KPIs Demystified – Using Fathom to set goals and track progress

James Erving - Head of Customer Success (APAC) and James Lin - Partner Success Specialist (APAC) explain how Fathom is used to track business performance.

This webinar explains what KPIs are for those who might be new to Fathom or the concept of tracking KPIs and how you can define KPIs for your business. 

A framework for setting up KPIs in Fathom is shared so that you can see how Fathom helps you move towards meeting your business objectives.

Transcript table of contents

1. Introductions
2. Agenda
3. Objectives
4. Intro to KPIs (KPIs 101)
5. Defining your KPIs
6. Setting up KPIs in Fathom
7. Section recap and Q&A
8. Measuring Performance
9. Section recap and Q&A
10. Monitoring Performance
11. Section recap and Q&A
12. Key Takeaways
13. Final Q&A Session

Introductions

James Erving: 00:00:02

All right. Welcome and thank you for joining in for today's webinar, KPI's Demystified - Using Fathom to set goals and track progress. We've got attendees from all over the world joining in for this webinar, so wherever you're joining in from, thank you so much for taking time out of your day to be here with us. Today's webinar is going to focus on how Fathom can be used to set KPIs for your business that enable progress towards your business performance objectives. We've got a great webinar planned and we're really excited to dive in. It looks like we still have people joining in, but we'll just start to kick things off. So just to start things off, we'd like to quickly introduce ourselves. My name is James Irving, Head of Customer Success here in Asia Pacific for Fathom and my role, really I'm responsible for making sure we have the tools and resources for our users and customers to make sure that you have the ability to get the most value out of Fathom. And I'm also joined by a fellow James.

James Lin: 00:01:08

Hey guys, I'm James Lin. I'm a Partner Success Specialist here at Fathom. I help you guys to get the most value out of the platform by providing educational and training content. I also work in Support as well, so really excited to be here.

Agenda

James Erving: 00:01:21

Awesome. So what are we talking about today? So this webinar is all about KPIs. It's going to be how to set performance goals and track progress for your KPIs in Fathom. First, we're going to do a little bit of KPIs 101. We're going to clarify what we mean when we talk about KPIs and we're going to set the stage for the rest of what we're going to cover today. This will be helpful for those of you who might be newer to Fathom or newer to the concept of tracking KPIs in your business. Now we're going to talk about defining KPIs for your business and we're going to provide a simple framework for setting KPIs which will move you towards your objectives. Next we're going to walk through the three key steps for making better business decisions with KPIs in Fathom.

James Erving: 00:02:11

The first is setting KPIs, and then measuring performance, and monitoring performance. Setting up KPIs is pretty self explanatory. Measuring performance is going to be making sure we have our goals set and our targets set to measure how well we're doing in our KPIs. And then monitoring is going to be actually surfacing those results in Reports and Analysis.

Objectives

James Erving: 00:02:37

So what we hope you'll come away from today is an understanding of how Fathom can help you understand your business performance and make more informed business decisions, a framework for setting your KPIs and how to actually implement and track KPIs in Fathom. So whatever stage you're at right now in your journey towards defining business objectives and going after them and tracking progress, we hope that that today's webinar will be helpful for you.

James Lin: 00:03:11

So the format of today's webinar, I'll just cover that a little bit and what you guys can expect from today's session. So it's going to be approximately one hour in length and we're going to be talking through a mixture of slides and in product training. So we want to cover a few topics first around KPIs and just make sure that we've provided some context around KPIs in general. But really most of today's webinar is going to be focused in the product itself. We're going to be doing that in product training to show you how to best use those KPIs within Fathom. So after going through each of those topics that James just mentioned, setting up your KPIs, measuring performance, and then finally monitoring performance. We're going to have a short recap on that material that we've just covered and we'll give you guys a chance to ask any questions or provide any feedback during that time. We're also going to have a final Q&A session at the end of this webinar. So feel free to ask any questions during the webinar. You can shoot those through to us through the Zoom Q&A feature.

Intro to KPIs (KPIs 101)

James Erving: 00:04:17

Awesome. So just to kick off today's presentation, what is a KPI? So for those of you who aren't maybe as familiar, KPIs are key performance indicators. They help to assess performance in a business. And moreover they help Business Managers and Advisors to stay focused on the metrics that matter most for that specific business. KPIs fall under the umbrella of performance measures or metrics depending on what you like to call them. And KPI's a bit of a catch all term. It gets thrown around and used for many different purposes and often terms like this can get diluted and they lose their weight. And this can actually lead to some uncertainty when it comes to actually choosing the metrics that matter most for your business and tracking them in the business. So to understand this concept fully and use KPIs effectively, it's worth drilling down and defining KPIs a bit further.

James Erving: 00:05:13

So a great analogy for how KPIs should be used in a business is analogy made by Bernard Marr. Bernard Marr is a high profile business consultant, author, and speaker who works with fortune 500 companies. Marr says that running a business is much like a ship running along on the sea. So let's imagine a cargo ship headed for port. A ship goes out with an objective in mind and that objective is to get to their destination by a given date and time. As the ship goes along, there are many different measurements and numbers that the captain can track such as water depth, temperature, battery levels, all those things. However, it wouldn't be worth his time to track all of those numbers constantly because not all these measures are useful information all of the time. So you need the information to be there, but only if something major changes. So in the context of business, all of those types of daily numbers are called metrics. So that's kind of everything. There are also some numbers that are going to tell you whether the ship is running efficiently and operating correctly. So for example, the fuel gauge shows how much fuel you have and the engine temperature lets you know there's nothing major failing in the engine compartment.

