Budget forecasting is an essential part of good financial management, yet many companies rely on their once-a-year projections throughout the year. Although that strategy may have worked in the past, it’s no longer effective. Things are moving too fast: Technology, government regulations and artificial intelligence are only some of the disruptors businesses are subject to on a regular basis.
Today, good financial health relies on ongoing monitoring of key business metrics and the ability to shift assets to meet current needs — and that means regularly comparing annual forecasts with real-time key performance indicators (KPIs).
Technology has made monitoring your company’s KPIs relatively simple. By taking advantage of this ability and monitoring important trends on a frequent basis, you and your management team can quickly make needed adjustments. Consider these examples:
Annual forecasts won’t catch these types of glitches quickly enough for you to make the strategic adjustments needed to prevent adverse effects on your business. But a dashboard can give you access to real-time data that allows you to react to unexpected changes as long as you coordinate departmental reporting standards and methodology. Lack of a standard system or methodology for data collection, analysis and reporting will affect accuracy.
The following KPIs should be closely monitored:
Today’s technology allows company leaders to monitor important information on an ongoing basis, which allows for more precise and agile decision making — and a more profitable business. If you want to better understand how to better anticipate your company’s growth, contact us today.
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