October 17, 2011, 5:42 PM — In just four months on the job, Robert Fetterman, vice president of finance with the Oneida Indian Nation, based in Verona, N.Y., has chopped 20% off the time required to complete what's come to be known as "the last mile of finance." And he's not done yet. At two previous companies, Fetterman was able to slash the function from 10-plus days, to fewer than three.
Achieving these reductions is akin to a manufacturer streamlining its cycle time, Fetterman says. While conventional wisdom had held that more time on the process equals higher quality, Fetterman has found that the opposite often holds true. "When you reduce the cycle time, you improve accuracy and cost because you have a more disciplined process," Fetterman says. It also frees up the finance staff to work on higher-level projects, he adds.
The last mile of finance typically refers to "the activities that take place from the time a transaction is captured until the reporting or regulatory requirements are fulfilled," according to Bob Pritchard, vice president of North American sales and marketing with software technology provider Trintech Inc. This can include transaction verification, reconciliations, journal entry and exception management, among other tasks.
Completing these jobs accurately is key, says John Colbert, vice president of research and analysis with BPM Partners Inc. "The risks of dropping the ball in the last mile can be significant." Errors made by publicly held companies can mean having to restate results. For private companies, mistakes can put them in technical default on loan covenants, among other problems. And for either type of firm, of course, an erroneous management report can lead to all osrts of sub-optimal decisions.
Overlooked So Far
Even so, until recently this area often has been overlooked, as many finance departments focused first on automating such other processes as transaction and payroll systems. After closing the general ledger, the processes "kind of explode again," says John Gimpert, partner and national leader, finance transformation, advisory services, for Deloitte & Touche LLP. Finance areas that used automated systems mainly for other, earlier functions often find that they need to develop volumes of one-off worksheets for analysis and reporting at the end of things.