HOW TO USE KEY PERFORMANCE INDICATORS

a business has financial objectives. the thing with financial measurements is that they have to come out of the financial accounting system. there is a great quote about this: 'running a business on financial objectives and using the financial accounting system for measurements is like driving a car and using the rear view mirror to see where you need to go'

the financial accounting system is great. I will write another post about this later. however the accounting system is not so great at providing real-time and let alone forward looking information. and that is where the key performance indicators come in

if you can find in your business physical or raw financial indicators that correlate to financial numbers that only become available later, then these are prime candidates to become key performance indicators. if such indicators are available in (near) real-time, reliable and resistant to tampering and error, easy to collect, easy to understand, and visible - then consider using them as key performance indicators

that way, you will not need to wait for the financial accounting system to tell you where you are. you may also be able to forecast your key performance indicators. if you can do that, you can forecast your financials

https://funzzionale.com/

design & development of business controlling applications - personal solutions for busy managers on the go #finance #business