The Top Record to

Report KPIs You

Should Be Tracking
What are they, why are
they important and how do
you measure them?

R2R Insights
The Top Record to Report KPIs
You Should Be Tracking
The What, Why and How
There is an old adage What gets measured gets managed, however, it is
also true that if you are measuring the wrong things you will end up
managing the wrong things.

In this R2R Insights piece we will identify what is meant by KPIs, why they
are important to the finance function and what best in class companies
are tracking to help them improve their Record to Report processes. In
other words, making sure you are measuring and managing the right R2R
information across your business. metrics
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The Top R2R KPIs
What do we mean by KPIs? Business Strategy
What is the ultimate aim of the business?

So, what do we mean by KPIs? On the right you can see a pretty typical
flow that leads all the way from the overall business strategy down to
operational metrics.
Business Objectives
We arent going to try and tell you how you should run your business, so How is the company going to deliver the strategy?
the first few layers of this will be up to you. However, there are a number
of common KPIs that our customers use to help them manage their R2R
process and to communicate upwards which we will show in this
document.
Key Performance Indicators
To gain management interest, however, it is important that these What measures of success can functions use to meet the objectives?
operational KPIs are linked into the business strategy through the
business objectives.

Operational Metrics
What are the detailed, operational measures that deliver the KPIs?

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The Top R2R KPIs
Some Considerations
Upon setting any KPI, there are always some specific challenges that need
to be front of mind to avoid any unexpected or unintended impact on the
business.

As soon as KPIs are set, and especially if they become remunerated,

people will try and reach the target however possible. Because of this,
items such as Number of Journals Posted would have to be applied with
caution. For example, one may be tempted to avoid posting a journal due
to the negative impact on their target.

In addition to the KPIs in this document, there will also be other

information that you will need to add that is specific to your business.
This includes making sure that there is a person or team responsible for
the information and metric, and making sure that you are realistic in the
number and nature of KPIs you use. In this document there are 16
example KPIs in total - and while you could implement all at once - it is
advised to select the most relevant ones, and work from there.

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The Top R2R KPIs How to use this document

The Record to Report Process For each page there is the an overview of the R2R process, the metric
description, how the metric is calculated and a short description as to why the
metric is important, as can be seen in the diagram below.

The Record to Report process consists of a set of interrelated sub-

processes relating to preparing and reporting the financials efficiently and
effectively. These include:

Record to Report An overview of the entire R2R process and the

impact that this has on the business
Close Monitoring All of the activities and tasks, checklists,
dependencies & desktop procedures required to close the books
Reconciliation The most important individual control in your overall
compliance framework, providing Balance Sheet integrity & oversight
Journal Entry All of the activities related to the JE processes including
creation, validation, approval and posting
Compliance Ensure effective corporate and regulatory compliance
controls across the company

Over the next few pages you will see example key KPIs for each of these
sub processes. R2R Process How the Metric Why is the
Description metric is description metric
calculated important

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 P/L Exposure

P/L Impact This metric gives an indication

A =
KPI Group 1: Record to Report Reconciling Items
of the impact on profitability
and risk to the business.

Aim: To ensure that the whole Record to Report process is managed

effectively. Best in class companies have been proven to close quicker, with
less resources and for less money, all with increased quality.
Process Cost

As mentioned before, the Record to Report process is made up of a number Process Costs Identifies the cost of managing
of different sub-process activities. However, these are all interdependent and B = the entire R2R process as a
subsequently there are a number of KPIs that can be examined from a top Revenue ration of the total revenue.
level to manage the overall R2R progress. From the outset, you have the
opportunity to holistically look at your R2R processes.
Time to Close
If you do that, you will start to move from simply seeing KPIs that give you
information that you already know to those that tell you what you really Identifies how successfully the
need to know. For example, without a joined up approach it is very difficult Actual Days to Close business is meeting their days
to measure the KPIs on the right to enable you to calculate what a true C = to close target versus how
overall exposure, costs and time are, let alone the overall quality of your Close Window many days it is actually taking.
close.

Close Quality
This gives a strong indication of
1 the quality of whole close
Quality = process and leads to reduced
AxBxC rework and expense.

