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Finance Keeps Cranking Away

When cost pressures reach finance departments, small improvements go a long way.

With recession starting to slice into sales of his firm’s flagship software suite, Adobe Systems CFO Mark Garrett looked for ways to cut costs. In the end, Adobe trimmed capital investment, combined departments, and reluctantly laid off about 600 employees, around 8 percent of its workforce. No department was spared, including finance.

Garrett proceeded with extreme caution. No amount of savings would match the penalties for a slip in accounting procedures. Amid companywide efforts to stretch resources, an errant bit of financial data could spell big problems. “It’s very difficult to stop doing things in finance,” says Garrett. “There are certain things we just have to do to run the business from a compliance standpoint.”

In crisis lies opportunity, says Mark Schmeling, the CFO Advisory Services practice leader at Archstone Consulting. This is a good time to identify inconsistencies, bolster weak controls, and maybe even jettison superfluous activities. For the most part, however, improving operations within finance will be an exercise in fine-tuning rather than a matter of discovering huge savings opportunities. These days it’s a rare department that has much fat to cut. What follows are several concrete steps that companies have taken to meet the ever-popular and recently reemphasized goal of doing more with less.

Consolidate Services
In their quest for greater efficiency, more finance departments are looking to rationalize their use of shared-service centers. Payroll, T&E, accounts payable, and other basic services have long been centralized or consolidated in some form. Some companies are now preparing to move a wider range of accounting and finance functions under fewer and more-centralized roofs.

Until last year, Adobe handled most accounting and finance support in 11 global offices. “That just wasn’t the most efficient way to do it — it wasn’t as scalable as it needed to be,” says Garrett. So the company consolidated payable processing, general ledger, and statutory accounting in three regional service centers. A location in the United States handles North and South America; Dublin handles Europe, the Middle East, and Africa; and Singapore now supports Asia and Australia.

Trimming the number of service centers forced Garrett to scrutinize the way Adobe manages finance and accounting. He found ways to standardize the monthly account-reconciliation process, streamline month-end accounting and accruals, and tighten standards on expense-account approvals.

Adobe’s efforts are aimed chiefly at holding down costs as the company grows. That benefit is material, says Garrett, but hard to calculate. A more efficient finance department also sends a vital signal to other areas of the company that everyone must rethink the way business gets done.

Wider use of shared services can trim finance-department costs by as much as 15 to 30 percent, says Stephen Lis, who heads KPMG’s Business Performance Services practice. But the degree to which savings can be achieved depends upon the degree to which shared services have already been applied. 

Optimize Resources

In 2008, executives at Duraflame reduced the company’s staff and trimmed its administrative costs by an undisclosed “double-digit” percentage. “There was no silver bullet, no single thing that was particularly significant,” says CFO Matt Connors. “But the sum of all of [the changes] had an impact.”

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