The Efficiency Deficit
Why finance workflows can consume capacity without producing proportionate governance value - and where process improvement should begin.
The efficiency deficit forms when finance processes consume time, approval effort and reconciliation capacity without producing proportionate control value. The issue is not simply that a workflow is slow. The issue is that the workflow may no longer be calibrated to the risk, scale, system environment or governance purpose it was originally designed to address.
A governance-aligned process is one where every step has a clear purpose: it mitigates a specific risk, produces a specific management output, creates required evidence, or satisfies a defined compliance requirement. Steps that no longer meet that test should be challenged before they are automated or optimised.
The issue usually forms through two mechanisms: first, approval workflows calibrated to a prior risk environment, and second, reconciliation activities maintained beyond their current assurance value.
Process inefficiency in the finance function is rarely dramatic. It presents as friction: a close cycle that takes longer than it should, an approval workflow that requires more senior involvement than the risk warrants, or a reconciliation that exists because two systems cannot communicate rather than because the reconciliation itself produces assurance.
Each source of friction is individually manageable. Together, they create a cumulative drag on finance capacity. The finance team often learns to absorb that drag because no single source appears large enough to justify redesign.
Issue one - approval workflows calibrated to a prior risk environment
Approval thresholds and authorisation chains are usually designed at a specific point in the organisation’s development. They reflect the transaction values, risk profile, control environment and management structure that existed at the time. As the business grows, those thresholds often remain in place even when the commercial context has changed.
The result is an approval structure that may require senior review for transactions that are no longer material at the current scale of the business. The problem is not the existence of approval control. The problem is the absence of recalibration.
An approval workflow should be tested against the current risk profile, current transaction volumes and the current cost of decision delay. If the approval step does not materially change the risk position, it may be consuming governance capacity without adding proportionate protection.
A control that made sense at one scale may become inefficient at another. Governance discipline requires the organisation to know when that shift has occurred.
Issue two - reconciliation processes maintained beyond their assurance value
Reconciliations are among the most useful controls in finance when they compare meaningful sources, identify material discrepancies and support reliable reporting. They are also among the most costly controls when they are maintained at a frequency or level of detail that no longer reflects the risk they are meant to address.
A reconciliation may have been introduced after a system issue, audit finding or reporting failure. If the underlying issue has since been resolved through system integration, stronger master data control or a changed process, the reconciliation should be reviewed. The question is not whether reconciliation is valuable. The question is whether this reconciliation, at this frequency and depth, still produces assurance commensurate with the effort it requires.
The efficiency deficit becomes visible when finance cannot clearly explain why each approval, reconciliation or review step still exists. At that point, process improvement should begin with governance purpose, not process speed.
Where the review begins
- Which approval thresholds have not been reviewed since the business last changed materially in revenue, transaction volume, entity structure or risk profile?
- Which reconciliations exist because of historic system or audit issues that may no longer apply?
- Which process steps consume senior finance or management time without materially changing the risk position?
- Which steps should be removed, recalibrated, automated or retained because they produce necessary control evidence?
If those questions cannot be answered directly, the business may be carrying an efficiency deficit inside its governance environment. The starting point is not to remove controls. It is to identify which controls are still proportionate to the risks they address.
Merixa supports leadership teams in reviewing finance workflows, approvals and reconciliations so that process efficiency improves without weakening governance. Review Merixa’s risk, controls and governance support.