Welcome to ‘My key KPI’, a new weekly content series where we ask CFOs and FDs what metrics and measures they use to drive their businesses forward.
The aim is to understand how different finance professionals, across a broad array of industries and sectors, use data to inform their decision making.
For this week's edition, AccountingWEB spoke to Duncan French, the CFO of People's Energy, a startup in the energy sector.
My key KPI: The weather
All throughout this heatwave, all anyone can talk about is the weather. Either how happy it makes them, or wishing that the weather would just become a bit milder.
But this weather talk isn't just idle elevator talk for People's Energy's CFO, it's a matter of grave importance.
The startup electricity and gas company buys its supply wholesale. And the amount it buys is hedged to a seasonal norm. "So you'll buy enough for a seasonal norm: if it fluctuates, you need to sell back or buy more," explained Duncan French.
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"The sooner you know what the weather is, the further ahead you are of the changing weather, the better positioned you are to make a call around whether you should buy or sell more."
Alongside the weather, French monitors the wholesale gas price. "We have access to a trading screen and that would be the one thing I monitor everyday. At the moment, the wholesale price is very high and that's why you're hearing about tariff hikes in the news."
Both of these variables affect People's Energy's cash balance. And as a startup in the extremely complex energy space, French admits that he's "obsessed" with the company's cash reserves.
"I'm obsessed by what the cash balance is going to be in three months, six months, nine months - are we going to make it through the winter?"
About Francois Badenhorst
I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter.