Finally the release of the Calxa KPI update is here. Following many requests from customers, KPI ratios are included in this weekend’s update. Use the 15 standard ratios provided or customise your own.
Key Performance Indicators
The standard KPI ratios can be loosely grouped into those that affect cashflow and those that affect profitability. I say ‘loosely’ because the two are heavily intertwined as you would no doubt know from your own organisation.Well, what are they, you may ask? KPI stands for Key Performance Indicator and generally they are used for performance measurement or setting targets as part of strategic goals within your business. Using 15 standard accounting ratios such as Working Capital, Return on Assets and Inventory Turnover, Calxa is now equipping you with a default set of KPIs for easy reporting.
Early Warning Signs
Use them as early-warning signs, giving you an indicator of future problems. A low Working Capital Ratio, for example, indicates that for each dollar of short-term debt, you have less than a dollar of assets you could easily turn to cash. If this is temporary and the ratio is only a little under 100% you don’t need to be concerned but if it persists it’s likely you will start to run out of cash very soon.
The profitability measures are useful for benchmarking your business – compare to other similar organisations if you can or compare to your own historical results. Retailers and manufacturers traditionally focus on Cost of Sales and Gross Profit Margins. For other organisations Wages to Turnover may be more interesting. Remember that if you are using Calxa Premier you can now provide these ratios to department and project managers so they can see their performance.
Choose KPIs by Objective
Choose your KPI report based on your objective: Use the KPI Spreadsheet report to observe changes over time and to help identify potential problems early or use the KPI Budget Summary report to see if you are meeting your business targets.
For help with KPI reporting please refer to the Calxa Support Note.
A hotel, for example, might want to compare Bar Wages to Bar Revenue and Restaurant Wages to Restaurant Revenue. Simply create an Account Group for each set of accounts and then a formula to compare them. Check out the Calxa support Note on Customising KPIs. Calxa Premier users can also look under the KPI bonnet and get their hands dirty with full formula and account group customisation available. This means if the KPI you want does not exist you can create your own. Simply, set up a custom formula or fine tune an existing KPI to suit your individual requirements.
What are KPIs?
KPI stands for Key Performance Indicator. It is a performance measurement tool. As a result, it is considered important in leading to potential improvements. KPIs are commonly used to evaluate the success of an organisation, a business unit or department or particular activities. Similarly, it can be used to track operational goals or progress made towards reaching strategic objectives.