Description: For the accounting department of a larger company, the bulk of the staff will be occupied with the repetitive processing of various types of transactions, such as billing, cash receipts, and payments to suppliers. If there is little focus on improving the efficiency of these basic functions, then the company may find itself paying for the wages of far more accounting personnel than comparable departments in competing companies. The number of transactions processed per person can be applied to any repetitive transactions and tracked on a trend line in order to see changes in efficiencies within these areas.
Formula: Divide the total number of transactions processed during the measurement period by the number of full-time equivalent employees required to complete the transactions. The formula is as follows:
Total Number of Transactions Processed
Number of Full-Time Equivalents Required to Complete Transactions
Cautions: Transaction processing rates per person are not very effective if a company is so small that it does not require accounting staff who are solely dedicated to the completion of specific types of transactions, such as supplier payments. If a staff person is required to complete several types of transactions during a measurement period, then it becomes quite difficult to clearly identify the time required to complete each type of transaction.
An additional problem is that the measurement should not be used on a summary level to determine the average number of transactions processed by employees who work on several types of transactions during a single measurement period. Though this may at first appear to be a reasonable method for deriving some general level of staff efficiency, it assumes that the mix of transactions stays exactly the same from period to period. Actually, the proportions of different transaction types will vary constantly, so that a greater volume of labor-intensive transactions will be required in one period, and a lower percentage in the next. This results in an efficiency measurement that reveals no relevant information.