We are on a steep growth curve and are looking for a skilled Finance Manager to further support our

Finance team-high ambitions. This is a broad Finance position reporting to the Head of Treasury &
Finance where the candidate will support and manage group functions across Treasury (Cash,
Liquidity, Forecasting and FX Risk Management), Accounts Payable, Accounts Receivable, Reporting,
Intercompany, Systems Implementation and Process Improvements. This position is remote, but the
candidate must be based in either Portugal or Spain.

Tasks

Treasury

• Drive the implementation of a Treasury Management System (TMS)

• Oversee cash balances and drive cash management optimisation projects and strategies

• Maintain & improve actual cash reporting and forecasting procedures

• Propose strategies to enhance returns on cash

• Manage intercompany balances and agreements

• Advise on opportunities to further develop the use of different banking products

• Resolve internal and external audit queries

• Drive efficiencies and automation

• Ad hoc duties as required

Accounts Payable

• Implement a robust control environment in Accounts Payable and ensure this is maintained
and respected

• Ensure all invoices are approved in line with the company approval matrix policy

• Ensure all vendors review and compliance are completed in line with company procedures
and their accounts are reconciled in a timely manner

• Ensure all AP e-mails are reviewed and all queries are responded to daily

• Prepare and analyze ageing reports monthly

• Manage the employee expenses process

• Prepare and improve Accounts Payable KPIs

Accounts Receivable

• Oversee Accounts Receivables processes

• Ensure the AR process is performed according to the existing policies and that adequate
controls are in place

1
 • Monitor, review and refine performance monitoring & reporting, including KPI metrics
regularly and take appropriate action

• Drive standardization across countries

• Review, monitor and update AR policies, procedures and manuals

• Maintain and establish excellent internal and external working relationships (customer
service, sales and other departments), ensuring excellent support

Requirements5+ Years of experience in Finance at a high-growth startup or tech company

• Previous experience in Accounts Payables and Receivables is a must

• Ability to navigate in an environment with different systems (Candis, Spendesk, etc)

• Proactive and able to drive new processes and implementations

• Strong logical thinking, sense of responsibility, sound judgment and excellent communication
and interpersonal skills

• Stakeholder and people management skills

• Advanced G-suite and Excel knowledge is required

Benefits Join a great team and become a strong leader within the Habyt cosmos: your colleagues are
talented, motivated self-starters

• Calm health and wellness App, Premium subscription

• Be a part of an innovative business model with global impact; A high degree of responsibility
and involvement from day one

• Fast decision-making and flat hierarchies make Habyt a great place for your professional
growth

Finance Manager

Overview: A leading iGaming business is experiencing growth and are looking to hire a Finance
Manager. This is a brand new position and the role holder will enjoy making the role their own.
This is a completely remote opportunity with strong remuneration.

Reporting to the Operations Director, this position will also have one direct report and
responsibilities will include;

Key Responsibilities:

• Prepare & review of year-end financial statements and weekly and monthly planning &
reports
• Monthly management accounts
• Accounts Payable and Accounts Receivable
• Credit control
• Bank and Payment Provider Reconciliations
• Data entry on Accounts packages
• Payroll processing

2
 • Cost Analysis
• VAT
• Office Administration

Requirements:

• A team player as well as being able to work independently, whilst making decisions
• Integrity and good ability to co-operate with a strong focus on solutions rather than
problems.
• Ability to manage multiple projects, working effectively as part of a team to drive projects
and deliverables.
• An eye for detail, ability to establish priorities and meet deadlines.
• Strong analytical and information gathering skills.
• Ability to communicate information and concepts clearly and logically, setting time
specific and achievable expectations. A competitive salary is available for this position.

We are currently seeking a Finance Manager for a role that requires flexible travel Monday to
Thursday.

RESPONSIBILITIES:

• In charge of several work streams for significant projects

• Direct reports are coached and developed, and team initiatives make use of each
member's individual strengths
• Uses a methodical approach to accurately and logically identify problems in a variety of
circumstances
• Experience supervising other professionals
• Provides the team with a clear direction and oversees project completion in accordance
with established team norms, defined responsibilities, and expectation
• Investigates issues in depth and holistically
• Uses a thorough understanding of the key factors influencing a client's business to make
judgements and provide advice to the client
• Understands how to effectively use expertise in a commercial situation
• Fills interim CFO roles for larger projects

QUALIFICATIONS:

• Completed university degree, preferably within top 20% and/or top tier university
• Willingness to travel (typically Mon-Thurs)
• Proven ability to lead and motivate international teams
• Entrepreneurial mindset
• Evidence of strong career progression
• Fluency in English and one other European language
• Professional communication and presentation of information, adapted to audience
• Good command of financial analysis and management accounting.

