KPIs and Performance Metrics
Finance, Accounting, and Treasury Department KPIs and Performance Metrics – A 360-Degree Approach
Ensuring Financial Efficiency, Regulatory Compliance, and Risk Control for Mega Construction Projects
1. Introduction
The Finance, Accounting, and Treasury Departments at BEC Arabia rely on Key Performance Indicators (KPIs) to measure financial efficiency, cost control, compliance, and liquidity management. These KPIs provide insights into the financial health of the company, ensuring that all transactions, budgets, and contracts align with Saudi regulations, IFRS/SOCPA standards, and strategic business objectives.
A 360-degree KPI framework is essential to:
Ensure budget adherence and financial discipline
Track financial compliance, tax accuracy, and reporting integrity
Monitor liquidity, investment returns, and cash flow efficiency
Optimize procurement payments, supplier financial risk, and contract finance management
Prevent financial risks through forecasting, cost variance analysis, and treasury optimization
2. Financial Planning & Budgeting KPIs
2.1 Budget Adherence Rate
Definition: Measures the percentage of projects that stay within the approved budget.
Formula: Budget Adherence (%) = [(Approved Budget - Actual Expenditure) / Approved Budget] × 100
Target Benchmark: 95% of projects should stay within budget limits.
Reporting: Tracked through ERP-based cost monitoring and financial reporting dashboards.
2.2 Cost Overrun Percentage
Definition: Measures the variance between estimated project costs and actual expenses.
Formula: Cost Overrun (%) = [(Actual Cost - Estimated Cost) / Estimated Cost] × 100
Target Benchmark: Keep cost overruns below 5%.
Reporting: Included in financial variance reports and ERP-generated cost control summaries.
2.3 Budget Forecast Accuracy
Definition: Evaluates how accurately financial forecasts predict actual project expenditures.
Formula: Forecast Accuracy (%) = [(Forecasted Cost - Actual Cost) / Forecasted Cost] × 100
Target Benchmark: 90% accuracy between projected and actual costs.
Reporting: Power BI dashboards tracking monthly financial forecast accuracy.
3. Accounting & Financial Reporting KPIs
3.1 Financial Statement Accuracy Rate
Definition: Measures how accurately financial reports align with actual financial transactions.
Formula: Accuracy Rate (%) = [(Total Correct Transactions - Errors) / Total Transactions] × 100
Target Benchmark: 99.5% accuracy in financial statements.
Reporting: Reviewed quarterly through internal and external financial audits.
3.2 Audit Compliance Pass Rate
Definition: Measures the percentage of internal and external audits passed without non-compliance issues.
Formula: Audit Pass Rate (%) = (Successful Audits / Total Audits Conducted) × 100
Target Benchmark: 100% compliance with external and internal financial audits.
Reporting: Annual financial compliance reviews with external auditors.
3.3 Invoice Processing Efficiency
Definition: Measures the average time required to process and approve invoices.
Formula: Invoice Processing Time = Total Invoice Processing Days / Number of Invoices
Target Benchmark: Reduce invoice processing time to 10 days or less.
Reporting: Automated invoice tracking through ERP financial modules.
4. Taxation & VAT Compliance KPIs
4.1 VAT Compliance Accuracy Rate
Definition: Measures the accuracy of VAT filings compared to financial transactions.
Formula: VAT Compliance Rate (%) = [(Total Accurate VAT Reports - Errors) / Total VAT Reports] × 100
Target Benchmark: 100% accuracy in VAT compliance filings.
Reporting: Quarterly ZATCA VAT compliance reports and e-Invoicing records.
4.2 Tax Filing Timeliness
Definition: Measures the percentage of tax filings completed on time.
Formula: Tax Filing Timeliness (%) = (On-Time Filings / Total Filings) × 100
Target Benchmark: 100% on-time tax submissions to ZATCA.
Reporting: Tax filing records and compliance reports.
4.3 Withholding Tax (WHT) Compliance Rate
Definition: Measures the accuracy of withholding tax (WHT) calculations on supplier payments.
Formula: WHT Compliance (%) = [(Total Correct WHT Transactions) / Total Transactions] × 100
Target Benchmark: 99.9% accuracy in WHT deductions.
Reporting: Supplier tax records and compliance logs.
5. Treasury & Liquidity Management KPIs
5.1 Liquidity Ratio
Definition: Measures the company’s ability to meet short-term financial obligations.
Formula: Liquidity Ratio = Current Assets / Current Liabilities
Target Benchmark: Maintain a liquidity ratio of 1.2:1 or higher.
Reporting: ERP-based liquidity monitoring and cash flow analysis reports.
5.2 Cash Flow Coverage Ratio
Definition: Measures how well cash inflows cover project and operational expenses.
Formula: Cash Flow Coverage (%) = (Operating Cash Flow / Total Expenses) × 100
Target Benchmark: Maintain at least 100% coverage of cash outflows with cash inflows.
Reporting: Monthly cash flow reports from Treasury and Finance.
5.3 Debt-to-Equity Ratio
Definition: Measures the company's financial leverage.
Formula: Debt-to-Equity Ratio = Total Liabilities / Shareholder Equity
Target Benchmark: Keep debt-to-equity below 2:1 to ensure financial stability.
Reporting: Annual capital structure and debt management reports.
6. Contract Finance & Procurement KPIs
6.1 Payment Processing Efficiency
Definition: Measures the percentage of supplier payments processed on time.
Formula: Payment Efficiency (%) = (On-Time Payments / Total Payments) × 100
Target Benchmark: 100% on-time supplier payments.
Reporting: Supplier financial records and ERP-based payment schedules.
6.2 Procurement Cost Savings Rate
Definition: Measures cost savings achieved through procurement negotiations and efficiency.
Formula: Procurement Cost Savings (%) = [(Baseline Cost - Actual Cost) / Baseline Cost] × 100
Target Benchmark: Achieve at least 10% cost savings annually.
Reporting: Procurement financial performance reports.
6.3 Contract Financial Risk Exposure
Definition: Measures the percentage of contracts at financial risk due to claims, disputes, or variations.
Formula: Financial Risk Exposure (%) = (Total At-Risk Budget / Total Project Budget) × 100
Target Benchmark: Keep financial risk exposure below 3%.
Reporting: Quarterly financial risk assessments from Contracts Administration.
7. Conclusion
The Finance, Accounting, and Treasury Departments at BEC Arabia use a structured KPI framework to ensure:
Financial accuracy, budget control, and cost efficiency
Full compliance with tax, audit, and financial reporting regulations
Effective liquidity management, investment planning, and risk mitigation
Optimized procurement payments and contract financial performance tracking
Seamless integration of digital financial tools for real-time financial oversight
By maintaining clear financial performance metrics, BEC Arabia ensures sustainable financial growth, regulatory compliance, and operational efficiency in mega construction projects.
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