Why Management Information matters to your business

Using Management Information and KPIs to measure the health and success of your business is crucial to help you manage your business. Setting clear and effective KPIs and tracking these metrics against your targets over time, will enable you to measure how your business is performing.

How important is quality management information in making business decisions and can I leverage technology to improve the process?

The key to measuring the financial performance is the preparation of timely, robust and reliable Management Information which provides a strong base for making business decisions.

AI and data insights have become an incredibly valuable asset for any business, which creates significant opportunities for your finance teams to use data to improve planning and decision making.

Financial systems have embraced AI and automation to help businesses with more timely information and allow efficiencies to be achieved in information processing.

Management Information is crucial to understanding how your business is performing and the valuable insights that provides can shape the timing, impact and effectiveness of your business decisions.

The changing economic conditions brings into focus the value of better Management Information. If you are able to monitor and track performance on a regular basis and be able to see changes in your cost base, you will have a better view of how your business is performing which will help you make informed decisions and compare performance against targets and goals.

Data insights provide powerful indicators of performance, profitability and efficiency. Your business can gain a competitive advantage from turning financial data into actionable insights.

How do identify a set of KPI’s that I can use to measure my business performance over time and make improvements?

The importance of effective KPI’s to achieve greater business performance cannot be underestimated. KPI’s provide a valuable scorecard to monitor the vital signs on the health of your business and allow you to focus on areas where you want to see and make change.

KPI’s are a set of measurable results which provide an indication of whether your business is meeting its objectives.

Defining your KPI’s

The most common mistake many businesses make when they start to measure KPI’s, is to try to measure too much. If you are unsure of which KPI to measure, how do you know whether or not you are making progress? If you’re not sure what you're trying to achieve, you won’t be able to tell if you're succeeding or failing.

A good starting point is to identify the areas that you want to measure and track regularly, identify a target for performance and agree a set of KPI’s and metrics with your teams that will allow you measure performance against that target.

KPI reporting also allows you to track metrics that are specific to your sector or industry and these insights helps support crucial business decisions. A SaaS business will have a specific set of KPI’s that are unique to the sector. A scale-up business will have KPI’s focused on cash to track how much cash the business needs each month and what length of time the cash in the business will cover.

I want to ensure to that my management teams have visibility of their performance against our targets

What gets measure gets improved

By defining and tracking KPIs, as business owners and managers, you can get an overview of how your business – or individual departments – are performing at any given time.

A regular review of key metrics enables you make decisions and effect change in your business. You should identify the KPI’s that are important to help you manage your business and set these with your team. You should then look to review these results every month or more frequently, so you know where you stand against your targets. Then you track them weekly to see if they are moving in the direction you want and adjust your decisions to bring them back on track. Each department in your business will use the KPI’s to assess performance and this creates accountability and responsibility across your business.

Regularly reviewing KPI performance allows you to spot trends and patterns in your numbers and apply the right levers to improve your performance on a timely basis so that you can start to see the impact of decisions.

It is important for us as a business to monitor financial and non-financial targets to be meaningful to our decision making

KPI’s and metrics don’t necessarily need to be focused on financial measures and can include other metrics that help you to manage specific areas:

Financial

• Revenue; gross profit margin; net profit margin; debtor says; cash burn

Employee

• Employee engagement; employee turnover

Customer

• Net promoter score; customer retention; new lead generation

Operational

• Capacity/resourcing utilisation; return on marketing spend; revenue per employee, customer returns

A range of KPI’s covering different areas of the business provides a balanced scorecard approach to monitoring your performance and gives you a better overall view, that is not just focused on a set of financial measures.

Management Information that is robust, reliable and timely, allows business owners to get a pulse on the performance and position of the business and is crucial to the decision-making process.

Including financial and non-financial KPI’s allows measurement against targets which creates accountability amongst teams and places a focus on measurement to improve to enhance profitability.

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