The role of a chief financial officer (CFO) is ever-evolving, much like the technology that powers it. Regardless of advancements in automation and artificial intelligence, key financial performance metrics like cash flow, current ratio, and the like will always be a concern for financial operations.
However, these KPIs have become easier to track and understand thanks to big data and automation. This frees up CFOs and other finance executives to focus on what they do best: using analysis to make better decisions and assist organizations in optimizing their strategic plans.
A survey by PwC found that 56 percent of respondents are still using manual processes and spreadsheets to keep track of performance indicators despite the arrival of automation tools that can manage repetitive daily operations and track KPIs.
Many organizations see the benefits of automation when they begin to use it. Adoption rates are rising, and finance teams are maximizing their efficiency.
So what Financial KPIs are worth considering in 2022?
The ideal financial KPIs to measure is aligned with your business goals in terms of what you measure.
Your business’s existing situation and plans should be considered while determining this. For example, have you developed any items yet? Is your business growing? You’ll want to make sure your performance is tracked using both leading and lagging indicators.
Lagging inputs, such as sales per month, are based on previous data and look at how well you’ve done in the past. Predictive analytics and leading indicators work well because they show you where you’re going.
KPIs may be automated using big data to help your company anticipate the future before making important decisions.
Customer acquisition cost
This KPI measures how much money and resources your company devotes to acquiring new clients and customers.
It includes costs associated with promoting a product or service, the price of advertising, the cost of innovation, and employee salaries.
The cost of acquiring new customers is a good indicator of a business’s health and understanding the company’s profitability in the future.
While considered a non-financial KPI, survey responses can calculate customer satisfaction. The Net Promoter Score, a metric for measuring customer satisfaction, can accomplish this (NPS). Retention is a sign of high satisfaction. Additionally, acquiring a new customer is more expensive than keeping an existing one, as you may be aware.
Return on Equity
You can determine whether or not your net income is appropriate for your business’ size by comparing your net income to the amount of shareholder equity you have. It not only tells you how profitable your business is, but it also tells you how well you’re managing your finances—increasing your ROE signals that you’re making the right decisions with shareholders’ funds.
The rate of Revenue Growth
The Revenue Growth rate tracks the change in sales revenue between two time periods.
To compute revenue growth rate, you need to subtract the previous period’s revenue from the current period and divide it by the total revenue generated in the last period. Multiply the result by 100.
Keeping track of this business metric is a good idea for an innovative startup. Your company’s ability to grow, hire new employees, and attract its revenue growth rate can gauge investors.
Tracking Financial KPIs with Performance Canvas
The decisions you make today will help drive the long-term viability of your company. Real-world data and numbers should guide these decisions. Using automation software, you can ensure that your data is accurate and complete before moving on to automating reports. Real-time dashboards allow you to monitor KPIs and see how your decisions affect your bottom line immediately.
Using tools like Performance Canvas allows you to easily access and manage all of your KPIs 24/7 with minimal effort and real-time data.
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