Whether you run a small independent business or a non-profit, if you have a reasonably functioning finance office, chances are you’ll probably be generating at least quarterly reports.
But while these reports are standard, actually leveraging these reports is a different matter altogether. And that is where dashboards—reports that illustrate key pieces of data, usually in graphical format—help. Financial dashboards open the door for collaborative environments in which easy-to-interpret data is more readily and comprehensively shared. It also allows easy access to data by anyone with permission to view the dashboard.
This article will explain why it’s so difficult to make good decisions consistently without the proper tools and how a financial dashboard can vastly improve your decision-making.
What is a Financial Dashboard?
A financial dashboard is a data visualization tool used to track KPIs across the financial spectrum. It may include accounting, sales, marketing, human resources, customer service, and many other departments. By sharing data with different stakeholders across your company in an easily digestible format, such as charts and graphs, it’s simpler to track your financial health.
Here are the common reasons why financial dashboards are important:
- It saves time. Once your dashboard is all set up to pull data from the appropriate sources, you don’t have to spend any time manually gathering data.
- It reduces the risk of error. Manual data gathering is susceptible to errors. But using dashboards eliminates the risk of error entirely. No more worrying about writing down the wrong number or pulling data from the wrong data range!
- It effectively shares data. There are many data-sharing options, but none that are quite as efficient as financial dashboards. With it, you may share it with anyone (or everyone!) in your company with just a single click.
- It helps track performance. A financial dashboard allows you to accurately track the performance of KPIs in real time, allowing you to analyze and compare.
- It keeps data all in one place. Data that’s scattered all over the place is more likely to go missing and have inaccuracies. Using a financial dashboard allows you to store data all in one place for easier reviewing and sharing.
What are the Benefits of Financial Dashboards?
Fortunately, despite these flaws, leveraging data to guide decision-making can help alleviate these problems. A great way to do that is to make use of financial dashboards. Here are the ways that financial dashboards can help you make more powerful financial decisions.
Financial dashboards encourage storytelling
Thoughtful and more concrete financial analyses require words as much as they do numbers. You’ll need to be able to explain variances in numbers before determining appropriate action. Actually being able to visualize the numbers prompts relevant questions and also initiates productive, practical conversations.
Financial dashboards ensure financial comprehension and engagement
Using financial dashboards creates a common language between people within a company. They allow employees with less financial experience and knowledge to communicate with those who are inclined to pore over the financials. Team members can adopt perspectives that are well-informed with accessible data delivered through a financial dashboard.
And guess what? When that happens, the stage is set for new efficiencies and improved productivity. Financial dashboards also work as a reminder of the level of information that everyone is expected to be familiar with.
Financial dashboards provide options for people who consume information in different ways
People consume information in different ways. Some members of your team might be more comfortable viewing data presented in charts and graphs. Others may comprehend quicker and faster when data is presented in more engaging or interactive formats. Financial dashboards offer customized views for different thinkers.
Financial dashboards are readily accessible
Unlike the dreaded spreadsheets, financial dashboards don’t have to be filed away (or attempted to be located years after being filed away, for that matter!)
Financial dashboards are always accessible via a wide range of devices. Moreover, the data can be updated in real-time, assuring members of your company that they were working with the latest available and most accurate information.
Financial dashboards define measures of success
The process of developing a financial dashboard forces business leaders to make choices about what they consider the company’s priorities and measures of success. After all, you can’t pay attention to everything all the time, so developing financial dashboard reports in thoughtful and inclusive ways is essential. Doing so makes the tool easier to be used by decision-makers across the company.
Financial dashboards increase objectivity and broaden perspectives
With the help of the data acquired from financial dashboards, the impact of inherent biases could be reduced. It does this by quantifying each element, making it easier to rely on facts because the data is measurable and organized.
And with the data laid out comprehensively, it would be easy to see the big picture instead of focusing solely on your initial responses. With that, you can make quicker, smarter decisions.
How Can You Leverage Financial Dashboards?
One of the best ways to use a financial dashboard to improve your decision-making is to define and track the key performance indicators (KPIs) that are most relevant to your business. Doing so offers actionable insights for business leaders. For example:
- Revenue per employee. Payroll costs are often the most expensive part of doing business. You’ll need to understand what your return on that investment will be.
- Acquisition costs or revenue per customer. Every business must use multiple strategies to generate leads and attract new customers. To make sure you’re using the most effective avenues, track the price of customer acquisition and compare that to the revenue they generate over time.
- Quote-to-close ratio. When deciding how to price your product or service, monitor the rate at which your leads either balk or buy after getting a quote.
Besides your most crucial KPIs, make sure your financial dashboard is tracking your cash flows and cash on hand. Every business is concerned with its cash flows, and every decision needs to be made in light of your current resources. Tracking your finances helps you determine which expenses should be prioritized and which ones must be cut down.
How Can You Create Effective Financial Dashboards?
How to create an effective financial dashboard is unique to your company, its financial circumstances, and its many financial needs. But there are basic steps to lay the foundation:
- Gather data sources.
- Define your financial dashboard’s audience and objectives.
- Choose metrics that are actionable, relevant, comparable, and understandable.
- Design your financial dashboard according to the needs of you and your team.
- Verify if the information is complete, comprehensive, relevant, and accurate.
- Provide context for your numbers.
- Build a balanced perspective.
- Don’t be afraid to get creative and make it interactive.
- Include and leverage advanced technologies.
- Customize your dashboard to suit your company’s needs.
As excellent visualization and data analysis tools, financial dashboards are an invaluable asset to companies interested in streamlining their financial reporting for improved decision-making.
With Jirav’s financial dashboard software, you could compile all your KPIs and financial metrics in one convenient place. It allows you to quickly visualize your business’ data, make projections, and use those insights to make better decisions. You could build rich dashboards that everyone within your company can use, allowing everyone to have a real-time pulse on your company’s financial health and performance.
Want to know how to create powerful financial dashboards that will help you make better decisions that could bring your company to greater heights? Schedule a discovery call with the Profit Reimagined Team. Get started on your financial health journey.