<img alt="" src="https://secure.leadforensics.com/167082.png" style="display:none;">

Have a question? Call us  877-735-7693

Additional KPIs to Track for Your Service-Based Business

    

Companies, regardless of whether their business model is focused on selling products or services, all have similar financial reports. Buried within these reports are key performance indicators (KPIs) that are useful points of information for monitoring the overall health of a business. In addition to measuring items such as profit margins and daily sales outstanding, here are some additional KPIs that your company can track to let you whether or not you are handling your cash and managing your staff effectively for optimal business performance.

Profits and Loss by Month Additional KPIs to Track for You Service-Based Business

Profits and loss statements (referred to as P&L statements) are also called income statements. These financial statements show how much revenue your company has earned over a specific period of time, in this case by month. It is recommended you pull the monthly summary for the past four months to help evaluate trends. By analyzing the costs associated with providing your service - such as labor costs, taxes, and operating expenses - you can see if you are bringing in enough business, charging enough for your services, and where you may need to reallocate your budgets for better performance.

Income by Customer

Tracking your income by customer allows you to identify your “star clients.” Sorting the income generated by customer identifies which clients spend the most at your business. This information can be used in many different ways. You can reach out to the most profitable clients and offer them some loyalty rewards for their continued business. Or you can ask for referrals from them, which provides you with leads to similar companies in their network. Most importantly, you can see if you’re allocating enough labor hours for services to these customers to keep them happy for the amount of money they are spending each month.

On the other hand, you can scroll to the bottom of the list to see which customers are bringing in the least amount of cash. These customers may need to be revisited. Comparing income by customer to your P&L and profit margins will allow you to see if a client/customer is worth keeping. If you are spending more in overhead and labor costs than what a customer brings in, it could be time for a re-pricing, or time to let them go. Don’t fret too much if it’s time to say farewell, as it frees your business to focus more time and energy on your current star clients or attracting more, higher paying customers.

Sales Tax Liability

This KPI provides your company with the information you need to submit your sales tax return. For businesses using QuickBooks®, users can pull a Sales Tax Liability Report that provides a breakdown of both sales and sales tax that are collected by county and sales tax agencies. Checking this KPI on a regular basis is important to make sure that the tax collected and the sales tax payable columns match. Any discrepancies here can hurt your cash flow by either accidentally overpaying to the agencies, or worse, not paying enough for your sales taxes for the period, which can result in a hefty bill later down the road.

 

Subscribe Here!