A KPI Dashboard Provides Critical Information About the Financial Health of Your Business
Running a small- to mid-size business means that you wear a lot of hats, and you’re watching a lot of areas of the company. However, how do you choose and prioritize the measures that tell you whether your company is on track? Determining the metrics to monitor and then following them on a KPI dashboard provides visibility into your financial health and progress on your goals with a simple click of a button.
There are a lot of metrics you can track. How do you know where to start to be sure that you are keeping tabs on your business? Here are a few metrics that any small- or mid-size company should be following on a KPI dashboard:
Revenue per employee: This metric is most useful when compared to other companies in your industry. Improving your revenue per employee is generally a good goal, but you will get a better feel for reasonable goals when you look at competitors.
Days sales outstanding: This metric is critical because it is tied directly to your cash flow. A company with a cash flow problem is generally in trouble, so tracking your days sales outstanding will tell you important information about your cash flow.
Days payables outstanding: This is another metric where it is useful to compare your numbers to that of another company. If another company has a higher number in days payables outstanding, this means that they are likely getting better credit terms than you are, allowing them to hold their cash longer.
Cash from operations: This metric tells you whether you are able to meet your obligations, or if you require outside financing to pay your bills and invest in your business for growth.
Earnings before interest, taxes, depreciation and amortization: This measures your net income with interest, taxes, depreciation and amortization added back in. Using this number to compare your earnings to another companies is useful because it eliminates considerations of how accounting and financing decisions impact your bottom line.
Return on capital employed: This metric is a basic way to determine whether you are making wise use of capital spending. Return on capital employed should be higher than the company’s capital cost.
The above metrics give you a picture of the financial health of your company and give you insight for making business decisions. There are many software options that offer customized KPI dashboards to give you a highly visible and convenient way to view your metrics and identify problems and opportunities for your business.
If you would like more information about KPI dashboards, give One Vision Solutions a call. We are experienced at working with companies like yours to determine a software solution that streamlines operations and provides insightful tools for business analysis. Set up an initial consultation to discuss your business needs with us today.