The 5 Most Important Financial KPIs That Drive Business Strategy

Use these balanced scorecard KPI templates to get your KPI scorecard started. Each of these KPIs measures the performance of a key part of your business to help ensure that you meet the business objectives of the team. Our extensive list of BSC KPI examples is listed below and available for download and include customer KPIs and scorecard measures for any industry and should be part of any strategy map. Tracking financial key performance indicators will allow you to anticipate the future growth of your business and steer your relations with partners, banks, investors, suppliers and customers. Return on assets is an indicator of how profitable companies are in relation to their total assets.

The equation for this The Complete List Of Financial Kpis is Shareholder’s Equity ÷ Total Number of Shares Outstanding.

Balanced Scorecard KPI Examples: 2023’s Complete List for your KPI Scorecard

Budget Variance – The variance between the forecasted budget amount and the actual operating budget amount . Percentage of Electronic Payments – Percentage of total disbursements/collectibles processed over the Internet. Expense per Treasury Employee – The overall expenditure related to the treasury accumulated by the company divided by the overall number of Treasury Division staff. 360 degree feedback An easier, effective method of 360-degree feedback collection from peers, upward, downward and customers too.

It goes without saying that your revenue is a key metric when looking at a financial KPI dashboard. It’s key for every type of business, from large corporates through to small charities. Misusing KPIs can happen by over-emphasizing the KPI number itself, and under-emphasizing the real-world operational contributors that generate the numbers.

Financial KPIs

That means you don’t have enough money on hand to cover your financial obligations. If your customers are dragging their feet and paying their invoices late (or not paying them at all!), it can seriously harm your financial health. Simply put, if your net profit margin is positive, you’re generating profit. You can either keep doing what you’re doing or adjust your strategy to increase your profitability.

The NPS a simple and accurate measurement of likely rates of customer retention across your revenue base, and of potential for generating referral business to grow that base. Primary KPIs that you’re undoubtedly already using include revenue, expense, gross profit, and net profit. Here are other key indicators that should be tracked, analyzed, and acted upon as needed.

KPI #25. Return on Assets

Financial dashboards can collect data as it comes in and process it at the click of a button. For managers, these metrics and KPIs should be made available internally and distributed on a weekly or monthly basis in the form of email updates, dashboards, or reports. If they’re not readily distributed, you can still become familiar with the metrics via financial statement analysis. Performance Indicators A high percentage of the error rate clearly indicates that the controlling of procurement functions lacks efficiency. Performance Indicators High working capital doesn’t automatically mean the company is performing extremely well. The resource utilization KPI indicates how effectively a company uses its resources , comparing the billable time vs. non-billable work.

At this point, companies often begin digging into department-level KPIs. These types of KPIs are often more informative as to why specific outcomes are occurring. Many of the examples mentioned above are department-level KPIs as they focus on a very niche aspect of a company. KPIs are usually not externally required; they are simply internal measurements used by management to evaluate a company’s performance. The KPI requires you to know your net credit sales, which are any amounts not paid upfront in cash.

Cash flow

For example, any customer who signs up to a recurring monthly subscription to Cascade increases our MRR. Expresses your profits as a percentage of total sales revenues generated. Therefore, it gives you a high-level view of how much profit you’re making. Whether you’re a dedicated finance team or not, these financial KPIs are critical to measuring the success of your business. In the two equations above, the present value represents how much you and your company are willing to invest now.

Strategically speaking, the net profit margin gives you the bottom-line view of how profitable you are. When you know which customers, clients, or projects are driving the most revenue , you can shape your strategy around serving the clients and/or projects that will be the most financially lucrative. Sales growth is one of the most basic barometers of success for a business. By monitoring the growth of your sales over time, you can identify which elements of your strategy are positively impacting sales and which are falling flat. Dylan, Founder and Managing Partner at ClearPoint, has over 25 years of experience working with organizations to improve their performance management and strategy execution processes. Finally, relevant financial KPIs help to highlight how the business is performing against the industry it operates within.