James Erving: 00:06:34

You may not monitor all of these figures all the time, but it is really important to know if they fall below or exceed a critical level. So in business, these numbers we can define as performance indicators. Then finally there are the measures such as location, speed, and direction. These indicate whether the ship is going to reach its destination successfully and on time. These measures are key to getting the ship to where it needs to go and as a result they are critically important to everyone on the ship. So in business, these are your key performance indicators. So now we can take that analogy and apply it a bit more in the context of Fathom and the world of accounting.

James Erving: 00:07:15

So we can split performance measures into three main categories. We've got on the bottom, metrics and then performance indicators and key performance indicators. We can think of the process of defining and creating KPIs for a specific business as taking lots of granular detailed information and distilling that into a meaningful insightful metric. So starting from the bottom, we start with the metrics being the most granular, the least insightful on their own, and we go up the chain to KPIs, being the most insightful and the least granular. So a metric could be a single line from your chart of accounts. It could be one bank account or a single expense line, in the context of your accounting data. A performance indicator is going to be a bit more critical towards your business objectives.

James Erving: 00:08:09

So in this context, it's going to be one step up in detail. This could be your total variable expenses, for example, or your total costs of sales. So PIs are a bit more insightful because they typically give a clear view of how your business is running on their own. However, they still lack some context and they're often too granular to base decisions solely on these metrics. KPIs are the product of the underlying metrics and the underlying performance indicators. A KPI could be a metric which has been defined as a key metric for the specific business, or it can be made up of multiple metrics and PIs to form insightful ratios.

Defining your KPIs

James Lin: 00:08:53

So at this point in time, you guys might be thinking about your own business and how all of this applies to you. What metrics do you currently track? What metrics would you like to track instead to get better insights into your current performance and to achieve your goals and objectives? So that's really what we're going to talk about here. We're going to delve a little bit deeper into defining your KPIs. We can't really tell you what KPIs exactly that you should be tracking. Each business and each industry is very different and we're not industry experts, but I think it's helpful to start with a framework that you can use to help in the process of deciding what KPIs that you should be tracking for your business in order to achieve your business objectives.

James Lin: 00:09:38

So this can be done using the concept of OKRs, which is also known as objectives and key results. So KPIs are basically those indicators of progress and success towards that particular objective. So if we start with the objective in mind, this allows us and makes it easier for us to decide on the KPIs that we should use in order to achieve that particular objective. So using that example of the ship at sea that James was just mentioning, the objective there is to reach a certain location at a certain time. From this objective, we can break that down into several KPIs that are critical for achieving that objective. So things like speed, direction, and current location.

James Lin: 00:10:21

So starting with your objectives in mind, you'll be able to define the KPIs that indicate progress towards that objective. Then what you can do is to define the metrics that are needed to calculate those KPIs that you've decided on. And this may help you to recognise what information that you're currently missing as well as what additional information that you're going to need to import in order to supplement your current financial data that you've got within Fathom.

James Lin: 00:10:51

So just a few tips that might be helpful for you guys when selecting your objectives and KPIs and how that all ties together. Try to select only the KPIs that are most relevant for your business. There's usually a temptation to select too many key performance indicators and that can really dilute the information that you're seeing and make it harder to make decisions due to analysis paralysis. Also, try to select an appropriate balance of KPIs. So for example, focusing on too many profitability KPIs can provide a lot of similar signals. It's important to get a holistic view of performance and financial health so that you can consider tracking other perspectives such as cashflow, growth, efficiency, and working capital management as well.

James Lin: 00:11:39

And finally, try to select a mixture of leading and lagging indicators to help track overall performance. So lagging indicators are basically an output. These are the outcomes that stakeholders are looking to see. Things like earnings before interest in tax, net profit, et cetera. And on the contrary, leading indicators are the the input. So these are the levers that drive the business result. Some common leading indicators can include things like client satisfaction numbers, on time delivery, brand recognition, et cetera. So the leading and lagging indicators have that cause and effect relationship. It's important to track a mixture of both of these types of indicators so that you can gain a clearer picture on how your business is performing and catch and correct problems before they start to grow. So just to summarise, you want to start with your objectives. From there, you can break that down into the KPIs that will allow you to achieve those objectives and then from that, break it down even further, find the PIs and metrics that you'll need in order to calculate those KPIs.

James Erving: 00:12:48

That's great. Thanks James. That's a great framework for thinking through how you're going to implement KPIs in your business. Now we're going to switch into the product and then we're going to actually see what this looks like in Fathom. So what it looks like to create your own KPIs in Fathom itself. So I'm just going to switch over to the product here and just share.

Setting up KPIs in Fathom

James Erving: 00:13:19

Great. So now we're on the home screen of Fathom and I'm going to immediately go into the settings for an individual company. That's where we're going to select and create new KPIs for this company. So we're going to go straight to step four, KPIs in the Fathom settings. Now step four is where everything KPI's related happens in Fathom. So we can see a number of default KPIs here that have been populated for me when I first connected my company to Fathom. They're arranged by profitability, efficiency, liquidity, these different categories of metrics. And all of these standard ratios are standard business metrics. So they're going to be many of the financial ratios that you would be familiar with. Fathom comes with these right out of the box. Fathom has over 50 default KPIs that you can choose from and we recommend that when you're starting to set up your company, start with the default KPIs first, see what Fathom has to offer, select the ones that are relevant to your objective and then move on to create.

James Erving: 00:14:31

Oh, sorry. It looks like my screen may have not been shared.

James Lin: 00:14:37

Just let us know guys if you can see the screen share coming through.

James Erving: 00:14:44

So I'm just going to do a new share here and we'll switch.

James Lin: 00:14:49

Yep. Looks like it's coming through okay.

