APQC Financial Management Definitions and Key Measures
APQC Financial Management Definitions and Key Measures
APQC Financial Management Definitions and Key Measures
History
The Process Classification Framework was originally envisioned as
a taxonomy of business processes. The initial design involved more
than 80 organizations with a strong interest in advancing the use of
benchmarking in the United States and worldwide. Since its inception,
the PCF has been updated a number of times to reflect changes in the resulted in this document: a listing of processes with definitions and
way organizations do business. selected key performance indicators. The definitions contained in this
document are to be considered in conjunction with the PCF. The content
In response to feedback from users of the PCF, APQC engaged in this document will be updated according to research performed by
practitioners, consultants, and academics to develop definitions based APQC and subsequent updates to the PCF. This document was created
on real-world experience with the processes. That collaborative effort using PCF version 5.1.0.
8.1 Perform Planning and Management Accounting ________________ 3 8.6 Process Accounts Payable and Expense Reimbursements_________ 8
Key performance indicators for this process Key performance indicators for this process
group typically include_ ____________________________________ 3 typically include___________________________________________ 8
8.1.1 Perform Planning/Budgeting/Forecasting ________________ 3 8.6.1 Process Accounts Payable ____________________________ 8
8.1.2 Develop and Implement Human Resources Plans_________ 3 8.6.2 Process Expense Reimbursements _____________________ 8
8.1.3 Perform Cost Management ___________________________ 3
8.1.4 Evaluate and Manage Financial Performance______________ 3 8.7 Manage Treasury Operations________________________________ 9
Key performance indicators for this process
8.2 Perform Revenue Accounting _______________________________ 4 typically include___________________________________________ 9
Key performance indicators for this process 8.7.1 Manage treasury policies and procedures _______________ 9
group typically include_ ____________________________________ 4 8.7.2 Manage Cash _ _____________________________________ 9
8.2.1 Process Customer Credits____________________________ 4 8.7.3 Manage In-house Bank Accounts _ _____________________ 9
8.2.2 Invoice Customer___________________________________ 4 8.7.4 Manage Debt and Investment _________________________ 9
8.2.3 Process Accounts Receivable __________________________4 8.7.5 Manage Financial Risks _______________________________ 9
8.2.4 Manage and Process Collections _______________________ 5
8.2.5 Manage and Process Adjustments/Deductions ___________ 5 8.8 Manage Internal Controls__________________________________ 10
Key performance indicators for this process
8.3 Perform General Accounting and Reporting ___________________ 5 typically include__________________________________________ 10
Key performance indicators for this process 8.8.1 Establish Internal Controls, Policies, and Procedures _____ 10
group typically include_ ____________________________________ 5 8.8.2 Operate Controls and Monitor Compliance with
8.3.1 Manage Policies and Procedures_ ______________________ 5 Internal Controls Policies and Procedures ______________ 10
8.3.2 Perform General Accounting__________________________ 5 8.8.3 Report on Internal Controls Compliances _ ____________ 10
8.3.3 Perform Fixed Asset Accounting _ _____________________ 6
8.9 Manage Taxes_ __________________________________________ 10
8.3.4 Perform Financial Reporting __________________________ 6
Key performance indicators for this process
typically include__________________________________________ 10
8.4 Manage Fixed Asset Project Accounting_______________________ 6 8.9.1 Develop Tax Strategy and Plan _______________________ 10
Key performance indicators for this process 8.9.2 Process Taxes _____________________________________ 10
typically include___________________________________________ 6
8.4.1 Perform Capital Planning and Project Approval _ _________ 6 8.10 Manage International Funds/Consolidation____________________ 11
8.4.2 Perform Capital Project Accounting ___________________ 6 Key performance indicators for this process
typically include__________________________________________ 11
8.5 Process Payroll_ __________________________________________ 7 8.10.1 Monitor International Rates _________________________ 11
Key performance indicators for this process 8.10.2 Manage Transactions _______________________________ 11
typically include___________________________________________ 7 8.10.3 Monitor Currency Exposure/Hedge Currency __________ 11
8.5.1 Report Time_ ______________________________________ 7 8.10.4 Report Results ____________________________________ 11
8.5.2 Manage Pay_ _______________________________________ 7
8.5.3 Report Payroll Taxes ________________________________ 7 Related Processes ____________________________________________ 11
3.5.4 Manage Sales Orders _______________________________ 11
6.4.4 Administer Payroll _________________________________ 11
RIGHTS AND PERMISSIONS organizes operating and management processes into 12 enterprise-
©2010 APQC. ALL RIGHTS RESERVED. level categories, including process groups and over 1,500 processes
and associated activities. The PCF and its associated measures and
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for classifying and defining processes. APQC grants permission for no charge at www.apqc.org.