3
What Are Prepaid Expenses?
One type of expense that businesses often incur is prepaid expenses, which happens when a
company pays in advance for goods or services. If you're an accountant, you may handle these
expenses and record them. Understanding how to record these expenses can ensure that a
company's accounting books remain up to date with important financial information.

In this article, we discuss what a prepaid expense is, who benefits from them and how to record them
for a business, then offer some examples.

What are prepaid expenses?

A prepaid expense is when a company makes a payment for goods or services that it hasn't used or
received yet. Typically, a company may record this type of expense as an asset on its balance sheet,
which is expenses on the company's income statement. Goods or services that incur prepaid
expenses can generally provide value over an extended amount of time.

For example, a company may purchase vehicle insurance for its company cars in January of the
calendar year. Even though the company pays the expense upfront in January, the insurance may
provide coverage, which is the value, throughout the remaining months of the year. A few other
prepaid expenses a company may have include:

Employee insurance benefits

Other company-related insurance policies

Taxes

Interest expenses

Salaries

Leased office equipment

Rent for office space before use

Bulk orders of supplies

Retainer for legal services

Related: Your Guide to Careers in Finance

Who benefits from prepaid expenses?

Prepaid expenses benefit the company and individuals. These expenses can benefit the company
because it can help them save money and it can record them as tax deductions within compliance
with the tax deduction rules about how a business can write them off. This means a company may
think about its purchases and accounting ramifications before choosing to use a prepaid expense.

Additionally, these expenses can benefit individuals because they can help with plans, such as health
insurance or savings plans. For example, if a family creates a college savings plan for their child, each

4
year until the child goes to college, the family can purchase tuition units. This means when the child is
ready for college, the family has already paid for it.

How to record prepaid expenses

A company initially records prepaid expenses as an asset in its accounting books and balance sheets.
This means that even though the business paid the expense upfront, it's not an expense yet in its
financial records. The accounting department doesn't recognize these expenses until a later
accounting period. A company most commonly records the expenses of a prepaid purchase in the
accounting period that the company realizes the benefits of the purchase.

If the service or product covers several periods, then the company allocates the expense throughout
each period it realizes the benefits. This means the initial entry denoting the prepaid expense may
not affect a company's financial statements because the company hasn't received the service or
product. As the company experiences the benefit of the expense, the asset account expenses and
reduces. The following are the steps you can take to record a prepaid expense:

1. Make the payment for the prepaid expense

The first step is to make the payment for the prepaid expense on the company's balance sheet.
Ensure you mark it as an asset because it's a representation of a benefit the company is going to
receive. Don't mark it as an asset if the company won't receive the expense for another 12 months.

2. Enter it into an accounting journal

Upon paying for a prepaid expense, make an entry in the company's general accounting journal to
reflect the payment made. For example, if the company pays $6,000 for an insurance premium for six
months, note this payment in the prepaid insurance account. This creates the beginning of the
record's existence that the company paid for a good or service it expects to receive.

3. Debit the asset account

When first recording the prepaid expense entry, debit the asset account for the amount paid and
subtract the same amount from the company's cash account. Using the above example, add $6,000 in
assets to the prepaid insurance account and credit $6,000 from the cash account. The company's
overall financial record total isn't affected.

4. Expense a portion on the income statement

At the end of each accounting period that the company benefits from the prepaid service or product,
expense the portion that it has used on the income statement. For example, if the company goes by
monthly accounting periods, subtract $1,000 a month from the prepaid insurance asset account and
add $1,000 a month to the cash account. This reduces the balance of the prepaid insurance account
and turns it into an expense.

5. Repeat the process

Continue the above process until the company fully realizes the prepaid assets. For example, at the
end of the six months of insurance coverage, the company may have fully expensed its account. This
means the company may have a balance of $0 in its prepaid insurance account.

Example 1

Neptune Navigations sign a lease for one year at a rate of $5,000 a month. The property owner asks
the company to pay the entire year's lease costs upfront. This means that Neptune Navigations makes

5
a prepaid payment of $60,000 to the property owner, covering the lease for the next 12 months.
Neptune Navigations initially record this prepaid expense as a debit in its prepaid rent account and as
a credit in its cash account.

At the end of the first month, the company may have used one month's worth of rent payments. In
the company's books, it records $5,000 as a rent expense, which is the debit, and $5,000 as a credit in
the prepaid rent account. The company continues to do this every month. At the end of the year, the
prepaid rent account has $0.

Example 2

Parable Lighting purchases a one-year insurance policy that costs $2,400. The company pays for the
year-long insurance policy upfront and receives coverage for the following 12 months. When Parable
Lighting pays the insurance initially, the company debits its prepaid insurance account for $2,400 and
credits its cash account for $2,400.