James Erving: 00:14:51

Yep. It looks like somebody in the audience there couldn't see the screen, but hopefully it's coming through for everyone. Let us know if you can't see it. Essentially step four here is where you're going to select from your standard KPIs. To see all the KPIs that are available in Fathom, just click this bubble to show all KPIs. That's going to bring up all 51 default KPIs that you can select from. And what you're doing here, you'll see some have a green checkmark next to them and some of these metrics are grayed out. What that's differentiating is your active and inactive KPIs. Now you can only have 60, which is a lot, but the limit is 60 active KPIs in Fathom and you can have as many inactive KPIs as you'd like. So you can create pretty much unlimited KPIs and keep under 60 active.

James Erving: 00:15:41

The active KPIs are going to show up in your analysis tools, which James will show you in a bit. So we'll see where this is actually coming through. But essentially you're choosing which KPIs are going to be most visible to you and your team on the dashboard component of Fathom and which KPIs are going to be there to use in custom reports that you can surface later on. So if we'd like to track a metric here, we can simply activate it. If we'd like to turn a metric off and make it inactive, we can simply deactivate it like that. And then all we need to do is save our changes.

James Erving: 00:16:16

You'll also notice the importance column here on the right hand side. This is showing the level of importance that you set for your business. So this is going to be independent to your company setup and this allows you to basically organise your KPIs and differentiate them by importance for yourself. This will also allow you to filter some of the analysis tools and what you're looking at in those tools by the level of importance of KPIs. So you're going to be able to, to filter by that as well. Great. So now I'm going to switch it over to James and he's going to take you through the process for creating your own custom KPIs.

James Lin: 00:17:00

Thanks James. So that's a really great insight onto using default KPIs within fathom for the financial data that you're bringing in from your accounting system. But of course every business is really different. So what we do is actually provide you guys with the ability to create a range of custom KPIs so that you're able to tailor fathom to your business and really make that a horizontal solution for any industry. So the way to do that is to click on create a KPI. So this opens up a modal screen where I've got a range of different KPIs that I can create and I'll go through each one of these individually so you know what they are and how they're intended to be used. So the first one on the left hand side here is called the nonfinancial KPI. So this allows you to bring in any external data from outside of your accounting system.

James Lin: 00:17:49

So right now the only data that we've imported in Fathom is the P&L and the balance sheet from our accounting system. If you have any external data that you want to track such as number of employees, client satisfaction numbers, or other sales and operational data, you can actually create them as non financials and then bring in that information either manually or via an Excel import. The next one we've got here is account watch. So this basically allows you to track any account from a general ledger as a KPI within Fathom. So this is going to help you provide more visibility on key accounts such as a key revenue or expense account. You can also apply a target and view performance track results all from a single place. Formula KPIs. These basically allow you to create your own formulas or ratios within Fathom using any metric that you've already imported.

James Lin: 00:18:44

So this is a fantastic way to create KPIs that comprise of various metrics that you've defined from that OKR method that we talked about earlier in the webinar. And finally this option on the right hand side here is the KPI library. So this is really handy if you've imported multiple companies into your Fathom account. If you want to re-use a KPI going forward for other companies, what you can do is save that KPI to your KPI library and that's going to be easily re-used. It's also very important when using KPIs in multi entity features like consolidated groups and benchmark groups as well. So what we're going to do now is jump in and start creating one of these KPIs. I'm going to start with a formula KPI. It's one of the more useful types of KPIs that you'll be using in Fathom. So let's go ahead and select that one.

James Lin: 00:19:37

Now this is the first step of creating a KPI. You can see we've got several fields that we need to fill in with details. At the top here we've got the KPI name. Let's track something like wages per sales as a percentage. So this is an employee efficiency ratio. It helps us to track how much of our sales that we're paying to wages as a percentage. So next we can type out a description for this KPI. This is helpful to explain in more detail what exactly this KPI is tracking, particularly if you've got other users in your account that may not know what this KPI's talking about. The next field we have here is the units of measure. So right now in Fathom we can only track numerical results as KPIs, but you've got a range of different units of measure that you can track. So for this one we're going to use a percentage.

James Lin: 00:20:33

The next field here is aggregation. So this is a little bit nuanced. Aggregation is basically going to affect the way that Fathom treats your monthly results when viewing multiple periods. So such as if you're viewing quarterly or annual periods. So for example, suppose we view Fathom from an annual perspective. If you choose summative, this is basically going to take the sum of the results of the 12 months. If you choose average, it will take the average of the 12 months and then balance takes the balance of the final month. So we've got a tool tip here available, which goes into more detail if you're having trouble figuring out which one you should use, but because we're choosing a percentage, in this case we're going to go with average.

James Lin: 00:21:21

Next we've got the target type. So is a high result or is a lower result better? And for us, we actually want a lower results. We want to be paying less wages as a percentage of our sales. Next we can choose the category that we want to put this KPI in. So we've got several categories available by default, we're going to choose to put this in efficiency, but you can also create a new category to put your KPIs in if you'd like. And down the bottom here we have the ability to add this KPI to our KPI library. So if you did recall, I touched on KPI libraries. Basically it's useful if you're doing multi-entity consolidations or benchmarking and you want to use that KPI in those groups. So let's go ahead and add that to the library today. Now what we could do is proceed to the next step here. So this is the formula builder. Now we can see all of the different metrics that are available that we can include in our formula here. These are split out between our profit and loss balance sheet, any custom KPIs that we've created, and also other options like interest rate, period length, tax rate, and WACC.

James Lin: 00:22:37

Now when we have a look at the metrics that are available, you can see that there are various types that we can choose from. So for example, if you have a look at these two options here for accounts payable, one of them is called an account and the other one is called a classification. So accounts is basically a general ledger account line from your chart of accounts. Classification, this refers to the way that you've mapped your chart of accounts within Fathom. So selecting classification will basically take the value of any accounts that you've classified as an accounts payable. So this classification could actually comprise of multiple accounts in your chart of accounts, whereas this particular accounts payable is just referencing a single account in your chart of accounts. You've also got other options available. So for example, cash tax paid, this is a default financial metric that Fathom automatically provides for you and you can also select any headings. So down here we've got an option for general expenses. So this depends on the way that you've grouped and structured your chart of accounts in the settings process. So if you did have any headings and groups, you can reference those in your formulas. That's basically going to take the value of all of the accounts that are contained within that particular heading.

