Examples of Balanced Scorecard Financial Perspectives
When you think about the balanced scorecard and its four main perspectives you must focus on in your organization. Otherwise from the internal business process perspective, the financial perspective is another area you must pay a lot of attention to. The reason being is because it’s important for you to set objectives and create metrics to help track the different financial performances within your organization.
This will help you to focus on cutting cost and try to maximize profits on certain operations. Additionally, when thinking about financial perspective, you have to think about the long term goals of your company.
You need to look at where do you see your company in 5 years, will it be operating in new industries. Furthermore you will look at how will it operate efficiently keep your operation cost at a certain level.
Other areas you must focus on are increase in company growth, increase in shareholder value, focusing on creating new revenue streams etc. Creating a financial perspective for your organization can be pretty simple. Mostly of what you are going to do are setting goals and milestone along with key performance indicators to measure and track them.
Another thing you should keep in mind is that whatever financial perspective you are planning to set should be aligned with your overall company’s strategy at that specific time.
You have instances where objectives and indicators are set. But when reached the impact is pretty miniscule because it just wasn’t necessary at that time. Below you can see examples of balanced scorecard financial perspective examples. It’s going to be organized in objectives and metrics.
Balanced Scorecard Financial Perspective Examples Objectives and Measures
Objective: Decrease product testing cost
Measure: Decrease our product testing cost by 10% in 6 months
Objective: Improve our operational cash flow
Measure: Invest $1,000, 000 over the next 12 months to improve our operational infrastructure to try and cut cost
Objective: Give our shareholders better return on equity
Measure: Increase our organizational growth by 10% in order to give our shareholders better return on equity
Objective: Invest in new markets
Measure: Invest $3,000,000 in new innovations over the next 5 years to be competitive in new markets
Objective: Improve our net profit margin
Measure: Increase our net profit margin by 5% in the next 12 months
Objective: Improve our accounts payable ratio
Measure: Decrease the speed of our account payable ratio by 3% in 10 months
Objective: Increase our Return on assets
Measure: Increase our return on assets by 10% in 12 months
Objective: Improve our revenue growth rate
Measure: increase our sales numbers by 20% in the next 8 months to improve our revenue growth rate
In summary shown above are just some of the balanced scorecard financial perspective examples. That can be set in any organization. But it’s all up to you as the manager to know what your organization needs and where there is room for improvement. Overall as stated before. It’s important to put a lot of effort and time into creating a proper financial perspective in your organization’s balanced scorecard.
The financial aspect of your business is really important. Making sure it’s organized and all the goals are necessary will increase the odds of success in your favor.