This shows an increase in assets in the prepaid account and the payment in the cash account. Each
month, the company can reduce the prepaid insurance account with a credit of $200 and expense the
$200 on the balance sheet. This process may continue until the year ends and the prepaid insurance
account is empty.

Recognized Gain vs. Realized Gain: What Are the Differences?

Recognized gains and realized gains are two types of capital gains which represent the profits
companies and individuals make from selling assets. Depending on the type of asset and the financial
factors involved, recognized gains and realized gains can have several benefits. However, there are
also several differences between the two types of capital gains that you must consider when
categorizing revenues you make from selling assets. In this article, we discuss what recognized and
realized gains are, the differences between a recognized gain versus realized gain and the advantages
of both types of income.

What is recognized gain?

A recognized gain means that a business earned money by selling an asset like a piece of equipment,
property or investment. Recognized gains are represented in the difference between the initial cost of
an asset and the sale price of the asset. Depending on a company's tax obligations and the type of
asset it sells, the gain it makes from selling the asset could be taxable. Sometimes, though, recognized
gains may not be taxable.

Typically, the taxable value of a recognized gain is the difference between the initial or base price
(basis) of the asset and the sales price. In other instances, recognized gains may not be taxable or
may be deferred to a later date if companies don't recognize gains at the time of sale. The IRS sets the
standards on taxable values of recognized gains, so it's important to understand the tax criteria your
organization must meet.

What is realized gain?

Realized gain is the total profit a company earns from selling an asset after it subtracts the initial and
associated costs of the asset and any taxable amount it owes on the sale price. For instance, if you
sell a real estate asset, you can deduct the initial purchasing price you paid for the asset and any
related costs from selling the real estate, like agent fees or closing costs. Much like recognized gains,
realized gains may or may not be taxable, depending on the asset and specific tax obligations.

6
Difference between recognized gain vs. realized gain

Although recognized and realized gains are both types of capital gains, there are several key
differences between these two profitability statements. Consider the following differences between
recognized gain versus realized gain to better understand how each value works:

Calculation

Recognized gain is simply the amount of money you earn when you sell an asset. You can calculate
your recognized gain by subtracting the basis (initial cost) from the selling price of the asset. As an
example, assume a company sells stock for $10,000. If the basis is $2,500, the recognized gain is
$7,500.

Realized gain, though, is the total value of your profit after you subtract any associated costs and the
basis from the profit you made selling the asset. Using the previous example, assume the company
owes $350 in brokerage fees besides the expense of the asset's basis of $2,500. The company
calculates ($7,500) - ($2,500) - ($350) to get a realized gain of $4,650.

Tax obligations

The taxable values between recognized and realized gains can differ, too, depending on the types of
assets, costs and specific regulations companies must follow from the IRS. Some examples of
recognized gains that companies may sometimes be able to exclude from taxable assets are usually
assets that fall within specific IRS guidelines, like real estate and interest.

Tax obligations for realized gains, though, can sometimes account for costs associated with the sale of
an asset. These costs may then be tax deductible, depending on the IRS's specific criteria. For
example, the fees companies pay to brokers or agents when selling real estate or stock investments
may not be taxable if the actual earnings fall under specific guidelines the IRS sets for realized gain.
This is different from recognized gain because recognized gain doesn't account for any costs related to
the sale of an asset.

Profit and revenue

The profit values between recognized and realized gains are also different. This is because companies
don't account for expenses and costs associated with earning money from selling assets with
recognized gains. So the value of the recognized gain a company earns from selling an asset is its
revenue rather than total profit.

Realized gains account for costs and expenses and show the total profits a company earns from the
sale of an asset. Essentially, the profit in a realized gain is the remaining value after deducting fees,
taxes and other costs from the recognized gain.

Advantages of recognized gain

Recognizing capital gains you make on the sale of an asset can be beneficial in several ways:

Comes with possible tax benefits

Depending on the specific guidelines, type of asset and value of the profit, you may be eligible for
various tax benefits. The IRS outlines different criteria for factors like income bracket, basis value,
sales value and business revenue versus individual income to determine which recognized gains are
eligible for tax benefits or not.

Provides insight into revenue

7
Since recognized gain represents the gross profit a company makes from selling an asset, this value
can give shareholders and investors valuable insight into the company's ability to generate revenue.
The more efficiently a business generates revenue, the more likely it is to acquire investors, resulting
in growth opportunities.

Creates reinvestment opportunities

The ability to anticipate reinvestment opportunities is an important advantage of recognized gains.

Understanding recognized gain allows companies to better plan for reinvesting in business processes.
The insight an organization can get from calculating recognized gains can help it determine which
areas of the business to allocate funds to.

Realized gains can also have several advantages, including:

May have non-taxable earnings

Companies may take advantage of tax deductible expenses associated with selling assets. Because of
this, many organizations may be eligible to report realized gains as tax-free earnings. The IRS outlines
the specific regulations for both businesses and individuals regarding realized gains, though in many
situations, some of the expenses associated with owning the asset may be non-taxable.

