Performance Tracking

Performance Tracking

Businesses should be continuously tracking performance to identify potential issues and make room for improvement. This can be surprisingly complex and involves more than simply reviewing financial reports each month or quarter. A significant amount of data can go into performance tracking.  Maybe the most complex part is identifying the Key Performance Indicators that are unique to your company.

It is essential to select the right KPIs to track and to implement efficient systems that provide you with the information you need to make decisions today that will affect your profitability tomorrow. Many company leaders and boards of directors might not know how to identify the right KPIs, which can lead to lots of irrelevant reports that don’t properly identify issues.

If your company needs an accurate and granular performance tracking system, you should consider seeking help from a fractional CFO. At CFO Simplified, we provide a variety of CFO services on an as-needed basis, including effective performance tracking. This can be a complicated process, but our part-time CFOs have the financial and business knowledge to help your company trend in the right direction. Contact us today for more information.

Factors of Performance Tracking

Accurate and effective performance tracking involves more than reviewing your receipts and expenses. The following are only some aspects of performance tracking for many companies:

• Financial performance – This can include examining your gross margin, net income, percentage of your various revenue streams to the total, return on assets, return on investment, quick ratios, profitability changes, comparative margins by product and product family and trend analysis of any of these metrics.
• Operations – It is important to analyze time efficiency, energy and materials efficiency, production variances, dock to stock times, QC percentages, production costs, scrap rates, capacity utilization, safety, downtime, maintenance schedules, quality concerns, inventory turns by product and family.
• Customers and marketing – You should track and review sales trends, customer acquisition costs, customer retention rates, customer satisfaction, returns on marketing investments, customer concentration.

Tracking all of these indicators is impossible.  Some of these KPIs might not be relevant for our company, or there may be more that would specifically help you guide your business.  Selecting and measuring KPIs can be complex and time-consuming. Let a part-time CFO help you with the analysis, while you focus on the daily operations of your business.