"When performance is measured, performance improves. When performance is measured and reported back,
the rate of improvement accelerates." - Pearson's Law
Fundamental Financial Measures
If your business has already implemented
steps 1 - 3 of financial control,
its is time to take your business to the next level.
Below are some very basic, but powerful, examples of measures, that can,
boost the financial performance of your business.
Customer Acquisition Cost - Obtaining new customers can be expensive, understand if these costs are bringing the desired results.
Customer Cash Flow Contribution - Late and non-paying customers can have a huge impact on your ability to grow, not to mention the time and stress it takes to collect outstanding money. Know who they are, and actively work on improving the collection of outstanding monies.
Customer or Product Profitability - Not all customers and products are equal. Do you know if you are spending time and money on non-profitable customers, or selling non-profitable products.
Sales & Marketing
Sales & Marketing
Gross Profitability - The internal systems in your business must be focused on converting an order to invoice, as quickly and cost effectively as possible.
Supplier Cash flow Contribution - Is your supplier base optimal? How much, and when you pay suppliers, directly impacts on your ability to grow.
Inventory or Stock Cost - Slow and non-moving stock is cash that is tied up, maybe forever! Keeping these low, releases cash and reduces business risk.
Cash flow - The ability to generate cash is key to any business' growth and survival, yet it's very seldom actively managed.
Financial Ratios - There exits a multitude of financial ratios to track specific business goals. These can include:
Various profitability ratios,
Various debt ratios,
Liquidity ratios, and
Return of Investment ratios.