Finance teams often struggle to implement OKRs due to a lot of business-as-usual responsibilities.
They need to take care of many operational tasks before they can dedicate their time to improvements.
It doesn’t mean, however, that finance teams shouldn’t have OKRs. Improvement work is extremely important, and if you don’t find the time for it, your business will suffer the consequences.
For Finance teams with limited resources, it would be perfectly fine to dedicate only one day per week to their OKRs. This also means that they should not have more than one OKR per quarter.
When writing accounting OKRs for the first time, try to identify what doesn’t work well or what slows the team down. For many Finance & Accounting teams, the answers would be in cross-functional workflows and reporting structure.
Improving internal workflows will allow you to automate certain tasks and have more time to work on larger financial improvements.
Check the examples below to learn how to define OKRs for the Finance team in your company.
OKR Examples
Implement a new ERP system
O: Optimize management of accounting records to prepare for the move to the new ERP system
Comment to Objective:
Our current accounting platform does not have enough analytical tools and reporting capabilities to support the needs of the growing business. We would like to bring all of our document management and accounting processes to one tool to ensure the accuracy of cross-references and calculations.
KR1: Analyze reporting issues from 3 main angles to prepare the move to the new ERP tool (4 stages): 1- review accuracy of salary calculations, 2- review accuracy of inventory count in stock, 3- review accuracy of the billing records in relation to the respective service providers, 4-prepare the plan of action
Comment to KR1:
We need to make sure there are no reporting errors in the key accounting areas. It’s a lot of manual work for the accountants but it’s necessary to ensure that we don’t move forward with the same mistakes we had in the old system.
KR2: Find equivalents in the new system (or develop requirements) for 7 types of reports requested by management
Comment to KR2:
The move to the new ERP is not just for the sake of a unified accounting system but also for better financial management and analytics. We can do better forecasting with the reporting capabilities.
KR3: Review expense types under 12 cost centers to analyze cost-saving opportunities
Comment to KR3:
We have a hunch that some expenses can be optimized if we do the purchasing in bulk for several divisions (cost centers). To see these opportunities, we need to analyze expense reports for the past 6 months from all divisions based on their payment history.
The OKR:
O: Optimize management of accounting records to prepare for the move to the new ERP system
KR1: Analyze reporting issues from 3 main angles to prepare the move to the new ERP tool: 1- review accuracy of salary calculations, 2- review accuracy of inventory count in stock, 3- review the accuracy of the billing records in relation to the respective service providers, 4-prepare the plan of action
KR2: Find equivalents in the new system (or develop requirements) for 7 types of reports requested by management
KR3: Review expense types under 12 cost centers to analyze cost-saving opportunities
Building the team and in-house accounting
O: Lay the groundwork for in-house accounting and financial reporting to take it over from the outsourcing firm
Comment to Objective:
Currently, there is no in-house finance department, and we need to take over all accounting and reporting operations from the third party by the end of this quarter. We need to put together the team and assign responsibilities as well as to choose supporting tools with powerful reporting capabilities.
KR1: Successfully onboard 3 new hires to the finance team
Comment to KR1:
We need a person to handle bank operations and payments, a person to do salary/vacations/sick leave calculations, and a person to handle incoming documentation for tax authorities. The hiring process is underway but we need to put together a comprehensive onboarding plan.
KR2: Develop a structure for 5 types of reports to set them up in the ERP system (price per unit; revenue projections per month; purchase volume; expenses per service provider; monthly budget per cost center)
Comment to KR2:
Management team has requested specific reports to analyze our expense structure and make decisions about the future pricing policy. The accuracy of these reports is paramount.
KR3: Complete 5 stages of the ERP implementation process: 1-research of the needs and requirements, 2-setting up the tool, 3-internal finance team training, 4-team management training, 5-developing improvement plans and iterations
Comment to KR3:
ERP implementation is an all-consuming process that requires a lot of back-and-forth with tech support. The outcome of this implementation is to have a working in-house financial reporting system that also allows viewing the 5 types of reports requested by the management.
