This might occur if you took out a significant loan to fund a new business initiative. It’s important not to take KPIs at face value and to understand the context behind the figures. For instance, a KPI showing a decline in revenue might be due to a one-time event, such as a major client delaying payment until the next quarter. This kind of drop is not necessarily due to a failure in your sales strategy.
The debt-to-equity ratio typically measures the company’s liabilities against the shareholder’s equity. A ratio greater than one indicates that the company is losing investments and accumulating debt, which might worsen during downtime. Sales growth rate refers to the net change in total sales during a given period of time.
ROA KPI reports provide investors and stakeholders with insights into how efficiently your company’s management is using assets to generate earnings. The total asset turnover KPI can show how efficiently your business uses assets to generate revenue. It takes into account the value of your organization’s sales or revenue numbers relative to the value of its overall assets. Quick ratio KPI is a more conservative evaluation of your fiscal health than current ratio because it doesn’t include your inventory as part of your assets. The accounts receivable turnover KPI tells you the number of times the average AR balance becomes cash in your account during a certain period (often a year).
With this KPI we’re comparing the share price in a company to the earning per share. Leverage can be one of the most controversial topics, which makes it fun to think about. Just remember the old saying, “It takes money to make money.” This might motivate you to use leverage.
Different roles within an organization may require different insights, so make sure the dashboard speaks to its intended audience. For example, bar charts can be great for comparisons, while line graphs show trends over time. African Development Bank transformed initiative management with Spider Impact, delivering previously stalled 4+ year projects within one year. The bank expanded from 20 to 60+ users, breaking down silos across business units and providing executive reporting that impressed the President enough to recommend bank-wide adoption.
It is important to periodically review and adjust the selected KPIs to ensure they remain relevant.
It might be caused by something outside of your control, such as an external impact, or it could be a lack of analysis or market understanding.
Being profitable is key, but if you’re not able to pay your debts or stay liquid, you won’t be around for long.
Using the right KPIs enables businesses to make informed strategic decisions.
Regular monitoring of KPIs is crucial to maintain an accurate picture of the organization’s financial health.
Defining the most useful and meaningful KPIs for your business can be challenging.
What Is a Key Performance Indicator (KPI) Dashboard?
Modern automated AP solutions also allow you to integrate your AP workflow with your ERP systems, enhancing visibility with a single source of truth and boosting operational efficiency. It provides a centralized view of critical data, allowing you to monitor operations, identify trends, and take corrective actions if results are not optimal. If you’re cost-focused, then prioritize cost per invoice processed and early payment discounts captured. An obvious indicator of inefficiency is the percentage of payments you make after the agreed-upon due date, highlighting potential issues with your payment processes. This is the average time taken to process an invoice from receipt to payment. This KPI measures the number of invoices processed within a specific timeframe (usually a week) by one full-time employee.
Tracking leading and lagging indicators through KPIs also bolsters risk management. Metrics around liquidity, leverage, cash flow, and creditworthiness provide insight into financial risks. KPIs on controls, process compliance, vendor management, and cybersecurity address operational risks. Leading indicators in particular allow you to mitigate risks proactively before issues arise. While finance teams conduct various forms of risk management, having the metrics to identify emerging risks quickly enables you to respond and protect organizational value. Amid economic uncertainty, monitoring key risk indicators is more important than ever.
Typically you calculate this metric by working out the difference between cash inflows and outflows.
It provides insights into the proportion of debt and equity financing used to fund a company’s operations and investments.
If you’re profitable and liquid, you’ve already passed some of the hardest tests in the business.
This KPI is usually used by loss-generating startups to express the rate at which the company uses its available cash to cover operating expenses.
Use visual aids like charts and graphs to make complex data more digestible.
Key market metrics serve as a bridge between financial data and market realities. They enable accountants to create more comprehensive and actionable financial reports, which are vital for stakeholders looking to understand the broader market landscape. Cost per Invoice – Automation minimizes labor-intensive tasks and paperwork, cutting administrative costs and improving operational efficiency. By measuring the right KPIs, businesses can streamline operations, cut costs, and reduce financial risks.
Fixed assets turnover is an efficiency metric representing how well a company uses its mixed assets to generate sales. Days sales outstanding (DSO) measures the average number of days it takes to collect payments for a sale. The metric also demonstrates the company’s ability to generate quick cash if experiencing cash flow problems.
What are Financial KPIs?
In a nutshell, financial KPIs illustrate your company’s financial health and help you determine if your company will make a profit. Financial key performance indicators track your company’s performance in achieving those goals. To further your knowledge and expertise in KPI analysis and implementation, we invite you to check out our extensive resource on KPI examples & templates. It shows how much money the business is spending to operate and is usually done on a weekly, monthly, quarterly or annual measurement. When used in conjunction with other KPIs it can be an illustration of the financial health of the business.
Info-Tech Data Quadrant: Business Intelligence & Analytics – Enterprise
Is it due to price increases, inflation, branch openings or the addition of new product lines? Or is it due to customer acquisition i.e. attracting new customers, or by increasing share of wallet with your existing customers. Observing such trends over a period of time can help to shape future sales & marketing strategies.
