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Use KPIs to stay on top of your business

Business owners need business and financial plans so as to have targets to which actual results can be compared. Included in these plans should be the company’s key performance indicators (KPIs).  KPIs measure what a business owner has identified as critical business success factors to track the company’s direction, overall  strategy and goals.

KPIs are very important to a business because they help measure how the company is performing and reveal where corrective actions are needed in order to achieve the intended company objectives. At the end of each month, quarter or year, actual results are compared to the targets. If there are any gaps, they are investigated, analyzed, and corrective actions are implemented.

Here are some examples of KPIs:

Human resources

  • Percentage of vacancies filled within x time
  • Recruiting fee as percentage of annual salary

Financial

  • Accounts Payable Turnover
  • Accounts Receivable Collection Period
  • Accounts Receivable Turnover
  • Percentage of financial reports issued on time
  • Percentage of invoices disputed

Sales

  • Average Sale $ per Customer per transaction
  • Units per Customer per transaction

For Medical Profession

  • Claims Denial Rate
  • Patient Turnaround

Construction Industry

  • Unapproved change orders
  • Labor productivity
  • Schedule variance

In closing, remember to use KPIs to track and measure what is important to your business and most importantly, take action to correct the underlying issue.

What are some of the KPIs you use to track how your business is doing?