Key Metrics to Track Efficiency in Your Finance Operations

Any senior manager or executive will tell you that mastering their KPI’s is a top priority, and that tracking sales and revenue metrics occupies a significant portion of their time.

While these metrics are crucial to the growth of your organization, there are other financial indicators you must track to stay on top of your company’s health and performance.

Neglecting these metrics, or focusing on irrelevant ones, can contribute to poor decision making that impacts the bottom line.

So what should you be tracking to ensure that you’re getting a complete picture of your company’s performance? We’ve surveyed some of the top KPIs mentioned by Forbes, Oracle, Fast Company, and Harvard Business Review, so you don’t have to! Here are a few crucial methods that you shouldn’t go without:

Monthly Burn Rate and Runway

Forbes explains that for younger companies and startups, two of the most essential measurements to track are your monthly burn rate and runway. These two metrics are best combined, as they tell different parts of the same story. Your monthly burn rate works to calculate your revenue-adjusted spending each month. Meanwhile, your runway determines how long your business will operate based on this monthly burn rate. Combining these measures gives you a timeline for how long your business can operate at its current level of performance.

Sales Growth Rate

According to Oracle, the Sales Growth Rate is one of the most important KPIs to measure. This metric takes sales from one period, and compares it to another, expressing the change in terms of a percentage. It should go without saying that you always, always, want a positive sales growth rate.

Dynamic KPIs

At the risk of understatement, the Pandemic era has significantly impacted business’ ability to meaningfully track performance. Comparisons mean nothing when we are living in an incomparable time. That’s why Fast Company has astutely pointed out that you need to have performance metrics that are flexible, and adaptive. Your business (and its employees) need to regularly review what’s working and what’s not, and create metrics based on real-world conditions.

Mapped KPIs

Harvard Business Review encourages us not just look at KPIs individually, but rather, to actually map out how they are all related. By understanding the linkages between various measures of performance and seeing how they affect one another, you can move from measuring past achievements and into measuring future performance. When you finally move on to that next level, businesses like Divvy can help you understand what you need to forecast, and how you should do it.

Understand the Importance of Your Businesses Finance 

Financial KPIs can help managers and business leaders understand the success and performance of their company. If you want to learn how to find bottlenecks in your processes and operations and what to do to fix those bottlenecks, register now for our upcoming Spotlight on Finance being held on January 26th.

Photo by Stephen Dawson on Unsplash

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