Provides insight into profitability

Since realized gain deducts costs in addition to the basis, this calculation can give a better idea of a
company's profitability. Likewise, some companies may rely on realized gains as a large part of their
revenue stream. In these cases, companies can better understand the average profits they can expect
to earn from buying and selling assets like stocks, bonds and real estate.

Adds to profitability

A realized gain can add to a company's overall profitability because the value represents the net profit
the company makes after subtracting all other associated costs. Many companies often purchase
short-term assets like stocks and bonds and sell them to earn realized capital gains, which boosts
profitability and adds to growth and development.

Profit vs. Income: What's the Difference?

Understanding the difference between profit and income is an important component of running a
successful business and effectively managing expenses. While some people may consider profit and
income to be one and the same, they are actually two different types of monetary gain that affect an
organization in different ways. In this article, we explore the definition of profit, the definition of
income, the differences between profit and income, and examples of these two types of gains.

What is profit?

Profit is a financial term that refers to any revenue left over after expenses are accounted for. In other
words, profit is the difference between how much money is earned and how much is spent on
operating or producing something at the end of a set period. Profit is dependent on the revenue of
an organization, as less revenue equals less profit after expenses are deducted. Calculating profit
allows a company to realize how much it has earned compared to its costs to produce the sales that
brought in the revenue.

There are two primary types of profit that organizations must account for. These types include:

8
 ▪ Net profit: Net profit is how much money is left over after all business expenses have been
subtracted from the total revenue. This type of profit shows exactly how much a company
has earned after depreciation, taxes, interest and operating expenses have been
accounted for. Some companies refer to net profit as their bottom line, net income or net
earnings.
▪ Gross profit: Gross profit, sometimes referred to as gross income, is how much a company
has left over after subtracting the cost of goods sold (COGS). A business's cost of goods
sold is how much money it takes to produce goods or services that are used to generate
revenue. As opposed to net profit, gross profit does not take into account other business
expenses such as operating costs, rent and salary.

What is income?

Income, or net income, refers to the company's overall profitability and accounts for all money that
flows out of and into a company over a set period of time. Income involves several calculations that
include how much revenue a company brings in, other income streams the company may have and all
expenses incurred during a given period. Income represents the actual amount of money a company
earns and has available to it at any given time.

Income depends on both a company's revenue and profit and is a representation of how much
money can be distributed to an organization's shareholders. Income can also be used to reinvest into
the company to promote further growth and production.

There are two primary types of income in the business world. These types include:

-Unearned income: Unearned income comes from investments and other types of monetary gains
that are not related to production or employment. Common types of unearned income include
dividends from stock, savings accounts, retirement funds and bond interest. This type of income is
also referred to as passive income.

-Earned income: Earned income refers to any income that is gained through actual work. For
example, bonuses, salaries, wages and net earnings are all considered earned income.

What are the differences between profit and income?

There are a few key differences between profit and income that are important to understanding
when running or managing a business. These differences include:

▪ Profit is seen when expenses from the revenue are taken out, while income is seen
when all expenses incurred by a business are subtracted.
▪ Profit refers to the difference between how much money is spent and earned in a
given time period, while income represents the actual amount of money earned in a
given time period.

Profit is used to determine how much cash flow is available versus the company's total costs, while
income shows the total amount of money a company can utilize.

Profit can be calculated at several points throughout the year to inform a company of its financial
strengths and weaknesses. At the same time, income is typically only determined once a year and is
the deciding factor as to whether an organization should keep or reinvest its remaining money.

Profit is dependent on revenue, while income is dependent on both profit and revenue.

9
A primary reason why it's important to know the difference between income and profit is for financial
decisions and cash flow. For example, if you assess your company's current income shows that you
have $500 in the bank but you have expenses that are due at the end of the month, this does not
show you an accurate depiction of cash flow available. Using income as a basis for making financial
decisions without considering the actual profit of a company can result in spending money a business
doesn't have and incurring unwanted debt.

The following are examples of profit and income:

Profit example

FEL Corporation purchased several products for $1,000. The company also paid $200 in labor costs
and $100 in additional materials, for a total of $1,300 spent on cost of goods sold. FEL Corporation
then sold the goods produced for a total of $1,500.

Total sales = $1,500

Cost of goods sold = $1,300

Sales minus cost of goods sold (1,500 - 1,300) = $200

FEL Corporation's total profit is $200.

Income example

FEL Corporation spent $1,000 on the cost of goods sold during a fiscal period. They also paid $300 in
marketing and advertising fees, $15 on interest fees related to loans and $1,000 in administrative fees
and wages. FEL Corporation earned a total of $4,000 for the same period of time through sales.

