Whatsyouridea1996 您說呢?!: 【#BusinessManagement #KPI】When Finance and Accounting Department is asked to define work KPI, it means this company is already making progress 202208230001

Friday, December 23, 2022

【#BusinessManagement #KPI】When Finance and Accounting Department is asked to define work KPI, it means this company is already making progress 202208230001

【#BusinessManagement #KPI】When Finance and Accounting Department is asked to define work KPI, it means this company is already making progress 202208230001

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Hi, this is Emily from Taiwan, the author of Whatsyouridea1996 blog.

Preface

Do you agree? -> 「When Finance and Accounting Department is asked to define work KPI, it means this company is already making progress!」

Why?! Because：

1.The whole company starts to realize that it needs to pay attention to not only making money or customer related work departments, sales or customers’ complaint related work issues but other work function of this company in order to manage business well in all aspects.

2.For the purpose of sales and service departments achieving work target, it is surely that the supporting work function needs to have high -quality work result in order to provide timely work supports in aspects of 「efficiency」, 「effectiveness」 and 「accuracy」for not only helping sales and services departments reaching work expectation but completing supporting work function their own work mission.

Because of above situation, all the departmental work objectives need to link to others’ rather than defining it based on their own work preference. Do you agree with this point of view?

Examples of Finance and Accounting Department Work KPIs

1.Accounting records reach 100%「Accuracy」. Regarding this goal, people will raise 2 questions promptly：

(1) Only Accounting Department itself knows the accuracy situation of the record they created, and how would other departments verify the result?!

My opinion：50% Yes, 50% No.

Reasons of “No”：for example, when the company implementing profit center or departmental expense allocation management policies, every month, each department will receive their departmental profit and loss statement from Accounting Department, and, at that moment, for Accounting, from the beginning of defining the rule of expense allocation, advocating, implementing and booking and ensuring the accuracy until all work departments reviewing the record of their spending, every work step involves the accuracy verification of accounting records. Do you agree with this opinion?

On the other hand, from what we’ve already known, the records of responsible persons of each accounts receivables items and accounts payables also need accuracy. If not, they may become no responsible persons due to personnel change, thus, Accounting department needs to take the initiative to review all work process which would have impact on accounting records’ accuracy and ensure all work mechanism will be performed timely for accounting records timely update at the same time.

(2) Numbers of accrual of expense or loss, for example, when current month utility bill has not arrived, we only can do the accrual in accounting, hence, the number is not possible to achieve 100% accuracy every time.

My opinion：exactly!

However, in KPI setting, we also need to define 100% as the target, it means, we need to do the accrual cautiously and collect all possible estimation information for calculation in order to reach the goal of 100% accuracy. That is, we surely need to define 100% as the target, otherwise, how much it needs to be? And we also have to explain the number we define! If you say it can be 99.9%, and the unreachable 0.1% tolerance is also expected to be explainable. Thank you!

2.Efficiency. Starting from inquiry received ( ex: Wednesday, 2022/8/24), Accounting needs to respond by noon 12:00 of the 3^rd working day ( Noon 12:00 at 2022/8/26).

Regarding work efficiency issue, it depends on its overall company situation and expectation at that moment. Some companies’ most urgency is the work efficiency of accounting closing and its related document quality sent to accounting, thus, the efficiency of inquiry response may not be the most important thing at that timing.

What needs to be mentioned is the work efficiency of cross departments interaction, sometimes, the company hope to increase the communication activeness of all staffs in order to avoid important issues unanswered at some circumstances, then, all the department has the goal/KPI of communication efficiency；at the same time, the quality of questions, answers, form and frequency are also defined completely to avoid all the employees being trapped in fighting in communicating and creating a waste of time.

3.Effectiveness, there are kinds of example can share, however, sometimes, they work against the purpose of Efficiency. For instance：petty cash storage location, for internal control purpose, sometimes, it needs to reduce the number of petty cash location, then, it will cause the work efficiency of petty cash payment. In this kind of situation, the company may define those KPI which is good for the whole company or staffs：

(1) Finance investment tool, hope it can achieve +0.5 dollar in EPS a year；or, profit or loss from exchange rate management, interest expense or credit card acquiring fees negotiation …etc.

In Taiwan, there was already news saying a Chief Investment Officer of a listed company new year work mission was similar to above defined goal. It already happened in business management real work practice.

Now, I would like to mention one of the most impressive thing I’ve encountered in year 2017, in Lixil Group：Finance Director of HQ, Mr. Yamada, building up a mechanism gathering all foreign currency demand negotiating the best rate with Bank for all the subsidiaries, and Taiwan subsidiary was one of the beneficiaries at that moment, right after the 1^st month of doing it, so appreciated. It’s a pity I only remember his family name is Yamada, I can’t find him via LinkedIn but I still hope he can feel my respect to him in this case. It’s my honor to experience that case from starting up to its benefit fulfillment.

(2) To raise at least 1 business advice regarding cost saving, risk control or business development quarterly or half a year.

This is because Finance and Accounting Department’s work role is at the end of all the business work process, cash flow and information flow and is responsible for all business activities work records implementation, more than that, there is also internal control and resource allocation properly work duty, thus, it is usually be expected to raise advice, we often see this happen in business management.

(3) In employees welfare, if the number of employees is significant, or, there is large demand of funding with Banks, usually, it will work closely with employees welfare committee that the Finance Department is defined to create more resource from Banks side to gain benefits for employees, such as beneficial bank charge in interbank withdrawal, lower interest rate of employee loan etc.

What’s your Finance and Accounting Department work KPI in your company? Please discuss and send it to：whatsyouridea1996@gmail.com

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