The accounting department or finance department is one of the critical parts of a company. An accounting department in any given company is responsible for assessing and gauging the expenses, cash flow, and revenue of that company. This department is highly significant as it helps to analyze the financial health of other departments across the company.
Dealing with numbers, figures, record-keeping can be tricky, hence this department needs to be very careful in their day to day tasks. Often times, they will be focused around managing the cash flows or containing cost.
This is where OKRs comes into play. It is, therefore, necessary for the accounting team and individual employees to have a well defined operational goal that aligns them to the biggest strategic goal of the company.
OKRs will serve as a compass providing a clear path on how an accounting department can contribute directly to the company’s top-level objective effortlessly. Are you new to OKRs? check out the complete OKRs methodology for companies.
Below are some examples of OKRs for an accounting department. These examples may not be specific to your company goals but an insight into what an accounting OKRs should look like:
1. Income and profits
Objective 1: Achieve record revenues and profitability
- Increase quarterly revenue by 20%
- Increase in orders for the next month of 20%
- Improve monthly profit by 15%
Objective 2: Increase the company’s margins
- Increase gross margins from 30% to 40%
- Reduce the percentage of deficient components by 2%
- Increase operating margins by 50%
Objective 3: Improve the company’s cash flow
- Reduce accounts receivable by 30%
- Negotiate new contracts with major customers
- Reduce to half the payment period.
2. Budgeting and Fundraising
Objective 1: Create a financial strategy for the next two years
- Organize a strategic meeting with the heads of all departments before next month
- Finalize and approve budgets within a month
- Raise $ 2 million for growth targets over the next six months.
Objective 2: Make team salaries more competitive on the market
- Consult industry salary experts for comparison ranges
- Bring 100% of wages to industry standards in 2 years
- Achieve a 75% salary satisfaction level in the team
Objective 3: Improve annual budgeting and activity planning
- Conduct a day planning session with each team leader
- Receive industry budget proposals within a week
- Closing of the final budget in three weeks.
3. Tax and accounting
Objective 1: Improve operational efficiency
- Perform an external accounting audit within two weeks
- Finalize the supplier purchasing process
- Finalize the new guideline process with the sales manager
Objective 2: Improve tax compliance
- Reduce audit adjustments by 2%
- Lessen the number of tax-related complaints 3 per month
- Reduce the number of accounts payable by 5%
Objective 3: Reduce tax liability
- Increase tax-efficient investment by 75%
- 20% reduction in current commitments by the end of the semester
- 40% reduction in depreciation cost
Finally, OKRs are systematic in nature but also flexible for companies to learn, structure, and grow with. By practice, they are re-adjustable with more observation. However, knowing some common mistakes to avoid in OKRs could be a good way to start.