FTE Benchmarking: Finance Best Practices

• ‍Define "Finance" clearly - When benchmarking the size of your finance team, the first thing to do is establish what activities are included in the finance function.‍
• Standardize methodology - Use consistent definitions of FTEs, headcount, and roles to ensure benchmarks are accurate and comparable.‍
• Context matters - Interpret benchmarks within the specific context of your company’s industry, size, and geographic region. Don't use generic all industry benchmarks.‍
• Use benchmarks as a guide, not a goal - FTE ratios highlight opportunities, but they aren't the answer themselves. Combine benchmarks with qualitative insights and business priorities.‍
• Apply benchmarks strategically - Treat them as part of a broader effort to improve efficiency, optimize costs, and align finance resources with organizational goals.

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In the busy world of finance, we tend to evaluate performance using metrics and financial ratios. So, in this blog we will walk through the best practices for FTE benchmarking (meaning full-time equivalent), which is an important tool for measuring the efficiency of finance employees.

Benchmarking FTE is an important tool because it allows organizations to identify areas where they may be overstaffed or understaffed. This means that organizations can then identify opportunities for improved business practices and cost savings.

Five Best Practices for Finance Benchmarking

1. Determine the appropriate benchmarking group

When benchmarking FTE levels, it is important to compare against organizations of similar size within the same industry to gain the most relevant insights. For example, it would not be suitable for a small startup to benchmark themselves against a large multinational corporation.

2. Consider the scope of the finance function

FTE benchmarking should be done with a clear understanding of what's included in the finance function. This is particularly important for certain activities such as payroll, as companies can perform payroll from different functions, such as Finance, HR, or sometimes both functions.  

3. Use a consistent methodology

When benchmarking, it is important to use a consistent methodology. This means using the same definitions and assumptions for calculating FTE levels, such as the number of hours worked per week, or any adjustments for part-time or temporary employees. This also ties into the scope of the finance function, where you should always try to compare similar finance functions.

4. Consider qualitative factors

While FTE benchmarking is largely a quantitative exercise, it is also important to consider qualitative factors such as the employee morale and culture. These factors may not be captured by FTE levels alone, but they are important to consider when making staffing decisions.

5. Use FTE benchmarking as part of a broader analysis

In addition to qualitative factors, FTE benchmarking should not be performed in isolation, but as part of a broader analysis of the finance function. This includes considering factors such as the organization's strategic priorities, the competitive landscape, and the regulatory environment.

Where to Find FTE Financial Ratios?

Many businesses struggle to source finance benchmarking ratios. Especially when they try to drill down and find companies of a similar size in the same industry or sector. The easiest way is to source this data from finance benchmarking providers such as APQC, Gartner, or CompanySights.

Apply these best practices - Explore finance benchmarks

Case Study: Benchmarking Finance FTEs

A mid-sized SaaS company in the United States with 500 employees faced rising finance costs as it scaled. The finance team had grown organically to 20 FTEs, but leadership noticed duplication in transactional tasks like accounts payable, expense processing, and payroll.

Challenge

Finance leaders needed to reduce overhead without slowing down operations or impacting financial compliance.

Approach

They sourced FTE benchmarks from CompanySights to compare their finance headcount against similar sized peers in the US software industry.

Result

Results showed their ratio of finance FTEs to total employees was 25% higher than the industry median.

Outcome

To address this, they outsourced transactional finance activities and invested in automation software for expense management and reconciliations. Finance FTEs were reduced from 20 to 15, bringing their benchmark ratio in line with industry norms. This freed up finance team members, who were reassigned to higher-value work, such as forecasting and scenario analysis.

Takeaway

This case highlights how benchmarking is not just a diagnostic tool. It provides a roadmap for reallocating resources, improving efficiency, and supporting growth.

Shaping Smarter Finance Teams

FTE benchmarking is more than a finance metric - It’s a roadmap to smarter, leaner, and more effective teams. By comparing your finance function to best practices, you can spot cost-saving opportunities, sharpen performance, and build a team that drives strategy. In a world where agility is everything, FTE benchmarks give businesses the edge to adapt quickly and stay ahead.

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