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hello@creative-computing.co.uk
As a CFO or Finance Director, have you ever started a company and either you don’t have access to the metrics you would like to be able to drive business success or it’s too difficult or it takes too long to get this data. As finance leaders’ roles have evolved, it’s even more imperative that you have access to the data you need on demand and in an easy to view format. So, in this series we’re going to show you how you can become leaders of transformation, evaluate, and improve your finance strategy, improve finance metrics, and optimise costs. I’m Laura at Creative and welcome to Season 3 of Dynamics Unwrapped…
For a new CFO entering a business, it cannot be overstated how important it is to ask what are the things we need to know to be able to optimise performance over time. Looking at the individual business and being able to identify the metrics which are relevant and key to ensuring your business can make decisions off of is imperative. These are the most important things that you need to track and build upon to ensure you can not only understand the output but the behaviour that’s driving that data.
Obviously its important to track revenue and profit as this is a key indicator to show how well your business is performing. But, ultimately these numbers are the result of other KPIs. So, its really important to understand what numbers bring you to your revenue, what metrics influence your profitability and really hone in on these. A good example is a lot of businesses scrutinise their gross margin and maximising this. Now whilst this figure is important, if the gross margin decreased, would you know why? Well unless you’re looking at a whole other bunch of numbers you won’t and by this point the percentage has already decreased. So instead, you might want to be focusing more on things like your average selling price per unit and your average cost per unit. So, identifying the key metrics that drive your business performance is really important. But, to be able to really scrutinise these numbers, you’ll need a finance system that allows for that deep analysis.
So coming into a business, finance leaders need to have the ability to evaluate the numbers they already have but more importantly how valuable they are to making decisions. If the correct infrastructure isn’t in place, it can make this process slow and difficult, especially for those organisations producing lots of data. So, if these metrics aren’t readily available, and I’m talking about the numbers that drive output, that’s something that you’ll need to change pretty quickly so that you’re able to understand the financial health of your organisation, enable strategic decision making, identify operational efficiency, and establish a baseline for improvement. And this series is going to help ensure you’re able to do just that, so get ready for the next video…