Last reviewed: 29 September 2026 · Reviewed by IFM's qualified accountant
No benchmark is universal. Compare with the business's plan, prior periods, capacity and economics before comparing with another company.
What should you know about 1. Cash balance and available headroom?
Track cleared cash plus genuinely available facilities, shown separately. The number answers what is available now, not what customers might pay later.
Set a minimum operating level linked to payroll, tax, supplier commitments and volatility. Explain restricted cash or accounts held for client money separately.
What should you know about 2. Short-term cash forecast?
Show the lowest projected cash point over the next 13 weeks and the date it occurs. The forecast converts invoices, payroll, taxes, financing and planned spending into timing.
Measure forecast accuracy by comparing prior predicted closing balances with actuals. A forecast repeatedly wrong in one direction needs better assumptions.
What should you know about 3. Revenue?
Track recognised revenue for the month and year to date against budget and the prior period. Split by the dimensions management can act on: product, service, channel, customer type or location.
Separate recurring, project and one-off revenue. Growth in a low-quality stream can consume capacity without improving profit.
What should you know about 4. Gross profit and gross margin?
Gross profit is revenue less direct costs. Gross margin is gross profit divided by revenue, expressed as a percentage. Define direct costs consistently so the trend is meaningful.
Review price, volume, product mix, delivery efficiency and supplier changes. A revenue increase with falling gross margin can reduce the cash available for overheads.
What should you know about 5. Operating profit?
Operating profit shows the result after operating overheads before financing and tax under the chosen definition. Compare amount and percentage of revenue.
Identify owner remuneration, exceptional costs and non-cash items transparently. Do not create an “adjusted” number that removes recurring inconvenient costs.
What should you know about 6. Recurring revenue or committed order book?
For a subscription business, track contracted recurring revenue, renewals and changes. For a project or product business, use confirmed order book or contracted backlog.
Exclude unqualified opportunities. State cancellation terms and delivery capacity so the number is not mistaken for guaranteed cash.
What should you know about 7. Pipeline coverage and conversion?
Pipeline coverage compares weighted qualified opportunities with the sales target for the relevant period. Conversion measures opportunities won divided by opportunities decided, using consistent stages.
Track value and count where deal sizes vary. A high conversion rate can still miss target if the pipeline is too small.
What should you know about 8. Customer concentration?
Show the share of revenue and receivables represented by the largest customer and top five customers. Concentration is not automatically bad, but it makes loss, delay or renegotiation more significant.
Add contract end dates, payment behaviour and margin. A large customer with low margin and slow payment creates more risk than revenue alone suggests.
What should you know about 9. Debtor days and overdue receivables?
Debtor days estimates how quickly customers pay; use one defined formula, such as trade receivables divided by credit sales multiplied by days in the period. Pair it with an aged list because averages can hide old disputes.
Record collection actions, promised dates and invoice issues. Prevent delay by confirming purchase orders and acceptance before billing.
What should you know about 10. Utilisation or capacity?
For service businesses, utilisation can be chargeable or productive hours divided by available working hours. For operations, use units, machine hours, bookings or another real capacity measure.
Define holidays, training, sales and rework. Maximum utilisation is not necessarily healthy; the business needs time for improvement, leave and unexpected work.
What should you know about 11. Customer retention or repeat purchase?
For recurring contracts, track customers retained, revenue retained and expansion separately. For transactional firms, track repeat purchase within a relevant period.
Exclude new customers from retention calculations and record the starting cohort. Read cancellations and complaints alongside the percentage.
What should you know about 12. Delivery quality?
Choose a measure customers feel: on-time delivery, first-time-right rate, rework, service response or defect rate. Define completion and the denominator before reporting.
Quality failure often appears in margin and cash later. A leading operational measure gives management time to intervene.
What should you know about definitions make KPIs reliable?
Create a KPI dictionary with name, purpose, formula, source, owner, frequency and exclusions. State whether figures are monthly, rolling, cumulative or cohort based.