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standard to facilitate improvement through process management
and benchmarking regardless of industry, size, or geography. The PCF
This process group encompasses financial planning processes, including preparing quarterly and annual projections of revenue,
expenses, operating profit, net income, and capital investments. The processes in this group support decision making through an
analysis of the organization’s historical effectiveness and by recommending the most effective ways to allocate scarce resources to
ensure that economic value is created for shareholders.
This process group includes the recording/reporting of data related to the sale of goods and/or services provided to customers. Revenue
accounting, which is a major component of preparing formal financial statements, reflects the decisions an organization makes to
recognize revenues in a given reporting period. Costs (both direct and allocated) are then applied to revenue to determine profit. The
Perform revenue accounting process includes revenue recognition decisions and often decisions about reserves held back for bad debts
and outstanding liabilities such as warrantees.
This process group is greatly affected by process 3.5.4 Manage sales orders, which is explained in the Related Processes section of this
document.
• Total cost of process 3.5.4 Manage sales orders per • Total cost of process 8.2.3 Process accounts receivable as a
$1,000 revenue percentage of revenue
• Number of sales order line items per 3.5.4 Manage sales • Percentage of total receipts that are processed error-free the
orders FTE first time
• Average days sales outstanding • Cycle time in days to resolve adjustments
• Cycle time in days for credit approval • Percentage of invoice line items paid in full the first time
• Cycle time in days to generate complete and correct • Cycle time between product/service delivery and receipt of
billing data customer payment
• Total cost of process 8.2.3 Process accounts receivable per • Total annual value of uncollectible balances as a percentage of
customer receipt revenue
This process group contains processes related to managing an organization’s ongoing financial records, including the maintenance of the
chart of accounts, the processing of journal entries, and the adjustment of the organization’s general ledger accounts. This group also
encompasses all operational activities performed to close the books on a monthly, quarterly, and yearly basis as well as the recording,
tracking, and depreciation of fixed assets.
This process group encompasses the financial planning and supervising of projects involving fixed assets (capital projects), including
additions, retires, transfers, adjustments and depreciation expenses. This group typically relates to the acquisition or disposal of
fixed assets.
New fixed assets for the business that result from these projects will then be tracked under process 8.3.3 Perform fixed asset accounting.
This process group consists of reporting time, managing pay, and processing taxes. Payroll administration tasks as defined under
6.4.4 Administer payroll 1 are not considered in scope for 8.5 Process payroll.
1
See the Related Processes section of this document for more information about process 6.4.4 Administer payroll.
This process consists of processing payments for operating expenses and other supplier charges, which includes verifying of accounts
payable with vendor records, maintaining and managing electronic commerce, auditing invoices and approving payments, processing
financial accruals and reversals, processing payments and taxes, researching and resolving exceptions, and adjusting accounting
records. It also encompasses the development of policies and procedures around the processing of accounts payable and all related
operations. Technology is typically key to achieving top performance in this process.
This process group includes the management of treasury policies and procedures, cash, in-house bank accounts, debts, investments,
and financial risks.
• Number of FTEs for process group 8.7 Manage treasury operations per $1 billion revenue
This process group consists of operating controls, monitoring compliance with internal controls policies and procedures, and reporting
on internal controls compliance.
• Total cost to perform the processes in process group 8.8 Manage • Average cycle time in calendar days (including weekends)
internal controls as a percentage of revenue from identification of a change in risk until changes to risk
• Number of FTEs for process group 8.8 Manage internal controls management policies and procedures are completed and
per $1 billion revenue ready for deployment/communication/implementation by the
business entity
8.8.2 Operate Controls and Monitor Compliance with Internal Controls Policies and Procedures
This process incorporates the planning, management, operation, and monitoring of internal control mechanisms, policies,
and procedures. It includes designing and implementing control activities; monitoring control effectiveness; remediating
control deficiencies; creating compliance functions; operating compliance functions; and implementing and maintaining
technologies and tools to enable the controls-related activities.
This group includes the processes associated with estimating an organization’s periodic tax liabilities and ensuring that appropriate
taxing authorities receive tax return filings and payments when due.
• Number of FTEs for process group 8.9 Manage taxes per $1 billion revenue
This is the process of managing cash collections and disbursements made by operating units across the enterprise and, when
appropriate, transferring cash from those units to parent-level bank accounts managed by the organization’s treasury team.
Related Processes
These processes are not found in category 8.0 but apply to most financial management functions.