It provides insights into the proportion of debt and equity financing used to fund a company’s operations and investments. Measuring this financial metric is important because it helps assess a company’s financial risk and solvency. A higher ratio indicates that a company relies more on debt financing, which can increase financial obligations and interest payments. On the other hand, a lower ratio indicates a more conservative capital structure and lower risk. Monitoring the debt-to-equity ratio allows you to evaluate your company’s financial stability and make informed decisions regarding inventory planning, debt management, and capital structure. In summary, implementing robust KPI tracking across your finance department delivers numerous benefits for decision-making, planning, risk management, team performance, and more.
An automated solution like Cflow provides automated, accurate, real-time KPIs that keep the company moving towards those financial kpi examples goals and objectives, instead of getting lost in layers of data and reports. A long-term solvency KPI, interest coverage quantifies a company’s ability to meet contractual interest payments on debt such as loans or bonds. A higher ratio suggests that the company will be able to service debt more easily.
«Our team understands that by hitting targets and being successful as a business, we can produce our best creative work,» Matter of Form’s Chief Operating Officer Fred Moore said. KPIs are a valuable tool for evaluating business performance, but to truly get the most value from them, understanding the story behind the numbers is essential. In this guide, we’ll explain why financial KPIs are so important in 2024 and share 11 of the most critical ones that your business needs to know. Send an invite to your team members to collaborate on shared KPIs and ensure everyone is on the same page. The latter option is far more efficient, as it simplifies data collection and ensures you’re working with accurate and up-to-date data. The two KPIs work together to give you an idea of how much time you have for survival if sales were to cease completely in the worst-case scenario.
This consistency allows for trend analysis and benchmarking against industry standards. Reviewing and updating KPIs is essential to adapt to changing business environments and objectives. Early Payment Discount Capture Rate tracks the percentage of available early payment discounts that are captured.
Sometimes, you may choose to pay bills later than you normally would to accrue capital to use for other things. Whatever your cash-flow goals, you should always pay bills before their due date. If you aren’t, it’s time to improve your efficiency, profit margin or make some other tough calls to bring your books in line. This number is essentially how much you get to keep from every dollar your company earns, and it’s an important measure of profitability and efficiency. Generally, rent or mortgage costs and sales or marketing expenses aren’t included in a COGS calculation. Gross profit margin is your overall revenue (sales) minus your cost of goods (COGS) sold.
With this KPI, you can monitor the rate at which you collect money that’s owed to your business. A high AR turnover can sometimes indicate that a business is overly aggressive in collection strategies and practices. If customers discover this practice, it might put them off your brand, no matter how diligently and timely they plan to pay. A sales KPI dashboard is crafted to empower sales teams with insights into targets, conversion rates, and customer acquisition costs.
10 Excellent Financial KPIs You Need To Track In 2025
This might occur if you took out a significant loan to fund a new business initiative. It’s important not to take KPIs at face value and to understand the context behind the figures. For instance, a KPI showing a decline in revenue might be due to a one-time event, such as a major client delaying payment until the next quarter. This kind of drop is not necessarily due to a failure in your sales strategy.
The debt-to-equity ratio typically measures the company’s liabilities against the shareholder’s equity. A ratio greater than one indicates that the company is losing investments and accumulating debt, which might worsen during downtime. Sales growth rate refers to the net change in total sales during a given period of time.
ROA KPI reports provide investors and stakeholders with insights into how efficiently your company’s management is using assets to generate earnings. The total asset turnover KPI can show how efficiently your business uses assets to generate revenue. It takes into account the value of your organization’s sales or revenue numbers relative to the value of its overall assets. Quick ratio KPI is a more conservative evaluation of your fiscal health than current ratio because it doesn’t include your inventory as part of your assets. The accounts receivable turnover KPI tells you the number of times the average AR balance becomes cash in your account during a certain period (often a year).
With this KPI we’re comparing the share price in a company to the earning per share. Leverage can be one of the most controversial topics, which makes it fun to think about. Just remember the old saying, “It takes money to make money.” This might motivate you to use leverage.
Different roles within an organization may require different insights, so make sure the dashboard speaks to its intended audience. For example, bar charts can be great for comparisons, while line graphs show trends over time. African Development Bank transformed initiative management with Spider Impact, delivering previously stalled 4+ year projects within one year. The bank expanded from 20 to 60+ users, breaking down silos across business units and providing executive reporting that impressed the President enough to recommend bank-wide adoption.
What Is a Key Performance Indicator (KPI) Dashboard?
Modern automated AP solutions also allow you to integrate your AP workflow with your ERP systems, enhancing visibility with a single source of truth and boosting operational efficiency. It provides a centralized view of critical data, allowing you to monitor operations, identify trends, and take corrective actions if results are not optimal. If you’re cost-focused, then prioritize cost per invoice processed and early payment discounts captured. An obvious indicator of inefficiency is the percentage of payments you make after the agreed-upon due date, highlighting potential issues with your payment processes. This is the average time taken to process an invoice from receipt to payment. This KPI measures the number of invoices processed within a specific timeframe (usually a week) by one full-time employee.
