How do your clients know how their business is actually doing?

• At year-end, when you close the books and send them their financial statements and tax returns to sign,
• At month-end, when you run profit-loss reports for them,
• By the number of complaints they receive from their customers every week, or
• Sales order revenue (but without direct profitability analysis from sales to delivery).

“An activity measured, is an activity managed!”

There are thousands and thousands of ways to measure business performance.  However, the key is to:

• Capture, and make available, as much business performance data as possible from business activities, and
• Determine the best (i.e. - cost effective and efficient) data to measure and report on that will help improve business performance.

All companies use the most common KPIs that arise from:

• Information from their financial statements, and
• Ratios of various financial indicators that measure a company’s performance (AR ageing, AP ageing, inventory turnover, overhead as a % of sales, etc.)

But, are your customers measuring and analyzing the most appropriate KPIs?  Or, any KPIs at all?  Most industries have a set of “best practice” KPIs that help their member companies determine how their business is doing against industry average and better performance indicators.  A great place to learn more, research, and find the most appropriate KPIs for your, or your customers’ business is the KPI Library.

Using ERP/accounting software to improve business performance...be more profitable

Today’s modern and sophisticated ERP/accounting software is built on stable, and highly dependable, relational databases.  Relational databases allow for the ability to compare an infinite number of data sets (imagine reporting on sales by region, by sales person, by product).  Data in the database can be cross-referenced, and then presented into reports, which personnel and management can use to monitor, correct and improve company performance - from top to bottom.  ERP/accounting systems have sophisticated reporting tools that allow for a company to report on a set of KPIs, that can then be built into a  performance dashboard, individualized for each and every system user.

Your clients are already using the most common financial statement ratio measurements (liquidity, profitability, asset activitiy, capital structures, etc.) as primary KPIs.  The KPI Library provides hundreds of more sophisticated financial statement ratio KPI examples.

But, what about measuring business activities beyond the financial statement?  Capture, measure, and analyze operational activities to gain additional insights into revenue, cost and profitability:

• Order Entry Errors; measure, track and improve the frequency with which orders are rejected by the order processing system or which require follow-up by a customer service representative. Causes could be incorrect pricing, incorrect material number, incorrect minimum lot size or pallet quantity, discontinued item or invalid ship date.
• Customer Service Performance; measure, track and improve the percent of customer orders which are delivered 100% complete with all correct paperwork, billed correctly and fit for use.
• Contact Per Customer; The less contacts to your customer service department the better. Fix (or automate) the reasons your customers are calling, and lower the number of contacts per customer.

Key Performance Indicators should also be used in manufacturing, delivery, warehousing, transportation/delivery...and much more.  If the data can is captured, it can be measured; and then reported  on as a KPI to gauge business performance.

Help your clients improve their business performance by assisting them to implement KPI reports & dashboards, and understanding how to use the information to improve their business operations.

They’ll thank you for it!