Top 5 KPIs from Project Cash Flow Reports
Dear BIVILLEPM Community,
Maintaining a financially healthy project requires vigilant monitoring and reporting of key financial metrics. Here are the top five KPIs derived from project cash flow reports that every project manager should prioritize, especially when employing cash basis accounting for expenses inputs.
1. Net Cash Flow
Net cash flow, the cornerstone of financial stability, represents the difference between total cash inflows and outflows over a specified period. A positive net cash flow indicates that the project is generating more cash than it is expending, essential for sustained operations.
Target: Ensure a consistently positive net cash flow.
2. Cash Flow Forecast Accuracy
Accurate forecasting of cash flows is paramount for effective financial planning and risk management. This KPI measures the alignment between projected and actual cash flows, enabling proactive decision-making.
Target: Maintain cash flow forecasts within a 5% variance of actual cash flows.
3. Cash Flow from Operating Activities
Reflecting the financial sustainability of core operations, cash flow from operating activities highlights the project’s ability to generate or utilize cash through fundamental activities.
Target: Maintain positive cash flow from operating activities.
4. Days Sales Outstanding (DSO)
Efficient management of accounts receivable is crucial for maintaining liquidity. DSO measures the average number of days it takes to collect payment after a sale, ensuring timely cash inflow.
Target: Keep DSO below 30 days to facilitate efficient cash collection.
5. Burn Rate
The burn rate denotes the rate at which the project depletes its cash reserves, offering insights into expenditure trends. Managing the burn rate ensures alignment with budgetary constraints and project timelines.
Target: Maintain a controlled burn rate, in accordance with the budget and timeline.
Summary Table
Image By #GeorgeNWOGU
Monitoring these KPIs provides a holistic view of your project’s financial health, ensuring immediate liquidity and long-term sustainability, particularly under cash basis accounting for expenses inputs.
Stay tuned for more insights on effective project management and financial reporting!
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Warm regards,
Engr. George (Chìsom) ÑWÒGU (MBA, PMP®️)
Motto: Humanity First, then Smart and Green. 🚀
My name is George Nwogu, a Senior Project & Planning Manager, COO and Global Trainer from Nigeria. I’m the Founder of Bizville Project Management Limited
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