CEO Wavelength
Company Productivity and Financial KPIs: the Juice to Grow the Bottom Line
Karen Inman, Fractional CFO Consultant, Aspire CFO
October 2024
For those of us who ditched corporate life to take a walk on the wild side of start-ups and scale-ups, the urge to ditch the corporate think and speak, is, not insignificantly big. It’s like, capital “m” for massive.
So, how far to go in ditching corporate? KPI’s… ditch those, too? Should growth just happen, let everyone be their own bosses because they know their jobs is the company ethos? Not quite. Structure matters. Especially for the bottom line.
In this issue, we’ll go through the case for KPI’s. We’ll get right down to it. Here goes…
The Set-up:
Company ABC was going through multiple years of growth, both due to organic expansion and acquisitions of other companies. The finance team was working hard to do everything they needed to do but were they working smart? They were so busy they didn’t feel that they had time to measure their performance.
The Problem:
Suppliers were starting to complain to the Company about late payments, some new suppliers were even denying credit. The team was also hearing complaints from other departments about their responsiveness.
As companies were being acquired and integrated by Company ABC, often the old processes were maintained resulting in a different process for the same accounting function.
Many of the processes were manual and undocumented. The finance managers’ solution was to throw additional people at the problem but, that increased costs and, created confusion in the team as to who was responsible for different tasks.
The Solution:
The first task was to measure the team’s performance and compare to top performing teams. The team was able to celebrate the areas where they were performing well and highlight areas of concern, to create a prioritised action plan. Processes were aligned and technology was implemented where there was a business case.
Dashboards illustrating performance (KPIs) helped keep an accurate view of successes and opportunity areas for improvement.
KPI’s for a finance team matter for a Company’s long-term success, especially when a Company navigates many chapters of change - they:
Align the finance function with overall business goals
Enhance efficiencies and productivity, promoting a continuous improvement mindset
Promote accountability
Boost employee morale and development
Enhance communication and transparency
Support scalability, improved company profitability.
Key Takeaways:
Measure performance and as you do, make sure you are grabbing the problem at the right end by measuring the right things. In other words, get the right KPI’s in place – including and especially for a Company’s finance team.
Also, ensure that you have some quick wins for the team along with medium and longer team goals. Change management is key, especially when introducing new technology and processes. Strive for continuous improvement on your KPI’s rather than focusing on a specific end number.
The key items that improve KPI’s:
Streamline and document processes
Planning and Checklists
Cross department collaboration
Leverage technology
Automate