The OKR:
O: Lay the groundwork for in-house accounting and financial reporting to take it over from the outsourcing firm
KR1: Successfully onboard 3 new hires to the finance team
KR2: Develop a structure for 5 types of reports to set them up in the ERP system (price per unit; revenue projections per month; purchase volume; expenses per service provider; monthly budget per cost center)
KR3: Complete 5 stages of the ERP implementation process: 1-research of the needs and requirements, 2-setting up the platform, 3-internal finance team training, 4-team management training, 5-developing improvement plans, and iterations
Internal procedures and reporting
O: Simplify internal procedures and make financial reporting more transparent
Comment to Objective:
We have a lot of overdue payments (causing contractual penalties) and late financial reports although we are always busy and always in a rush. The reasons are numerous: 1) it takes time to categorize expenses due to the back-and-forth with team managers on their payments, 2) team managers don’t provide invoices and bills on time, 3) the payment confirmation procedure is too complicated and could be simplified.
KR1: >80% of invoices are categorized by expense type before they come to the finance department
Comment to KR1:
If team managers specify what the payment is for and if there was a prior purchase from this contractor, it would save a lot of time for the financial department (as we won’t need to double-check the type of service provided and whether this contractor is already in the ERP system). We need to provide a clear format for the submission of the documents.
KR2: Reduce the number of primary documentation reported late to the financial department by 20%
Comment to KR2:
Team managers are not sending primary documentation (receipts, bills, invoices) to us on time and submit their payment requests too close to the payment deadline causing issues with unexpected fines and going over the planned budget. According to feedback from team managers, the payment request application is too complicated, as there are too many people who need to confirm the application before it comes to the finance department.
KR3: Speed up payment processing time from “application” to “paid” from 16h to 8h
Comment to KR3:
We should create a presentation about handling receipts, bills, invoices, and similar forms of primary documentation, to make sure that everyone else understands the process. If the process is clear, our internal workflow will run smoothly and we will be able to handle outstanding payments much faster.
The OKR:
O: Simplify internal procedures and make financial reporting more transparent
KR1: >80% of invoices are categorized by expense type before they come to the finance department
KR2: Reduce the number of primary documentation reported late to the financial department by 20%
KR3: Speed up payment processing time from “application” to “paid” from 16h to 8h
Step-by-step OKR writing process
Company A has an overarching Objective to improve cross-team collaboration. Let’s explore an example for the finance team that is writing an OKR to align with the company goal.
- Step 1: Team Discussion
- Step 2: Writing an Objective
- Step 3: Writing Key Results
- Step 4: Alignment & Linking
Step 1: TEAM DISCUSSION
What should the finance department focus on to help move the company forward? In order to determine the answer to that question, the team has to put their heads together and have a discussion that could go like this:
Question: What problems are we facing?
Answer: We have a lot of overdue payments (causing contractual penalties) and late financial reports although we are always busy and always in a rush.
Q: Why is this happening?
A1: Team managers are not sending primary documentation (receipts, bills, invoices) to us on time and submit their payment requests too close to the payment deadline causing issues with unexpected fines and going over the planned budget.
A2: Also, it takes a very long time for us to determine a type of expense to enter it correctly into the ERP system. The reason is a non-descriptive expense name in the invoices. If team managers specify what the payment is actually for, it will save a lot of time for us in preparing reports.
A3: According to feedback from team managers, the payment request application is too complicated, as there are too many people who need to confirm the application before it comes to the finance department.
Q: How can we change this?
A1: We need to explain how financial reporting should work to reduce overhead for the team managers and make sure that we can process all documents on time.
A2: We should create a straightforward manual to categorize all invoices by the type of expenses they represent. This way, when team managers submit payment requests, they can specify the expense type for us, and we wouldn’t need to spend extra time researching the background of every single document.
A3: We should organize a payment confirmation process that requires no more than 3 parties involved.
