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Hello everyone, thank you for taking the time to visit to our new Consulting Services Blog. I am Andrea White, the Manager on Porte Brown's consulting services team.


The team and I would like to welcome you and look forward to sharing helpful information on the topics of managerial consulting, strategic consulting, and technology solutions, such as ERP Solutions, CRM, and custom software solutions.


Welcome to Our Consulting Services Blog!


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Consulting Services Blog

The 5 Financial KPIs for Professional Services Organizations

Andrea White - Monday, February 04, 2019

A recent Service Performance Insight (SPI) study shows that with the right financial maturity, service organizations can increase their profit by up to 30%.

Many professional services organizations use generic KPIs that have either been inherited from past leaders or don't offer a clear path to improvement. You could be leaking away revenue, but if you're looking at the wrong KPIs, you may never see it or determine how to stop it.

Through years of research, SPI has analyzed and identified the profit-centric measures that are highly correlated with financial success in professional services.

Download the 5 KPIs for Professional Services Organizations.

Intacct Projects: Starting on the Right Foot

Andrea White - Thursday, July 13, 2017

With Intacct Projects, all your time, expense, and project data (financial and non-financial) is tracked and visible in one place. Automate exactly the processes you need from tracking costs, time, and expenses to managing resources, billing, and revenue recognition. Intacct Projects will help you generate deep insights that will keep individual projects... Read More

2017 Buyer's Guide to Accounting and Financial Software

Andrea White - Wednesday, May 17, 2017

 In today's business world, financial leaders must be able to balance managing an increasing level of business complexity while maintaining an efficient level of speed and productivity. Rather than continuing to rely on outdated legacy softwares with limited capabilities and archaic financial data management systems, it is more than prudent to take the time and advance the tools you use to handle your business 's financial lifeblood and expand your business's capabilities as you move into the future.

Is your accounting software helping you grow—or holding you back?

Download the 2017 Buyer's Guide and Discover:

The Modern CFO's Balancing Act
• 6 Key Questions to Ask Before Moving to the Cloud
• Evaluating Cloud Software Solutions

Software Delivery Models
• On-Premises Solutions
• Hosted Solutions
• Cloud Computing Solutions

Vetting Cloud Software Providers
• 7 Attributes to Look for in a Cloud Vendor
• Service Level Agreements (SLA) & Performance Metrics

Intacct is the innovation and customer satisfaction leader in cloud ERP software. Intacct is designed to improve company performance and make finance more productive. The Intacct system includes accounting, cash management, purchasing, vendor management, financial consolidation, revenue recognition, subscription billing, contract management, project accounting, fund accounting, inventory management, and financial reporting applications, all delivered over the Internet via cloud computing.

KPI of the Week: Quote to Close Ratio

- Thursday, August 27, 2015
Quote to close is a KPI used to determine what percentage of customers a business has contact with and actually make a purchase. It is measured by dividing the actual customers or clients who made a purchase by the number of prospects contacted or to the number of potential customers who visited the business. If the business talked to 100 prospects in a month and 12 of those prospects made a purchase, then the quote to close ratio would be 12%.

The ideal quote to close ratio is determined by the company’s industry. Businesses in the entertainment industry or food service industry have a higher quote to close ratio than a business that sells cars or appliances. Measuring the company’s ratio against other companies in the same industry determines how well it is closing its sales versus its competitors. A higher percentage indicates a greater ability to close a sale. It is also important to track the company’s ratios from month to month to establish a trend. If the trend indicates the ratio is decreasing, the company needs to determine why and take steps to resolve it.

Many businesses concentrate on its salespeople’s effort to try to improve results. Investing in a company’s sales staff by providing them with training in both sales techniques and people skills is a good way to improve the quote to close ratio. However, the advertising and promotions that brought the customer to the business also play a role. Marketing and promotional efforts need to bring in the right customers and be in line with the overall objective the company is trying to achieve. Sales and marketing staff need to work together to match the company’s products with the needs of the potential clients.

Contact Porte Brown to obtain more information on selecting the best KPIs to track your organization.

KPI of the Week: Customer Profitability

- Thursday, August 20, 2015
Customer profitability is a KPI used to determine the profitability each customer or customer group provides to the company over a specified period of time. It is calculated using the same method as determining overall profit. It is the difference between the revenues earned from the customer or customer group and the costs for that customer or customer group. While revenues by customer are usually easy to obtain, calculating the total cost incurred for those revenues are usually more complex. It is important to select methods that best represent the complete costs and fairly divide shared costs between all customers the cost is attributed.

