My key KPI: Underspending

16th Oct 2018
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My key KPI

‘My key KPI’ is a 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.

In this week's edition, a very special AccountingWEB venn diagram featuring Richard Hattersley's Practice Talk series.

My Key KPI: Underspending

Two worlds are colliding on My Key KPI this week: On the practice side of the site, my colleague Richard Hattersley talks to practitioners for his Practice Talk series. Rich’s series is similar to mine but with, as you can imagine, a practice bent.

But in a recent edition of Practice Talk, Richard stumbled across something of an accounting chimera: OIiver Cooper from Nimble Accounting. Before he set up his practice, which is based in South Africa, he worked as a finance director for Merlin, Christian Aid and AFEX Group.

Cooper was kind enough to share his key KPI from his FD days. The metric he has chosen relates to his work in the NGO sector. And it’ll be a weird one for commercial FDs: Underspending.

“It's difficult because when I was working for an NGO the KPIs we'd use were completely different from a commercial business. In commerce, you're trying to spend as little for as much return as possible.

“For NGOs, often, the aim is to spend as much as possible so that you're delivering the programmes you need to deliver. So you're focused on if there are underspends, making sure those underspends aren't symbolic of the work not being done. It's very different KPIs I've used throughout my career.”

According to Cooper, there’s a heavy focus on the burn rate of a particular budget and “making sure that we were doing the activities in line with the schedule which was agreed on”. “It’s making sure the money was spent in line with the budget,” he said.

“Often in the countries we were working in there were problems in implementing the programmes. There were often delays so the focus was trying to get rid of those delays and make sure we were up to date with the implementation and therefore the spend.

“We were working all sorts of countries that have a number of different issues in working in them. I worked a lot in South Sudan, in the Democratic Republic of Congo, Somalia, and in all of those countries the transport systems, the legal systems, the banking systems, and pretty much every system has some kind of issue and so delays are very much expected and very much the norm. So it was working to resolve those issues.”

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