How To Build Your Financial Dashboard

When you want a snapshot of your company’s successes (or struggles), a financial dashboard is usually the first thing that comes to mind. A dashboard that gives a clear overview of your fiscal performance helps you make smart decisions. Your leadership team will know what’s profitable and what’s not, along with other “dollars and cents” data. Here is how to build one, step by step.

Building A Financial Dashboard

Step 1: Figure out your goals.

If you use a Balanced Scorecard, the goals or objectives from the financial perspective are a good place to start. This perspective is usually straightforward and tracks your profits, revenue, and costs. Most of the measures in this perspective are lagging indicators because they tell you what happened last month or last quarter.

Step 2: Decide which metrics to include.

Your dashboard should display metrics that provide a broad view of your company’s financial health. These vary by organization, but it’s common to see numbers related to profit, cash flow, revenue, etc. Two important things to keep in mind when choosing your dashboard metrics:

• Don’t display an overwhelming amount of data. Keep it high-level, while offering the ability to drill down into details if needed.
• Summarize and interpret the numbers, versus just reporting them.

When you’re thinking about the metrics to include, also consider the audience. Ask yourself who will view this dashboard, which numbers they care about, and where it will be published.

For example, if you’re a nonprofit or municipality, you’ll likely have one version of a financial dashboard posted on your website showing how donations or taxes are spent in a format the public can easily understand. You’ll have a second version of the dashboard containing more detailed, confidential numbers and “insider information” suited for the eyes of senior stakeholders. If those stakeholders are CFOs, complex ratios or advanced scoring may be appropriate.

Step 3: Track and report performance.

As a barometer of financial health, a dashboard should report on your organization’s performance. Depending on the measures you use in your dashboard, some may be more suited to revealing trends over time while others may simply tell a story for that accounting period. For example, revenue and net income are ideal to track over time to understand trends. In contrast, something like a ratio may be best displayed with other ratios for the current period only to indicate performance.

You should also have targets for your measures. With targets, you can see if you are above or below your plan. This will tell viewers where you’re succeeding and where you may be struggling so you can make informed strategic decisions. Many organizations use Red, Amber, and Green status indicators (RAG status) to show readers at a glance whether a measure is above or below plan.

Step 4: Chart it.

Charts are strong visual aids, and we recommend using them in your financial performance dashboards. Viewers find metrics easier to understand in a chart than in a written account of how an objective is performing. Here are a few best practices to follow:

• For single data points, display the status in some way (such as a RAG status).
• If a metric is cyclical, show year-over-year (YOY) performance. For some industries, such as retail, it’s more helpful to compare performance YOY than against the previous month.
• If it helps to combine multiple metrics, do it. For example, short-term assets for cash, investments, and A/R should all be plotted together.

• Try to use similar charts for all measures. If you design a new chart for each measure, then the reader has to first figure out the chart, then figure out the data. For example, it’s easier to know that “Actual” results are a blue bar and “Target” results are a red line for all measures.

Step 5: Determine frequency.

We recommend generating strategic dashboards on a quarterly basis. Anything more frequent turns into detailed operational measures and metrics. There’s nothing wrong with an operational dashboard, but it most likely suits the financial operations team rather than the strategic or executive teams. For high-level, strategic financial dashboards, quarterly is best.

After You Launch

After you build your financial performance dashboard, keep these three things in mind:

1. Don’t get hung up on perfecting your dashboard right out of the gate. Accept that it’s a work in progress. Get a version in front of stakeholders, gather feedback, and adjust it each cycle.
2. Identify a person or team to own and manage the dashboard. There should be a single source “controlling” the contents and distribution.
3. Make sure all data gets added to the dashboard at the designated frequency, and review and verify the data each reporting period. It must stay accurate and relevant.

Remember that your strategic plan and success shouldn’t focus solely on your financial metrics. The Balanced Scorecard framework includes three other perspectives. Operations, customers, and the people who make up your organization matter too, and each will have its own metrics and dashboards. To learn more, see how ClearPoint handles reporting and dashboards.