Using dashboard reports. Selecting KPIs

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1 WHITE PAPER

2 When you have accurate, timely and actionable financial information, you re able to make smarter business decisions. Key Performance Indicators (KPIs) can provide a clear picture of your company s current financial situation and allow you to make those decisions with confidence. To be of value, however, KPIs must be quantifiable. You can only manage what you can measure. KPIs will differ by industry. Those relevant to the retail environment will be different from those for a manufacturing or financial environment. Regardless of your industry, however, successful KPIs must be: Specific to the goals of your organization Measurable to enable you to assess progress Achievable and realistic Relevant to your business metrics Time-bound to place achievement in a determined time frame Selecting KPIs Businesses should develop KPIs that provide a balanced scorecard. To do that, KPIs need to look at key business metrics related to customer satisfaction, sales pipeline, employee productivity and cash flow. Combined, these KPIs measure the health of the company from the perspectives of finances, customers, internal processes and human resources components. For most businesses, only a few decisions will typically make or break the company, including: Pricing: Are you charging enough for your services? Staffing: Who are your best performers, and how do you reward them? When should you hire new staff, and should anyone be let go? Cash Flow: What are your Days Sales Outstanding (DSO)? Is your company doing a good job billing and collecting? Using dashboard reports The Insperity Reveal software solution provides dashboard snapshots of 12 critical financial KPIs that let you analyze today s data, evaluate your transactions over the past year and offer suggestions for improving the financial health of your business. Dashboard reports should be a part of every company s regular financial reports, according to Stephen King, president and CEO of GrowthForce. They provide KPIs with actionable information that businesses can use to make critical decisions to increase margins or invest in a surplus, King says. And it s much easier for business owners to quickly digest financial results graphically, rather than as small type on printed financial reports. Your financial information is the foundation of your business. It s critical that your records are accurate and up-to-date and that you have real-time access to your financial information. Stephen King, president and CEO of GrowthForce. 2

3 The 12 KPI dashboard reports provided by Insperity Reveal software include: Days of cash This is how much cash you have today and the number of days of expenses you can cover with this cash. The number one reason businesses fail is they run out of cash, but monitoring this indicator will tell you in advance if you re headed for a problem. Cash on hand This is the total amount of cash you have today, calculated as the sum of all balance sheet accounts. Companies that stay on top of their cash positions are the ones that survive. Receivables This is the amount of money your clients or customers owe your company today. The ability for a business to survive is often based on how quickly it s able to convert receivables into cash. Payables This is the amount of money your company owes to vendors, including amounts due to suppliers, utilities, credit card balances and more. Vendor terms are important, because delaying payment when appropriate increases cash. Credit card debt This is the amount of unsecured liability incurred through a short-term revolving loan facility. Users must remain alert and vigilant. Even small balances can quickly balloon out of control due to interest charges. Working capital This measures your company efficiency and short-term financial health. Key components are inventory, accounts receivable and accounts payable. Your working capital equals current assets minus current liabilities. Positive working capital means you have the ability to pay off short-term liabilities. Income This is remaining revenue after all your company expenses and taxes have been paid. The financial statement that reflects the resulting net income or loss is your income statement. Stockholders and lenders want to know how your company is performing financially. Cost of goods sold This measures all costs directly associated with making a product or delivering a service, including purchase price and any freight charges, storage of goods and goods returned. 3

4 Gross profit This is the amount of money left after your company has paid all direct costs incurred in making a product or delivering a service. It tells you the basic profitability of your product or service. Expenses This is all costs incurred to produce revenues. Expenses are measured by the assets surrendered or consumed in serving customers. If your expenses exceed your revenues, your company is in trouble. Net income This is your company earnings, the money left after the company expenses have been subtracted from the revenues. It is the single most important measure of your profitability, and net income makes it easier for regulating authorities to understand the financial health of your company. Equity This is your net worth. It is the residual interest in the assets you have remaining after deducting liabilities. This is the book value of your company, and it records your claim to funds that you have invested. Insperity Reveal can help you manage your financial operations and drive productivity and profits. 4

5 About Insperity Insperity, a trusted advisor to America s best businesses for more than 27 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2012 revenues of $2.2 billion, Insperity operates in 57 offices throughout the United States. To learn more about GrowthForce, an Insperity alliance company, call us at Visit us at insperity.com The information contained in this document is for general, informational purposes only and is not intended to be legal advice. This information is not a substitute for the guidance of a professional and should not be relied upon in reference to any specific situation without first seeking the advice of a qualified HR professional and/or legal counsel regarding applicable federal, state or local laws. Insperity and its respective employees make no warranties, express or implied, and make no judgments regarding the accuracy of this content and/or its applicability to a specific situation. A reference or link to another website is not an endorsement of that site or service. 5 FS -P13-620