With the introduction of the NDIS and other customer-directed care reforms, there is a need for many organisations to more closely manage cashflow and ensure their long-term sustainability. These Business KPIs will help you monitor your financial health and give early warning of potential problems. Most of them are suitable for any business, not just Not-for-Profits.
Unit Costs
Knowing the cost of each activity you are providing is vitally important in the new funding environment. While we don’t have a direct method of including non-financial information in Calxa yet (it’s coming later this year), we have a simple workaround that will enable you to work out the cost per participant or per client for each of your activities. Use this to ensure you are earning enough to make your program sustainable for the long term.
Working Capital
Business owners have always had to keep an eye on their Working Capital, a lesser known concept in the third sector. Essentially it compares your Current Assets to your Current Liabilities and gives a good indicator of how easily you’ll be able to pay your bills. A ratio of less than 100% (you owe more than you can quickly turn into cash) is usually a warning sign of potential trouble. Watch out also for a declining trend over time (the Spreadsheet report is good for this).
Debt to Income Ratio
Most organisations have some debt and this is likely to be more common in the NFP sector over the coming years as organisations borrow to expand and grow – much like a business would. The Total Debt to Income KPI allows you to monitor your debt compared to your annual income. The absolute value isn’t so important with this ratio – it’s more important to monitor trends and ensure that your income is sufficient to manage repayments.
Build your own KPIs
Every organisation has its own unique quirks and idiosyncrasies so Calxa gives you the ability to create your own Business KPI ratios. Use this to get exactly what you need to manage your business and help it thrive well into the future.
Need to know more? Watch the recording of our last Webchat on this topic.