Finance function boosts productivity, and reduces process turnaround time and manpower costs using a structured PDCA-based Lean Kaizen methodology across two major finance processes—Payroll, and Advances & Reimbursements.
Context and Challenges
A global professional services firm was expanding rapidly in the GCC region, with KSA emerging as an important and fast-growing territory. Finance operations—especially payroll processing and advances & reimbursements—were under pressure:
- Headcount in KSA grew by 86% in less than a year; one client alone (Philips KSA) represented 22% of total GCC headcount.
- Payroll processing for GCC/KSA involved multiple entities, banks and approvers, resulting in long cycle times, complex handovers and heavy email traffic.
- Preliminary analysis showed high waiting time, duplication and rechecking; VA ratio for payroll stood at only 28%, with most effort consumed by waiting and other non–value-adding activities.
- In the advances & reimbursements process, value-added time was just 7.1%, with a turnaround time of around 430 minutes, and many approvals and verifications happening in series.
Our Approach
The improvement was run using a structured PDCA-based Lean Kaizen methodology across two major finance processes—Payroll, and Advances & Reimbursements:
Define & Map: Selected target processes and clarified objectives: improve VA ratio, reduce NVA and cut TAT.Collected process data through Gemba observation, interviews and document review. Mapped current-state processes end-to-end on large wall charts for payroll and for advances & reimbursements.
Measure & Analyse: Measured cycle time, waiting time and total TAT for each step and each person involved. Separated Value-Adding (VA) and Non-Value-Adding (NVA) time and prepared NVA Pareto charts to identify the biggest wastes. Conducted MUDA analysis to highlight waiting, rework, motion, inventory of emails/documents and unnecessary approvals.
Improve Future State & ECRS: Used ECRS (Eliminate–Combine–Rearrange–Simplify) to challenge high-NVA steps and redesign the process. Developed Future State Maps for both payroll and advances & reimbursements, with fewer steps, clearer roles and reduced handovers. Converted ideas into a Kaizen Action Plan with owners and deadlines and implemented within days/weeks.
Control & Standardise: Documented new standard operating procedures (SOPs), calendars and checklists for finance, HR and bank interactions. Set up simple TAT and VA ratio dashboards to monitor performance and sustain gains.
Key Strategies Implemented
Payroll Process Improvement
- End-to-end mapping of payroll for GCC / KSA clients, capturing each approval, bank interaction and document handoff.
- VA / NVA time analysis person-wise highlighted that a large share of time was lost in waiting for approvals, confirmations and funds.
- MUDA & NVA Pareto showed a few steps—document checks, multiple approvals, waiting for funds, escalation calls—were consuming the majority of NVA time.
Using ECRS, the team:
- Eliminated or simplified redundant checks and duplicated document reviews.
- Combined approvals where possible and rearranged the sequence to avoid back-and-forth loops.
- Blocked calendar slots (T+2 for 15 minutes) for key approvers to ensure predictable approval windows instead of unplanned delays.
- Clarified responsibilities for follow-up calls and escalation (e.g., assigning specific team members to contact banks and internal stakeholders).
The Future State Map for payroll showed fewer steps (down from 86 to 67) and a streamlined flow with clearer ownership.
Advances & Reimbursements Process
Mapped the current process from employee expense submission through verification, manager approval, treasury actions and final disbursement with baseline: VA ratio 7.1% and TAT 430 minutes. Key improvements included:
- Batching and verification standards using ECRS to reduce repeated verification and re-keying of expense data.
- Role clarity between accountant, manager and treasury, so approvals and payments followed a clean, predictable path.
- Switching more payments from cheque to wire transfer, reducing manual handling and waiting time.
- Updating SRM / petty cash files in a more standard way to prevent rework and searching.
Future state analysis showed a 32% reduction in total turnaround time, with particularly strong improvement (up to 63–41%) in key roles handling large parts of the process.
Results Achieved
Payroll Process
- People involved in payroll were reduced from 14 to 8 (42% reduction), simplifying coordination and handovers.
- Total turnaround time decreased by 47%, moving significantly closer to the target defined in the workshop.
- VA Ratio increased from 28% to 49%, a 75% improvement, indicating much more of the team’s time is now spent on real value-adding activities.
- Non–value-adding time reduced by around 48%, especially on waiting and unnecessary approvals.
Advances & Reimbursements
- Turnaround time was reduced by about 32%, from 430 minutes to around 290 minutes.
- The process saved around 136 hours, with key individuals’ turnaround times improving by up to 40–63%.
- VA ratio moved towards the target of 14.4%, with clearer standards and fewer iterations.