Lock definitions for a sensible period. If a definition changes, restate comparatives or mark the break so improvement is not manufactured by the calculation.
The underlying accounting records must remain adequate and reconciled. Companies Act requirements for day-to-day money and assets and liabilities are a baseline, not replaced by dashboard totals.
What should you know about targets and traffic lights?
Set targets from the operating plan and capacity, not an arbitrary industry average. Use a range where uncertainty is genuine and define when escalation occurs.
Traffic lights should trigger action. If “amber” appears for months without response, it is decoration. Show the owner and agreed next step beside material exceptions.
What should you know about avoid vanity measures?
Website visits, followers and proposal count can be useful only when linked to qualified demand or customer economics. A large number with no defined decision is not a KPI.
Do not reward one metric in isolation. A sales target without margin or collection quality can encourage discounting and weak customers; utilisation without quality can drive rework.
What should you know about monthly review routine?
Issue one page of KPIs with trends and a short commentary. Discuss exceptions, causes, forecast effect and actions. Preserve the underlying detail for challenge.
Review the set quarterly. Add a measure only when a new decision requires it and remove one only after understanding why it no longer matters.
See management information and consultancy for the relevant service page. Use the Deadline Finder for standard first accounts, first confirmation statement and Corporation Tax dates. For VAT, payroll, personal tax and other obligations, check the tax deadlines calendar and your official records.
What should you know about data quality and accountability?
Assign a source and owner to every KPI. Reconcile financial measures to the management accounts and test operational extracts for duplicates, missing periods and changed classifications.
Show the last refresh date and preserve prior values. If data is provisional, label it; precision in the formatting does not make an estimate certain.
What should you know about read measures together?
Revenue, margin and cash should be reviewed as a set. Growth with falling margin and slower collections can weaken the business despite a favourable sales chart.
Pipeline, capacity and quality also interact. A large pipeline with no delivery capacity may predict delay rather than profit; high utilisation with rising rework can be a warning.
Use a short narrative to connect the measures and identify the decision needed.
What should you know about set a review cadence?
Operational teams may review leading indicators weekly, while owners review the full set monthly. Quarterly, test whether targets and definitions still reflect the plan.
Do not change a target merely because it was missed. Change it when assumptions or strategy have changed and document the reason.
What should you know about protect behaviour?
People respond to measures. Pair speed with quality, sales with margin and collections with customer resolution. Avoid incentives that reward one number while damaging another.
Invite challenge. A KPI is a signal for investigation, not a verdict on a person. The most useful meeting ends with actions, owners and dates rather than an argument about colours.
Keep the dashboard concise enough to use. Detailed analysis can sit behind it, but the owner should be able to identify the principal change, risk and required decision within a few minutes.
What should you read next?
Management accounts, small-business KPIs and management information services.
What do people also ask about this topic?
What should you know about 2. Short-term cash forecast?
Show the lowest projected cash point over the next 13 weeks and the date it occurs. The forecast converts invoices, payroll, taxes, financing and planned spending into timing.
What should you know about 3. Revenue?
Track recognised revenue for the month and year to date against budget and the prior period. Split by the dimensions management can act on: product, service, channel, customer type or location.
What should you know about 4. Gross profit and gross margin?
Gross profit is revenue less direct costs. Gross margin is gross profit divided by revenue, expressed as a percentage. Define direct costs consistently so the trend is meaningful.
What should you know about 7. Pipeline coverage and conversion?
Pipeline coverage compares weighted qualified opportunities with the sales target for the relevant period. Conversion measures opportunities won divided by opportunities decided, using consistent stages.
Which official sources support this guide?
- https://www.gov.uk/government/publications/college-management-accounts-good-practice-guide/management-accounts-good-practice-guide-for-colleges
- https://www.gov.uk/government/publications/academy-trust-management-accounting/academy-trust-management-accounting-good-practice-guide
- https://www.gov.uk/running-a-limited-company/company-and-accounting-records
General guidance, not advice for your situation.
