Knowing how to set goals for your Accounting team is helpful all year round, but especially so at the beginning of a new financial year. Unlike sales, production or other roles that can be easily quantified, Accounting can be a little harder to assign specific milestones to. However, this doesn’t mean that it has to be a giant task. Based on the advice from Accounting Managers we have met with in recent months, here are some strategies to incorporate when setting goals for your accounting team.
Why Goals are Important
The new financial year offers a great opportunity to pause, reflect and evaluate the effectiveness of strategies from the previous 12 months. This review can form the basis of new goals and objectives to steer finance teams in the right direction. Having a clear-cut purpose can help managers and employees understand where the business is headed and how to meet those objectives. Moreover, it ensures that your team’s behaviour is aligned with the overarching targets of the company.
How do finance leaders set performance management goals to generate positive outcomes? One way is to set SMART goals, which include five essential criteria used for implementing goals. To be effective, they need to be Specific, Measurable, Attainable, Realistic and Time-related. Over time, the acronym might have changed, however, the technique is still seen as best practice when planning and setting KPIs. SMART goals offer a simple blueprint for outlining and managing the objectives of your department, eliminating any ambiguity and instead painting a picture of what success looks like. Let’s explore what setting SMART goals look like for Accounting teams:
Goals must be well-defined and clearly stated. What will be accomplished? What specific actions are needed? A couple of finance goal examples could be:
Reducing the average number of debtor days from 45 to 40 by a specific date or time period.
Completing all monthly billing by the 5th of every month.
The objective has to be quantified to be measurable. How will you know when it has been reached? What sort of data is needed to measure it? Attach definitive metrics to the attainment of the goal, either numerical or fiscal, for example:
- Execution of income statements on time.
- Debtor days reduced from 45 days to 40.
Teams must also have the resources and skills to meet their goals. There’s no point in having a target if the team has no chance of achieving it. To ensure that these goals are achievable, there may be a requirement for upskilling or refresher training or more drastically, a review of systems and processes. Examples:
- Reduce invoice processing errors by 10% over the next 12 months.
- Improve customer response times by 15%.
Employees should have an affinity with the objectives being set. They need to be realistic and align with an organisation’s wider goals. Let teams know why the results are so important:
- Is it realistic to expect the accounts payable team to pay invoices within three business days (from 14 days), or answer emails within 4 hours (from 24 hours)? Be realistic about the size and skills of the department.
- If the overall company goal is to increase profits by 5%, accounts receivable could align their KPIs to reduce delinquent accounts and adjust the age of invoices to chase. These milestones are very relevant to the business objectives as they increase revenue and keep finances in balance.
To drive a culture of accountability, specify a timeline to complete actions. Tasks can be segmented, and deadlines placed at each step of the process to make it easier. Accounting goals and targets are mostly deadline driven and built with time frames in mind. Examples of these SMART goals include:
- Complete monthly billing on time and by the 15th calendar day of each month.
- Meet quarterly reporting deadlines by the 10th business day of each quarter.
Individual and Team Goals
To gain traction with your finance team’s SMART goals, connect your employee KPIs with the broader company vision. When staff don’t understand their role in the bigger picture they can become detached and less engaged. The Accounting Managers we talk to on a daily basis, consistently tell us that their teams work best when their individual KPIs are linked to the team’s and ultimately the whole business. It’s also possible to make personal bonuses contingent or weighted on team targets. This offers a greater sense of purpose and collective success.
Setting goals for your Accounting team that are effective and easily measured can seem like a lot of work, but it doesn’t need to be. Follow some of the advice of the Accounting Managers we have worked with, and not only will the business as a whole reap the fiscal benefits, but your Accounting team will enjoy being part of a collaborative and engaged team working towards an achievable vision.
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