An engineering and environmental consulting firm recently sought to evaluate the effectiveness and efficiency of its accounting functions, including its organizational structure, business processes and procedures, controls, business intelligence and use of technology relative to overall objectives. During the past seven years, the firm’s revenue had increased four-fold, making its profitability among the highest in the industry.

Despite its success, the firm’s management recognized that its accounting and finance function was not providing the level of support to effectively run a large firm. Though the company had no debt, average DSO exceeded 100; WIP was also excessive, and it took more than 45 days to create a receivables invoice.

By applying lean management methods, substantial restructuring was implemented, and process improvement and technology recommendations were made to streamline, automate and eliminate tasks where appropriate. These changes impacted the firm’s operations significantly, including:

• Transferring $250 million in overhead to operations, a portion of which would be recovered, as the positions that were shifted were expected to be 40 percent billable.
• Implementing consistent reporting through dashboards and eliminating a $60,000-per-year staff accountant who spent most of his time creating custom reports.
• Reducing the billing cycle and DSO by approximately 10 days, for a positive cash impact of more than $3 million.
• Generating an estimated positive cash impact of between $900,000 and $1.5 million by developing a standardized project set-up process to improve budget tracking and reduce the number of draft invoice revisions associated with moving and reclassifying time.

Related: Bottom Line: Lean Management

David Rubin is a J.H. Cohn principal and co-director of J.H. Cohn’s Performance Consulting group. He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or 877-704-3500.