Lean Accounting for Profit Focused Improvement

Lean Accounting is an effective tool to improve bottom-line profitability. It provides a profit-focused accounting approach to streamline business processes both on the shop floor and in the front office. My approach to a lean transformation is utilizing these methodologies in conjunction with my Effective Change Management program and change management methodologies to effectively blend the lean concepts into the culture of the organization.

Concepts of Lean Accounting

Lean accounting eliminates and minimizes accounting transactions so that key information is available faster. Actual costs are utilized on a direct costing basis to provide profit contribution that provides faster and more accurate data. This enables companies to increase sales because they have access to better information more quickly than traditional accounting systems.

Value Stream Costing

Process flow is mapped using value stream analysis to gain insight on the most effective and efficient use of business processes. In conjunction with this technique, I employ continuous improvement and target costing to achieve target profit margins that produce maximum profitability in addition to providing customers with the quality, price, and service they demand.

Front and Back Office Processes

One of the primary benefits of lean thinking is to transform office, accounting, and other overhead business processes. This represents a significant opportunity to improve profitability and contain costs in a recessionary environment. These steps don’t necessary involve capital expenditures for technology. Some basic business process improvement techniques linked to lean principles can dramatically streamline the office environment with significant cost savings and improved efficiency.

I utilize the principles of the Toyota Production System to streamline office workflow through the application of "best business" and process management. These techniques are utilized to produce a zero defects accounting environment and achieve greater productivity.

Lean Performance Measurement

I have developed a wide range of lean performance indicators (financial and non-financial) strategy focused measurements to enable lean thinking and monitor the results of the lean initiatives. My profit focused accounting approach utilizes activity-based management and analysis as well as the Theory of Constraints. This is actually a component of Building Business Value for increasing shareholder value in contrast to quick fix attempts that fail to solve root causes of problems.

Benchmarking and Industry Analysis

I utilize Profitcents analytics to thoroughly document and analyze business performance and compare with data from similar companies within the same industry. I combine financial analysis with strategic and operational assessments to provide businesses with the advice and recommendations they need to grow their business and improve profitability.

Give me a call to schedule an initial consultation at no charge to determine how lean accounting can benefit your company. My book Profit Focused Accounting provides a thorough discussion and explanation of the lean accounting and management techniques and methodologies used to advise clients.