Number 175 – Lean Accounting Practices Drive Results

Use and refine lean accounting practices to drive results.

Practitioners: tactical, integrative, and strategic

One of the most impactful endeavors I embarked upon was the study or lean accounting practices.  Educated in accounting, I am familiar with GAAP, and so I was a bit leery at first glance, but Orry Fiume gave me hope for new possibilities in this process.  From Art Byrne’s book The Lean Turnaround and others, lean accounting practices began to show up more and more in my reading and in my own practice.

We might be a bit reluctant to tread this path.  Our accounting processes have been in place for eternity and have changed very little since the beginning, and for good reason.  GAAP is meant to keep us honest and out of trouble with reporting agencies.  As Fiume explains, there is nothing in lean accounting that is counter to any GAAP.  The adjustments are logical and offer efficient processes with effective outcomes that meet the needs of decision makers and GAAP.

Lean Accounting Practices Drive Results

If you are unfamiliar with lean accounting, I encourage you to explore a few titles to learn more and consider the possible benefits of the concepts.  You will certainly encounter resistance from the accounting professionals.  I did, I do, and I will continue to face this resistance.  Invite them to explore the ideas with you.  Orry Fiume is an accountant and would never ignore GAAP, he says so in many of the books in which he is quoted. 

As I help leaders explore and implement lean accounting, decisions are made with information that might have been excluded in the past, only because the changes to the process allow the financial impact of certain choices to be seen sooner rather than later.  One example is the potential impact of month end closing.  Wouldn’t it be great to close the month in four hours instead of two weeks?  It can be done, and it has been done, and all within the boundaries of GAAP. 

Some titles for your consideration:

Practical Lean Accounting – Maskell, Baggaley, Grasso
Accounting for World Class Operations – Solomon, Fullerton
Who’s Counting – Solomon
Better Thinking, Better Results – Emiliani
The Lean Turnaround – Byrne
Real Numbers – Fiume, Cunningham

Questions For Your Consideration

What is the purpose of the accounting systems we use?

How effective are they for internal decision makers?

Would receiving better information in a timelier manner help those decision makers?

What do you know about lean accounting and GAAP?

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