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 On Time Critical Path
KPI Group 2: Close Monitoring Identifies risk to the business
Critical Activities Performed on Time of critical activities "not" being
Aim: To have more confidence in the consolidated management report that is performed. Can also be set for
filed. Total No. of Activities all general activities.
Internal and external stakeholders need month end data for decision-making
purposes. When stakeholders require this information by a certain deadline,
additional pressure is exerted on the finance team to reduce the time Comparability
needed to close the books.
Benchmarking key tasks
To meet the overall aim, companies need to gain complete management and submitted by BUs to ensure
audit transparency into the close by:
Key Task Types By Business Unit (BU) comparability across BUs and
completeness of JE and
Identifying bottlenecks and communicating potential issues early and Reconciliations task counts.
often, reducing the possibility of missed deadlines and ensuring accurate,
complete financial statements
Promoting teamwork among dispersed finance teams (and external
auditors) through an advanced collaboration-and-workflow environment Issue Management
Reducing external audit time and cost by creating Close e-Binders, a final
system of record for all documents and activities to reconstruct the close
Orchestrating and managing all system, analytical and dependent close Measurement to identify
activities Issues Raised effectiveness of close cycle to
Standardizing and mapping the overall entity hierarchy and calendar see how many issues are being
Total Tasks raised against tasks.

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 On Time Reconciliations
KPI Group 3: Reconciliations
This indicator demonstrates
No. of On Time Recs the effectiveness of the
Aim: To take your number one control (and typically number one bottleneck),
relating to the close and control and automate in the most efficient way. reconciliation process.
Total No. of Recs
During the reconciliation process, performers may come up against a
reconciling item or exception. This item may have a negative impact on the
profit and loss statement or it may not. To do this, companies need to control No. and Aging of Reconciling Items
and automate the general ledger reconciliation process by:

Driving efficiency through dynamic account analytics that facilitate a top- Links to the accuracy of the
down, risk-based approach to reconciliation No. of Items by Bands balances and identifies items
Automating review of reconciliations and certification for all balance sheet E.g.. 30, 60, 90 days that require immediate
accounts attention.
Using simple templates to standardize and streamline balance sheet
verification
Gaining needed visibility to ensure compliance
Enabling reconciliation controls and reducing dependency on unmanaged % Automated Reconciliations
spreadsheets
Reducing operational costs and improving internal control
Automated and controlled
No. of Automated Recs reconciliations as a proportion
of all recs to identify rec
Total Recs efficiency.

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 Automated Journal Entries
KPI Group 4: Journal Entry Highlights how efficient the JE
Automated Journal Entries process is and where there are
Aim: To gain oversight to take complete control of the Manual Journal Entry opportunities for further
process. All Journal Entries automation such as reversing,
recurring and rec adjustments.
Accurate and timely journal entry is essential to the enterprises Record to
Report process as journal entry provides the foundational information for
understanding enterprise financial performance. However, many companies Timely Approval
struggle with manual journal entry and non-automated processes. To counter
this, businesses need to:
Shows how efficient the
Exercise management oversight to take control of the manual journal journal posting process is. Can
entry process
Days Taken for Journal to be Posted be improved through dynamic
Gain certainty from visibility into, control over, and validation of the real- routing, notification schedules,
time status of both standard and nonstandard journal entries, from mobility etc.
preparation to approval to posting
Enjoy a fully integrated workflow solution for preparers and approvers
Avoid pitfalls resulting from disparate systems, missing/inadequate Journal Entry Quality
supporting documentation, improper management approval, and/or lack
of transparency into the impact of late adjustments Journal Entry Error Rate focuses
Perform exception management, identify errors, eliminate approve after
posts and reduce processing time
No. of Rejected Journals on the quality of the JE process
and is an indicator as to the
Gain the transparency and control required to enhance financial
governance Total Journals Raised effectiveness of the overall
journal submission process.

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 Cost of Compliance
KPI Group 5: Compliance The total cost of compliance to
your business. Can be split by
Aim: To ensure effective corporate and regulatory compliance controls across Cost of Controls + Cost of Events the cost of controls vs the cost
of negative events to see
the organization
where improvements can be
made.
For companies with subsidiaries, global operations, and multiple legal
entities, there is a real danger of companies wasting valuable time and
resources on redundant or inappropriate controls. Companies must ensure Issue Time to Resolution
corporate and regulatory compliance by:

