How To Create a Financial Dashboard For Your Business

What is a financial dashboard?

Every company is different, but common financial dashboard examples use some form of data visualization, for instance, in an Excel spreadsheet.

Yours will drill down into short-term financial data, giving you a long-term view of where the business is going. It should be a summary: simple enough to fit onto two pages, but clear enough to give you an overview of your financial health.

This includes tracking trends, drawing on relevant data sources such as key performance indicators (KPIs). You can display these as percentages to get a user-friendly view of where your business is headed. 

Key components of a financial dashboard

Broadly, there will be two main components: a balance sheet dashboard and a profit and loss (P&L) dashboard. The balance sheet looks at the sustainability of a company, helping with future business decisions. The P&L is an important CFO dashboard which examines profitability.

Balance sheet dashboard

This dashboard focuses on current assets and current liabilities, as fixed assets and long-term ones don’t need ongoing monitoring. Here we are looking at the day-to-day, such as:

Money in vs. money out

Business owners need a keen eye on their cash flow – what’s in or coming in (cash and receivables) versus cash needs (payables). It’s important to use the right dashboard design here. 

For example, if you create an invoice for the full job as soon as the contract is signed, you could risk overstating receivables. Conversely, if you don’t enter charges until statements arrive, you risk underestimating payables.

Typically, your accounts receivable (AR) and accounts payable (AP) should be no more than 61 days old.

Current ratio

Current ratio is a key part of your financial performance dashboard as it measures liquidity. You need enough current assets (cash and AR) to cover liabilities. To calculate this, divide:

Current assets/Current liabilities

The higher the number, the better. You’re aiming for a ratio of 1.25 or more, and should consider some strategic decisions if yours is less than 1.

Debt-to-equity ratio

Turning the current ratio on its head, your debt-to-equity ratio should be less than 1. These calculations offer valuable insights into your company’s financial risks, looking at the relationship between debt and equity. To calculate this, divide:

Total liabilities/Total shareholder equity

Generally, you should aim for less than 1. If yours is a smaller company, slightly over this may be permissible , as you may pull profits out of the business or use owners’ drawings. 

P&L dashboard

Finance teams use P&L dashboards to measure profitability, specifically drawing from simplified financial data. With these key data points, we can make more informed decisions, for example, comparing figures year on year. Specifically, simplified P&Ls look at:

Revenue, cost of goods sold  (COGS) and gross profit

Comparing total revenue to your cost of goods sold is a simple calculation of profit drivers – could you source cheaper suppliers or increase pricing?

Breakeven analysis

Finance professionals need to know exactly how many business units (in this case, completed jobs) they can sell to cover costs. This results in a gross margin – if this falls, you’ll need to generate more sales to account for overheads.

Gross margin

Here we can assess the profitability of each project. By drilling down into each one, we can see which jobs generate enough profit, as well as leaving extra for net profit – covering all fixed costs.

Why your business needs a financial dashboard

Whether they’re decision-makers or technicians, all stakeholders can benefit from strong financial report dashboards. They provide a real-time data snapshot of where your business is headed, looking at daily activities rather than getting lost in overly complicated financial statements.

In turn, they help us to identify trends, using data-driven insights into customer needs, cost of goods sold and other key metrics. This data analysis allows integrators to spot growth opportunities or ways to save costs. They can even pinpoint risks before they become catastrophic to a business.

Your financial analysis dashboard is a short-term visualization with long-term results. The best teams are in the know, and it all starts with the numbers.

Protect your business with a financial dashboard – learn more at CEDIA

A clearer view on your short term data will allow you to determine your net profit margin, ideal for driving your business forward. When tailored and used regularly, a financial dashboard is essential for capturing your business health and its future.