Like in an airplane the financial cockpit should include only the most important financial information. The ones that are key and you can assimilate and digest at a glance.
No enterprise without a cockpit!
Nobody would consider to build an airplane without a cockpit. An airplane without a cockpit cannot be controlled and would risk to crash. An enterprise is similar in many ways. But still many entrepreneurs act without a financial cockpit. Even though a company does not risk an immediate crash due to this, important developments and changes can happen. And – without a cockpit – financial developments can go in the wrong direction before the entrepreneur realize what is going wrong and can take measures.
The most important phase happens before the setup
Much more critical, than the cockpit itself, is the setup phase, during which the decisions are taken which key figures shall be shown in the cockpit. In this phase, it is very important to get the awareness what is key and what information you really need on a monthly or quarterly basis. Usually 3, 5 or 7 parameters can show all important developments of a company that one would like to be informed about on a regular basis. A key figure cockpit should be kept as lean as possible, as a data graveyard is boring and doesn’t help anyone.
Short timespans are a necessity
The cockpit should be available once a month or quarterly, otherwise the timespan between the evaluation and interpretation is to long. It is most important that developments can be observed promptly. Otherwise developments could be interpreted wrong or urgent measures could be taken too late.
Traffic light system Cockpits are very clear and simple
With a traffic light system, you can see at a glance which parameters are green, yellow and red. For this, before implementation, for each indicator ranges are defined where they become red, yellow or green. If for example cash and cash equivalents fall below a defined minimum amount, the respective light turns red.
We can’t live without a financial cockpit anymore!
All clients, who we were asked to support them to introduce a cockpit, state the same. They wonder how they did it without this valuable tool in former times and cannot imagine how they took financial decisions without. The have become aware that they can see undesirable developments much earlier. Entrepreneurs and CEO’s therefore are put in a position where the can take action instead of only showing reactions to given positions.
A key figure cockpit puts you into the driver seat, when it comes to dealing with financial data. Take action and arrange for a meeting with our specialist Andreas Okle!