Lean Accounting

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Lean Accounting Summary
As companies grow, they continuously look for ways to save on costs, be more productive, and overall be more efficient. Many companies are starting to implement lean accounting. The traditional accounting method focuses mainly on reducing costs and creating increased shareholder value, whereas lean accounting is mainly focused on increasing capacity, creating more customer value, and reducing the amount of waste. Successfully changing the accounting system within a company can take a considerable amount of time and resources, and does not come easy. The article discusses that there are six main reasons why traditional accounting procedures should change. The six reasons are: the wrong measurement, the wrong costs, better decision making, understandable information, complex systems, and focus on customer value. There is a lack of simplicity within traditional accounting methods. The complex reports can create confusion within the company’s leaders. There are three primary methods used in lean accounting. The first method is visual management. Through the transfer of information, visual management focuses on reducing unnecessary transactions, performance measurement, and box score. The second method, value stream management, helps identify the benefits from lean accounting, value stream costing, and provides information to help guide decision making. The last method is continuous improvement. Within this method, a company can set target goals and focus on creating greater efficiency between the operations within the company. In order for lean accounting to take place and be successful, there needs to be active participation of executive management, lean thinking throughout the entire organization, investment in lean transformation, and patience and tenacity throughout the company’s leaders. Lean accounting generally does not provide short term financial benefits. It may take several years to see the cost savings but if...
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