James Lin: 00:24:03

Now on the right hand side here, we can see that we've got options to use the current period or prior period results. This is really great if you're building up growth metrics that require the use of prior period in the formula. So for example, if we wanted to build out revenue growth so we could use current period revenue divided by prior period revenue, then minus one. So that's a great way to do growth metrics using those current or prior periods. But let's continue with wages per sales as a percentage that we were building out. So we can use the search bar in the middle here to find the relevant metrics that we want to include. Let's search for wages and then using the mathematical operations in the top right here, I can start to build out that formula.

James Lin: 00:24:59

Now you can see there's a note at the top as well. This KPI is currently measured as a percentage, so definitely recommended to add times 100 so that will make sure that we're showing that correct percentage number. But now what we can do is go ahead and create and add that KPI to our library. That's popped up under efficiency and it's part of our KPI list. We can now use that going forward in the analysis and the reports as well. So I'll let James cover off on a bunch of the other KPIs that you can create. So the account watch and also the non financials.

James Erving: 00:25:45

Awesome. Thanks James for that great overview. Now we're going to jump into non-financial KPIs. So as James mentioned, non-financials can be used to import data from outside of the financial data coming from your summary of financial data and financial statements. We're going to create a sample KPI to track the number of employees in this business. So to do that we're going to select non-financial. We're just going to name the metric. Pretty straight forward. The unit of measure for this metric is going to be a number and the aggregation for this is actually going to be balance. We don't want to add up all the monthly results at the end of the period. We just want the balance at the end. A higher result is going to be favourable and we'll go ahead and we'll create this KPI. So when we do that, we essentially define a new metric in Fathom that didn't exist before and we have this metric called number of employees. Now what we need to do is actually import the data to support that metric.

James Erving: 00:26:57

So to import. We're going to go back to step one of company settings. We're going to go down to non-financial and click add results. Results can be added directly in this screen or they can be added via Excel import. But we're just going to go ahead and import some test data here so that we can see the results later on and then we're going to move forward. So we'll save those changes and now we have some data in this metric, and we'll be able to see those results in the analysis tools when we go through them. The other option for importing non-financials is to import from Excel. As you can see here, the template for importing is very straightforward. It's essentially just the name of the company, the names of each non-financial metric, and then the monthly results. So it's pretty easy to do a monthly import and to import, all you need to do is download this import template, including existing data. And that's going to have any non-financial KPIs you've already created and any results you've already imported to Fathom in a single sheet. So once you import a result, we saved that and you can just import supplementary data going forward. And you'll just upload here at the top.

James Erving: 00:28:27

So now that we've created that non-financial, that's great. We can report on the number of employees in the business, but we can start to leverage these metrics into more insightful KPIs. So to demonstrate this, we're going to create the ratio to track revenue per employee. So we're going to create this metric. This is now going to display as a currency aggregation summative and high result is favourable. We'll go ahead and we'll create that KPI. This is a simple one to create. Once we have the number of employees entered, we'll just select our revenue classification, which is going to bring through all of our income. And then we're just going to divide that by our number of employees, non-financial KPI. So this is going to give you an average dollar value for each employee, what they're generating in the business. And we'll go ahead and create that KPI. So now we've taken two metrics essentially, or performance indicators, you might say. We've taken revenue and number of employees and we've created a ratio that's going to give us some insight into how efficiently our business is producing income.

James Erving: 00:29:49

All right, and the next type of KPI I'd like to cover is the account watch. So this is really straightforward, James overviewed this, but essentially it's going to allow you to track any single item from your chart of accounts as a key performance indicator. So let's say you want to keep a close eye on a specific expense account. Maybe for the sake of example here we're going to go with marketing expenses. Now you can see these are actually differentiated. So marketing expenses here is a heading that we've already created in the chart of accounts. So this is a grouping of multiple accounts, but we're going to go ahead and select the marketing expense heading and select a lower result is favourable and we'll create our KPI. So really straight forward, it's just selecting a single item from the chart of accounts and tracking that line item as a KPI. So that's non-financials and account watch KPIs. Now James is just going to switch over to a different company file and we're going to take you through divisional KPIs. It looks like we actually had a few questions on tracking individual KPIs so far.

James Lin: 00:30:59

Yeah, and that's fantastic to see that you guys are making use of all those features that are available within Fathom. Divisional analysis is definitely something that is really valuable to use to be able to really track those different business units, cost centers, locations, et cetera, that you might have for your business. So for those of you guys who are using different accounting solutions, divisions in Fathom are basically tracking categories from Xero, classes or locations in QuickBooks and jobs and categories in MYOB. So if you do have those set up, you can import those into Fathom. So you can see that I've got a company open at the moment. We've got four regions currently imported for this company. So this will allow us to go through a few of the ways that you can filter your results in your KPIs by those different divisions.

James Lin: 00:31:53

So now when we click create a KPI, you can see that we have a new option that's available only when we've imported those divisions. And that's called a tracking KPI. So this basically is a quick and easy way for us to track profitability or performance for a single tracking item. So I can jump in here and select anything from profitability KPIs and growth KPIs, and I can filter those results by those four regions that I've imported. Now another KPI that we can use our divisions and really dig down deeper is in formula KPIs. So let's jump back into another formula KPI here, and maybe I want to call this, we'll create a new formula KPI that basically digs down into those different regions. So we'll call this one revenue for East Side as a percentage. So this is a percentage and it should be average. Great. Let's proceed to step two. So back into the formula builder.

