Financial KPI
In today’s finance world, the information you need is spread across many different systems and in different formats. You’re dealing with next quarter’s numbers, profitability analysis and the financial tasks of counting revenue, collecting on accounts receivables, and paying your vendors. Current methods can be error prone, labor intensive, and not always aligned to your corporate goals and objectives.
Business Intelligence solutions can help overcome these challenges by helping you align Key Performance Indicators (KPI) to organizational strategy, monitor key financial metrics with dashboards, reports and analysis such as cash flow, accounts receivables and payables, and profitability, minimize manual financial processes and error prone spreadsheets, enable organizational transparency to meet compliance requirements. Few of the Financial Key Performance Indicators (KPI) could be:
Monitor financial performance
- Total sales generated
- Revenue by major customer
- Sales generated by department / team
- Sales per employee hour
- Total gross profit margin
- Gross margin for each product line
- Gross profit % by department / team
- Benefits cost per employee
- Sales growth rate
- Sales per customer and shrink (loss due to theft and breakage)
Monitor financial costs
- Cost of goods sold
- Receivables turnover ratio
- Total receivables
- Payables turnover ratio
- Total payables
- Budget variance
- Budgeted expenses
- Actual expenses
- Inventory turnover
- Inventory value
Measure returns on investment
- Gross profit
- Skills
- SER
- Order processing cost
- Capacity utilisation
- Return on capital
- New product development rate
- Customer lifetime value
- IT cost by sales
- Contingency %
- Customer satisfaction
- Annual Equivalent Rate (AER)
- Productivity
- Average delivery cost
- Growth against market
Procurement and supplier management
- Accounts payable days
- Bought in materials and services (value of materials consumed + value of supplies consumed)
- Purchasing department’s administration costs as % of sales
Monitor site health & safety costs and suggest any improvements that could be made
- Health & safety cost reports produced – weekly / monthly
- Number of initiatives raised to optimise health & safety costs\
- Reduce costs of safety management
Monitor HR costs
- Total HR revenue
- Total headcount
- Revenue factor (total HR revenue by total headcount)
- Total overtime cost
- Overtime headcount factor (for total employees)
- Total eligible headcount
- Total labour cost
- Overtime labour cost ratio
- Labour cost competitiveness (comparability in the industry of lowest possible labour cost)
- HR related total operating expenditure
- HR related operating cost (total labour cost by total headcount)
- HR controllable cost
- HR related operating cost (HR controllable cost by labour cost)
- HR related operating cost (HR controllable cost by headcount)
Financial management – Manufacturing
- Gross profit %
- Return on capital employed %
- Interest cover
- Annual Equivalent Rate (AER) %
- SER %
- Debtor length (days)
- Creditor length (days)
- Stock turn/year
- Current ratio
- Capex ratio (cash flow by capital expenditure)
- Working capital requirement
- Z-score
- Tax charge %
- Cost of finance %
Work centre load of all operations – Manufacturing
- Employee work center loading
- Employee scheduled time
- Employee available time
- Machine work center loading
- Machine scheduled time
- Machine available time
% Available – Percent available of total funds based on budgetary control option
% of Budget – Expenses as a percent of budget
% of Forecast – Expenses as percent of forecast
Posted on October 12th, 2009 by Dhiren Gala
Filed under: Business Intelligence
I completely share your point of view on Financial KPI. Thank you for this clear information about finance performance measurement through the use of KPIs.