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Thursday 10 May 2012

Dashboard: Business Outlook

Your Dashboard contains a number of useful numbers in the "Business Outlook" section.  This post will detail what each of those numbers signify.  In each case, these values are expressed in your domestic currency.

First, some definitions:

Your backlog is the total value of unfulfilled (not delivered or shipped) orders you have from customers.

Your bookings are the total value of new orders you have received from customers in the current month.

Your billings are the total value of goods you have shipped to customers in the current month.

Scheduled Sales is the total value of goods scheduled (determined by the commit dates on sales) to ship in the current month.  This value includes goods that have already shipped.  It also includes product that is late (scheduled to ship in previous months).

Outstanding POs
As backlog is the value of unshipped sales, Outstanding POs is the value of unreceived goods on purchase orders.

Current Inventory Value:
This is simply the value of your inventory.  For each item, OfficeBooks does a simple calculation, multiplying the quantity in stock by the unit value for inventory.  OfficeBooks adds up all the individual values to get your total inventory value.  Remember, to your accountant (and the taxman) inventory=cash.

A little more detail...

Let's start with Bookings, Billings, and Backlog.  Bookings push your backlog up, and billings drop your backlog down.  In periods of growth, your bookings will exceed your billings and your backlog will grow.  When business is poor, your billings will exceed your bookings and your backlog will decline.  This "book-to-bill ratio" is a globally recognized business performance metric.  Ratios above 1 are good.  Ratios below 1 are cause for concern.

Ideally, Scheduled Sales and Billings should be equal to each other by the end of the month.  If your billings are lower than scheduled sales, you have an on-time-delivery problem.

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