Key Performance Indicators (KPIs) are a set of quantifiable measures that a company uses to measure their performance over time. In the finance department, senior managers and executives always look at their bottom line.
The KPIs set in finance departments are always attached to money – expenses, net income, and revenue. Understandably so, this is because the finance department is paid to track, monitor, and analyze the flow of money in and out of the company. Makes sense, right?
If we take a closer look at how Financial Controllers, senior accountants, accountants or finance analysts work today, it is rather disturbing that much of their time is spent on generating and compiling reports rather than analyzing what the reports actually mean for the business. This isn´t because they dislike analyzing but simply because many finance departments have not modernized the way they do things to increase their efficiency.
Nonetheless, when we look at the generated finance reports from an operational perspective there are several criteria that must be factored in more than just revenue generation such as work volume metrics, work quality, cycle time or process metrics. These metrics are most often overlooked by senior managers because they are intimidated by the complexity of implementing these metrics within the department.
Here are the top 3 operational KPIs that are important for the finance department:
- Reports produced per employee
This simply means the number of reports created and managed by an employee in a given time frame. This operational metric is a classic productivity metric that tracks down to individual level. This metric together with finance report error rate enables the management team to identify the high performing and low performing personnel. This can be very good to have during the annual performance review as these present an objective and fair assessment rather than subjective ones that are highly disputable and unfounded.
- Finance Report error rate
This is the percentage of financial reports produced that require corrections. As a CFO or finance manager, you want to have a low error rate because financial reports that are marred with errors will give the company a lot of trouble with regulatory bodies, it will require rework and increase expense of the finance function. Consequently, increased expense leads to reduced net income for the entire business.
- Number of days to close
This is the number of days it takes for the finance team to close the books and create the final reports that are then submitted at the end of the accounting period. As many finance departments are aware, faster closing of the books means more timely response and adjustments in the business.
This is an important metric to have because it gives the company an idea of the fiscal cycle time on a departmental level from start to end. Small companies can close books in just 1 day, the high performing ones close in 5 days, and mid-level performing companies close in thirteen days or longer.
If you want to implement KPIs, dashboards or simply automate the entire fiscal cycle in your organization from budgeting, planning to forecasting to reporting and consolidating, Performance Canvas Financials can help.
Performance Canvas Financials (pcFinancials) is today´s most modern and intelligent automation of finance processes. pcFinancials has native Microsoft Excel interface which makes learning the tool instinctive. Be sure to check out www.performancecanvas.com to learn more about this solution or email us at firstname.lastname@example.org to see a free demonstration of the product online.
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.