James Lin: 00:33:00

So now you can see just below the search bar, there's a new option that allows us to select the division. So we can actually filter our results by those four different regions that I've imported for this company. So let's choose East Side here and we'll start to build out this KPI. So let me search for revenue. And you can see that it's actually filtering our revenue accounts by the East Side location. Now I can clear this off to go back to using the full company results. So divided by revenue again for the entire company. And you can see that distinction just within that formula builder, whether it's the full company results or whether it's filtered by a particular division. And of course, because this is a percentage, we want to times that by 100. Awesome. So we've created that KPI that will pop up in our KPI list. So you can really see that bringing in divisions is very handy if you have those different jobs and locations and tracking categories set up. It gives you more ways to include your divisional results within Fathom.

Section Recap and Q&A

James Lin: 00:34:10

So let's just hop back into the slides now. We'll do a bit of a recap on all of the content that we've just covered. That was a pretty good run of content that we've covered here today. So that was talking all about setting up your KPIs. So remember we recommended to start off with those business objectives in mind when setting up your KPIs. So those KPIs should always tie back to achieving the business objective in Fathom. The default KPIs are a great place to start, they're a range of financial ratios that are taken from your P&L and your balance sheet. And then after that you can start creating custom KPIs to fill in those gaps. So create non-financials to bring in external data like sales or operational metrics and use formulas to create custom ratios that are specific to your business. Awesome. So now let's take a few minutes just to answer any questions that you guys might have. We can see those coming in, in the chat and also in the Q&A. Yeah, so that's really great.

James Erving: 00:35:16

Yep. Thanks James. So I've got a bunch of questions coming here. We'll take about three minutes for questions just in the interest of time we'll have to move on to the next section. Any questions we don't get to, we'll follow up at the end of the webinar. So let's see here. So good question. A question here from Michael. Can you use imported non-financial but numeric results in the development and presentation of a KPI? Absolutely. If you create a non-financial KPI in Fathom, it can be used on its own and displayed in charts, tables and other reporting components or you can go ahead and create ratios like we did with the revenue per employee line and create your own formulas for calculation. Great question.

James Erving: 00:36:05

Someone says, I love Vandelay, I'm a big Seinfeld fan. That's great. Thanks Michelle. Another one. Can you set up an auto import for non-financial data used in the KPI? That's a great question, Michael. Currently we don't have an automatic sync for non-financial data. It's something we're definitely keen on adding into the product. Potentially the first step for that would be a Google Sheets integration. We've talked about that, so just need to devote the resources there. But we do plan on building more in that direction. Question from Steve. What is the integration with QuickBooks like? Our integration with QuickBooks online is seamless. We've had an integration for quite some time. We have a close partnership with Intuit, our technical teams work closely together and that's a very reliable integration for us. So essentially the way it'll work is you'll connect your QuickBooks online company, set it to automatically update every day and then Fathom will update your financial data every day for all periods you've imported to Fathom. So you should always come in with, with up to date information.

James Lin: 00:37:21

There's a few questions coming in. How do we track KPIs in reports and how do we show those KPI results? That's a fantastic question and that's actually going to be covered in one of the later sections. We're going to talk about monitoring your performance. So we're going to look through Fathom's analysis tools and also the reports and show you how to add those KPIs and present all of that information.

James Erving: 00:37:44

Yeah, so I think we have time for probably one more question. A good question here from Matthew. How can I do a six month to a year cashflow forecast? So currently Fathom doesn't have a cashflow forecasting feature. We are building a forecasting feature right now that we expect to release next year. In terms of cashflow, if you import a profit and loss and a balance sheet budget, you can get a cashflow projection based on the budget for the rest of the financial year. So if you do have a well kept budget, you can get a pretty good cash flow projection that way, in a cashflow statement format. Great question though. All right, so just in the interest of time, we're going to jump into the next section here.

James Lin: 00:38:37

If we didn't get to your question guys, we'll definitely follow up and get back to you on those questions after the webinar. But just an interest of time, we have to keep things moving.

Measuring Performance

James Erving: 00:38:49

Yep. So onto the next section, which is measuring performance. So we've now set up all of our KPIs in Fathom and we have our key metrics in place. So how do we know if we're performing well and progressing toward our objectives that we've set. Targets and alerts give you the ability to measure your performance and specifically targets allow you to understand how you're tracking against the goals that you've set. So we're going to go over targets and alerts here and I'm going to switch over to the demo. So we'll jump right into step five, which is setting targets. We're dealing with the end of the company settings here. We'll start with the setting to use targets, the same targets each month. So we have this concept of fixed and variable targets. Fixed targets would be a target that is fixed across all 12 months of the year.

James Erving: 00:39:57

Maybe you're predicting that you're not going to have a lot of variability. Maybe you don't have a very seasonal business. You may not have a high growth rate. And so you want to plug in a single target and have that set across your whole year. Keeps things really easy. But it also doesn't allow for a lot of flexibility. So you can use the same targets each month. However, if you have more of a seasonal business and you'd like to adjust for that a little bit in your target setting, you can use variable targets. Variable targets let you set a different target for each month and a few other things. So as far as methodologies for setting targets, we recommend setting your targets based on your objectives. So take your objectives where you'd like to, to get in your performance and set your targets based on that.

James Erving: 00:40:50

However, if you're not quite sure what your objectives are yet or exactly where to set your targets, we have some other recommendations for how to do this. You can set targets based on past performance plus a growth rate, so take your prior year performance or up to the last month and essentially plug that in and set a growth rate going forward. It's really easy to set a growth rate, if we set a base level in Fathom. We just click this green arrow and that allows us to either apply a fixed amount across the whole year, or we can adjust by a percentage. So let's say we want to grow sales by 1% each month or 2% each month, we can plug that in and Fathom is going to apply that across as a target. So that's a really great way to set targets when you're starting off. Another great way is by using a budget.

