Financial data can be complicated and the financial department can be time-poor. The need for speed is one of the big reasons why business performance dashboards are essential to make the most of business intelligence.
There is a common desire – and has been for some time – for organisations to make data visible and, most importantly, easy to understand at a glance, certainly around the performance of the company.
Where employees are in remote locations and perhaps don’t benefit from the office culture, it makes them feel connected and allows leadership teams to focus on tasks that are business critical. Since the coronavirus (COVID-19) outbreak, this has become more apparent.
What are business performance dashboards?
Business performance dashboards can track and simplify complex data sets, providing visualisations that can give you a quick but thorough insight into current performance.
These visualisations will typically include analytical metrics and key performance indicators (KPIs).
If the data does not look right, you can drill down and understand discrepancies within seconds rather than spending hours.
Why they can help your business make smarter decisions
Business performance dashboards can help identify areas for improvement, risks and trends.
If these dashboards are clear and easy to read, they can provide you and other decision makers in the business with information in a visual format that can be easily understood and remembered, and used to make smart decisions fast.
Spreadsheets, software and dashboards
Many businesses (regardless of size) still use spreadsheet applications – you can use automated tools to build charts as a basic way of visualising data.
As the business expands, you need to focus less on the day-to-day activity and spend more time reviewing the bigger picture.
But you must be careful in not providing overkill to your employees and also be mindful of change within your organisation.
Too much change too fast could result in people reverting back to old behaviours simply to get things done.
You may face resistance if you tell your finance department that you’re removing spreadsheets from their toolkit. Finance teams in general are accustomed to using macros and formulas, and like the look and feel of them.
And while a business intelligence platform acts as a tool that will generate visuals of data, therefore giving the data a purpose, it’s not uncommon to download the data into a spreadsheet to understand discrepancies.
Financial management software will help you create the reports that can meet compliance requirements and allow you to monitor your financials.
To complement the reports, the software offers dashboards that can be used to present real-time information in a visual format, which can be useful for decision makers throughout the company.
Tips for using business performance dashboards
Ideally, you’ll want reporting and dashboarding tools built right into your financial management software, rather than as a separate program, presenting your company’s financial data in one place.
With dashboards, you can combine this financial data with other information for a comprehensive view of the company.
Real-time financial data, measurements and snapshots are critical in keeping a tab on your company’s pulse and early warning signs of financial problems.
Choosing metrics and KPIs
Metrics and KPIs you should be looking at include:
Fundamentally, solvent capital is the bulk of what a business needs to make significant leaps forward into a market. Day-to-day cash flow simply isn’t enough.
So when the big decisions roll in, you need to know if you have the capital ready or incoming to address a big market move or change by the time it arrives.
That measurement, the net of asset worth less liabilities, can’t be delayed waiting for end-of-the-month reporting.
Operating cash flow
Cash flow works on an entirely different pace than income, sales and revenue.
While on the surface things can look great, what’s actually in your dashboard dictates whether you can meet payroll on payday or pay the bills timely to keep operations going.
Or deal with external events, such as coronavirus, that may have an impact on your business and your finances, where key investment decisions may be required to keep things moving.
Without a running balance on cash flow in the bank, a business can shut down in days. You will need to have a view on your dashboard of every day of the week of where the company bank accounts are. Then you can plan for tomorrow.
Return on equity
If you’re a public company, your shareholders will want to know where their investments are going. Return on equity is a KPI that will decide what their mood will be at your next quarterly report meeting.
Looking ahead for such reports is critical because it allows you to make changes now for what’s coming.
The return on equity metric slices your financials accordingly from the investment perspective versus the operating view.
Debt to equity
It’s easy to borrow and generate cash flow via debt for your business, but how are you handling the management of that debt?
Are the payments on track, or are they starting to become a burden?
The debt to equity ratio takes a hard look at your commitments and flags where your business is becoming handicapped by borrowing and credit obligations.
Accounts payable turnover
Along with cash flow management, the rate of accounts payable processing is a pulse barometer of operations. Fast turnover means your business is very solvent, taking care of obligations and clearing them, and staying in the black.
Reduced turnover can signal delays due to cash problems, lack of trained staff, or mistakes that you need to fix.
A business intelligence platform will give you the data insight you need to understand how your suppliers are performing against your requirements.
As an example, a supplier may have been procured to do three hours of work but bills for the complete day. If this is a common theme, not only will your business lose revenue, this will raise an issue around integrity from the side of your supplier.
Accounts receivable turnover
Customer credit is only beneficial if your customers pay their accounts. Otherwise, your company will be giving away goods or services for free.
Accounts receivable turnover is a crucial metric on how fast cash and sales revenue is coming into your bank account. Long delays can mean having to borrow while waiting or having to delay operations.
A business intelligence platform will allow you to identify risks around your receivable process ahead of the activity taking place.
By creating dashboards, decision makers can very quickly identify certain clients who are at risk of not paying according to your terms and conditions.
Customising your dashboards
You should have your dashboard set up as you need it, complete with the dials, metres, graphs and performance indicators that can provide you with a clear and concise snapshot of the business.
Ideally, you might want to have eight to 10 KPIs that cover financial and non-financial metrics, such as volume, pricing, shipment and utilisation.
For a holistic view of performance, you’ll also want to integrate data from outside the financial system.
Modern financial dashboards are interactive and customisable, which you’ll need to get a true insight. In essence, you’ll want to sort, slice and further explore the necessary data up to a transactional level.
Across the business, think about the fact that you might want to create dashboards for different users, to give them the insight they need specific to their role.
Turning real-time data into actionable insights
Your finance team needs to try and keep pace with new sources of analysis and insight, and if your financial system can deliver and update data in real time, you can issue reports faster and more frequently.
You’ll also take some of the pressure off month-end financial reporting because you’ll already know about the problems and be able to take action as a result of those insights – you can monitor and react to issues at speed.
A cloud-based financial solution will be critical to real-time reporting and analysis, as it can pull in data from different entities and sources.
You can eliminate the time-wasting hand-offs, manual data entry, external spreadsheets, and the associated errors that can plague your finance team when it comes to financial reporting.
Recommended Next Read
Corporation tax changes in 2023: How to support your clients