The Key Performance Indicators: Your friend or foe?

“What you can measure is what you can manage".

The above statement is indeed true, but a bit of confusing as pretty much everything can be measured in accounting and bookkeeping services business. Every business operation can be monitored once an efficient bookkeeping system delivering accurate information is set up.

KPIs being a lovely accountancy buzz word, stands for Key Performance Indicators. But what exactly are KPIs?

A KPI is anything within your business that can be measured; it can be related to finance like profit margins or it can be a customer satisfaction score. So, as you can appreciate, there ought to be billions of KPIs that you can choose to monitor.

KPIs are really helpful. But at the same time KPIs can be dangerous as choosing the wrong ones can destroy your business.

To use the word destroy may come across as overhyped, but it is the way it is!

When deciding to introduce KPIs into the accounting and bookkeeping services business, it should only be done as to improve them; a great initiative can be understanding what success means to the customers. So what exactly needs to be done in order to seek appreciation from them?

The KPIs like customer complaints, turn-around times, service delivery times, lead generation and conversion times etc. are helpful as they reflect the true condition of your business performance.

These are all about balancing business performance with expectations. When do KPIs turn out bad?

Any KPI that damages the health of a business is bad. And it won’t be wrong to say that the most damaging ones are often finance related.

These KPIs force entrepreneurs to cut down costs until the product or the service becomes awful and clearly no one would want to pay for them. In other cases, these might be the ones making employees work tirelessly towards the hard to achieve targets.

Targeting only gross profit percentage may result in cost-cutting for the product or service you are delivering i.e. using cheap raw materials or maybe reducing the time spent on service delivery. You may feel grateful for that fantastic, high gross profit percentage but there will be a moment when your customers will deny to your services and will eventually leave.

Asking employees to generate some X amount per head making zero investment in tools or the training that they need to achieve this goal will only demotivate your team. And that demotivated staff will further add up to your lower customer satisfaction scores, a higher staff turnover and more hectic days.

So should you even be having KPIs or not? A Bigg Yes! The point is to pick them with much care. Brainstorm among your accountants, bookkeepers or business partners and decide what needs to be done in order to make the business more successful and make sure the KPIs help towards this goal.

Or otherwise, they'll destroy it.

Bikham Finance helps you identify the most important KPIs for your business practice. With our efficient accounting and bookkeeping services you are able to achieve business goals easily and witness only pure profit.

To know more about our accounting and bookkeeping services, please visit our website and schedule a free consultation soon.