P&L Statements with Lean Accounting-

Companies implementing lean production system must implement lean management accounting to achieve sustained operational improvements and financial results.

?Lean Accounting is a robust accounting system that addresses the needs of internal as well as external stakeholders and provides a clear picture of the company’s financial performance that is understood internally by functional managers in production, assembly, quality control, sales and marketing, finance and accounts, design and R&D, PPC, procurement, and logistics and so forth.

?The accountants under lean accounting simply make two P&L statements, one for internal use and one for external use, or one production based and other based on current practice as per GAAP for external use by banks and for compliance with statutory authorities with a few journal entries both serving their purpose to respective stakeholders by sharing relevant and comprehensible information.

?This will be revolutionary for the large companies.

?But the biggest challenge in lean accounting lies in convincing the finance team in the company about the meaningful information lean accounting enables them to share. They feel that they are asked to do something illegal when they change the format of P&L. But how would a P&L statement that still uses true data without manipulation lose its integrity?

?Each team in the company must be sensitized about internal costs, and the numbers in a P&L statement should be interpretable by teams so that cost reduction and capacity generation opportunities can be recognized.

?What is being stressed here is that finance and accounts should shift their focus to internal processes to become familiar with them and to collaborate with the functional managers to jointly bring internal improvements through implementation of lean production system and lean accounting.

?The company does not have control on market prices, but the marketing team can make efforts to solicit price increase for the negative contribution products as per the new knowledge gained from lean accounting and decrease in cost of production will leverage negotiations for veering in the business from competition.

?Financial parameters get better if operational parameters get better. If operational scorecard is achieved, financial scorecard will definitely be achieved.

This and much more is in the “The Lean Business Guidebook – How to Satisfy Your Customers and Maximize Your Profit?”?Authors-MJS BINDRA and EKROOP KAUR with 482 pages, 78 exhibits in 18 chapters. The recommended methodology can be suitably modified for use in your company for implementing Lean Accounting.

?Published by Routledge: Taylor & Francis Group: Productivity Press: New York NY in paperback, Hardback and eBook.

?Please order your copy on the Links shared below: Routledge,: https://lnkd.in/dNXXe_S4; Taylor and Francis: https://lnkd.in/dFjP5sKC;

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