The Operations Shopping List of ideal Finance KPI’s

By Clinton Jones on December 9, 2015

How does your finance group measure up relative to its goals?


This question often presents itself around budgeting time, but in reality, measuring the performance of the finance group is a perpetual activity that is best measured with Key Performance Indicators (KPI’s).

A finance KPI has several objectives that might include:

  • Being a relevant yardstick in relation to organizational goals
  • Trending the performance of a department or group against that KPI over time
  • Exposing management to performance with respect to the KPI against a target goal
  • Informing employees about how their personal KPI’s are aligned or impacting company goals.

Key Performance Indicator - 3d render illustration of text on black chalkboard in a room.If a particular group is having issues with the flow of work, tracking intake duration and completion numbers of events might make sense. However, in alignment with the principles of ‘lean’ or continuous improvement, you want to make sure that tracking specific KPIs leads to operational improvement, or at least track opportunities to re-evaluate business processes, activities and tasks. You also want to improve through-flow, completion durations and quality.

Selecting an appropriate target KPI is critical. All KPI’s should have a  SMART goal in place – Specific, Measurable, Achievable, Relevant and Timely or time-bound.

If a KPI goal is too easy or nearly unattainable, it will have little value to the business.

The overarching goal of a KPI should be to balance the cost against the benefits of having the measure. Keep the KPI target goal realistic and be mindful of any potential negative consequences.

Specific, Measurable, Achievable, Relevant and Time-bound KPIs

A common KPI for finance groups is the number of days it takes to close the books.  If your target is three days, it is considered very specific; if it’s over a range of days, it is less specific and perhaps less useful.

Understand when your close actually happens. Is it when you have reconciled your last account, or is it when you have reconciled your top 10 or top 10% of accounts? It could even be when you finalize your P&L or produce your first trial balance. This is all measurable.

For some organizations, ‘days to close’ is an important KPI – especially if there are downstream dependencies or consequences if the close takes longer than the target duration. Understanding what those consequences is vital to understanding relevancy. If you know that it takes 15 days to close and you have no intent or action plan to reduce the days to close, then why measure it as the target? A target with fewer days to close in this instance, is not an achievable KPI goal.

Reporting the days close more than a month after the close isn’t particularly useful either. You should provide the ability to report on the close day the moment it happens, and your KPI reporting tool and presentation format should come out in a timely manner. Reporting on KPI’s quarterly may even be acceptable if that’s what the goal demands.

Most importantly, if you are planning to report on KPI’s monthly or quarterly, be explicit about the reporting cadence and follow through to ensure your KPI goal is time-bound. If you take too long to advise others that there are delays in the days to close, they have no way of knowing whether or not they need to take remedial or alternative action.

There are many KPI’s to consider, and we’ll explore a few below and add more as we discuss this topic with various Winshuttle customers over time.

Some basic examples to consider:

  • Number of invoices processed as payables in the period
  • Number of payable errors identified, to be corrected or corrected in the period
  • Monetary value of receivables collected in the period
  • Number of collection credits and collections calls undertaken in the period
  • Number of journal entries entered in accounting in the period
  • Number of corrected journal entries entered in the period

These examples could be considered in the context of individual goals or departmental goals.

Defining and assigning these goals will also help understand what the correct ratio of headcount should be, and where you should consider automation with a product like Winshuttle Transaction, or solution like Winshuttle Journal Entry or Foundation workflows.

KPI Risk

An interesting challenge is also the classification of KPI’s. For example, targeting the number of adjustment journal entries may not be a good KPI unless you have granular classification, as there can be some risks involved.

Many adjustments are caused by errors in programmatic interfaces, or behavior in other parts of the organization that Accounting will likely have to fix.

An accountant who targets a drive down of these can avoid having to make a correction, if it would negatively impact a KPI with less manual journal entry adjustments.

Driving towards First Time Correct wins

tcccftcWinshuttle customers have enjoyed tremendous success after implementing Winshuttle Foundation Enterprise with custom workflows in SharePoint, routing documents like MJE requests. In a multi-phased implementation by a major global brand, the First Time Correct MJE KPI moved from 88% using a Lotus Notes based approach to 99%. The value dropped down to 93% after the fourth phase of Winshuttle Foundation Enterprise was deployed, and the same process gained almost 6% performance improvement for the business.

This customer’s journey with Winshuttle Foundation is just beginning, however they’ve already experienced 12.5% in process efficiency benefits just on rework avoidance. This could prove to be a significant value, particularly when high volumes of transactions are executed along with time savings and manual data entry avoidance.

You can learn more about stories like this at the annual Winshuttle User Group conference which, in 2016, will be held in Las Vegas!

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About the author

Clinton Jones is a Director for Finance Solutions Management at Winshuttle where he has worked since 2009. He is internationally experienced having worked on finance technologies and business process with a particular focus on integrated business solutions in Europe, the Middle East, Africa and North America. Clinton serves as a technical consultant on technology and quality management as it relates to data and process management and governance for finance organizations globally. Prior to Winshuttle he served as a Technical Quality Manager at SAP and with Microsoft in their Global Foundation Services group.

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