James Erving: 00:41:44

So if you have a budget imported from your source accounting system or from Excel to Fathom, you can use that budget to set targets for all of your financial KPIs. So as I click this option, we see these targets being automatically populated by the budget values that we have connected. Now this won't work for any of the non-financial KPIs because those aren't represented in the budget at all. But for any financial KPI, you'll be able to set directly using the budget. So that's another great way. And then finally by using industry benchmark data, and this can be a little more difficult to get your hands on depending on how niche your business is, but essentially the idea here is getting your hands on an industry publication or outside benchmarking data from a third party source and then using that to set your targets in Fathom.

James Erving: 00:42:38

Keep in mind this means that typically you're tracking versus the average, so you're comparing your targets at the average of whatever industry you're looking at, but it can be a good way to set targets as well. So now that we've set our targets, we're going to move on to alerts and the concept of targets is really around setting where you want to be in your business and tracking progress towards those goals. The concept of alerts is more setting a threshold, setting that floor level of where you don't want to cross that level of performance. So alerts work very simply in Fathom. You can turn them on or off to track them or not. You can enter the threshold you'd like to be notified at. For example, if profitability drops below 25%, we'll receive an alert here. And then the way that alerts come through, they actually come through in product within the analysis tools and Fathom reports. So right now it's not a text or email outgoing. We may add that in the future. Right now it's just internal to the Fathom tools. But you will basically be notified within Fathom when that threshold is crossed.

Section Recap and Q&A

James Erving: 00:43:52

That's great. So that concludes the measuring performance. I'm just going to pop out and we'll do a short recap of what we just went through. So some takeaways here, we recommend to use targets to track progress toward your objectives. So take your objectives first and then drive your targets based on that. If you're not sure what those objectives are yet or happy with just general steady improvement, you can set targets based on past performance plus a growth rate. And then another way is by using your imported budget to set financial KPIs. And then finally to use industry benchmarks and plug those in to track performance versus the industry average. We recommend you use alerts to flag the downside. So bringing visibility to your areas of weakness or decline or where improvements may be necessary. Great. We're going to take a couple minutes to answer any questions that have come through here on this section, on measuring performance.

James Lin: 00:45:11

That's right. We've got a question coming through. Can you set up revenue alerts for certain income accounts? That's a fantastic question. Unfortunately, right now you can only set alerts for specific financial KPIs that are predefined, so there's no way to really customise what KPIs that you're getting alerted for, but that's certainly something that we can push to the team. I think that'll be really handy to have within Fathom. Let's see. Got a great question. Are they going to be any benchmarking features with industry data pushed out by Fathom? I think James was talking about industry benchmarks. Unfortunately, this is something that you'd have to get from a third party at the moment. We do have benchmarking features within Fathom, but this is basically internal benchmarking, so if you do have multiple entities, you're basically able to segment them and then slice and dice all that information for your internal companies.

James Erving: 00:46:13

Yeah. Good question also, on consolidated reporting. How do I bring in a series of targets into a consolidated group? So currently the concept of targets sits separate between the consolidated group of combined companies and the underlying company. So those targets do need to be set separately in the consolidated group. However, you do still get the ability to set targets based on the budget in the group. So if you have a budget imported for one or more of the underlying companies in that group, you can feed those through to your group targets. We may also add an Excel import for targets at some point and we know that would be really helpful in some scenarios when people are tracking a lot of KPIs especially. But right now it would be that direct entry that we showed.

James Lin: 00:47:06

Great. All right. I think we'll move onto the final section on monitoring performance. And don't worry guys, there'll be a final Q&A session at the very end of the webinar. So keep sending those questions through. That's fantastic. And we'll get to them at the end of the webinar.

James Erving: 00:47:21

Yep.

Monitoring Performance

James Lin: 00:47:26

So we'll switch over here. Fantastic. All right, so now after you've set up all of those KPIs and you've created the measurement goals and the targets for each of these KPIs, what are you going to want to do is actually monitor those results and report on them to management, to other clients, or to stakeholders in your business. So in Fathom, there's a variety of different ways that you can report on those KPI results. The first one that we'll touch on is the analysis tool. So you can see previously where we were in settings for this company, and I've just clicked on analysis and it's brought me over to here. So these analysis tools are basically online dashboards. They're fantastic for quickly viewing your results at a single glance. They're also perfect for presenting your data to others as well. You can go full screen. The dashboards are interactive, they're dynamic, they're great on Zoom calls, like what we're doing right here. So the first analysis tool that we have is called the KPI results tool. So this is a great way to view all of your results of your KPIs from a high level.

James Lin: 00:48:31

You can see the current period results that we've got for this KPI compared against the current target. You can also see how that's performing at a glance. You can view these results for any historical month that you've imported into Fathom and also roll that up into quarterly or annual periods. You can also drill down into more information here, so suppose you get asked a question about one of these KPIs. I can actually click on that, pull up some more information. We've got a description of this KPI, we've got a formula that's being used, as well as the exact figures for the month. And we've also got a trend chart of historical results compared against the target there and some more details on the right hand side. So this tool also helps us to keep track of any alerts that we've set up from the measuring performance stage. So any of those alerts are going to be shown for those KPIs by a red dot that you can see here and it'll inform you what exactly that alert was set for.

James Lin: 00:49:32

So this alert was currently set for $10,000 for revenue. Now you can also filter your results to show all of those KPIs with alerts and this is a great way to stay on top of any downward trends on your business and resolve any issues before they start to spiral out of control. If you remember that we did recommend to keep track of a mixture of leading and lagging indicators. So any downward trends in your leading indicators can be a good time to actually solve issues before they hit your profitability or cashflow. And just as a note, all of these KPIs that we're seeing here are the ones that we've actually activated from the settings process. So there were active and non-active KPIs just by using the little checkmark in the settings process. So only the activated KPIs will be available in this screen.