Total sales = $4,000

Cost of goods sold = $1,000

Other business expenses (300 + 15 + 1,000) = $1,315

Total sales minus total expenses (4,000 - 1,315) = $2,685

FEL Corporation's total profit for that fiscal period was $2,685.

Everything You Need To Know About Income Statements

An income statement is an important document for all businesses that sell goods or offer services.
The income statement includes elements like revenue, expenses, gross profit and losses. Income
statements are used to report the operating costs and profits of a business while assisting team
leaders with making important business decisions. In this article, we'll discuss income statements and
provide a guide to assist you in drafting and filling out your own income statement.

What is an income statement?

An income statement is a document used in business for listing the financial performance of an
organization. An income statement might include numbers from the last month, from the last few
months, over a certain quarter or over the course of a year. Each business will choose the
organizational and reporting method that works best for their industry.

What is an income statement used for?

10
The purpose of the income statement is to describe how your company will use revenue and
eventually turn it into profits or losses. By dividing the income statement into different categories,
business leaders and shareholders can determine the value and efficiency of the company. They can
also use this information to compare each element of earnings to other industry organizations and
identify areas of improvement. Business leaders might also use income statements to make
developmental decisions or to assist with the decision to minimize departments or close store
locations.

It's important to ensure that your income statement is completed with accurate and clear
information because you will submit it to the Securities and Exchange Commission (SEC). While some
businesses might outsource creating their income statement to an accounting professional, other
business owners or leaders might prefer to complete it on their own.

Parts of an income statement

The typical income statement is divided into four elements, and then each element may be broken
down further to include individual line items. The important parts of an income statement include:

Revenue

Revenue—also referred to as operating revenue or income—includes the income or profits that you
earn through the offerings of certain services or the sale of products. These are the profits that you
earn before paying any interest or taxes on them. Revenue is always listed at the top of the income
statement. Nonoperating revenue may also be included in the income statement and includes other
sources of income like profits from interest earned or rental income from property ownership.
Revenue might include items like:

Products sold

Services offered

Interest earned

Rental income

Expenses/cost of goods sold

Businesses have expenses that are required for them to operate. These expenses are also referred to
as the cost of goods sold. It is the cost of materials or labor that is required to then offer products or
services to the customer. Expenses might include things like:

Rent

Utilities

Labor

Administrative costs

Interest paid on a loan

Some of these expenses may qualify for tax deductions and be written off on the business' annual tax
return. Your accountant should be able to assist with gathering that information.

Gross profit

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Gross profit is the combination of all types of profit of an organization minus the costs associated. You
can calculate the gross profit by adding up all types of profit and then subtracting the cost of goods
sold. Keep in mind, the gross profit is not the same thing as the net profit. The net profit takes other
expenses into account like interest and taxes whereas the gross profit only considers the cost of
goods sold.

Losses

Losses are used to divide the loss of value and depreciation among assets over multiple categories.
You can calculate your losses by adding up the value of all sales and then subtracting the cost of
goods to come up with the gross profit. From here, you will subtract any losses. Losses might
individual include costs like:

Depreciation

Amortization

EBITDA

EBITDA stands for "earnings before interest, taxes, depreciation and amortization." The EBITDA is not
included in every income statement but may be used when comparing profitability among multiple
businesses. When calculating the EBITDA, you combine net income with taxes, interest expenses,
depreciation and amortization.

How to create an income statement

The goal of creating an income statement is to list all relevant information in a manner that is easy to
read. You can use these steps to create an income statement:

List the company's revenue or operating income. The company's revenue is the gross of all costs
associated with creating products or offering services. Be sure to list all types of company revenue.

Input the cost of goods sold. You can calculate the cost of goods sold by adding the value of your
inventory to the amount of income from purchases or services sold. You can use the following
formula: Beginning inventory + purchases sold = ending inventory

Calculate gross profit. Gross profit can be calculated by subtracting the cost of goods sold (amount
from step #2) from the overall sales revenue. Be sure to also include any temporary gains such as the
sale of company assets or a one-time sale of unused property.

Include details about expenses. Combine all eligible expenses including interest, and input the total
amount.

Include net income before taxes. You can calculate net income before taxes by taking the gross profit
(amount from step #3) and subtracting the total cost of expenses from it.

List depreciation and amortization expenses. These are costs often calculated by an accountant. Input
these numbers into the income statement and then calculate your net income.

