KPIs · Finance
Finance: KPIs
Runway, forecast accuracy, project margin and control measures, with the three questions the CEO must be able to answer without a project.
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The three questions#
Before any dashboard, this function is judged on whether the CEO can answer three things today, without commissioning work:
- What is our runway, in months?
- Which projects are profitable, and which are not?
- What have we committed to spend that has not yet been spent?
Every measure below exists to keep those three continuously answerable.
The six that matter#
| Measure | Definition | Target | How it gets gamed |
|---|---|---|---|
| Cash runway | Months at current burn | Above 12 | Excluding committed but unspent obligations |
| Forecast accuracy | Cash forecast against actual, 90 days out | Within 10% | Forecasting conservatively so every month beats plan |
| Project margin | Contract value minus true delivered cost | Above target, per project | Not counting unbilled scope, which is where margin goes |
| Days sales outstanding | Invoice to cash | Under 45 | Excluding the disputed invoices, which are the slow ones |
| Committed but unspent | Contractual obligations not yet in cash | Known, always | Not tracking it, so runway looks longer than it is |
| Anomalies caught before payment | Flags acted on before money moved | 100% | Counting anomalies found afterwards as catches |
Runway must be net of commitments. Cash in the bank minus burn overstates runway whenever there are signed obligations not yet paid, and the difference is largest exactly when it matters.
Project margin measured at closure is a post-mortem. Measured monthly, it is a chance. A losing project usually declares itself in month two through unbilled hours.
Two counter-metrics#
| Counter-metric | Catches |
|---|---|
| Invoices paid late by us | Cash management achieved by damaging supplier relationships, which is borrowing at a very high interest rate |
| Time to close the month | A finance function keeping numbers accurate by keeping them slow. Accurate and late is a different failure from fast and wrong, and both are failures |
Control measures, monthly#
| Question | Bad answer |
|---|---|
| Payments released with a single approval | Any, above threshold |
| Supplier bank changes this month | Any not verified out of band, by phone, to a number held beforehand |
| Duplicate invoices caught | Reported after payment |
| Spend outside delegated authority | Any, unescalated |
What is deliberately not measured#
- Invoices processed. Volume, and largely automated.
- Cost reduction alone. Cutting spend and cutting capability look identical on this line.
- Budget variance in isolation. Under budget can mean disciplined or can mean work did not happen, and the second is usually worse.
- Revenue without margin. Growth at negative margin is a faster way to run out of money.
Cadence#
| Weekly | Cash position, receivables ageing, anomalies flagged |
| Monthly | Close, project margins, forecast against actual, control checks |
| Quarterly | Runway including commitments, pricing review with Sales, forecast recalibration |