Business transformation and the high volume of data available in companies make financial management increasingly difficult. In this sense, having a financial dashboard can be the ideal solution for analyzing business finances more quickly and assertively.
This task is essential to ensure consistent results that are visually easier to analyze. This makes it possible to assess the company’s financial health in real time, ensuring agility in the decision-making stages of your business.
With this in mind, this article will present what a financial dashboard is and the importance of using this tool in your company.
Continue reading and understand!
What is a dashboard?
First, it is important to understand what a dashboard is. The term can be translated as control panel or main panel, as it is a type of bulletin board or board linked to the business management system.
In this way, the tool concentrates various relevant information about the business with the aim of facilitating the visualization of various data. Thus, the dashboard gathers the system records and presents them on a single screen.
The data can show issues related to the performance of different sectors of the company. This is usually done through graphs and tables — which makes it much easier to interpret the information presented.
It is also possible to access specific points to delve deeper into the records. In addition, there are different types of dashboards, each of which fulfills a specific function, relating to a specific sector of the business.
What is the financial dashboard?
As you have seen, there are several types of dashboards that can be used by small and medium-sized companies. In the case of the financial dashboard, the panel visually presents the compilation of the main metrics and KPIs (key performance indicators) necessary to monitor the financial health of the business.
To achieve this, the system automatically collects, consolidates, analyzes and reports data from various systems and processes. Thus, it provides a single point of control for those working with financial management in companies and helps them make better decisions.
Furthermore, the dashboard allows for more complete financial analyses, through a comprehensive and unified assessment on the initial panel itself. This dynamic enables the maintenance of the health of corporate finances on a day-to-day basis.
How does the financial dashboard work?
In terms of functionality, the financial dashboard combines multiple data sources to provide a complete and accurate picture of the business’s finances. This allows the company to explore this unified information in real time, directly within the dashboard.
In addition to simplifying financial reporting , this tool also expands the power of data analysis. This makes assessment more robust, enabling advanced forecasting, budgeting, and planning.
As a result, the solution makes business routines easier, as professionals in the area spend less time preparing data — as happens when spreadsheets are used , for example. Therefore, they can focus on identifying opportunities to reduce costs and increase profitability, for example.
How can financial dashboards be divided?
Now you know what a financial dashboard is and how it works. Although it refers to corporate finances, in general, each piece of information presented serves a purpose. That’s why there are several types of financial dashboards used by companies.
They have specific functions, depending on the needs of the business. Check out some examples of financial dashboards that can be used by small and medium-sized companies:
Operational
A financial dashboard with an operational focus provides useful information to optimize process performance. Therefore, this model is used to present the metrics that need to be monitored by analysts.
This way, they can make improvements to their activities, in order to gain more agility in correcting work. Among the data that can be evaluated in these panels are:
- cash flow ;
- balance of receipts;
- balance of payments.
Other metrics relevant to the business can also be used, as long as they are related to the operational part. Thus, the system can present information on inventory, production, production capacity, among others.
Therefore, the operational dashboard is quite relevant and directly affects the tactical and strategic visions of the business. Its main characteristics are related to the company’s day-to-day activities, the short term and a focus on actions. Thus, the tool helps to quickly identify critical failures, allowing for early corrections.
Tactical
The tactical dashboard is a panel aimed at the management team. It presents information so that medium-term goals can be achieved. The purpose of this dashboard, therefore, is to gather day-to-day actions and show the manager data related to:
- treasury, such as cash, projection, debt;
- customers, such as profile, average payment term, default rate ;
- suppliers, such as average payment term.
Unlike the operational tool, the tactical financial dashboard cross-references information from the system. In this way, it provides a broader view of the business processes and results. As a result, this dashboard is more complex than the operational one and has the advantage of bringing together information from different sectors.
Strategic
The strategic financial dashboard is most commonly used by management, as it assists in decision-making and defining long-term goals. The indicators displayed in this type of dashboard may include:
- profitability;
- profitability;
- gross margin;
- debt ratio;
- ROE (return on equity);
- liquidity ratios;
- between others.
This information allows management to mobilize resources to achieve different goals targeting more distant dates. In addition, the advantages of the strategic financial dashboard are the macro and complete view of health and financial sustainability.
What is the financial dashboard for?
After understanding that financial dashboards can be divided into different types, it is important to know that there are some common points between them. Therefore, before using the tool, it is necessary to understand its usefulness.
Check out some features of the financial dashboard that can be very useful for your company:
Track balances across all your accounts and wallets
In a single system, you can view your overall balance. It consists of the balances you have in all your accounts and digital wallets, which helps you understand the financial health of your business.
