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May 01 2015
Metrics that Matter Most
Erik Wright, CBF, Spectrum Engineers, Inc.

To effectively manage a process, you must first be able to control and measure that process. To successfully manage the credit process, it is important to have immediate access to pertinent data that can be effortlessly translated into meaningful and relevant information. Analytical dashboards can help!

Like operating a car safely, we are reliant on an efficient and intuitive instrument panel which allows us to 'at-a-glance' analyze the condition of our vehicle. Our car's dashboard allows us to effortlessly analyze our speed, rpm's, outside temperature, tire pressure, and among many other things, they can even help us see in our blind spots! Similarly, if you gather key information from your accounting software, PBX or phone system, and your customer relationship management system or collections software into a single, at-a-glance location, you can have an extremely effective way of managing your company's second largest asset - its receivables.

Of course dashboards can be more meaningful if data is able to be gathered and analyzed in 'real-time;' however, this doesn't have to be the case. Monthly dashboards equipped with higher-level information can be equally beneficial and can aid in developing plans to create monthly targets and goals. More frequent, dashboards that drill-down from the high level metrics can help ensure that these goals are met.

While there are third-party packages that can be purchased and implemented to help create these dashboards, I have found that I can import the raw data needed from my systems and use pivot-tables and pivot-charts within Microsoft Excel to create the views that help. Large quantities of data can be analyzed, viewed, and then shared with relatively little effort (after some practice).The benefits of dashboards are apparent.  

1. With the additional insight and greater visibility these reports can give you, you can become more effective in managing the aspect of the business you are responsible for and receive the recognition you deserve.  

2. Besides providing a very efficient means to show your effectiveness to your management team, they can be used to show improvements with your employees. Often when your employees know their performance is being measured in a dashboard and they can see their results, they naturally start to improve their work.

3. They allow you to measure your performance throughout your organization and make improvements accordingly. They insure you are performing to your monthly targets and goals.

4. They insure you are performing to your monthly targets and goals.

Your challenge is choosing what metrics to track! The best place to start is to begin with the most important metric for which you and your division is responsible. You then need to 'drill down' and determine which underlying drivers have direct influence upon that metric and track those elements.  

For example, if your company is still using DSO to gauge your effectiveness, you will want to track your total net receivables and your monthly sales or billings. You then want to focus on your net receivables and those factors that influence your collection effectiveness. Metrics to consider that make a nice dashboard that can be tracked over time could be: collection roll rates, liquidation rates (or percent collected), and dollars collected to dollars billed - each could be looked at from various perspectives such as by client type, project type, or risk portfolio.  These can be further drilled into by looking at other influencing factors like collector effective measurements such as utilization rates, talk times, and contact rates.  Of course, there are many different things you could look at depending upon your business, but the bottom line is, if you have a visual representation of your crucial goals and targets you can more effectively drive your business. Charts and graphs, like pictures, can display a thousand words!

If you would like more information on Pivot-Tables or Pivot-Charts or other ways of creating dashboards, please feel free to contact me at esw@spectrum-engineers.com