Choosing what KPIs to measure for the finance department and its finance managers is always a tricky business.
Do you measure KPIs that are important to track but your managers have little influence over? Alternatively, do you measure only KPIs that your finance managers and their teams can directly impact or do you measure both? If you do both, do you have enough time and ability to track them?
At the end of the day finance KPIs are measured to look at the bottom line and to analyze performance.
Many key performance indicators are worth tracking in financial dashboards, but for this article, we will only look at the KPIs that have something to do with financial reports.
- Financial Reports Produced per Finance Employee
This KPI looks at some reports created or managed by a single employee at a specific period, and this is important to track because this is a productivity measure on an individual level. Tracking this alongside another metric called finance report error rate makes it easier to see who your high and low performing finance employees are.
By applying this metric across the entire department, employee performance is fair and comparable, and performance reviews are objective.
- Finance Report Error Rate
You calculate this KPI by dividing the number of financial reports that contain errors and the number of reports created and over a certain period. The percentage from that is your report error rate.
If this figure is low, it means your employee produces high quality work. If this number is high, it means your employee produces poor quality reports. This KPI is important because error-laden reports increase the expense of the finance department which can also lower the net income of the business. More importantly, errors in reports can cause mistrust in the finance function and troubles with regulatory authorities.
- Days to Close
This KPI is the number of days it takes to close your books and to submit the final reports to authorities and the management team either monthly, quarterly or yearly. This KPI covers the period from which the finance team gathers all the the needed information until the consumer of the reports receive them.
This cycle time can range from 1 day for very small businesses to 28 days for large businesses. Best-in-class companies though aim to close their books comfortable within 3-5 days.
- Total Revenue per Finance Employee
This report is the total revenue generated by the company over a certain period divided by the number of finance employees.
While this KPI is not exactly related to the creation of financial reports, we included this because it is a good measure of how a finance team performs against businesses of similar nature based on reconciled dollars. This finance KPI is important because you can then assess how many people you need to process the work by the cash coming through.
Effective tracking of KPIs
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Performance Canvas Financials is a complete and cloud-based FP&A solution. It optimizes your financial reporting, financial budgeting, financial forecasting, and financial consolidation. On top of that, you get an interactive and easy-to-use and understand financial dashboard that will allow you to track the finance metrics that matter.
DSPanel offers cutting edge technology platform for business analytics, planning, and visualization. DSPanel designs, builds, and operates with the end users in mind. Performance Canvas was created by DSPanel to answer the unarticulated needs of the market not addressed by previous available solutions. With Performance Canvas, information is transformed into valuable business insights for the business executives to utilize in their decision-making process. DSPanel currently has over 2500 organizations deploying their solutions.