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My final views on Executive Dashboards….

March 17th, 2009

            My last two postings spent a little more time summarizing the different approaches that can be taken in developing an EIS platform. In this last installment I want to discuss the remaining elements that I chose to include in our first generation rollout. In the last posting we discussed the approach to Order / Revenue reporting.  Now it’s worth summarizing my approach to Operating Expenses, Balance Sheet, and Ratios. Again, it’s worth noting that this level of reporting is intended to only provide a quick “temperature” on what is happening with the Company.

 

            With respect to Operating Expenses, I chose to include this area since there’s always a need to keep tabs on major expense areas. I’m not interested in just a blended topline number, I’m interested in knowing what is happening in key expense areas. Out of the dozens of expenses, I chose to include only 12 that I would want to track on a constant basis. These ranged from 3rd Party Logistics, Advertising, and Bad Debt, to Professional Services and Travel. However, while the remainders of our reporting metrics will be reported on a weekly basis, these are only being updated on a monthly basis. Then why don’t we just hold this for review in our standard financial reporting? I chose to include because I want our OpEx to be a constant data source that our entire team will be conditioned into being sensitive to and not paying attention to on strictly a monthly basis.  With the reporting of the 12 areas I chose, we’ll be able to have constant oversight on almost 85% of our Operating Expenses.

 

            Next up, I wanted to focus on Balance Sheet accounts.  Again, I wanted to focus on those areas that should be tracked on a constant basis and not lost sight of.  We’re obviously following Cash/Cash Equivalents and Inventory, but I’ve taken a slightly different approach for A/P and A/R. For our Receivables, I chose to focus only on the 90+ column. We’re routinely seeing accounts in the Current to 60-day column, but my blood pressure starts going up when they hit the 90+ column.  I want to know if this column is growing.  Similar approach on the Payables side. I want to know if our A/P group is behind in paying vendors or if we are staying current, which is why I chose to follow the Past-Due column. Similarly, I will also be following the amount of early pay discounts that we are taking with vendors.  I want this number increasing every week. Since we have the ability to easily meet payables, I want to push the calendar a little more and start taking discounts.

 

            Last, but not least, were the E-Commerce/Dealer metrics and the basic financial ratios. I chose to include newly opened dealers, closed dealers, inactive dealers, as well as 5-key metrics for our E-Commerce efforts. Considering the current environment, I kept the financial ratios to the top level considerations of working capital rations, DSO, inventory turns, etc..  As mentioned in my first post, the intent of an EIS platform is not to be a data dump.

            -It’s intended to give a very top level view of what is happening with the Company.

            -It’s not intended to replace any of your financial reporting.

            -It’s intended to be an indicator of what further reporting needs to be addressed if there is a problem.

            -It’s not a static tool, but one that is dynamic to the needs of the Company.

 

Thanks for reading . . . .

 

Jeffrey Ishmael

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