The most important starting point for most businesses to track each month is revenues, but what figure should businesses look at? The clear and logical answer is that you should track monthly billings and yet I have seen a number of businesses that track collections instead.
Numbers should be a servant, not a master. Running a business without monthly financials is like playing golf without keeping score but even monthly financials are of little practical value if they aren’t telling you what you need to know about your business.
The Gross margin is probably the most important in any business, and yet many people fail to measure it. Part of the reason for this is that the Gross margin is radically different for different businesses and in many cases it is not a well understood concept.
Any company that sells time has what amounts to an inventory of future hours that its clients have committed to buy from it at an agreed rate. This commitment may either be firm or contingent on future events, but it is important to find a way to calculate the size of the inventory on hand at any point as this is an important measurement of workload and ultimately of future revenues.