Hiring guide
Build a finance KPI dictionary before automating reports
By CFO Index · Published
A KPI dictionary is a short specification for each number management uses. It should let another person reproduce the result, not merely expand an acronym. Start with the few measures that influence decisions before automating a dashboard whose labels different teams interpret differently.
Write a calculation rule, not a slogan
For each measure, record its purpose, formula, entity scope, period, currency, units, source fields and owner. Define exclusions and what happens when inputs are missing. For a ratio, specify both numerator and denominator, including whether the denominator is a starting balance, closing balance or average. Set a rule for a zero denominator, such as displaying 'not applicable' with an explanation rather than an unexplained zero. These are proposed reporting controls, not universal KPI definitions.
Use a complete dictionary entry
The example below defines an internal invoice-process measure. It deliberately excludes payment collection and accounting revenue recognition. Adapt the time window and scope to a decision your team actually needs to make.
| Field | Example definition |
|---|---|
| Purpose | Monitor the hand-off from invoice readiness to invoice issue |
| Population | All invoice requests first marked ready in the selected month for Entity A |
| Numerator | Requests issued within two working days of readiness |
| Denominator | All requests in that population; exclude documented duplicates only |
| Calendar and cutoff | Entity A working-day calendar and timezone; assess after every request's two-day window has elapsed |
| Missing data | Keep requests without an issue timestamp in the denominator; flag the data gap |
| Owner and version | Billing lead; approved definition ID and effective date |
A denominator change can manufacture improvement
Hypothetical completed cohort: 40 requests became ready, 30 were issued within two working days, six were issued later and four remain unissued. Under the example definition, the rate is 30 divided by 40, or 75%. If an analyst quietly excludes the four unissued requests, the result becomes 30 divided by 36, or 83.3%. Nothing improved operationally. The calculation changed. Retain the cohort and issue records so both the numerator and denominator can be checked; these figures are not service-level benchmarks.
Document product settings beside the export
Stripe's subscription analytics documentation allows configuration of certain MRR discount treatments and when a subscriber first becomes active. It also provides customer-level MRR change exports. Those details illustrate why a product's metric label is not the complete definition. Record relevant settings, export time and the calculation version used in your report. If you build a separate management measure, label it distinctly and explain the difference rather than forcing both systems to show the same number.
Test boundaries before connecting the dashboard
Create a small test set with ordinary cases and exceptions: a request ready just before month-end, a duplicate, a late invoice, a missing timestamp and a holiday between readiness and issue. Write expected inclusion and timing outcomes before running the calculation. Have the process owner check them. For monetary metrics, add refunds, currencies and tax treatment as relevant, with the accounting owner's input. A reproducible formula can still answer the wrong business question if its population is poorly chosen.
Version definitions separately from corrections to data
Give each approved rule an effective date and preserve the prior version. When a definition changes, show its effect on comparisons where practicable and mark any break in the series. A corrected source timestamp is a data correction; a new working-day calendar or population rule may be a definition change. Record which reports need updating. Do not silently rewrite issued management packs so historical decisions appear to have used information unavailable at the time.
What to ask your fractional CFO to hand over
Request a small approved dictionary, test cases with expected results, source mappings and an exception owner. Have a colleague recreate one KPI from the source records using only the written entry. Resolve differences before scheduling automatic refreshes. Keep a visible 'provisional' status when important inputs are incomplete. Automation can repeat a calculation consistently; the dictionary establishes which calculation the business has actually agreed to use.