This week’s episodes builds on an idea from Episode 98 Balances are the Inventory of Finance. Where are these balances maintained? Many are maintained in things called ledgers. But they are also at times simply called Master Files.

Finance certainly facilitates accurate recording of transactions. But little reporting is done about transactions themselves. People are interested in balances–something that states a position as of some moment in time. Each individual need for a position–usually every question asked of finance–results in a balance of some kind.

Creating, updating, maintaining, and reconciling all of these balances is the largest costs driver of finance.

If we were able to, like the disruption in manufacturing 20 years ago by moving to just in time inventory, move to just in time balance creation, we would significantly change the cost of finance, and it’s ability to produce the required outputs.

A good measure of progress towards this goal (when we finally get started on it in earnest) will be to measure the reduction in the number of master files maintained in the organization.

This is Episode 209 of Conversations with Kip, the best financial system vlog there is. Literally learn more–about ledgers and financial systems–at LedgerLearning.com

Watch all episodes in order at the Conversations with Kip Playlist