Managing cross-enterprise compliance initiatives, including SOX, HIPAA, Identifies the time lag between
FERC/NERC code of conduct and more Days from Identification to identifying and resolving
Coordinating security standards such as PCI-DSS, and other process compliance issues to
Remediation demonstrate efficiency. Can
management initiatives, including quality control, IT governance and
security also be used as an average.
Managing corporate social responsibility (CSR) initiatives such as green
and sustainability projects
Ensuring that the financial governance model is properly implemented, Test Rate
and that relevant performance and compliance management controls are
properly identified, scoped, scheduled and performed
Leveraging state-of-the-art technologies such as dynamic scoping, Reduces redundant testing and
scheduling, test and evaluation workflow, exception and remediation
No. of Control Tests provides oversight. Especially
workflow, management consoles, audit trail and flexible ad hoc reporting because controls can be shared
Total Controls across BUs, locations and Risks.

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The Top R2R KPIs
Underpin with software
Once you have decided on the KPIs that matter most to you and your
business, you need to ensure that you arent just spending all of your time
collating and compiling this information. The information needs to be
there for all the different sub-processes when and where you need it.

To make this happen, the analysts all recommend automation and a fully
integrated solution that removes all the white spaces and offers a single
view of your close. One that can integrate not only across your ERP
landscape for consistent data management, but also across your whole
close process, to offer a single view across the business, wherever and
whenever.

As Gartner states When considering the automation and unification of

critical financial processes, such as account reconciliations, compliance Record to Report Console
and Financial Close, the whole is greater than the sum of its parts. These
Advanced Journal Close
activities are highly dependent on each other and, when unified, create Certification Compliance
Matching Entry Monitoring
new insights and return on investment (ROI) savings.
High Volume
Balance Sheet Smart Journals, Checklist, Internal Controls
Transaction
integrity & workflow & dependencies & over Financial
Reconciliation and
oversight auto-post to ERP desktop procedures Reporting
Data Matching

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Conclusion:
Want To Find Out More?
Identify, Automate, Monitor
To effectively manage the impact that you are having on the business it is vital If youd like to know more around this topic, please click on the relevant
that you can measure and communicate these appropriately: links below:

Identify: Start by looking at what is important to your business and function Enabling Record To Report (R2R) Transformation Through Technology
and identify which KPIs will make most sense and be most useful to you. (eBook)
Remember that to succeed and provide value to the business, these need AstraZeneca Discovers $2.5 Million in Savings by Automating Closing
to be relevant and reliable (SAP Insider)
Automate: To ensure that the data coming out in the form of KPIs is
reliable, you need to make sure that the data you have to start with is Closing Outside The ERP, Why Your ERP Cant Do It All (R2R Insights)
reliable. This is incredibly difficult if you have multiple manual processes
managing each of the different sub processes. Standardize on single
instances of technology wherever possible Or, if youd like to get in touch to see how Trintech can help you gain value
Monitor: Once you have the information you need to use it to improve the from automating your R2R processes and KPIs please:
efficiency and effectiveness of your processes, saving time and money and
delivering extended value to the organization Visit: www.trintech.com Or Call: Americas: +1 972 701 9802
EMEA: +44 207 628 5235
Email: info@trintech.com
To see how Trintech can help you achieve this, please get in touch through the APAC: +61 3 9225 5239
details on the right.

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Trintech 2016. All rights reserved
The information contained with the document is given in good faith
and is believed to be accurate, appropriate and reliable at the time
it is given, but is provided without any warranty of accuracy,
appropriateness or reliability.
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About Trintech
Trintech, Inc. pioneered the development of Enhanced Finance
Controls and Automation (EFCA) software to optimize the
Record to Report process.
From high volume transaction matching and streamlining daily
operational reconciliations, to automating and managing
balance sheet reconciliations, journal entries, treasury
management and bank fee analysis, to governance, risk and
compliance Trintechs portfolio of financial solutions,
including Cadency, ReconNET and T-Recs, help manage all
aspects of the financial close process. Over 1,700 clients
worldwide including half of the Fortune 50 and the FTSE 100
rely on our cloud-based software to increase efficiency,
reduce costs, and improve governance and transparency across
global financial organizations.
Headquartered in Dallas, Texas, Trintech has offices located
across the United States, United Kingdom, Australia, France,
Ireland, the Netherlands and the Nordics, as well as strategic
partners in South Africa, Latin America and Asia Pacific. To learn
more about Trintech, visit www.trintech.com.