What is Financial Intelligence?
Financial intelligence is the process of collecting business data and turning it into information that is meaningful and actionable toward a strategic goal.
BY STAYING ON TOP OF YOUR FINANCES YOU CAN:
- Understand how your business is performing
- Make informed decisions about your spending
- Make sure you have enough money in the bank to pay the people you need to and when you need to.
- Stay on top of your tax payments
- Provide accurate information to get an investment or a business loan
- Set and achieve key business milestones — like expanding into new areas, or hiring someone new.
7 ACCOUNTING KPIS TO WATCH WHEN SCALING YOUR BUSINESS
Before you start considering scaling your business, you need to think about strategy as successful growth is more about managing your numbers effectively and planning sustainable development. To achieve this, you need to be monitoring the right metrics and using them to develop your growth strategy.
OPERATING CASH FLOW
Your operating cash flow is the total cash your business produced from its operations. It indicates whether your company has sufficient cash flow to operate or if you need more funding. The operating cash flow focuses on money in and out related to your primary functions, such as inventory, services, salary, and sales.
WORKING CAPITAL
Working capital measures your liquid assets that meet your short-term financial obligations; this includes short-term investments, accounts receivable, and cash on hand, which outlines how your business generates money. Your working capital is also known as the difference between your current assets and your current liabilities; this indicates your operational effectiveness. Generally, solid working capital has a ratio between 1.2 – 2.0. Anything below 1.0 is negative working capital or operating at a debt. A ratio over 2.0 could indicate that you aren’t maximizing your surplus assets for revenue.
SALES GROWTH
Sales growth is a metric that indicates the ability of the sales team to increase revenue over a fixed period. This is a crucial KPI to determine financial projections for growth and business decisions. Sales growth should be monitored weekly or monthly to determine consistent growth or identify any issues with your teams or processes. It’s essential to address these issues before scaling to prevent any negative trends
SALES REVENUE
Revenue is the first KPI most businesses evaluate to gauge their success and market demand. Sales revenue refers to the income from all customer purchases. Measuring revenue growth rates requires breaking down measured performance by a time period, say a month, quarter, or year. For example, month-on-month, quarter-on-quarter, and Year-on-year can show you market fluctuations, and changes in consumer demand, and may provide insights regarding factors impacting growth or decline.
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