You can use the following template when drafting your income statement:

Income statement for [Company Name]

For the quarter ending [Date]

Revenue:

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Sales revenue: [Input sales revenue]

Services revenue: [Input services revenue]

Total revenue: [Sales revenue] + [Services revenue] = [Total revenue]

Cost of goods sold: [Beginning inventory] + [Purchases sold] = [Ending inventory]

Gross profit: [Profit total] - [Cost of goods sold] = [Gross profit]

Expenses:

Rent: [Input cost of rent]

Utilities: [Input cost of utilities]

Labor: [Input labor costs]

Administrative costs: [Input administrative costs]

Loan interest: [Input loan interest costs]

Total expenses: [Combine all expenses here]

Net income before taxes: [Gross profit] - [Total expenses] = Net income before taxes

Depreciation and amortization: [Input depreciation, amortization and other taxes]

Net income: [Total expenses] - [Depreciation and taxes owed] = Net income

Income statement example

While every businesses income statement might look a little different, here is an example of an
income statement that uses the template above:

Revenue:

Sales revenue: $480,000

Services revenue: $240,000

Total revenue: $720,0000

Cost of goods sold: $180,000

Gross profit: $540,000

Expenses:

Rent: $18,000

Utilities: $8,000

Labor: $280,000

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Administrative costs: $1,900

Loan interest: $8,800

Total expenses: $316,700

Net income before taxes: $223,300

Depreciation and amortization: $27,900

Net income: $195,400

Accounting KPIs for Accounts Payable Departments

Accounts payable departments take care of a company’s short-term liabilities. They are responsible
for tracking what is owed to suppliers and when. Accurate accounts payable data is required to
ensure accounting managers have the best information possible when making important decisions.
When accounts payable departments pay their bills accurately and on time, it maintains good
relationships with external vendors which can lead to favorable payment terms and discounts. Here
are the best key performance indicators that an accounts payable department can use to track
performance:

Days Payable Outstanding (DPO) – This is a financial ratio that shows the average number of days it
takes for a company to pay its bills. It may sound counterintuitive, but a higher DPO value is actually
desirable since it allows a company to hold onto their cash for longer which can be used for short-
term investments and increase free cash flow. However, if DPO is too high it can indicate that the
company may have problems paying its bills.DPO = (Accounts Payable / Cost of Goods Sold) x # of
Days

Cost per Invoice – This is an accounting manager KPI that indicates the total average cost of
processing a single invoice from receipt to payment. A high cost per invoice suggests that
inefficiencies exist within the accounts payable department.Cost per Invoice = Total AP Department
Expenses / # of Invoices Processed

Invoice Cycle Time – This is an accounting metric that tracks the average amount of time it takes to
complete the invoice payment cycle from receipt until payment. High invoice cycle time can make it
difficult to make payments in time which will result in late payment penalties and strain on vendor
relationships.

Invoice Exception Rate – This accounting KPI shows the percentage of invoices that have issues and
require manual intervention due to missing or incorrect information. High invoice exception rates are
associated with a slowdown in the entire accounts payable process and can potentially lead to
duplicate payments or other errors.Invoice Exception Rate = Total Invoices with Exceptions / Total
Invoices

Payment Error Rate – This key performance indicator measures the accuracy of the accounts payable
department. Common payment errors include incorrect account numbers, incorrect payment
amounts and duplicate payments. High payment error rates indicate that a problem exists with
accounts payable staff or processes.Payment Error Rate = Total # of Payments Made Containing Errors
/ Total # of Payments Made

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Error Resolution Time – This accounting metric tracks the time it takes to correct an error when it is
identified. If this value is high, it likely means the error resolution process can be made more efficient
in order to free up staff time and better satisfy vendors.Error Resolution Time = Total Time Spent
Resolving Errors / Total # of Errors

Invoices Processed per Year per Full Time Employee (FTE) – This key performance indicator reveals
the efficiency of your accounts payable department employees. A low value for this suggests that
accounts payable processes have room for improvement or that staff can benefit from additional
training.Invoices Process per Year per FTE = Total Invoices Processed in a Year / # of FTEs

Accounts Payable Expense as a Percentage of Revenue – This ratio compares the cost of accounts
payable to total revenue. As companies grow, they will usually need to spend more on accounts
payable. This KPI allows accounting managers to track if accounts payable expenses are growing at
the same pace as revenue. If this value is increasing, it could indicate inefficiencies within the
department.

Discounts Received for Paying within Discount Period – Paying within the discount period according
to the agreed upon credit terms can allow your company to receive sizable discounts and increase
profitability. Tracking the amount of discounts received compared to discounts lost allows accounting
managers to determine how well the accounts payable department is adhering to credit terms. It also
quantifies the dollar value associated with their performance.

Electronic Invoices Rate (as a Percentage of Total Invoices) – Electronic invoices are much faster to
process when compared to paper invoices. Encouraging vendors to provide electronic invoices can
save your accounts payable department time and money. Electronic Invoices Rate = Total Electronic
Invoices / Total Invoices

You should now have a grasp of what KPIs for the accounting department look like. However, it is
important to note that not all KPIs are created equally – some are more useful than others. This next
section will help you identify which accounting KPIs you should be implementing at your company.

