Analytics has made it easier than ever to get insight into your business. However, with so many possibilities, you’ll have to choose your metrics carefully. While you could analyze your business in a thousand different ways, all that analysis could get in the way of actual work, especially if you work at a smaller organization. You already know you can’t look at every metric, but you might not be sure which ones really matter. For example, every business needs to worry about their finances, but not every business will find a significant benefit from analyzing every last aspect of them. That said, an automated analytics system can deliver most of the benefits of analytics while actually reducing time and labor requirements. Part of the way it does this is by focusing on a few key measurements. In the case of finance, it mostly comes down the following six metrics.
Cumulative Revenue (Year to Date)
This metric shows you how much money your company has made during the current financial year. It’s great for cutting through the noise and visualizing how much money the company brings in. With a single glance, you can get an overall sense of how the company has performed over time.
Budget vs. Actuals (Monthly)
This metric shows you the difference between the budget you planned for and the money you actually ended up spending. In the real world, these numbers don’t always agree, but with a better understanding of your spending, you can start to craft more accurate budgets. This metric is great for keeping yourself honest when it comes to budget planning. It can also help you make estimates for the cost of new projects or initiatives.
Budget by Month YoY
This metric shows you how your budgets have changed over time. It’s great for identifying bloat in your spending, or for finding areas of the company that could benefit from more budget. Identify months where you spent more, and identify runaway spending. Use the insights you find to inform discussions on overhead, profit margins, and the effect of budget on growth.
Budget by Month YoY (Cumulative)
This metric shows you how much money you’ve spent in your financial year so far, and allows you to compare to previous years. It offers a great perspective on your budget as a whole, and it can help you anticipate possible budget issues before they happen. Every business has unique ebbs and flows when it comes to budgets, but the more you can understand the factors behind those changes, the better you’ll be at controlling them.
Budget vs. Expenses
This metric shows you how sources of expenses compare with your overall budget. It’s great for identifying expenses that have gone too far, or aren’t pulling their weight. For example, you might be considering a sales or production push, but you’re afraid once things get started the spending will be hard to reign in down the road. This metric helps you stay on top of budget changes so you’re never caught off guard by a costly month.
Budget vs. Expenses (Cumulative)
This metric allows you to compare your budgets and your expenses for the year. It’s great for offering perspective on your budgets on a year-to-year basis. Over time, it’s easy to allow expenses to pile up. From one month to the next, it’s easy to write off subtle increases, but those little jumps can add up. This metric can help you recognize those sneaky expenses that pile up over time.
You probably don’t need to spend a ton of time analyzing your numbers. With a few key insights, you can get almost all of the benefits of analytics without the head scratching. iCharts Finance IQ is one example of an analytics tool that removes the guesswork. If you use NetSuite, there’s a good chance you’re already set up for Finance IQ. With a streamlined implementation, along with metrics and visualizations based on best practices and years of experience, you can get analytics without the hassle.