The size of the finance team required to keep an organization thriving can vary significantly from one company to another. A valuable way to assess your performance is by calculating the number of finance function full-time equivalent employees (FTEs) per $1 billion in revenue. This benchmark enables you to compare your performance against peers and competitors across various industries, providing a clearer view of your organization’s effectiveness.
Generally speaking, having fewer FTEs per billion in revenue is a positive indicator. It suggests that your organization is able to accomplish its financial tasks more efficiently, achieving the same results as others but with a leaner team.
Here are some tips to maximize the efficiency of finance FTEs in an organization.
- Focusing FTEs- APQC reports that personnel costs make up 60% of finance function expenses, with many finance teams spending over 50% of their time on transaction processing. While this is acceptable for transaction-centric companies like Amazon, it may signal inefficiencies in others, where employees are stuck on manual tasks. New automation tools can enhance employee efficiency, as advancements in technology have made it easier and more affordable to automate processes like accounts payable and receivable, potentially reducing the need for full-time employees in transaction processing.
- Shared Service Centers to Boost Finance Function Efficiency- Many organizations are adopting a shared services model for finance to enhance efficiency and achieve economies of scale. Shared service organizations (SSOs) centralize high-volume, repeatable processes for various business units. When staffed with trained personnel and standardized processes, SSOs significantly improve efficiency. For instance, APQC’s shared services research shows that median-performing SSOs have 65 finance FTEs per $1 billion in revenue, while those in the bottom quartile have 100, and top quartile SSOs have only 33.
Learn more and explore the average number of Finance FTEs per $1 billion in revenue in this article.