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There are dozens of financial indicators your company keeps track of. While all are considered important, there are a few that stand out in terms of criticality. These are early signs of how your business is tracking. Like a vehicle’s fuel gauge, they tell you whether you have sufficient fuel to get to where you want to go.

Monitoring these three key financial insights daily can significantly help provide the faith that your financial health is in order. This confidence is essential for you to adjust your business mode – to stay put and consolidate or to attack and expand.   

1. Revenue

Running a business is like a marathon. It is a long journey to set small targets; business success requires self-discipline in setting multiple small targets and ensuring you hit them. Revenue is probably the most straightforward measurement of this success. It tells how effective your sales strategy, marketing campaign, or even cross-selling framework are.   

You can proactively protect revenue by catching unusual revenue drops daily. An unexpected drop or slow sales trend indicates there might be a quality issue in your product and service, an ineffective marketing strategy, or even just a lack of attention and love to your customer. This early indication allows you to perform root cause analysis, respond promptly, and consult with the concerned team. When this is overlooked for an extended period, your business may incur unrepairable structural damage.

2. Cash Flow

Cash flow, the actual dollars that are moving in and out of your bank accounts, is just as important when it comes to determining your business’s performance. It is vital to keep an eye on cash flow daily to make plans and decisions such as expansion, recruiting, and spending on discretionary items.

It is a common pitfall to assume that trading performance equals cash generation. It is quite common that solid sales and profitability on paper may not necessarily translate to strong cash flow. This could sometimes provide false confidence to management that the business is in an excellent position to expand the model by scaling up resources, creating unexpected liquidity issues to fund the increased scale. Overlooking the timing misalignment between trading performance and cash flow could break any business, regardless if it’s big or small.

3. Debtors and Creditors

Your company’s debtor and creditor management activities are both important and can impact your cash flow and overall business. 

Managing debtors is critical to ensuring your business doesn’t get into a cash crunch and provide you with enough working capital to reinvest and grow. Monitoring payment patterns allows you to profile your customer base and potentially adopt a pricing tier strategy. Similarly, knowing when you make the payment to the suppliers, there may be an opportunity to have the conversation for a shorter trading term for a better price discount.

Your payments for your business’ short-term debt should also be tracked efficiently so you avoid risking defaulting.  

Business intelligence (BI) lets you effectively monitor revenue, cash flow, and debtor and creditor activities, and a lot of other financial indicators at ease. You can save valuable time and gain insight into your financial performance, allowing you to position your business better.

FlexBI offers real-time tracking of all key financial and business indicators to assist you make wiser, data-based decisions fast. Contact us to know more about how we can work together for your business’s success.