Understanding KPIs & Step 4

In 'Step 4: KPIs', you can select from a list of default key performance indicators (KPIs) or create custom KPIs that are important to track for your business or your client's business.

KPIs help to track both financial and non-financial performance. The KPIs selected in Step 4 will appear in your reports and analysis tools, allowing you to drill down into more detail and show patterns over time. KPIs can then be grouped in categories.

  • ✔️A green tick indicates that a KPI is active.

  • There is no limit on the number of KPIs which can be created in Fathom and used in custom reports. There is only a limit on the number of KPIs which are 'active' in Step 4, and will display in the Analysis tools and specific report components.

  • When selecting your KPIs, you can assign a degree of importance to each KPI. Click on the appropriate star to assign low, medium, high or critical importance. The importance level helps to organise and prioritise your active KPIs. Your selection of KPIs and their importance can be updated or changed at any time in the future.

  • You can also arrange and re-order the KPIs presented in your reports. Simply drag & drop KPIs or categories to re-order. This will affect the presentation order in your reports and analysis tools.

KPI Types

Default KPIs

Fathom calculates 50+ standard financial KPIs by default. In addition, you can create your own custom financial and non-financial KPIs.

Custom KPIs

There are 4 different types of 'custom' KPIs in Fathom:

  1. Non-financial KPIs can be used to measure operational data, leading indicators, or common business measures, for example: sales & marketing, customer service, production, operations, research & development, human resources etc... Results for these KPIs must be imported into Fathom from Excel (see importing instructions) or manually entered into Fathom, in 'Step 1' of the company settings.

  2. Account Watch KPIs enable you to track any account from your general ledger as a key metric in Fathom, allowing you to keep a close eye on key Income or Expense accounts. Performance can then be tracked against budget.

  3. Tracking KPIs enable you to track financial KPIs for your divisions or locations.

  4. Formula KPIs are created by defining a formula for calculation. For example, you can create a KPI to track any expense accounts as a percentage of total costs or total revenue. You can also create KPIs using both financial and non-financial data (eg. ‘Revenue per Employee’).

In addition to creating a new KPI, you can also select a KPI which you have previously created and stored in your KPI Library. To access your organisation's KPI Library select 'KPI Library' from the top menu.

Creating a custom KPI

When you create a custom KPI, you can specify a name, description, unit of measure, aggregation type, category and target type.

Aggregation: This is the method used to aggregate monthly results to quarterly and annual results.

There are three types of Aggregation possible for custom KPIs:

  1. Summative: Sums the KPI's monthly results into a total for the Quarter or Year. KPIs related to items on the Profit and Loss (Income Statement) would typically use a Summative aggregation type.

  2. Balance: Shows the balance of the result for the ending month in the Quarter or Year. KPIs derived from Balance Sheet items, or non-financial KPIs such as 'number of employees' would typically use a Balance aggregation type.

  3. Average: Displays the average of the Monthly KPI's results over the Quarter or Year. KPIs measured as a ratio or percentage would typically be averaged over the months in a quarter or year.

Decimal places: This represents the precision to which the KPI is measured (zero, one or two decimal places).

Creating a Formula KPI

For formula KPIs, you can define the calculation using the formula builder.

You can select from a range of different variables when building a Formula KPI. This includes: Accounts from your source accounting system, Custom headings/groupings created in your Fathom Chart of Accounts, Non-financial KPIs, Summary financial items i.e. 'Gross Profit' and 'EBITDA', and Default rates (specified in Step 2 of company settings).

For example:

You can return to this step at any time to change your selection of KPIs.

Using Divisional Data in KPIs

If you’ve imported divisions (classes, locations, tracking categories, jobs & categories) into Fathom, then you’re able to use this divisional data in custom KPI formulas and track KPIs at the divisional level.

For more information about using divisional data in KPIs, please read our ‘Using Divisions in KPIs’ article.

Next Steps

Congratulations on setting up and organising your Chart of Accounts! Any decisions you made in 'Step 4 - KPIs' can be changed at any time, if needed. Finish setting up your company for analysis, reporting, and forecasting by choosing from one of the next steps below:

What you want to do:

Next step in setup process:

Happy with your chosen KPIs and ready to set targets for your company?

Good with your targets and ready to set up alerts?

Additional knowledge & common questions:

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