Annual revenue per billable consultant is a rough indicator of how much revenue your billable resources generate each year and the productivity of your technology services team. This number should be higher than the average fully-loaded cost of your consultants, meaning your consultants are generating more revenue than it costs to employ them. A good rule of thumb for this metric: one to two times the average consultant’s fully-loaded cost.
| KPI | Definition |
| Utilization | The percentage of time that your company’s consultants are billing clients. The higher the better, until it gets to a point where it negatively impacts morale. The typical target utilization at consulting firms is 80%. |
| Spend Under Contract | The percentage of procurement spend managed by a contract. Purchasing goods and services using pre-negotiated contracts typically allows for better price negotiation. The higher this percentage, the more likely that your company is saving money on goods and services. |
| Days Sales Outstanding | How many days, on average, it takes your customers to pay invoices. Also called DSO or Days Receivable, it is a financial ratio that illustrates how your receivables are being managed. The lower this number is, the better. |
| Churn | Also known as the Rate of Attrition, churn is the percentage of subscribers who discontinue their subscriptions within a given time period. For a company to expand its clientele, its growth rate, as measured by the number of new customers, must exceed its churn rate. |
| Cash Flow Adequacy Ratio | The cash flow adequacy ratio is used to determine whether the cash flows generated by the operations of a business are sufficient to pay for its other ongoing expenses. In essence, cash flows from operations are compared to the payments made for long-term debt reductions, fixed asset acquisitions, and dividends to shareholders. |
| Annual Revenue per Billable Consultant | This metric represents the average amount of revenue generated by a consultant. The higher the annual revenue per consultant, the better. |
| Customer Referenceability | Percentage of total customer base willing to provide positive stories about a successful delivery of your products or services. This is used to create demand. |
| Finance FTEs per $XM Rev | A calculation of how many FTE (Full Time Equivalent) Finance department resources are required for each $100M in revenue earned. |
| Liquidity ratios | One of the commonly used liquidity ratio is the cash ratio. This ratio compares just cash and readily convertible investments to current liabilities. As such, it is the most conservative of all the liquidity ratios, and so is useful in situations where current liabilities are coming due for payment in the very short term. |
| Debt service coverage ratio | Calculated by dividing total net annual operating income by the total of annual debt payments. This measures the ability of a business to pay back both the principal and interest portions of its debt. |
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