Tracking leading and lagging indicators through KPIs also bolsters risk management. Metrics around liquidity, leverage, cash flow, and creditworthiness provide insight into financial risks. KPIs on controls, process compliance, vendor management, and cybersecurity address operational risks. Leading indicators in particular allow you to mitigate risks proactively before issues arise. While finance teams conduct various forms of risk management, having the metrics to identify emerging risks quickly enables you to respond and protect organizational value. Amid economic uncertainty, monitoring key risk indicators is more important than ever.
Key market metrics serve as a bridge between financial data and market realities. They enable accountants to create more comprehensive and actionable financial reports, which are vital for stakeholders looking to understand the broader market landscape. Cost per Invoice – Automation minimizes labor-intensive tasks and paperwork, cutting administrative costs and improving operational efficiency. By measuring the right KPIs, businesses can streamline operations, cut costs, and reduce financial risks.
FAQ: Understanding Key Performance Indicators (KPIs)
Fixed assets turnover is an efficiency metric representing how well a company uses its mixed assets to generate sales. Days sales outstanding (DSO) measures the average number of days it takes to collect payments for a sale. The metric also demonstrates the company’s ability to generate quick cash if experiencing cash flow problems.
What are Financial KPIs?
In a nutshell, financial KPIs illustrate your company’s financial health and help you determine if your company will make a profit. Financial key performance indicators track your company’s performance in achieving those goals. To further your knowledge and expertise in KPI analysis and implementation, we invite you to check out our extensive resource on KPI examples & templates. It shows how much money the business is spending to operate and is usually done on a weekly, monthly, quarterly or annual measurement. When used in conjunction with other KPIs it can be an illustration of the financial health of the business.
Info-Tech Data Quadrant: Business Intelligence & Analytics – Enterprise
Is it due to price increases, inflation, branch openings or the addition of new product lines? Or is it due to customer acquisition i.e. attracting new customers, or by increasing share of wallet with your existing customers. Observing such trends over a period of time can help to shape future sales & marketing strategies.
It provides insights into the proportion of debt and equity financing used to fund a company’s operations and investments. Measuring this financial metric is important because it helps assess a company’s financial risk and solvency. A higher ratio indicates that a company relies more on debt financing, which can increase financial obligations and interest payments. On the other hand, a lower ratio indicates a more conservative capital structure and lower risk. Monitoring the debt-to-equity ratio allows you to evaluate your company’s financial stability and make informed decisions regarding inventory planning, debt management, and capital structure. In summary, implementing robust KPI tracking across your finance department delivers numerous benefits for decision-making, planning, risk management, team performance, and more.
An automated solution like Cflow provides automated, accurate, real-time KPIs that keep the company moving towards those financial kpi examples goals and objectives, instead of getting lost in layers of data and reports. A long-term solvency KPI, interest coverage quantifies a company’s ability to meet contractual interest payments on debt such as loans or bonds. A higher ratio suggests that the company will be able to service debt more easily.
«Our team understands that by hitting targets and being successful as a business, we can produce our best creative work,» Matter of Form’s Chief Operating Officer Fred Moore said. KPIs are a valuable tool for evaluating business performance, but to truly get the most value from them, understanding the story behind the numbers is essential. In this guide, we’ll explain why financial KPIs are so important in 2024 and share 11 of the most critical ones that your business needs to know. Send an invite to your team members to collaborate on shared KPIs and ensure everyone is on the same page. The latter option is far more efficient, as it simplifies data collection and ensures you’re working with accurate and up-to-date data. The two KPIs work together to give you an idea of how much time you have for survival if sales were to cease completely in the worst-case scenario.
This consistency allows for trend analysis and benchmarking against industry standards. Reviewing and updating KPIs is essential to adapt to changing business environments and objectives. Early Payment Discount Capture Rate tracks the percentage of available early payment discounts that are captured.
Sometimes, you may choose to pay bills later than you normally would to accrue capital to use for other things. Whatever your cash-flow goals, you should always pay bills before their due date. If you aren’t, it’s time to improve your efficiency, profit margin or make some other tough calls to bring your books in line. This number is essentially how much you get to keep from every dollar your company earns, and it’s an important measure of profitability and efficiency. Generally, rent or mortgage costs and sales or marketing expenses aren’t included in a COGS calculation. Gross profit margin is your overall revenue (sales) minus your cost of goods (COGS) sold.
With this KPI, you can monitor the rate at which you collect money that’s owed to your business. A high AR turnover can sometimes indicate that a business is overly aggressive in collection strategies and practices. If customers discover this practice, it might put them off your brand, no matter how diligently and timely they plan to pay. A sales KPI dashboard is crafted to empower sales teams with insights into targets, conversion rates, and customer acquisition costs.