Dashboards with forty metrics don't get followed by anyone. They get built with enthusiasm, shown once in a meeting, and three months later they're out of date — because keeping forty numbers current takes work that doesn't pay off, and because not one of them ever ends up changing a decision.
Five numbers, reviewed every month with the same definition, change decisions. This article says which they are, where they come from, and what is deliberately left out.
Why fewer works better
An indicator is only useful if someone acts when it moves. That requires three conditions: it has to be calculated the same way every time, it needs an owner, and it needs a threshold that triggers a conversation. Forty indicators cannot meet that bar — five can.
There is also a practical reason. At a company of ten to fifty people, whoever collects the numbers is the same person doing the work. Every indicator added comes out of somewhere.
The five indicators
| Indicator | Question it answers | Review |
|---|---|---|
| 90-day projected balance | Will I have the cash to pay what's committed? | Weekly |
| Average collection period | How fast is money coming in? | Monthly |
| Margin per client | Which work actually pays off? | Monthly |
| Monthly fixed costs | How much do I have to invoice just to break even? | Quarterly |
| Revenue vs. budget | Is the year going the way it was planned? | Monthly |
90-day projected cash balance
The only one of the five that looks forward, and so the most important. It is not today's bank balance: it is the projected balance week by week, with expected receipts and already-committed payments, including salaries, VAT and social security.
It is built in a spreadsheet, with information the company already has, and needs no software. The method is in 90-day cash flow forecast. The trigger is simple: any week with a negative projected balance calls for a decision today, not in that week.
Average collection period
Accounts receivable balance divided by sales for the period, multiplied by days in the period. It tells you how many days, on average, it takes money to come in after invoicing — and it explains most of the cash squeezes at profitable companies. The detailed calculation is in average collection period.
What matters is not the absolute value, but the distance from the agreed term. Twenty days above what was agreed points to a missing invoicing or collections process.
Margin per client
Overall margin almost always hides a very uneven distribution: two or three clients who fund the whole year, and some running at a loss nobody noticed. It is calculated without an ERP, by assigning each client its period revenue and the costs directly attributable to it, including people's time. The method is in margin per client without an ERP.
A quarterly review is enough if the client base is stable; monthly if the company works project by project.
Monthly fixed costs and break-even point
The sum of everything the company pays even if it sells nothing: rent, salaries, insurance, licences, contracts. Divided by the contribution margin, it gives the revenue level below which the company loses money.
It is the single most clarifying number a management team can have, and the one least often written down. The split between fixed and variable is in fixed vs. variable costs.
Revenue against budget
The fifth indicator only exists if there is a budget. It is the comparison between what was invoiced and what was planned, accumulated since the start of the year — never just for the month, because one month on its own says little. On what to look at and what to ignore, see budget control.
What was deliberately left out
Turnover on its own, client count, proposals sent, sales conversion rate, billable hours. These are not bad metrics — they are metrics for a specific function, useful to whoever runs that function. They do not belong on the dashboard of a ten-to-fifty-person company's management team, because management is not who acts on them.
Monthly net profit was also left out. It arrives late, depends on accounting criteria, and tells you nothing the projected balance and margin per client don't already tell you sooner and more precisely.
How to run the monthly review
- Fixed date, between the 10th and the 15th, always the same.
- One page, with the five numbers and last month's figure next to each.
- One person responsible for collecting them, with each definition written down.
- A defined threshold per indicator, above or below which a decision is triggered.
- Thirty minutes of meeting. If it takes longer, there are too many indicators.
Check your own case
- You know today, without doing any maths, what the bank balance will be in six weeks.
- You can state your average collection period as a number.
- You know which three clients have the worst margin.
- You have the monthly fixed-cost figure written down.
- There is a monthly meeting, on a fixed date, where these numbers get looked at.
Three or more "no" answers mean the company is being run off the bank statement, which is the indicator that always arrives too late.
Frequently asked questions
Do I need software to track these five indicators?
No. All five can be calculated from the trial balance, the bank statement and a spreadsheet. Software helps save time collecting them, but it does not change what the numbers say — and buying a tool before having the monthly-review habit is the wrong order.
Do these indicators work for any industry?
All five apply to any company that sells on credit. A company that carries stock should add a sixth — inventory turnover — because in that case money also gets tied up in the warehouse. A company that sells cash-on-delivery can drop average collection period.
Who should collect the numbers?
Someone who is not the one making the decisions, so collection does not depend on management's availability or get shaped by it. It is one of the admin functions that most clearly benefits from being explicitly assigned, whether internally or externally.
In summary
Five indicators, one page, one fixed date a month. One looks forward, three explain the present, and one compares against what was decided. The value is not in how sophisticated the calculation is — it is in them always being the same ones, always calculated the same way, and looked at by someone who can act on them.