How to effectively categorize these KPIs? Managing accounting key performance indicators from a holistic perspective helps ensure effective management of the entire accounting process. financial end.
Holistic closing KPI
1. Exposure to profit and loss – This metric provides companies with essential data on the profitability and to risks that can affect them. By dividing the impact on profit and loss by the number of reconciliation items, companies can assess the effect of large volumes of reconciliations on the organization’s risk and profit profile.
2. Costs of process – This accounting measure identifies the cost of managing the entire financial process as a ratio of the company’s total income. The use of automation technologies not only allows organizations to reduce resources and overall costs, but also financial services to effectively expand its operations to cope with large volume transactions.
3. Time to close – With this financial KPI, companies can identify how far they reach their target of closing days and how many days they really need. The evaluation of it indicator provides visibility into the near-term financial schedule and helps understand what may be preventing finance and accounting team members from completing their tasks on time.
4. The quality of the fence – The evaluation of this metric is based on the figures found in the previous three KPIs. It gives a strong indication of the quality of the entire financial process, helping to reduce rework and expenses.
Church monitoring KPIs
Analysis of nearby tracking parameters allows financial services and managers to have more confidence in the consolidated management report that is presented each period.
5. The risk profile related to the critical activity carried out on time – This accounting metric monitors the risks associated with the number of critical activities carried out in the financial department. If too much critical tasks are not executed on time, the company’s financial risk profile may increase.
6. Comparability – This metric compares the number of types of activities per business unit (CU) to gauge the distribution and completeness of financial activities nearby. Instead of placing the burden of closing tasks on a small number of people, delegation allows accountants to have a more even workload, which further reduces number of overtime hours and cases of professional exhaustion (burnout).
7. Problem management – This metric measures the effectiveness of the close cycle, specifically the number of issues raised relative to the total number of close tasks. As the organization expands its operations, it is crucial to keep an eye on the problems throughout the closure; these problems can mean that the inefficiencies of work flow to accumulate
Key performance indicators that measure the efficiency of specific processes are essential for evaluating basic accounting processes at a granular level. This allows managers to identify opportunities to effectively automate controls or bottlenecks.
8. Timely reconciliations – Calculating the number of completed reconciliations over time versus the total number of completed reconciliations gives financial managers an insight into theprocess efficiency general reconciliation.
9. The number of aging elements – The assessment of the number of tasks and their duration of assignment gives the financial managers an insight into how many activities are handled accurately in a timely manner and how many activities are delayed ; it also helps visualize any symptoms of closing difficulties and bottlenecks.
10. Automated Reconciliations – This measure visualizes the ratio of automated and controlled reconciliations compared to all reconciliations to identify the effectiveness of the reconciliation process : The higher the number of automated reconciliations, the more effective this process.
Finally, there are specific accounting KPIs to the conformity. These metrics will help gauge the effectiveness of compliance and regulatory controls in the business.
11. The Cost of Compliance – By adding the cost of controls and the cost of adverse events, companies can evaluate their control framework and determine where improve must be carried.
12. Problem resolution time – The evaluation of the resolution time gives the financial managers an insight into the speed of each financial task close to being completed. The calculation of the number of days between identification and problem solving it shows whether there are bottlenecks and delays in the closing process.
13. Testing rates – By dividing the number of control tests by the total number of controls, organizations can assess the trial fee. This helps determine the effectiveness of the control framework, reduces redundant testing, and provides oversight of the controls present in all business units, sites and risks.
It is essential that companies ensure that the chosen indicators cover the entire closing process, be it cost, time, effort or quality. It is by taking a step back and examining all the elements related to the financial end that the company will be able to distinguish the indicators that it really needs to improve the quality of its finances. Measuring these thirteen metrics allows finance departments to evaluate their close processes with clear data. These KPIs also give an overview of the areas to improve with time and those that are already optimized and simplified. Over time, financial managers and leaders should evaluate the trend of these financial KPIs closely to see how the teams are progressing each month. By regularly testing these key metrics, department members can capture quantitative data for all of their processes and closing activities.
Helene Sourdeau has been Marketing Manager at Trintech since 2017. She is committed to promoting the benefits of automation to meet the challenges of the digital transformation of the Finance Function. From Paris to London via Copenhagen, it provides the link between the financial players of major European companies by organizing debates, summits and other virtual or live events, so that ideas for transformation journeys and processes change.