How to measure performance of you business accounts

Sometimes in the world of business management and business finance, it gets hard to see the forest through the trees. This "tree blindness" can strike when you start looking at the number of business accounts, especially the number of new business accounts, and you stop looking at the bottom line. Sometimes the number of accounts and the bottom line are less related to each other than common sense would indicate.

The truth is that more accounts doesn't always translate to more revenue. Each account should be considered carefully and independently. How much money does the account bring in? How much goes into keeping and maintaining the account? Subtracting the second number from the first will give you a decent picture about the bottom-line performance of that account. Still, that number won't tell you the whole story.

Another thing you need to consider when thinking about the performance of your business accounts is how the individual accounts work together with other accounts in your company. Are the same strategies used on several accounts or is one account so different from the others that is requires its own special treatment? Special treatment accounts might perform beautifully but you have to think about the resource expenditure allocated to that stand-alone account.

You might also consider the "fringe benefits" of each account. If the account doesn't bring in much money but it is closely associated with a lobby group that lobbies for your interest, it might be worth much more in real life than it is worth on paper. Similarly, if your account has a great reputation in your business world the account might be worth as much as a word-of-mouth advertising strategy as it is worth as a direct moneymaker for you. There are accounts that don't bring in much revenue but are still extremely valuable to your business.

These are all some examples of how to measure performance away from the bottom line. Typically, what you will be measuring is performance on the bottom line. A popular technique, right now, for getting to the bottom line is the Return on Investment (ROI). ROI is an objective measurement that calculates the money that goes into an account and the money that is gained from that account. However, this technique has been recently as being "misleading". Almost certainly, other techniques will become popular in the coming years.

It is much easier to measure the progress of your business's investment accounts. Just as you should consider your sales accounts at least once a month, look into your investment accounts once a month. Make sure that the money coming in from those accounts matches the money that you are expecting.

You also have creditor accounts that need monitored. To increase your bottom line it is imperative that you pay on your principle and not on your interest. As I'm sure you know, you can spend a lifetime paying interest and wind up owing just as much as you did the first day you opened the account. Work with your lenders and with your financial managers to make sure that you are paying down the principle of all your loans.

Just like everything in business, keeping good records is the best way to measure the performance of your business accounts. If you have not yet computerized, consider doing it. By having a computer program monitor all of the account activity, it will free your staff up to do better evaluations. You will also be able to get a lot more information out of a computer program than you would out of an entire financial staff.

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