Every department in every organization uses Key Performance Indicators (KPIs) to supply them with a wide variety of information. Are their goals being met? Do their targets need to be revised? Are their teams being pushed too little or do they need to be pushed harder? What factors are acting as a barrier to optimum performance?
Based on these KPIs, the department designs strategies that will remove barriers and ensure peak performance.
The finance and accounting department requires KPIs as well, but determining these could be a cause of confusion – what factors can they use to track the performance of their teams, and how will this information help them improve themselves?
1. KPIs need to give the managers two sets of information:
2. Other features that KPIs should have:
Many finance departments as well as finance and accounting outsourcing companies rely on automated systems to reduce errors and work burden. The organizations do not mind investing in upgrades, because they know that it will save them time and cost in the days to come. But is the technology really working as well as it should? How can you tell? The KPIs should provide the managers with three key sets of information:
Only when the KPIs indicate that these three factors have been met can the finance manager have complete faith in these systems. Otherwise, he or she has to constantly redesign systems and processes till the goals are met. Thus, even in an automated environment, KPIs play a highly useful role.
The question arises as to what factors should finance managers include in their KPIs when they are measuring specific items on their balance sheet. Here are a few examples:
Since the finance and accounts department is at the heart of the company, it is essential that it function smoothly. That is why a coherent set of indicators should be created that would tell the finance managers everything they need to know to ensure that work in the department carries on seamlessly.
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