KPIs in Record To Report

KPIs in Record to Report - The why, The
what, The who & The when
How to measure the performance of your

Accounting Department
Written by Cristina Mihăiloaie on April 6, 2017. Posted in Articles, KPI, Trending
Many companies are facing difficulties in measuring the performance of support functions within
the organization, such as Human Resources, Information Technology, or the Finance and
Accounting Department.
What sets apart these functional areas from sales or production, is the difficulty in capturing the
outputs, or the impact of their work on the organization. It is a common mistake for companies to
focus on measuring what is easy to measure such as $ Sales, % Sales quota attainment, % Market
share, # Production cycle time or # Production output.
However, in order to produce the best results for the organization, a performance management
system should be aligned across the organization, and not isolated around the key functional
areas.
Common KPIs to monitor the performance of the Accounting Department are:
Timeliness:
 # Days to close the books and sign off the month

 # Days to close the books and sign off the year
 # Time to process invoices
 # Time to process transaction /payment
 # Time spent correcting documents or input data per week
 # Payroll processing time
 % Financial reports submitted on time
 % Travel expense accounts processed in three days
 # Days in accounts receivable
Quality:
 % Input errors detected

 % Invoices accuracy
 % Accuracy of transactions /payments
 # Factual errors identified in reports
 # Errors reported by outside auditors

 % Audit recommendations implemented
 % Transaction items requiring reconciliation
 % Collection rate of outstanding amounts
Generic KPIs
 # Internal complaints received

 # Internal customer satisfaction index with accounting services
 % Tasks finalized on time
 % Internal procedures updated
 % Processes optimized
 # Accounting employees to FTEs ratio
 # Improvement ideas coming from accounting employees
 # Accounting employees engagement index
Based on the departmental strategy and the objectives formulated, suitable KPIs can be selected
to monitor performance.
In the case of larger companies, the accounting department can consist of different teams which
manage specific activities: accounts receivable, accounts payable, payroll. In this context, a
dashboard can be used to monitor all the key activities, in conjunction with a scorecard, that will
comprise the strategic objectives and the KPIs.
Some of the KPIs presented above under the clusters Timeliness and Quality, can also be
measured at individual level. For example # Payroll processing time can be different from one
accountant to another and an internal SLA (Service Level Agreement) can be established for this
activity, while also taking into account the qualitative aspect of work, such as # Payroll errors.
By clarifying the role of the accounting function, and establishing a strategy, it becomes more
easily to identify its overall contribution to the organization. Objectives help managers map this
contribution, while KPIs keep them focused on what matters the most for the department.
Accounting done right!
Measuring and managing your accounting department’s performance might not be the easiest
task in the world, but The KPI Institute is ready to help you successfully complete this task, so
that you can always keep track of your finances.
Our Top 25 Accounting Services KPIs of 2011 – 2012 report contains a thorough analysis on the
most popular accounting services KPIs in 2011-2012, selected by the number of views they
received from the smartKPIs.com community.
Accounting services include the provision of accounting, bookkeeping, audit and tax returns
services to both private and public organizations. Also, it can include the provision of advisory
and assistance with financial and fiscal-related issues. KPIs are used to measure the accountants’
expertise, quality of operations and the impact on the clients’ activities.
In addition to this, The KPI Institute’s Top 25 Accounting KPIs – 2016 Extended Edition report
compiles the most popular 25 KPIs used by global Accounting divisions throughout 2009 and
2015. One of the most important benefits that this report brings is an international perspective on
the most popular Accounting KPIs. They provide quantifiable measurement of the main
components that lead to a successful implementation of financial strategies.
If you feel that you need even more information and that the top 25 KPIs are not enough, you can
always get a copy of our Accounting KPI Dictionary, which is a comprehensive dictionary,
useful for both novices and experts alike who wish to better understand the ins and outs of
measuring their accounting department’s performance. Moreover, if you feel that you’d like to
know how to measure and set KPIs for other departments as well, we recommend you get your
hands on our KPI Compendium, which contains information on over 20,000 KPIs used in
practice.

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KPIs in Record to Report - The why, The

what, The who & The when

How to measure the performance of your

Common KPIs to monitor the performance of the Accounting Department are:

 # Days to close the books and sign off the month

 % Input errors detected

 # Errors reported by outside auditors

 # Internal complaints received

Accounting done right!

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