James Lin: 00:50:27

So moving onto the next tool, this is called the KPI Explorer. So this is a different way to view your KPIs. Basically helping you to understand at a single glance how your business is performing as a whole. So you can easily see how many KPIs are currently on track versus off track as well as that percentage mix. Currently it's 60% on track. You can choose to sort results by different perspectives as well and that allows you to gain deeper actionable insights. So for example, right now what we're seeing is all of our KPIs sorted by their KPI categories. What I can do is choose to sort them by importance so I can see them from low to critical importance based on what I've set up for them in the settings process. So I can see despite 60% of my KPI's doing well, actually three out of four of my KPIs, my critical KPIs, are doing well as well. So this might give me some more insight which critical KPIs I need to focus on.

James Lin: 00:51:30

I can also sort this by result as well so I can see my best performing versus my worst performing KPIs. I can also see which KPIs have just missed or just past the target and of course you can click on any of these KPIs to drill down into more information. Now finally we can choose to view our KPIs on the trend analysis tool. So this is a fantastic way to track business performance over time. You can see any historical trends that are emerging and you can view results for all historical periods that you've got imported into your account. So you can select up to five series to show, you can add series and basically select any KPI, any active KPI that you've created in Fathom.

James Lin: 00:52:21

It's great to note as well that for any of these analysis tools, what you can do is actually proceed to the bottom left of the menu bar and click on download. And this allows you to take a snapshot of whatever you're seeing on this analysis tool and prints it out into a one page PDF document so you can white label that with a logo as well. We'll just open that up and it's taken a snapshot of whatever we're seeing on the screen. We've got some more details here, so it's fantastic. If you've just had a meeting with a client or with another stakeholder, you can print this out to PDF and hand it to people as a deliverable after that meeting. All right, so that covers the analysis tools. This is one of the ways that you can monitor your performance within Fathom. Another way is using Fathom's customisable reports. So let's hop into the report center for this company.

James Lin: 00:53:16

So here we've got a published report that I've already created. This allows us to show a range of different ways to display our KPIs. So you can see that we've customised this report already. We've made this our own by importing a background image as well as a logo. So it looks fantastic. Same for the PDF version as well. So you're able to add your KPIs to various components in the reports. You can automate commentary by including KPI figures in your text and observations. These numbers are basically coming in as placeholders, so they're automatically going to update every single month, when you create this report.

James Lin: 00:53:57

You can also choose to add your KPIs to a range of different charts and graphs. So we've got some revenue charts, expenditure mix, so pie charts, bar charts, line charts, they're all available. We've also got some tables that allow you to customise the rows with any KPI that you've created. And you can also customise the columns with comparative results. So you can do things like prior period columns, you can add target figures, you can do variance analysis, et cetera. So all of these reports can be viewed online or they can be printed to PDF. You can basically save them as your own custom template and then re-use that going forward. Really automates that entire process and keeps you up to date with those monthly reminders about the progress of your business towards your business objectives.

Section Recap and Q&A

James Lin: 00:54:50

Awesome. So now let's jump back to the slides. So we'll do a bit of a section recap for monitoring performance. So after setting up your KPIs, after specifying the exact performance measurements that you're going to set for those targets, for those KPIs, you need a way to view that information in a clear, concise and meaningful way. So you can basically use Fathom's analysis tools to quickly view performance or to demonstrate those results to other stakeholders in an interactive way. You can also create those customisable reports that contain all of your KPI data. You can automatically create them and save them as templates and get them rolling out for you on a monthly basis so you can basically stay on top on how your business is performing. All right, so I'll pass this back to James to say a few closing words.

Key Takeaways

James Erving: 00:55:47

Awesome. This should go next? Great. Thanks so much James. So just a few final comments to wrap this up and then we'll go through a bit of a final Q&A with the time we have left. So right now I hope you're walking away from this webinar with a framework for setting your KPIs or at least thinking about how to select them, an understanding of how to track your KPIs with Fathom, and how Fathom can help you understand your business performance and make more informed business decisions.

James Erving: 00:56:21

So we do recommend starting with your objectives in mind when setting up KPIs or any other solution. From there break KPIs down to their components to know what data you have in your financials and what you need to bring in to supplement that data. And finally, Fathom can help you set goals and track progress toward your objectives. It does the heavy lifting of the financial analysis and reporting, taking away the busy work each month while you are able to focus on what matters most, which is making decisions in your business and making progress towards your objectives. Thanks everyone so much for joining in today.

So if you want to get in touch with our team with any more questions, if we weren't able to answer your questions on this webinar, you can feel free to reach out to our team at support@fathomhq.com.

If you don't currently have a Fathom account or haven't tried Fathom, definitely start a trial at www.fathomhq.com/signup.

Final Q&A Session

James Erving: 00:57:22

That'll put you directly onto a free 14 day trial. It's fully functional, you'll be able to use all the features we've just gone through. And yeah, give it a try. Go ahead and start a free trial and start tracking KPIs and making progress toward your objectives. Thanks everyone. So we're going to go right into a bit of Q&A with the time we have left and I've set aside a few questions here to answer and again, anything else we aren't able to get to, we will follow up after the webinar. So you will have your question answered either way. So someone asked, I'm trying to have the financials report a row below gross profit, for example, that calculates gross profit as a percentage of total revenue. So that would be a custom financial statement in Fathom. We do have the ability to create those. Essentially you'd create a KPI that would do that custom calculation, the percentage of revenue and then you'd create a custom table and place that line in below the gross profit line.

