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Introduction to this document

Critical success factors plan

It can sometimes be extremely difficult to get everyone in the finance team pulling in the same direction and focusing on the true essentials. That’s where a critical success factors (CSFs) plan can help.

Critical success factors

CSFs are the essential areas of activity that must be performed well if your finance department is to achieve its key objectives and goals. CSFs will help everyone in the finance team to know exactly what's most important and so pull together towards the same overall aims.

You may find a number of candidates for your CSFs. Reduce the list to what is absolutely essential. There isn’t a right or wrong number to have but it’s better to have fewer of them to concentrate on rather than more. Five CSFs is a good rule of thumb and that’s the number we’ve allowed for in our Critical Success Factors Plan document.

For example, your overall objective could be to deliver the month-end management reports on time, with zero audit adjustments and without the team working more than four hours of overtime each per month. Delivering this depends on two main factors: (1) the time taken to close the books; and (2) the time taken to prepare the analysis. Ensuring zero audit adjustments is also dependent on the finance team carrying out a number of tasks such as: (1) running cut-off procedures; (2) maintaining full accruals and prepayments; and (3) ensuring data is recorded accurately.

Measuring success

Once you have identified the CSFs for the finance function, you will need to keep track of how you are compared to your critical success factors plan. Remember that CSFs are the essential activities that must be performed to achieve your objectives and they are not the same as key performance indicators. To monitor a CSF, you can either measure inputs or outputs. For example, in the context of the sales ledger you could: (1) measure inputs - monitor the actual performance of the weekly sales ledger control account reconciliations, i.e. are they being done?; and/or (2) measure outputs - monitor the number of errors found each month in the sales ledger.