Once obtained, the organization can better analyze their relationships with the customers. Customers with low or no profitability can be assessed, and it can be determined whether a continued relationship with the customer is beneficial to the company. In some circumstances, the customer has the potential for greater profitability in the future. They could still be in an infant stage as a customer and through development could become an excellent customer. Or, having this relationship with this customer holds a benefit outside its profitability. This customer could have a complementary relationship with another one of the company’s larger and more profitable customers and the aggregate profitability of these customers justifies the low customer profitability of the single customer. By knowing the customer profitability, additional information can be obtained and the situation with the customer can be further analyzed.

However, relationships with some customers with no or low profitability could require the relationship be severed. Many times these customers are also the customers that require more work and have more issues. After looking at the complete picture, severing ties with these customers could increase the company’s overall profitability. This should never be done lightly, all angles should be assessed, and then a proper process for terminating the relationship should be followed.

Customer profitability is also useful in identifying a company’s top customers. Having this knowledge enables the organization to focus on these customers to continue developing the relationship. The company can also analyze its success with these customers to duplicate the success with other customers.

Contact Porte Brown to obtain more information on selecting the best KPIs to track your organization.

KPI of the Week: Cash Flow Coverage Ratio

- Thursday, July 30, 2015
Cash Flow Coverage Ratio is a KPI used to measure the number of times the financial obligations of a company are covered by its earnings. It is calculated by dividing operating cash flows by total current debt. Operating cash flows can be found in the statement of cash flows. Using the direct method, the operating cash flows can be ascertained by taking into account cash inflows and outflows that are directly related to the operations of the company. This includes cash receipts from customers, cash paid to suppliers and employees, interest paid, and income taxes paid as related to operations.

Cash flow coverage ratios should be greater than one. Ratios of one or greater indicate the business has enough cash flow from operations prior to taxes to cover its debt obligations. This ratio is often used by financial institutions to determine the creditworthiness of a company. A company with a larger cash flow coverage ratio indicates it has less dependence on debt and therefore could have more opportunities for expansion without additional requirements imposed upon them as part of debt agreements.

If the cash flow coverage ratio is less than one, this indicates the business does not have enough cash flow from operations to currently cover its debt obligations. A company in this situation should look for ways to improve its cash flow coverage ratio. Improvements to the cash flow coverage ratio can be made by decreasing your company’s draw, reducing G&A expenses, or paying off and retiring existing debt.

It is important to track this ratio and know how it is trending. By knowing the important KPIs financial institutions review, the better prepared your company will be when negotiating for important financing opportunities. Contact Porte Brown to obtain more information on selecting the best KPIs for your organization.

KPI of the Week: Inventory Shrinkage Rate

- Wednesday, July 22, 2015
Inventory Shrinkage Rate is a KPI used to measure the rate at which the value of inventory has been reduced due to loss, theft, or inaccurate record keeping. It is calculated by subtracting the value of the inventory from the expected value of the inventory and then dividing this difference by the expected value of the inventory. The value of the inventory is the value of the inventory after a physical count was obtained. The expected value of the inventory is the amount the inventory was recorded prior to any adjustments due to the physical inventory count.

Depending on the industry, acceptable levels of inventory shrinkage rates can differ. However, it is ideal for the inventory shrinkage rate to be as close to zero as possible. Tracked over time this rate can indicate whether actions taken to prevent inventory losses are effective. A company that experiences an increasing trend or sudden spike in the inventory shrinkage rate should investigate what the cause or causes might be and take actions in order to resolve the issues. Identifying how much is due to theft, how much is due to reporting discrepancies, and how much is due to other factors, such as the misplacement of product, is an important step. It is important to identify the root causes of the loss. Processes or systems may need to be adjusted or added in order to correct the issues.

Once the issues with inventory loss have been identified and a solution implemented, it is important to continue to track the trend of the inventory shrinkage rate. This will give valuable insight into the effectiveness of the solutions as well as provide an indicator of future issues that may occur.

Contact Porte Brown to obtain more information on selecting the best KPIs for your organization.

