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What's the right size (headcount) for the accounting/finance department?

Corporate Finance & Accounting Department Headcount BenchmarksI'm looking for benchmark data regarding staff size in accounting/finance.  I'm particularly interested in the medical device manufacturing industry.

 

Answers

Sheila Saffold
Title: Manager of Accounting
Company: Hospital
(Manager of Accounting, Hospital) |

I work at a large, urban teaching "safety net" hospital that grosses $150 mm/mo. in patient revenue. The total accounting/finance group is about a 100 people. Most of those people are in patient financial services. The core group that produces financial statements is 6 people. Managerial accounting is another 7 people. Accounts payable is 4 people. Reimbursement is 2 people.

As you consider this matter, there are variables that can't be counted in warm bodies. A group of highly educated, very experienced people who have been working well as a team for 10 years can produce more work than a similar-sized group of newbies who are working together for the first time. Departments will lots of drama or micromanaging get less work done than chilled-out groups who take responsibility for their own work.

Sharon Zeiler
Title: Consultant
Company:
(Consultant, ) |

Sheila -

I'm looking at a position in which the company's revenues will be based on healthcare provider payments. I would greatly appreciate speaking with you regarding your insights in this area.

Thank you in advance,
Sharon

Sarah Jackson
Title: Associate Editor
Company: Proformative
(Associate Editor, Proformative) |

Headcount is one important KPI. This free report details...

"Five Key Performance Indicators for Greater Financial Success"
https://www.proformative.com/whitepapers/five-key-performance-indicators-greater-financial-success

Enjoy! Best... Sarah

JUAN GOMEZ
Title: PRINCIPAL
Company: Juan Orlando Gomez Architect, Self-emplo..
(PRINCIPAL, Juan Orlando Gomez Architect, Self-employed) |

the benchmark I have heard quoted in the past for big companies is 1% of sales.

Randal Shields
Title: Consultant/CFO
Company: Randal Shields, CPA
(Consultant/CFO, Randal Shields, CPA) |

This really is going to depend on the company size and internal control/reporting structure.

Have to identify which areas come under the direct responsibility(s) of the Accounting department. Generally this is AP, AR-Billing, Sales Audit, Credit & Collections, Payroll, General Accounting, and Cash Management/Treasury operations. Also have to consider the volume of transactions and how good/bad the IT systems are. How much does your accounting system do for you, how many manual work-arounds are in play?

Generally, I'd staff AP, AR-Billing, and Payroll with competent clerical staff. Within these functional areas where multiples of clerical staffing are needed - because of volumes and/or complexity - I'd look at degreed level Managers or Supervisors for these functional areas.

Then the consideration is what type of reporting stream is supported - daily, weekly, monthly, quarterly, annually. Do you prepare and file various tax returns? What are the monthly closing cycle deadline requirements? What reporting packages are routinely prepared and what level of knowledge and experience is required? How often do you get audited by internal audit, external audit, and regulatory auditors?

All of this comes into play when considering what level and what education/credential criteriea is needed with degreed accountants and higher. How do you want to segment the internal control structure to reduce/eliminate conflicts. How much of this can be done through IT system user access rights.

How many legal entities and/or business units are supported. Do you prepare state and federal corporate income tax returns or outsource, and if outsourced, how much prep work is needed from internal resources?

One suggestion to keep in mind is once the FTE's body count is determined, for every 10 or so FTE's, you need one extra person (vacations, holidays, sick days, etc.)

In this manufacturing environment, other issues come into play with maintaining whatever ERP system you use for production valuations.

A technique I've used in the past is to have the existing staff provide a quantification of the job responsibilities they perform for daily, weekly, monthly, quarterly, annually, ad hoc, etc. They list out what they do and quantify the number of hours range it takes to typically perform these tasks.

The results are interesting. Usually those persons busy and productive get this request done quickly. Those that struggle with completing this quantification task start realizing they have difficulty justifying their job.

Hector Santibanez
Title: Controller
Company: "in-between"
(Controller, "in-between") |

On top of what had been commented above you should also consider what kind of ERP System do you have in your business and the quality of the Internal Control associated to the system and if the organization as whole as a commitment with the company in order to comply with the procedures.

John Harris
Title: Partner
Company:
(Partner, ) |

As you might have guessed, the answer is "It Depends..". A primary consideration is what is defined as Accounting/Finance? This differs between companies and industries. Some departments include aspects of customer service, regulatory compliance, contract management, treasury, HR etc. while others may be purely related to the generation of financial statements. Even within the purely financial area, there are factors such as the number and volume of transactions, number of locations, and what detail level reporting is desired or required (for example medical billing is very detailed and complex). For a given industry and department definition you could probably determine an appropriate headcount but I doubt any generalization could be made without otherwise.

Tim Northup
Title: Vice President/CFO
Company: Stiles Machinery
(Vice President/CFO, Stiles Machinery) |

I have a white paper surrounding a Robert Half Study done in 2009 on F&A Staffing. I don't see the functionality to attach it to this thread but if you wish to get a copy you can email me at tnorthupatstilesmachinery [dot] com. It is a very detailed study that places firms in revenue bands and then breaks down variables such as staffing from there.

Bob Newton
Title: President
Company: The Corporate Finance Group
(President, The Corporate Finance Group) |

Randal's answer gives good guidance. I would also recommend you contact your peers at other hospitals - it's not as though you are cut-throat competitors, at least with those outside your service area.

One factor that would skew your organization towards higher staff is the intensive paperwork of the insurance reimbursement process. So figures from similar-size companies in other industries will not be so relevant.

I have to believe that the major ERP vendors have hospital-specific installations and may have good benchmarking data from them. You can milk good information from their salespeople.

Stefanie Cavanaugh
Title: CFO
Company: In Transition
(CFO, In Transition) |

Thanks everyone for your insight. I really appreciate the feedback.

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