How to Cut Out the Fancy Dashboards and Get Back to Basics

Find Your Numbers

Business owners tend to fall into one of 3 main categories when it comes to the numbers they want to manage their business by…

The first group I call the “Flying Blind” CEO. He or she has no interest in the numbers, until it is too late and there is no money in the bank.

Why, you may wonder would anyone run a business blind? And, how could they possibly be successful in business if they “fly it blind”?

They do it and sometimes quite successfully, because they have amazing other qualities – they may be fabulous at sales and marketing, or operations, and are so good at, and surrounded with such great people, that they have been able to survive, even thrive without being overly analytical with their numbers.

If you are this type, you must find a great CFO/Controller to delegate this function to, or you will hit the wall at some point.

The second group is the overly analytical CEO who will create pages of Key Performance Indicators to track, often to 3 decimal points.

The problem here is that they tend to get lost in details that are not significantly impacting some basics (I will get to those shortly, keep reading…)

The third type is the focused CEO who knows exactly what to track and keeps it very simple. She/he refuses to let complexity strip away the focus they have on the basics.

Their dashboard consists of only 3-4 numbers.

Now, I am not saying that the business overall should not have different numbers to track by different people in the company depending on their role. They must have. And each department will be different.

What should you track at the highest level of your business?

There is no one answer to this question. Every business/industry is unique. There may be one driver in your industry that contains within it a lot of other information. It is what I call a Lead Indicator…

For example, I remember reading once that the CEO of British Airways tracked one Key Number above all others no matter where he was in the world.

What do you think that was?

Cash in the bank? New customers? Cost per flight? Percentage of flights filled up?

None of those. It was…

The number of flights that left on time.

I suspect he had discovered that when flights did NOT leave on time all costs sky rocketed – labour, airport fees, and so on. And the resulting domino effect could be devastating.

For the CEO who is focussed on growing the business, here are a few simple Key Performance Numbers that are great indicators of success:

  1. Net new customers/clients per month/Quarter
  2. Average sale per customer as a trend (i.e. tracked monthly in graphic form)
  3. Average transaction frequency per customers tracked as a trend as in (2) above

These 3 numbers are powerful indicators of other problems. For example, if the average sales value is going down you need to find out why? Is it because discounting is happening, is the quality of your products going down and people are buying less, is it due to product shortages?

A good indicator does not give you solutions – it points you to the questions to ask!

The 3 Basic Financial Indicators You Cannot Ignore

If you have a CFO/Controller then they MUST be tracking these 3 numbers frequently (weekly minimum, better daily):

  1. Cash-flow
  2. Overdue invoices owing to you
  3. Bills to be paid

If you do not have a CFO/Controller, then these numbers must be tracked in addition to the 3 above.

And, this leads to the….

Power of Bank Feeds/Document Feeds

Cloud-based accounting software has made available some amazing features. Two of the most powerful are daily bank/credit card feeds plus document feeds.

In the old days (and many, many businesses are still in the old days due to legacy type systems) you have to wait until after month-end to reconcile your bank, and to ensure that all bills are recorded from vendors for a proper, what we accountants call, cut-off.

Until that happens you have no idea where you are at during the month with any confident accuracy.

Bank feeds changes all that!

What bank/credit card feeds are doing is this – taking advantage of online banking to – daily – behind-the-scenes login to your bank (after you set up the credentials for it to do that for you) and download the daily bank transactions into your accounting software.

The accounting software then attempts to match the bank transaction to the accounting transaction.

In addition to that, the accountant can set up rules to match transactions based on key words for instance.

What this allows for is daily bank and credit card reconciliations.

Now, adding in document feeds from software like Bill.com, HubDoc.com, ReciptBank.com they will feed all vendor invoices, credit card receipts directly into the accounting software.

Putting it all together means you can manage your working capital in ways that were impossible before!


Real-Time Numbers

With bank and document feeds you now have real-time numbers updated every day. After month-end cut-offs are virtually a thing of the past (work is still required, but way less).

With a real-time dashboard based on reconciled numbers, you as CEO, owner can login to your accounting software and make decisions on numbers that are timely, accurate and reliable.

However, one cautionary note, if you don’t have all this set up correctly, or managed professionally with experienced people, those numbers will not only be unreliable, you will have a snowballing mess on your hands very fast!


Simplify Your Dashboard

So, the simple accounting dashboard can be these 3 main numbers:

  1. Cash on hand
  2. Invoices due for payment
  3. Bills to be paid

You simply add the payments coming due to cash-on-hand less current bills to be paid and you have your net projected cash.

From, there you will have to anticipate upcoming inventory purchases if you have goods for re-sale.

Furthermore, you can quickly focus your energy on getting the cash in from the invoices outstanding and delay as long as ethically possible the bills you have to pay.

This is how you….

Manage Your Working Capital

As a reminder working capital is the combination of cash-on-hand plus cash coming from accounts receivable collected, less amounts going out for bills to be paid, less future anticipated bills for inventory and fixed costs.

Working capital is challenging to manage based on timing differences between collections and payables.

The CFO/Controller’s job is to increase collections and stretch out payable bill payment times.

Thanks for reading….