James Erving: 00:58:24

So you'd basically be building your own data table, but you'll be able to do that in Fathom. We have great resources on how to do that in our help center and definitely reach out to us and we can give you a bit more information on exactly how to get to where you want there. Another question, going back to the divisional part of things, can you create a KPI like the East Side one that calculates for each region without having to set each region's formula? So what you're referring to there, Trisha would be a tracking KPI rather, so that would just be a tracking KPI allows you to select a specific metric for a tracking category and track that one line so that keeps things really easy. A great question from Beck, is there a way to rename the default KPI's name? So not currently. Those default KPIs fixed are in Fathom, but what you can do is you can replicate that formula if you'd like. Create a new KPI that tracks the same calculation or something similar and replicate it that way with a different name. You can easily find the formula for the KPI in the analysis tools. If you click on that KPI to drill down, it'll show you the formula it uses and you can just recreate that. Great question.

James Lin: 00:59:50

I've got a question from Michelle asking about the reports. Is there a way to have a clause at the bottom of the page? Definitely. So with the reports you can basically customise them fully. So if you want to insert a clause as a text box or if you want to use that as a footer, you can insert that into your reports, save them as templates and then every time you create a report from that template, everything's automatically updating for you going forward.

James Erving: 01:00:17

Yep. A few other questions. Someone who may have joined in a little bit later, what is a KPI? So a KPI is a key performance indicator. It's a metric that's going to be critical to getting to your objectives in your business. What's the best place to track your objectives or goals in Fathom? So that's a great question and that would be in the Targets section. So that's going to be the best place to set that target or that goal for each of the KPIs that you're tracking actively. So that's in step five of the company settings.

James Lin: 01:00:57

Question from Rebecca, would you look at weekly periods? That's a fantastic question. Right now, Fathom has been more designed as a macro tool, so right now the most granular data that we can bring in is monthly data. You can also do a month to date information if you want to bring in those current period results and view that. But right now there isn't a way to view weekly periods within Fathom.

James Erving: 01:01:18

Yep. Another question, can I create custom KPI in a consolidated group? That's a great question. There's a little bit of nuance to this and we do plan to run a different webinar on multi-company analysis, but essentially you'll want to create the KPI in one of the underlying companies and then add it to the KPI library. That will allow it to be viewable in the consolidated group. Currently you can't create a KPI in the group itself. You just have to create it in one of the underlying companies. Let's see.

James Lin: 01:02:01

There's one from Kirsten. I'm looking for more explanation around the difference between classification and heading. That's a great question. So we haven't really covered classifications and the way that we basically map accounts within Fathom, just because it doesn't relate directly to KPI's, but basically within Fathom you can specify a classification for certain KPIs. So for example, I can classify my accounts, my expenses as either a fixed expense or a variable expense or a depreciation account. So basically anything that's been classified in that way is going to be treated as such. So I could select to show all fixed expenses, which is going to take the value of all of those accounts that have been classified in that specific way.

James Erving: 01:02:51

Yep. That's a great question though. So you would define your classifications and headings in step three of the company settings. Great question from Matthew, can I create custom charts to compare multiple custom KPIs? Absolutely. So you can do this in the Trend tool in the analysis part of Fathom or you can create a custom report and create custom charts in that report to trend any of your custom KPIs, whether they're inactive or not. Great question. And then another question, can we now feed three QuickBooks data files into Fathom separately and consolidate them? Absolutely Fathom does consolidations of QuickBooks, Xero, MYOB, and Excel files into single reporting entities.

James Lin: 01:03:46

A question from Michelle. Can you track jobs or departments via Excel import? Right now that's not possible. It's only available for our cloud based integrations. So that is Xero, QuickBooks, and MYOB. I believe it's also possible for QuickBooks desktop as well. Yeah.

James Erving: 01:04:07

Question from Peter, can alerts be delivered by email? Not currently, but we do think that would be a valuable feature, so we'll definitely pass that along to our development team. Right now the alerts just show up in reports and in your analysis tools. So essentially they'll show up when you view a report or when you log into Fathom and view your results. Great. Just probably time for another one or two questions. A good question here from Jerry. We've had a fair number of questions on the consolidation features, so I'll address this. The question is, can you speak on the consolidation functionality for a little bit. So while this webinar wasn't designed to be about consolidations, they definitely play into consolidated... These KPIs definitely play into consolidate groups. Fathom can handle consolidations of multiple financial files, whether they're from Xero, QuickBooks, MYOB or Excel. It's a seamless consolidation process. It doesn't require any mapping. It consolidates based on the account name and then you can perform analysis on the group or the underlying entities that make up the group. We are thinking of running a webinar like this on multi company features exclusively, so maybe look for that. Also in our help center, there's a wealth of resources on how the consolidations work. So if you go to the Fathom website and find our help center or even on our features page, it'll tell you a lot about how the consolidation functionality works.

James Lin: 01:05:51

Yeah, and I believe we'll be sending out a survey after this webinar where you guys can give us your feedback. So if you're looking for similar webinars of this style where we're doing really in depth training on a specific feature. So we're thinking about doing one for consolidations, maybe for benchmarks, divisional analysis, and reports.

James Erving: 01:06:10

Reporting definitely.

James Lin: 01:06:11

That's a big one. So if you're keen for something like that as a specific topic that you'd like us to cover, then definitely let us know in that survey. We'd love to hear your feedback.

James Erving: 01:06:22

Absolutely. Well, looks like that's our time everyone. Thanks so much for all the questions. Anything that we didn't get to, we're going to record here and then we'll be able to reach out to you afterwards with a followup to your question. Feel free to reach out to us directly that support@fathomhq.com email.

We really appreciate you taking the time with us today to be here to learn more about Fathom and we're excited to help you through your journey. So let us know if you have any questions for us and have a great day and a great holiday season.

James Lin: 01:06:58

Thanks everyone.

James Erving: 01:06:59

Thanks everyone.

James Lin: 01:07:00

Bye bye.