The financial close KPIs you need to know

It’s no secret that tracking KPIs provides meaningful insight into the effectiveness of your operations. It’s the simplest way to keep tabs on period-over-period growth—and having formal governance around what metrics you watch out for helps streamline, enforce, and establish policies and procedures for improvement as you scale.

Governance layers

Think of governance layers as an umbrella, helping to segment your metrics according to the teams they directly impact. Here are the three we recommend:

  1. Executive: Metrics that affect long-term decision-making
  2. Management: Metrics that affect short-term planning
  3. Execution: Metrics that give insight into your overall efficiency levels

Metric categories

Taking one step further, it’s important to track a variety of KPIs—and having at least one from each of the following categories can help paint a more comprehensive picture of your current state.

  1. Process efficiency: The ease of your workflows
  2. Cost effectiveness: The value of your process compared to the associated cost
  3. Staff productivity: The level of automation tied to processes end-to-end
  4. Supplemental information: Additional data that supports the primary metrics you’re monitoring within your organization
  5. Cycle time: How quickly it takes to close the books

KPI ideas to get you started

The possibilities of what to track are endless—here are some to consider.

  • On time reconciliations
  • Percentage of automatic reconciliations
  • Aging reconciling items
  • Percentage of automatic journal entries
  • Timeliness of reconciliations
  • Timeliness of journal entries
  • Timeliness of tasks
  • Journal entry quality
  • Financial close activity timing
  • Process cost
  • P/L exposure
  • Reconciliation type
  • Number of reconciliation by ___
  • Number of journals by ___
  • Number of tasks by ___
  • Time to complete tasks
  • Percentage of policy adherence
  • Internal audit cycle time
  • Finance errors
  • Total cost of the close

With KPI governance in place, it’s easier to make meaningful improvements to your operations. Not sure where to start? Explore the common close improvement activities.

Categories: Financial close
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