KPIs for finance teams

Finance function can follow hundreds of financial KPIs, however there are only few, which the finance team really owns:

Forecast accuracy

Compares projected financial results to actual financial outcomes. It is an indicator of reliability to project future performance

Time to report

Measures the time (in days) it takes to produce accurate reports. Accurate is when posted results are not updated by more than 5% per line item and (sub)total results.

Cost income ratio

Compares finance function all-in cost to generated income. The income comes in form of treasury earnings, tax savings, benefits from smaller working capital, WACC optimization through capital structure and refinancing, etc.

Budget variance

Measures the gap between budgeted figures and actual spent. Desirable discrepancy is < 5% per line and (sub)total results.

Effective tax rate

Measures the final tax payable in % to statutory tax rate. To goal is to find tax law compliant ways to optimize tax burden for the business.