A financial dashboard is a specific type of dashboard, allowing to monitor the financial performance of an organization. To do so, like all dashboards, this tool presents Key Performance Indicators. However, these KPIs must be carefully selected to allow the most relevant performance to be monitored.
The financial dashboard is notably used by companies to monitor and analyze their performance. However, organizations in all sectors can use it to track, analyze and improve their financial performance. Indeed, whatever the industry, profitability is the main goal of a company.
Even not-for-profit organizations can turn to a financial dashboard to ensure they are spending their donations in an optimal manner. This dashboard should provide visibility into all aspects of cash flow, losses, profits, and other financial items.
This information must be presented in a clear and legible manner, and the dashboard must not be confused by unnecessary or irrelevant Key Performance Indicators. So here are the best financial KPIs or KPIs to integrate into your dashboard, to help you optimize and achieve your financial goals.
By implementing these KPIs, you will be able to create a complete financial dashboard to interact with the different metrics and automate the reporting and analysis processes. This will make your financial data and insights more informative and more easily manageable.
There is a very wide variety of financial KPIs, and several major archetypes of financial dashboards can be distinguished (cash management, profit and loss, CFO, financial performance, etc.). However, five indicators can be considered as the most important and popular for any type of financial dashboard.
1. The first is revenue growth. This KPI is one of the most basic ones to estimate the success of the company. It can be measured by tracking sales from one period to the next and then subtracting the revenues of the previous period from the current period.
This number is then divided by the total turnover of the previous period. The percentage obtained indicates the growth in revenues.
2. The second KPI to integrate into your dashboard is the revenue sources KPI. Analyze revenue by customer and service to determine which customers and segments are most profitable. You can then make informed decisions to support the growth of your business by focusing on the most lucrative services or customers.
3. The third indicator to monitor is income concentration. The purpose of this KPI is to ensure that the majority of your revenue does not come from a single client. Because if you lose this customer, the consequences will be disastrous for your revenue.
Divide the revenue per client by your total revenue and multiply the result by 100. This will give you the percentage of revenue allocated to each client. If your income is too concentrated, try to diversify your client portfolio.
4. The fourth KPI is profitability over time. By monitoring your expenses and revenues, you can compile profit and loss reports to analyze your performance over a specific period of time.
5. Finally, the fifth most commonly used financial indicator is that of working capital, i.e. the cash theoretically available for the company's operations. These funds may come from banks or private investors willing to support you.
By following this metric, you will be able to better plan your operations. To calculate working capital, subtract your debts from your current resources. If your resources are greater than your debts, working capital is positive. By dividing current resources by current debts, you can calculate the working capital ratio. This ratio should be between 1.2 and 2.
You now know the most relevant KPIs to integrate into your financial dashboard. This tool can be used by company executives, department managers or financial experts to gain a comprehensive view of the data and make full use of it.