How to Measure Success in Accounting: Top KPIs & Dashboard Strategies

Measuring success in accounting is about more than just crunching the numbers. It’s about getting the right data and analysis to propel your company forward. And while there are numerous ways to measure your performance and success in accounting, choosing the best possible KPIs is what will fuel your company’s growth. Amongst the many reports and metrics available in finance, it is vital to look at what’s most important to achieving your business’s goals.

So how can finance leaders measure success in accounting? Here are a few KPIs that we consider a good starting point, as well as those that will make an impact on your organization.

Why Measuring Success in Accounting Starts with the Right Financial Metrics

Just like you wouldn’t take your doctor’s word that you look healthy without data to back up the claim, you shouldn’t rely solely on hearsay when it comes to your company’s financial state. Financial metrics help accounting executives get a broad understanding of how much cash they have on hand and how the budget is looking at any given time.

These metrics also serve as a baseline for tracking month over month (MoM) or year over year (YoY). So, how does continually tracking metrics keep your business finances healthy?

• Monitor Real-Time Financial Health: It allows you to monitor your company’s financial health and cash runway.

• Establish Historical Baselines: It allows you to track performance over time across MoM and YoY trends.

• Drive Proactive Pivots: It indicates exactly when to make operational adjustments before margins shrink.

• Uncover Growth Opportunities: It gives you the precise, data-backed information needed to solve problems and pursue new revenue paths.

• Detect Systemic Anomalies: It allows you to detect patterns, workflow bottlenecks, and irregularities early.

Looking for a deeper operational dive? Read our guide on the five reasons why choosing the right finance KPIs really matters to discover how to fully align your accounting department with long-term corporate objectives.

Determining the Most Useful Key Performance Indicators (KPIs)

The metrics finance and accounting leaders need to pay close attention to vary from one company to the next. A startup might focus solely on burn rate, whereas a midsize company might watch for gross margin. Moreover, not all metrics are created equal. Some are so quintessential to the success of a business and a driving force behind growth that they’re dubbed key KPIs (which we elaborate in the next section).

So how do you determine the most valuable KPIs?

• Is it measurable? Your KPI should be based on a focused goal that produces results.

• Is it effective? Does the KPI do what it’s supposed to do? An effective KPI should impact its intending goal.

• Is it relevant? Your KPI should align with your goal. If your goal is to decrease invoice turnaround time, then your KPI should support that goal.

• Is it useful? Does your KPI benefit your accounting team?

• Is it available? Your KPI should be easily accessible. If it takes weeks to determine a KPI, then it’s not a good KPI to use.

What Top Accounting KPIs Should You Use to Measure Success?

We’ve discussed why metrics are significant, how to uncover the most notable KPIs, and now we’re shifting our focus to the question most leaders are begging to ask: ‘What KPIs should I tap into?’

We’ve identified a few key KPIs that will give you a complete view of your company.

Gross Profit Margin

This measures the profitability and efficiency of the company’s business.

Net Profit Margin

This shows how much of a profit a company makes after all expenses have been accounted for.

Revenue Growth Rate

This measures the percent increase or decrease in revenue between periods.

Working Capital

This compares the company’s current assets with its current liabilities, expressed in a dollar amount.

Current Ratio

This ratio shows the company’s short-term liquidity by showing if the company has enough liquid assets to cover upcoming obligations.

Gross Burn Rate

This measures the rate at which a company uses up its available cash to cover operating expenses.

Current Accounts Receivable (AR) Ratio

This shows the extent to which the company’s customers pay invoices on time.

Days Sales Outstanding

This metric shows how quickly customers are paying their bills.

Current Accounts Payable (AP) Ratio

This shows the extent to which the company pays its bills on time.

Days Payables Outstanding

This metric measures how fast a company pays its bills.

Return on Assets

This metric highlights how well a company is using its assets to generate income.

Interest Coverage

This gives insight into how well a company can cover its debt payments.

Debt to Equity

This ratio compares a company’s debts to its equity value to determine how leveraged the company is.

Creating Your KPI Dashboard to Measure Success in Accounting

KPI dashboards consolidate your data into one user-friendly interface. A KPI dashboard is crucial for quick tracking of goal progress.

After all, how likely are you to stay on top of your goals if you have to manually calculate KPIs each time? KPI dashboards can be created in two main ways:

Spreadsheets

This traditional method involves downloading data from your accounting system into a pre-built spreadsheet model. Spreadsheets work well for companies with lower KPI requirements, such as simple calculations. However, they require significant manual data entry, which increases the risk of human error and workflow fatigue.

Specialized Software & AI Analytics

There are specialized programs that pull information from your accounting systems to create dynamic, real-time dashboards. Today, the most effective specialized software leverages artificial intelligence (AI) and machine learning. Instead of just showing you historical data, AI-enabled dashboards can predict cash flow trends, automatically flag anomalies, and generate complex financial forecasts instantly. If you are looking for high-level, predictive insights without the manual data entry, upgrading to an AI-driven tech stack is worth the investment.

Regardless of which method you use, your KPI dashboard should include informative charts, graphs, and other visuals to help you track your goal progress. Start with tracking three to five KPIs. Once you get a grasp on those goals, you can add more to your KPI dashboard.

The Bottom Line on Accounting Success

If your team is already overwhelmed by the day-in-day-out tasks that consume their work plate, analyzing data might be the furthest thing from their minds. In fact, it might not even be a blip on their radar. Moreover, they might not even utilize metrics to meet their objectives. If you and your team fall into one of the above categories, you’ve probably searched every web page for answers on how to offload this responsibility. The reality is, there’s only one method that will not only meet your needs but exceed them: outsourcing.

Partnering with an expert virtual team is the most effective way to truly measure success in accounting and transform raw reporting data into an actionable roadmap for growth. Furthermore, here at Personiv, we’ve helped businesses like yours take a more hands-on approach towards driving growth. Get in touch with one of our experts to explore how you can create an unrivaled accounting department.

In the meantime, read how one company partnered with Personiv to increase efficiency in their accounting department in our latest solution brief, A Case Study: Outsourced Accounting Efficiency in Logistics.