What Makes the Best Accounting KPI Metrics?

The accounting sector is rapidly changing and growing more complex with the development of new
technology that has resulted in widespread productivity improvements. However, this means that
tracking performance using accounting KPIs is more important than ever. Accounting managers must
use new metrics to track how well their department is adapting rather than just changing for the sake
of change. While this article explains the most common examples of accounting KPIs, you may want
to come up with your own that are customized specifically for your company. Take the following
important factors into consideration:

Define Associated SMART Goals – Every accounting KPI should have a goal in mind that is SMART:
specific, measureable, attainable, realistic and timely. This will allow you to track your progress as
your organization gets closer to achieving its goals.

Track Your Progress – Seeing your KPIs move closer to your goals shows that changes you are making
are improving performance. If they are moving in the other direction, it could mean that process
changes are having the opposite effect and should be revisited.

Aligned with your Processes – accounting KPIs need to be aligned with your accounting department’s
processes. Creating additional work for the sake of a new KPI is counterproductive.

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Context – KPIs need to be evaluated within the context of your organization as a whole. It can be
difficult to control KPIs that are easily influenced by external forces.

Reliable Data – KPIs are only as good as the data that are used as inputs. Business intelligence
software can help you retrieve, analyze and report data to be used as inputs for your accounting KPIs.

Now that you have a better understanding of how to develop and utilize accounting KPIs, let’s take a
look at some examples of KPIs for accounts receivable departments.

Accounting KPIs for Accounts Receivable Departments

Accounts Receivable Departments are responsible for the collection of credit sales. By managing
invoice due dates and minimizing the amount of outstanding receivables, they are instrumental in
maintaining the company’s cash flows and liquidity. Profitability can also be influenced by the
effectiveness of an accounts receivables department because some receivables turn into bad debt, a
receivable that is unable to be collected. The reduction of these factors must also be balanced with
maintaining good relationships with customers so that repeat sales can occur. Here are the best KPIs
for an accounts receivable department:

Days Sales Outstanding (DSO) – This is a financial ratio that measures the average number of days it
takes for a company to collect receivables from a sale. A low DSO number indicates good cash flow as
a result of receivables being converted to cash quickly.DSO = (Accounts Receivable / Total Credit
Sales) x # of Days

Bad Debt to Sales Ratio – This accounting manager KPI shows the number of unpaid invoices
compared to total sales. A low number is generally good as it means bad debt is being avoided.
However, companies should also consider that avoiding all credit risks can lead to a reduction of
revenue due to lost sales. Bad Debt to Sales Ratio = Total Bad Debt / Total Annual Sales

Best Possible Days Sales Outstanding (BPDSO) – This key performance indicator is similar to Days
Sales Outstanding (DSO), but excludes overdue invoices and should be compared to your company’s
payment terms. If BPDSO is higher than your standard payment terms, not all of your invoices are
being billed under the same policy. This could be due to favorable terms being given to some
customers or it could indicate a problem with some invoices.BPDSO = (Current Accounts Receivables /
Total Credit Sales) x # of Days

Average Days Delinquent (ADD) – This accounting metric tracks the duration that the average
payment is overdue. A high ADD value can be a warning that the accounts receivable procedures
need improvement. The calculation for this metric is the difference between two KPIs we previously
discussed: Days Sales Outstanding and Best Possible Days Sales OutstandingADD = DSO – BPDSO

Collection Effectiveness Index (CEI) – This calculation measures a company’s ability to collect all
accounts receivables from customers over a certain time period. Tracking CEI over time can help
identify actions that are helping or hurting the collection of accounts receivables.CEI = [(Beginning
Receivables + Monthly Credit Sales – Ending Total Receivables) / (Beginning Receivables + Monthly
Credit Sales – Ending Current Receivables)] x 100

Receivables Turnover Ratio – This accounting department KPI shows how often a company converts
receivables into cash over a period of time. This provides useful information on liquidity and cash
flow. A high value means that receivables are being collected quickly. However, it could also indicate
that the company is too averse to accepting riskier credit sales and a loss of total revenue.Receivables
Turnover Ratio = Net Credit Sales / Average Accounts Receivable

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Percentage of High-Risk Accounts – This accounting metric is useful in combination with the other
accounts receivable KPIs because it helps provide context to what their values mean. One example of
this is if the percentage of high-risk accounts is high and bad debt to sales ratio is low, we can be
assured that the accounts receivable department is working effectively. In this case, we know that
bad debt is not low just because riskier credit sales are being avoided.

Number of Invoicing Disputes – Billing mistakes can damage the reputation of a company and also
increase the amount of processing time required for a single invoice. If this value is increasing, it can
indicate that staff or changes in processes are causing more mistakes and should be reviewed for
effectiveness.

