“Dashboards are effective tools for ensuring shared financial comprehension and engagement among board members.” – Forbes
Tracking the financial health of any business, from small-scale start-ups to global corporations, is key to business survival. A financial dashboard is one of the most effective ways to achieve this. It illustrates key pieces of fiscal data in a graphical format, making it easily accessible to all stakeholders, regardless of their background.
Here we explain a financial dashboard, how they work, and why you need one.
What is a financial dashboard?
This is effectively a visual representation of your company’s finances, showing whether the company’s key performance indicators (KPIs) are being met. This data visualisation tool provides chief financial officers (CFOs) and various organisational stakeholders with financial details in a user-friendly format, such as a graph or chart. It’s also available in real-time. This means that any discrepancies are quickly identified and rectified.
The data is drawn from several departments, including:
- Accounting
- Sales
- Marketing
- Customer service
- Human resources
What are examples of financial dashboards?
There are many ways that financial dashboards are used within an organisation to keep stakeholders constantly updated about their financial health. Here’s a look at some examples and how they’re providing insight for CFOs and more.
1. Sales and marketing financial dashboard
Sales and marketing leaders are constantly looking for ways to solve strategic challenges and formulate campaigns that will drive business growth. Through a financial dashboard, they’re able to see whether they’re on track with the next quarter’s revenue goals or not, as well as determine ways to improve performance. This is immediately evident through the KPIs on the constantly updated financial dashboard.
2. Profit and loss financial dashboard
In addition to individual departmental financial dashboards, you get an overview of your financial health with a profit and loss dashboard. This indicates whether your company is generating any revenue, allowing you to track metrics related to items like gross profit, and operating and net profit margins.
3. Customer health financial dashboard
The customer experience is key to any business’s financial health, which is why this financial dashboard is so insightful – particularly for subscription-based companies. Using this dashboard, CFOs are better able to communicate with individual teams about what challenges are facing the company, and which strategies are working.
4. Employee health financial dashboard
Just as you can’t run a business without customers, you can’t run a business without employees – and that’s where this financial dashboard comes in. Using KPIs, you can determine the revenue per employee, the costs related to hiring and training employees, and the company’s employee retention. This indicates areas where you could improve the workplace for all staff.
5. Business health financial dashboard
This provides you with a great overview of your business operations, what’s working and what’s not in financial terms. While this won’t provide you with the detail-focused insight that you get from departmental-level financial statements, it gives you a good understanding of the company’s general financial health.
What are the financial dashboard metrics?
There are many metrics that are used to assess the financial health of your organisation. Logically, these differ from company to company.
Here are some of the most notable metrics used for assessment.
- Customers: Your dashboard could include customer-related data such as the total number, demographics and more that assist you in tailoring your approach.
- Revenue: This includes data related to your total income alongside your monthly expenses for future budgeting.
- Net profit: This measures your net profit by product, month and employee by deducting all expenses.
- Operating cash flow: This is the amount of money generated during your day-to-day business operations to ensure you have sufficient funding.
- Accounts receivable turnover: This determines how quickly you’re getting paid for goods or services you sell on credit, tracking any significant delays in payment.
- Debt-to-equity ratio: This measures business funding growth to ensure you’re not too dependent on credit.
- Working capital: This assesses what resources can be converted to cash for payments if needed.
- Gross profit margin: This indicates whether you’re managing your labour and production supplies.
- Operating profit margin: Your company’s income is deducted from overhead costs.
- Total asset turnover: This shows whether you’re using your assets effectively.
What are the benefits of a financial dashboard?
Tracking your company’s financial health on a dashboard is incredibly beneficial for operations in a number of ways. By incorporating effective software that allows you to create financial dashboards, you will immediately enjoy a number of benefits.
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Time savings
Swift, automatic data import using software to create your financial dashboard removes the need to manually gather data. This means that you and your employees are saving time that is better spent on other business-related tasks.
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Data sharing
Data used to create a financial dashboard is incredibly valuable, and you’ll need to share it easily with stakeholders on a regular basis. While you could go with emailing or constant meetings for data sharing, financial dashboards make this process much simpler and more effective. Everyone will have access to this valuable information in an easy-to-read format.
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Risk reduction
When you use software to create financial dashboards, you’re not relying on manual data collection. This not only saves time but also reduces the risk of human error. Just one simple input mistake can have a massive knock-on effect that will result in poor decision-making based on inaccurate data.
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Single interface
The shift to digital operations, the arrival of social media, and the growth of global businesses mean that there is a wealth of daily data coming in from many sources. With a financial dashboard, you’re able to consolidate all this important data in one place. This can minimise inaccuracies and give you a holistic vision of the business’s health. Easily review and share this information with all relevant stakeholders.
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Performance tracking
With a financial dashboard, you’re able to effectively track the performance of your company at any given time. You can also compare this to previous performance to ensure you’re growing and developing. All of this takes a matter of seconds!
Now that we know what a financial dashboard is and why we need it, why not get in touch? We are industry leaders who can get you started right away.
Omni Accounts provide customised software for financial dashboard creation no matter the business type or size.
