Key Performance Indicators, or KPIs, help determine the condition and sustainability of your current business model. Get a full view of your company’s financial landscape and to increase your competitive advantage with these key KPIs.
- Working Capital KPI
Immediately available cash is known as Working Capital. Analyze financial health by reading available assets that meet short-term financial liabilities. Working capital, calculated by subtracting current liabilities from current assets, includes assets such as on-hand cash, short-term investments, and accounts receivable.
- Current Ratio KPI
Your company needs to pay financial obligations on time. The Current Ratio takes your assets, such as account receivables, and current liabilities, including accounts payable, to help you understand the solvency of your business.
Read: 5 Equations That Explain Everything a CFO Should Know About ERP
- Payroll Headcount Ratio KPI
How many of your employees are engaged in payroll processing? The Payroll Headcount Ratio displays the number of employees your company supports per dedicated full time employee.
- Return on Equity KPI
The Return on Equity (ROE) KPI measures your organization’s ability to generate revenue for each unit of shareholder equity. The return on equity ratio not only provides a measure of your organization’s profitability, but also your efficiency. A high or improving ROE demonstrates to your shareholder’s that you’re using their investments to grow your business.
Download Whitepaper: 5 Professional Service KPIs Driving Financial Success
- Quick Ratio/Acid Test KPI
Measure the ability of your organization to meet short-term financial obligations. The Quick Ratio offers a more conservative assessment of your fiscal health than the current ratio because it excludes inventories from your assets.
- Debt to Equity Ratio
The Debt to Equity Ratio measures how your organization is funding its growth and how effectively you are using shareholder investments. A high debt to equity ratio is evidence of an organization fuelling growth by accumulating debt.
- Accounts Payable Turnover KPI
Accounts Payable Turnover shows the rate at which your company pays off suppliers and other expenses. This ratio is important for understanding the amount of cash that your business spends on suppliers during any given period.
Read Also: Calculating ERP ROI: What the CFO Needs To Know About ERP
- Accounts Receivable Turnover KPI
The problem in maintaining a large bill for a customer is that you are essentially offering them an interest-free loan. The Accounts Receivable Turnover KPI measures the rate at which you collect on outstanding accounts.
- Inventory Turnover KPI
How often you are able to sell off your entire in-stock inventory in a given year should be measured with your Inventory Turnover KPI. Closely related to your supply chain, this KPI indicates the ability of your organization to generate sales and increase revenue.
- Net Profit Margin KPI
The Net Profit Margin KPI measures how effective your business is at generating profit on each dollar of revenue you bring in. This financial KPI is a measure of the profitability of your business and is instrumental in making long- and short-term financial decisions.
- Gross Profit Margin KPI
The Gross Profit Margin measures your profit on each dollar of sales before expenses. This ratio is calculated by looking at the difference between production costs.
- Finance Error Report KPI
Finance reports that require clarification or contain obvious errors can be analyzed for further investigation via Finance Error Reports.
- Payment Error Rate KPI
The Payment Error Rate is a percentage of incoming or outgoing payments that were not completed due to a processing error – no Purchase Order referenced, no approval, documentation missing, etc.
Related:4 Ways a Business Intelligence Tool Can Improve Financial Management
- Budget Variance KPI
The Budget Variance in projected budget totals compared to actual operating budget totals.
- Line Items in Budget KPI
Total number of Line Items in Budget shows the amount of detail included.
- Budget Creation Cycle Time KPI
The Budget Creating Cycle Time includes the number of days needed to research, produce and publish the firm’s budget.
Trending: Cloud ERP: 4 Reasons To Make The Move
- Expense Management KPI
The percentages of travel and expense vouchers submitted by employees that contain an error – insufficient documentation, wrong charge code, or no receipt – are tracked through Expense Management KPI.
- Internal Audit Cycle Time KPI
Management and stakeholders can view the amount of time required to perform a full internal audit on Internal Audit Cycle Time reports.
- Customer Satisfaction KPI
CFOs often consider budget and time targets, as benchmarks for successful project delivery, and while those KPIs are important, the ultimate test is customer satisfaction. The Net Promoter Score is a simple and effective measurement of how well you are serving your clientele.