Key performance indicators, or KPIs, show how your business is doing at any given moment. The frequency you measure this data depends on the kind of information you need. KPIs help managers, CEOs and business owners make decisions. If one decision occurs monthly, then the information that drives that decision should occur more than once per month. On the other hand, if you need to make decisions weekly, then you should run certain KPIs daily.
Financial statements that drive KPIs usually run once per month. These metrics include revenue, net profit, operating revenue and gross revenue. These numbers appear as ratios with each other to give you a chance to see if the numbers indicate growth, the same pattern or a decline as compared to the previous month. Anything unexpected indicates you should change something in the way you do business.
Some KPIs you can change quickly, which means you should run them daily or weekly. Sales is an easy figure to measure every day. Computers that monitor receipts in your accounting software show how much money your sales clerks pulled in over a business day. Daily cash flow can meet expectations compared to the prior week, month and year. A sales pipeline, depending on how important managers feel these numbers matter to the overall success of a company, should be run daily or weekly.
Measuring the sales pipeline lets your sales teams adapt different sales strategies from day to day. This KPI can affect staffing levels, hours scheduled for the following week and the price of your products or services. Updating this KPI daily or weekly lets you know what you can do to improve your monthly KPIs.
Longer-term KPIs could have more relevancy every quarter when your company issues guidance for the future. These KPIs usually have little bearing on the finances of the firm and do not show up on monthly financial statements. Metrics and KPIs help you make decisions about the future of your business. How often you run these KPIs is up to you, but more data helps you make informed choices.
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