Lean Six Sigma in Finance

Posted by on Mar 15, 2012 in Lean Six Sigma | 0 comments

A couple of years ago, a client did a project in their finance department to reduce the amount of accounts receivable (A/R).  After forming the team and putting the project contract together they pareto charted the past due A/Rs by customer and found that their largest customer accounted for the most past due A/R.  They then limited the scope of their project to this customer.

Next the team brainstormed different reasons for past due A/R and began to collect data.  Again using a pareto chart, the team discovered that unexplained non-payment was seven times higher than any other category.  They then developed a SOP to define actions to be taken to resolve the unexplained non-payments and track the past due A/R by customer.  Much of the SOP focused on follow-up with the customer to resolve any issues.  Within a month of implementing the SOP, >10 day A/R for that customer fell by 92%.

The team learned the following from doing the project:

  • Going through the DMAIC process provided a simplified, disciplined, and time based approach for solving problems.
  • Monitoring control metrics is key to sustaining realized gains.
  • Minitab is a very useful statistical tool.
  • Change is 80% people wanting to change, 20% is using the tools.

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