When running a small business, there are a lot of critical numbers to know that’ll help you make better business decisions. While many KPIs (Key Performance Indicators) are essential, what is most important is understanding your “critical drivers,” which are the key numbers that influence the results of sales, profits, or cash flow.
Here we will focus on the critical financial statement KPIs you should be receiving from your accountant:
- Cash in the checking account
- Accounts Receivable
- Accounts Payable
- Unearned Billing (work paid for, not completed)
- Billing in Progress if applicable
- Equipment Purchases or Notes Payable
While this summary is not a substitute for reading and understanding the details on the financial statement at the end of the month, it is designed for use throughout the month to manage cash flow. This overview will provide you with the key numbers to start with, and if you need to dig in further, you can review your financial statement or research more into it. Your financial statement is your business summary of how all these pieces came together. By reviewing your end-of-month numbers, we can determine what activities and decisions you can make to improve your results next month, and we’ll repeat this process each month for improved results.
These are just a few of the key financial statement KPIs. You may also have operational or sales-related KPIs to review, and a summary dashboard for those as well. This will give you the jump-start you need to make smarter and more profitable business decisions.
To learn more about Key Performance Indicators, please check out our Cash Flow Essentials, or one of our Numbers Skill Sessions online.