Revealed: the KPIs that really drive insight into performance
KPIs, or key performance indicators, are essential tools for businesses that want to work out how they are progressing. A finance team with access to a great deal of quantitative data will need to sure that all members are using it correctly and extracting the most relevant and pressing insights. If you have a data collaboration system onsite that allows you to access information from all different strands of your business, then it is possible to have cross-cutting KPIs that enable all operations to thrive.
An organisation’s burn rate demonstrates the speed at which it is going through its cash. Whether you assess it on a monthly, daily or yearly basis, monitoring your burn rate can be extremely useful. What makes this strategy particularly handy is that it reveals whether your business can maintain its rate of spending over time. This is a key strategic performance priority.
The burn rate is the sort of KPI that needs cross-departmental collaboration, however. Take marketing, for example. Your finance team may see a printed-out list of outgoings from marketing, but without a system that allows the two teams to collaborate both qualitatively and quantitatively, finance may not know that spending is particularly high because of a strategic marketing priority that month. Collaboration is necessary for an accurate, contextualised burn rate calculation.
There are several different ways to work out your inventory turnover. No matter which one you choose, you will learn how quickly you can get product stock or service capacity back and start selling again to your customers. Keeping track of inventory turnover is particularly effective from a performance point of view because it helps motivate people. Once you have worked it out, you can communicate the results to your logistics group or similar teams to give them a stock turnover target to work towards.
Payment error rate
An organisation’s payment error rate reflects the proportion of failed payments from your company to those that you owe. You can work out how your finance procedures are holding you back, as payment error rates often occur because of problems with sign-offs, manual keying errors and other issues. Often, a bad payment error rate is a wake-up call for the finance team and the overall company, including the C-suite, to change its systems. It can support a business case for a finance software package that can automate these functions and improve collaborative workflows.
For many companies, KPIs are a key part of working out how to move from one stage of development to the next. They are crucial ways for organisations to learn what is working well and what is causing problems. From burn rates to payment error rates, there are particular KPIs that can deliver important, in-depth insights that benefit all types of businesses.
Is your finance team struggling with KPIs? Do you need some more direction on choosing and measuring your goals? Access can help finance teams answer these questions and many more.