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Step 2: OBJECTIVE
In the team discussion, it became obvious that team managers are struggling when submitting payment requests to the financial department, and it’s not clear to them how invoices and receipts should be handled.
This is causing issues with outstanding payments being delayed, and one way to change the situation is to improve the procedure that team managers are following to submit their payment requests.
Based on this step-by-step analysis and the answers that the team has discovered, they can write an Objective that would focus on solving the problem.
For example, Simplify internal procedures and make financial reporting more transparent.
This Objective directly contributes to the overarching company goal (“improve cross-team collaboration“) because achieving it should mean a huge improvement in the internal processes and mutual understanding.
But how will the team know if the Objective is achieved? In other words, what needs to change specifically so that everyone would agree that the internal procedures are simplified and financial reporting is finally more transparent?
With these 2 questions, the team should approach writing the Key Results for their Objective.
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Step 3: KEY RESULTS
KEY RESULT 1
First of all, the team has discovered that it takes a very long time for them to determine a type of expense to enter it correctly into the system. Often they need to check if the contractor is already in the system, and reach out to the team managers to ask what kind of service the third party has provided. This is why they are always swamped with tons of documents to process. All due to a non-descriptive expense name in the invoices. If team managers specify what the payment is for and if there was a prior purchase from this contractor, it would save a lot of time for the financial department.
The go-to solution would be to categorize expenses in the payment request so that team managers could provide all of the necessary information from the beginning. So the first Key Result must indicate the change in categorizing expenses as a part of the new payment request procedure:
KR1: >80% of invoices are categorized by expense type before they come to the finance department
This would mean that the finance department needs to create a list of expense types, categorize them, and explain the new payment request form to the team managers. And only if the team managers understand and adopt the new process, this Key Result could be achieved.
***
KEY RESULT 2
Secondly, the finance team needs to make sure that team managers are capable of delivering primary documentation on time. Here’s how to measure this change:
KR2: Reduce the number of primary documentation reported late to the financial department by 20%
To move the needle on this Key Result, the team might create a presentation about handling receipts, bills, invoices, and similar forms of primary documentation, to make sure that everyone else understands the process.
Only if everyone understands the process, the team would consider that they have achieved a new level of transparency in the organization. It could be even a good idea to create a leaderboard for team managers who bring documents on time!
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KEY RESULT 3
Third of all, the finance team would want to focus on making the payment confirmation process easier so that applications can reach the finance department faster from the moment when team managers submit them.
But making the process easier might not be the only issue that needs to be solved to improve the processing time. Even if you are confident in the solution, don’t assume that it’s the best one. There might be better ways to solve the problem or there might be other factors you haven’t considered.
What if the procedure is simplified but the processing time hasn’t changed? Treat your solution as a hypothesis, and keep in mind that it’s absolutely important to determine the real change the team wants to see in the future, and not just the first good hypothesis that comes to mind.
You should never forget the problem you are trying to solve. (Learn more examples in this article)
In our current example, the problem is that the payment confirmation process needs to go faster (from making a request to making the transaction). Making the payment confirmation process easier is one possible solution. But if fixing the application procedure does not solve the problem, the team will have to keep thinking about other solutions.
Focusing on outcomes (as opposed to to-do lists) is a productivity lifehack and the greatest advantage of the OKR methodology.
So here is a measurable outcome the finance team would need to deliver:
KR3: Speed up payment processing time from “application” to “paid” from 16h to 8h
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ALIGNMENT & LINKING
When the team OKR is agreed upon, drafted, and aligned with the company Objective, here is what it looks like:
For the finance department to reach their Objective, they will have to develop better internal procedures for team managers to understand and adopt. Delivering results on this OKR will definitely create stronger ties between departments and better collaboration in the company. Thus, directly impacting the Company level overarching goal.
With OKRs acting as your teams’ north stars, you can say no to low-priority and low-value plans, or think about outsourcing and automating them.
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Learn more about writing good Objectives and Key Results, or browse more examples in our OKR examples database.