KPI of the Week: Capacity Utilization Rate

- Thursday, July 09, 2015
Capacity utilization rate is a KPI used to measure the rate at which potential output levels are being met or used. It is also known as the operating rate. It is calculated by dividing the actual output by the potential output and then multiplying by 100 to get a percentage. The potential output could be the number of units the company can actually produce in a given amount of time, or it could be the number of units at which the cost per unit increases. It is best used by companies that produce physical goods, which can be easily quantified and outputs can be expressed in units.

The capacity utilization rate can be an indicator of how the company is utilizing its resources. If this rate is low or it is decreasing over a period of time and the plant is in full operations, then this indicates the plant could be lacking in efficiencies. The equipment may need to be better maintained or the processes reviewed to determine why the expected capacity levels are not being met. The capacity utilization rate could also be low due to a low demand for the product. With lower demand, fewer units need to be made even though the plant has the potential and ability to produce a greater volume.

Higher utilization rates can indicate the plant is running efficiently by meeting expectations. It could also indicate that the plant is reaching its optimum capacity. The company then needs to determine if demand for the product warrants the added cost to increase production either through upgrading equipment or expanding the business.

Contact Porte Brown to obtain more information on selecting the best KPIs for your organization.

KPI of the Week: Customer Churn Rate

- Thursday, July 02, 2015
Customer Churn Rate is a KPI used to measure customer attrition. It is calculated by dividing the number of customers who discontinue a service during a specified time period by the average total number of customers over that same time period. It provides feedback on customers’ responses to service, pricing, and competition. Plus, it provides a basis for the average length of time an individual remains a customer.

Companies should look to their industry to determine if their customer churn rate is acceptable. Some industries, such as cell phone providers, have high churn rates and must take extra steps to minimize the number of customers who leave and go to their competitors. Other industries have very low churn rates. Utility companies have very little competition and provide crucial services; therefore their customer churn rates are very low.

Businesses that do not provide a continuous service can also calculate their customer churn rate. They can define when they consider a customer has discontinued their services. For instance, manufacturing or distributing companies could determine that if a customer has not purchased anything from their company in the past six months then this customer has been lost. The number of lost customers in a certain time period divided by the average number of active customers during that time period would be the company’s customer churn rate.

Tracking a company’s customer churn rate is the first step in understanding how good the company is at retaining customers. Lower churn rates indicate higher customer retention and less expense and effort needed for the company’s next sale. In most industries, it is usually cheaper and easier to retain customers than it is to acquire new ones. By monitoring the customer churn rate, trends can be analyzed and traced to changes made to service, price, or marketing efforts. If the churn rate is increasing, actions can be taken to assess the reason and take actions to find ways to retain customers and build customer loyalty.

Contact Porte Brown to obtain more information on selecting the best KPIs for your organization.

KPI of the Week: Revenue Growth

- Thursday, June 25, 2015
Revenue Growth is a KPI used to measure how sales are increasing or decreasing over time. It is calculated by dividing revenue generated during one time period by the revenue generated during a subsequent time period, subtracting 1, and then multiplying by 100 to obtain a percentage. Generally companies calculate revenue growth year to year. Some companies track revenue growth from one month to the next, but this is only meaningful if the business is unaffected by seasonal factors. For companies that have revenue affected by seasonality, it makes sense to measure the growth rate in revenue for the month (or season) on the same month (or season) as last year.

Companies should look to their industry to determine if their revenue growth is in line with others in their industry. During the analysis, the revenue growth should be taken in context to avoid any misinterpretations of the data. It is easier to achieve a 10% growth in revenue when the total sales volume is lower than it is to achieve the same 10% growth rate when sales volume is higher. Often revenue growth is used to forecast future sales. The revenue growth rate will provide the trend month after month, year after year, to indicate the direction and intensity of the company’s revenue growth. By using this trend and knowing the industry and the companies’ placement within it, better forecasting can be accomplished.

Revenue growth can be even more informative if it is broken down into meaningful dimensions. By analyzing this KPI in slices, a business can better address the areas that contribute to revenue. By reviewing revenue growth by customer or customer type, the company can see which customers have steadily increased their sales, determine which customers are consistent, and see which ones have slowing sales. By reviewing revenue by item or item group, a business can determine which items are doing well and which ones are starting to decline. By being able to combine dimensions, even more direct questions can be asked and answered and the company can direct its efforts in the right direction, making sound and informed decisions.

Contact Porte Brown to obtain more information on selecting the best KPIs for your organization. Ask about how using dimensions in financial reporting can provide better information.

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