Percentage of Credit Available – If your accounts receivable department sets a limit on the amount
of credit sales that individual customers can use, the amount of credit given should be compared to
the amount available. If any customers are at the maximum amount, but regularly pay off their
accounts on time, increasing their credit limit may increase total sales.

Operational Cost Per Collection – This KPI tracks the full operational cost of collecting a single
payment. This allows your company to determine the efficiency of accounts receivable department
staff and tracks how it changes as processes are updated. Automation of accounts receivable
procedures can help reduce this value in the long run.

It is great to have lots of KPIs for your accounting department, but how well are they being tracked? Is
your accounting department tracking KPIs in Excel? Or have they implemented specialized financial
reporting software, like a dashboard?

Enhance Your Reporting with an Accounting KPI Dashboard and Reporting Software
Accounting departments in organizations of all sizes can realize benefits by using an accounting KPI
dashboard and reporting software. insightsoftware’s reporting software can provide a solution that
offers the following features:

Handling Large Datasets – insight software’s accounting reporting solution is able to process large
sets of raw data into useful information which can then be analyzed.

Consolidated Data – An accounting KPI dashboard allows all of your data to be brought to one
centralized location which can save an accounting department time and money.

Integration with Existing Systems – Are your KPIs for the accounting department primarily in Excel or
another ERP? Our software has the ability to integrate with your current ERP system allowing for
automatic update of information as each system is updated.

Instant Reporting – Reports are available on demand and instantly. Business agility is becoming more
important in our current business environment, and this will allow your organization to react faster to
internal and external factors rather than waiting around for reports to be generated.

It should now be obvious that an accounting reporting solution makes managing KPI data and
reporting simpler and more effective. Let’s discuss another type of accounting department that can
improve its performance by tracking various metrics.

Accounting KPIs for Internal Accounting Departments

Internal accounting departments are responsible for budgeting and reporting financial information to
various stakeholders across an organization. Accurate budgets will reduce wasted expenses and
timely reports will allow managers to make decisions more quickly. Both of these enhance the

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profitability of a company, so it is important to track performance using KPIs suited for an internal
accounting department. Here are the best metrics to use:

Budget to Actual Variances – This accounting manager KPI measures the deviation between actual
and budgeted costs. A high variance indicates that the budgets are out of sync with the actual
spending of other departments. This could mean that the budgets did not adequately consider all
required spending or it could show that other departments are not doing a good job of controlling
their expenditures.

Days to Complete Monthly Close – This example shows how efficient the internal accounting
department is at closing the books at the end of each month. If this period is too long, it can lead to
delayed reporting of financial information.

Days to Complete Annual Close – Similar to the previous measure, this shows how fast your internal
accounting department is at closing the year end books. Delays to the annual close can lead to poor
quality annual reports as a result of being rushed.

First Contact Resolution Rate (FCRR) – This accounting manager KPI measures the proportion of
requests to the internal accounting department that are solved upon first contact, so that further
communication is not necessary. A high FCRR indicates that the service level of the internal
accounting department is satisfying other business areas and reducing the amount of time that staff
spends resolving issues. FCRR = # of Requests Solved upon First Contact / Total # of Requests

Number of Self-Identified Errors – Every internal accounting department should be running audit
reports with the purpose of catching errors. For this KPI, the value must be interpreted carefully. If
this number is increasing over time, it could indicate that more errors are occurring or it could mean
a more effective internal audit process.

Errors Detected by External Auditors – This metric is a record of how many errors are not caught by
internal audits or reports and make it all the way to detection by external auditors. These errors are
serious as they indicate that the internal accounting department does not have sufficient measures in
place to catch mistakes. It is best to track this over time and ensure that this value is not increasing.

Accounting Employees to Full Time Employees (FTE) Ratio – This key performance indicator shows
how efficient your internal accounting department is as it compares its size to the rest of the
company. Having a low value means the internal accounting department is being efficient with costs
by reducing the number of employees needed to complete the job. However, it is important to
ensure that other KPIs are not ignored in order to keep this ratio low.Accounting Employees to FTE
Ratio = Total # of Accounting Employees / Total # of FTEs

Internal Complaints Received – For the internal accounting department, other business areas are the
customers. If complaints are decreasing as process and policy changes occur, it is a good indication
that these changes are working. Not only does this increase customer satisfaction, but it also saves
accounting staff time and costs to resolve these issues.

Number of Budget Iterations – This internal accounting department KPI helps determine the
performance of the company’s budgeting process by recording the number of times a budget needs
to be reworked in a year. This can be influenced by the degree to which the process has been
automated as manual processes tend to be more prone to errors. Factors external to the accounting
department must also be considered when analyzing the results. Some examples of this include
changes to inter-departmental policies, overall business strategy, or economic climate.

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