The importance of knowing your contribution margins

October 2020

When you want to check the financial performance of an organisation, the first and most obvious indicator is profitability. Even in the ‘not for profit’ sector, profit is the key indicator of financial performance – has the organisation operated within its income for this and the most recent years?  Has it generated a surplus to reinvest in social impact and organisational sustainability and growth?

It’s easy to lean on profitability as the key indicator of financial success, and sometimes as a proxy for good organisational governance and management. Whilst profitability is the key driver of organisation sustainability, viewed in isolation, it can be a bit of a blunt instrument. The key risk is that overall organisational profitability can hide a lot of issues. Whilst the results for the business as a whole might look great – and they may genuinely be reflective of business performance as a whole – you could have some significant losses hiding behind some hero income streams.

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Key areas you should look at when considering which KPIs to select

September 2020

Choosing the right Key Performance Indicators (KPIs) may seem overwhelming, but the right metrics, and subsequently the measuring and reporting of those metrics, can provide enormous value to not for profit leaders and their boards.

The right KPIs can have the ability to provide meaningful insights at a glance, which is particularly useful for stakeholders that are not involved in the organisation on a daily basis.

With that said there are a number of key areas to take into account when considering which KPIs to select.

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Five ways to get more out of your cloud accounting

With COVID-19 forcing us to adapt to home working, cloud based technology has never been more popular and it’s likely that it’s made its way into your accounting software.

Whether you’re a new user or an old hand, it’s worth checking whether you’re getting the maximum benefit from your cloud accounting solution. Like many software products, upgrades and improvements are made on a regular basis, but you might not be using them.

Here are five ways you can get more out of your accounting software. Continue reading…


Four key items to look for in your end of year financial review

For many organisations a great deal of thought and effort goes into planning an upcoming financial year. Strategic plans are reviewed, meetings are held and budgets are prepared.

With so much effort put into looking forward, it is equally important to look back and review the financial year that has just passed.

When reviewing financial results the time horizon in which results are reviewed sets the scene for the entire analysis. Continue reading…


Data visualisation will change your life

Data visualisation will change your life and there’s a very good chance that it already has. Start-ups will talk about “hockey stick growth” and you’ve no doubt heard the term “flattening the curve”. Both terms refer to data visualisation and quite simply the insights that are drawn from being able to see past a mass of numbers, as data is presented in graphs and infographics. This cuts through the noise often created by large sets of data and allows people to see trends and outliers which in turn brings a focus to the key indicators that drive change.

Before we move to the impact that data visualisation can have, it’s worth defining data visualisation. Continue reading…


The importance of meaningful financial terminology

spreadsheet on lap top with dictionaryDifferent roles and situations in life require us to speak a different language. The most obvious that comes to mind is when we travel or communicate with someone whose first language is different to ours. The less obvious is when the language doesn’t change but you enter into a different area that has its own terminology that provides meaningful insights and understanding within the subject area. A good example of this is sports. If you’ve ever had a conversation with someone who deeply understands a sport that you don’t, you will have noticed a range of words and expressions used that leave you confused.

Many subjects have their own terminology and the same can be said for health, science and finance. Continue reading…


Why not for profits need to plan the year ahead

 

man asking where next

At this stage of the financial year, the thought of planning the financial year ahead has probably crossed your mind. If your organisation has a formal planning process that is in place for the start of every calendar year, you may have started planning already.

Before we go into planning mode, or agonise about the mere thought of doing any sort of planning, is planning ahead even useful? Is it just a waste of time?

Below are three reasons that planning is not a waste of time, but a valuable exercise.

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How to measure ROI with a zero-based marketing budget

man thinking in front of boardThe simplest and easiest way to set next year’s marketing budget is to take last year’s budget and simply add the percentage that you want to grow by.  Within 60 seconds your new marketing budget is set, but this doesn’t allow for external market factors like new providers, changing government policies or the needs or wants of customers.

Alternatively, you could adopt a zero-based marketing budget. This will take longer to put together, but it will make you ask the hard questions about the outcomes you want, how much you need to spend to achieve them and the different options available to you

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Financially, which way ought you go from here?

“Would you tell me please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the cat. “I don’t much care where…” Said Alice. “Then it doesn’t matter which way you go,” said the cat. – Lewis Carroll, Alice in Wonderland

Your organisation is in a current position. It has a certain level of revenue, a certain number of employees and makes a certain impact.

From a financial perspective you need to know where you ought to go from here. Asking this question allows the following: Continue reading…


Three financial ratios to instantly assess your organisation’s health

When analysing your organisation’s financials it can be easy to get caught up in an array of numbers and hard to know the financial health of your organisation. Key financial ratios can help you focus in on particular financial areas and highlight any potential risks that may be present.

The three ratios below highlight keys areas that all organisations should know and monitor. These three ratios and categories help indicate the financial status of an organisation and can be used to very quickly assess financial health.

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