change our attitudes. We candidly discussed the culture of pessimism that we were creating and, more importantly, how it was sucking trust and the creative juices from the team. Over a handshake, we agreed to help each other curb our negativity and celebrate small victories that were indeed happening. We’d address the challenges, but not mire in them. We agreed to not let anyone hijack the meeting with their negativity.

We were more careful in the words we chose – we rid ourselves of cynical remarks. We were careful with our body language. No scowling or worried looks. Above all, we focused on staying positive. We’d invest a few minutes before meetings to reflect on past successes, however minor, and mention them at the beginning of the meeting. We’d then address the challenges, and close each meeting with a reminder, once again, of past successes.

Frustration and pessimism were slowly replaced with enthusiasm and optimism. Wins starting coming. More wins followed. Within 2 years, our small team was saving DoD over $100 million annually with no reduction in quality. Our small team was recognized within the industry as a center of excellence. Our success was nothing less than stunning.

How did this happen? It turns out that Dan’s and my behaviors had a much more profound impact on our team members than we could have ever imagined. In fact, studies have shown that the leader’s level of enthusiasm and optimism directly impacts their team members level of enthusiasm and optimism. Why is this the case? A study by Gallup found that employees who are supervised by highly enthusiastic leaders are 59 percent more likely to be enthusiastic than those supervised by unenthusiastic leaders.[1] In other words, the leader’s behaviors, in this case optimism and enthusiasm, are contagious. Further, studies have indeed shown that businesses led by enthusiastic and optimistic leaders were significantly more profitable than those led by apathetic and pessimistic leaders. [2] [3]

Can a leader’s level of enthusiasm and optimism really impact the bottom line? Unquestionably the answer is yes. The leader’s ability to influence in politics, academia, sports and yes, profitability in business, is profound. Those businesses led by leaders who understand, respect, and embrace the strong correlation between the leader’s level of enthusiasm and optimism as it relates to performance and profits – and most importantly practice these behaviors – are at a distinct competitive advantage.

Be a great leader – lead with enthusiasm and optimism.

Mark E. Brouker, Captain, United States Navy (retired), Pharm.D., MBA, FACHE, BCPS, is founder of Brouker Leadership Solutions, and author of Lessons From The Navy: How To Earn Trust, Lead Teams, And Achieve Organizational Excellence. For more information visit http://www.broukerleadershipsolutions.com/.

[1] Gallup, “State of the American Workplace, 2017.” Accessed February 12,2020.

[2] Michael Bush, A Great Place to Work for All (Oakland, CA: Berrett-Koehler, 2018), 26

[3] Marcus Buckingham, First, Break All the Rules (New York, NY: Simon and Schuster, 1999), 40

 

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JPMorgan to launch UK consumer bank within months

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JPMorgan to launch UK consumer bank within months 2

LONDON (Reuters) – JPMorgan Chase & Co will launch a digital consumer bank in Britain under its Chase brand within months, the U.S. banking giant said on Wednesday.

The bank said the new business had already recruited 400 people and would offer a range of products, including current accounts.

The UK venture will be led by Sanoke Viswanathan, who has been named chief executive. Viswanathan was previously chief administrative officer for JPMorgan’s corporate and investment bank.

The digital bank will be headquartered in London’s Canary Wharf financial district, with customers supported from a new call centre in Edinburgh.

Reports about a likely tilt by JPMorgan at the UK consumer market have been circulating for around a year, but the bank had publicly disclosed few details.

“The UK has a vibrant and highly competitive consumer banking marketplace, which is why we’ve designed the bank from scratch to specifically meet the needs of customers here,” said Gordon Smith, CEO of consumer and community banking for JPMorgan.

(Reporting by Iain Withers; Editing by Jan Harvey)

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European regulator clears Boeing 737 MAX airliner for return to service

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European regulator clears Boeing 737 MAX airliner for return to service 3

(Reuters) – Boeing Co’s modified 737 MAX airliner is safe to return to service in Europe, the European Union Aviation Safety Agency (EASA) said on Wednesday, lifting a 22-month flight ban after two crashes of the jet which caused 346 deaths.

EASA Executive Director Patrick Ky said it had “every confidence” that the plane was safe following an independent European review of changes ranging from cockpit software to maintenance checks and pilot training.

“Let me be quite clear that this journey does not end here,” Ky said in a statement.

“We have every confidence that the aircraft is safe, which is the precondition for giving our approval. But we will continue to monitor 737 MAX operations closely as the aircraft resumes service.”

Regulators around the world grounded the MAX in March 2019, after the crash of an Ethiopian Airlines jet five months after one flown by Indonesia’s Lion Air plunged into the Java Sea. A total of 346 passengers and crew members were killed in the two crashes.

The United States lifted its ban in November, followed by Brazil and Canada. China, which was first to ban the plane after the second crash, and which represents a quarter of MAX sales, has not said when it will act.

Relatives of some crash victims have strongly criticised the move the clear Boeing’s best-selling airplane.

EASA represents 31 mainly EU nations, excluding Britain which formally left the bloc this month. Britain is expected to issue its own separate approval on Wednesday.

(Reporting by Sudip Kar-Gupta, Rachit Vats; editing by Jason Neely)

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