Manage cash flow quickly and accurately
When managing a business, it is often necessary to make financial decisions quickly. In these cases, having cash flow available on the dashboard allows you to make decisions quickly and with a higher success rate.
Have an overview of the company’s main expenses
With the financial dashboard, you can monitor the company’s main expenses in real time. This way, you can prepare to reduce costs or make decisions that are more aligned with the company’s needs.
Understand business health in real time
Do you know how your company is doing financially? To get this answer efficiently and reliably, you can analyze the information on your dashboard screen.
Track your card bills in one place
Keeping track of your invoices, limits and card details can be time-consuming, especially if you use spreadsheets to manage your credit card information. That’s why a financial dashboard is useful for keeping track of this information on a single screen.
Don’t miss appointments
With the financial dashboard, it is easier to know which bills the company needs to pay and receive, as well as those that are overdue, through a single source of information.
What are the advantages of using the tool?
Knowing the advantages of a financial dashboard also helps you understand how the tool can make your company’s day-to-day operations easier. Check out the main benefits of the system:
Helps in decision making
As you can see, dashboards make the decision-making process easier. Since they centralize information, it becomes easy to view and understand. This way, you can have a broad view of your business — including activities, investments, deadlines, KPIs, inventory, and other metrics.
Promotes transparency of information
In business management, it is essential that leaders allow their teams to have access to the company’s indicators and results. This way, it is possible to maintain transparency of information in all sectors and increase opportunities for employees to bring ideas for improvements.
In this sense, the tool aims to facilitate internal communication between all professionals, providing a more complete view of all ongoing processes. As a result, there will be greater integration and engagement between departments.
With employees aware of the business’s results and KPIs, they can work together to set goals and objectives. Furthermore, providing access to these resources is essential for the organization’s growth.
Optimizes time and resources
Another advantage of a financial dashboard is that it optimizes leaders’ time. After all, by organizing data, they can improve decision-making and avoid manual and complex work to generate reports. Therefore, it is possible to prioritize other activities that are more relevant to the company as a whole.
Ensures strategic alignment
With all information consolidated in a single system, management becomes more agile and effective. This enables the alignment of strategies and decisions for business development.
Reduces risks
The financial dashboard allows data to be updated and organized before being distributed. This makes it easier to identify potential risks in operations in advance. This way, managers can take preventive actions to avoid these problems or, at least, minimize their effects.
What not to do in a financial dashboard?
As you can see, financial dashboards can bring many advantages to small and medium-sized companies looking to grow and optimize processes. However, there are errors in the development of the system that can harm the results obtained.
It is important to keep in mind that any excess will fall outside the scope of the centralized view, compromising the analysis work. Therefore, it is worth knowing some mistakes that you should avoid when creating an information panel.
Check it out:
Excessive colors
Although the tool is quite visual, the excess of colors can make it difficult to see what is really a priority. This also causes more eye strain, which hinders data analysis.
Lots of visual effects
Following the same logic as excess colors, the excessive use of visual effects, such as transparencies, makes the user easily distracted. This strategy also takes the focus away from the analysis.
Information overload
To be functional, it is essential that the dashboard be objective. To achieve this, it is interesting to display only the most relevant indicators on the screen. After all, too much data also makes the user lose their sense of priority.
How to choose the best financial dashboard for your company?
If you believe that the solution is interesting for your company, it is important to know how to choose the best tool. And there are some tips that can help in this decision process.
See what they are:
Check the available features
The first step is to check what features are available in the management software you intend to purchase. After all, they must meet the demands of your company.
As you have seen, the system must address issues such as:
- balances of all your accounts and wallets;
- cash flow quickly and accurately;
- your company’s main expenses;
- health of your business in real time;
- card statements in one place.
Assess whether it has the option of integrating with systems
The financial dashboard can be part of a more complete financial management software. This feature is quite interesting because the tool can be used for complete financial control . To do this, it is important that it can be integrated with other systems.
Evaluate whether the system is intuitive
Since one of the goals of the dashboard is to facilitate data visualization, the system must be intuitive and easy to use. Otherwise, the tool will not be able to achieve the proposed objectives due to difficulty in operation.
Therefore, be sure to check the available settings and filters, whether the display is clear and objective, and how the system works in general. This care helps ensure that the dashboard will, in fact, be a differentiator for your company.
Find out if it is safe
Naturally, a financial dashboard deals with highly relevant information. Therefore, security is a fundamental factor in your choice. Make sure the system is secure to keep your data protected at all times.