My Past Life as Director of Finance in a Management Consulting Firm
(...and the top 3 things that made me lose sleep).
When we talk about management consulting, naturally the first thing that comes to mind are the consultants. For a change, I would like to shine a light on the finance team working diligently behind the scenes. Consultants may be jet-setting around the world to work on engagements, but we responsible for financial management ensure the firm gets paid for completed work, that expenses get reimbursed, and that projects are profitable, every day.
Finance does countless things to support all areas of the consulting firm from budgeting to cash management to financial reporting. The work finance does empowers the firm to succeed and make sound decisions based on relevant data.
If The Consultant Is The Heart Of The Management Consulting Firm, Finance Is The Nervous System.
New to management consulting, I quickly learned that the people on the finance team are experts at making things work. They often do this with little or no investment in the technology that could make life easier. Forget efficiency. These people are masters of the workaround. They know how to get things done NO MATTER WHAT. During my days as Director of Finance I couldn’t help but wonder, what could a team like this do with the right tools and support?
For me, this train of thought led down many paths all ending in sleeplessness, but we did take some significant steps toward fully enabling the finance team during that period in my career. At a very high level, here are the big three along with additional tips that can help you move forward immediately.
Create efficiency and deliver profitability
1. How Do I Decide What Software To Use?
The RIGHT tools are key, so let us be clear from the start. Your business is project-focused. Using financial software that doesn’t speak ‘project accounting’ is a recipe for workarounds, slow monthly closes, and near meaningless reporting. How many have struggled with an enormous General Ledger in an attempt to provide financial reports on different areas of the consulting firm’s business? Maybe it has been necessary to dump information into Excel to manually create project reports? Or perhaps someone spends hours on painstaking, manual journal entries to allocate costs?
This is all entirely avoidable. Start with a project-centric ERP system. Eliminate silos of information by managing projects, resources, and finance from one integrated solution. Here is the approach I took to select an ERP system for our firm, and one I recommend:
- Identify the short comings of your current system(s)
- List the challenges you want to solve with a new ERP
- Involve users in different areas of the firm to align priorities
- Document and prioritize system requirements
- Create a shortlist of project-focused ERP offerings
These may seem like basic steps, but you have to start somewhere. I’ll cover this process in more detail in a future post.
Tweet it: 'If the Consultant is the heart of the management consulting firm, Finance is the nervous system.'
2. How Do I Automate These Nightmarish Workarounds?
Some workarounds are so ingrained that they will live on even after you have implemented an ERP system for your consulting firm. These will take more effort and a certain amount of creative thinking to root out. Start with the worst workaround and simply ask a question. What if? What if there was a better way to do this? Not every idea will be workable, but the point here is to break down barriers.
Continuing to do something because you’ve always done it this way (my most despised phrase) will keep you mired in muck. Step back and map it out. Ask the following questions and start fresh:
- Why do we do this process?
- What is the desired outcome or output?
- Where is the information or input coming from?
- How would we approach this task if we had never done it before?
After answering these four questions map out a new process and test it. It may require configuration in your ERP or it may require an internal behavioral change. Either way you’ll need to spend some time gaining buy-in before you can roll it out. Don’t stop now! Set a timeline to address all your ugly workarounds and create a plan. It’s too easy to get stuck with the status quo without clear deadlines and expectations. Be sure to socialize your ideas and your goals. If you start out with support from different areas of the company, you will move to implementation much more quickly.
Create efficiency and deliver profitability
3. How Do I Provide Truly Meaningful Project Reporting?
Even with years of experience as a financial professional, project reporting was always top of mind for me with my firm. We all know that management consulting firms are a little different than other professional services firms. While there may not be much variance in process or mindset across accounting firms, there can be a world of difference between two similarly sized management consulting firms. This is also why your ERP selection is so important.
A system with enough flexibility is a must or you’ll just be adding more workarounds to deliver project reports.
Start with a blank page and sketch out a prototype In the margins, note down necessary inputs and sources of information Socialize the prototype with appropriate users and adjust Map out the process to make the prototype a reality and note gaps in information, process, or reporting Address the gaps, test the prototype in action and continue to refine the reporting mechanism.
Makes it sound easy, doesn’t it? We can all agree that the real challenge lies in addressing the gaps you noted during the mapping stage. My suggestion is to tackle these as individual problems or stages. Keep refining your prototype report in the meantime and continue socializing the end product to gain support within the firm. If you haven’t implemented or discussed a project-based ERP yet, this could be the conversation that sparks interest. Start working on your ideal project report regardless of where you are in the ERP implementation cycle.
About The Author
Amy Champigny spent more than 15 years working in finance and accounting and most recently she served as Director of Finance for a management consulting group. In 2015 Amy implemented a Deltek ERP and transformed the finance function in her firm.
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