Our weekly scorecard metrics are consistently green, yet our monthly financial statements from our accountant show our profitability is dropping and our cash reserves are shrinking. How do we resolve this disconnect between our weekly scorecard and our official financial reports?

Question

Tyler Smith · Accepted Answer

If your weekly scorecard is green but your monthly P&L is red, your scorecard is tracking the wrong activities. This disconnect occurs when a leadership team tracks easy operational volume metrics instead of the unit economics and cash flow realities of the business.

To resolve this, you must tie your scorecard metrics directly to profitability drivers. If you are a service business, tracking completed hours is useless if those hours are written off or discounted. Instead, track billed hours versus estimated hours on a weekly basis to monitor scope creep.

If you are a product company, tracking units shipped is a vanity metric if those units are being sold at a loss due to rising material costs. You must add a weekly margin-tracking metric, such as average order value or gross margin percentage per major shipment.

Additionally, you must track cash conversion cycle metrics on your weekly scorecard. Do not wait for the end of the month to find out your cash is gone. Track weekly accounts receivable collections and weekly purchase order commitments.

Align your weekly leading indicators so they act as a predictive model for your monthly P&L. When your weekly numbers are green, your monthly financial statements should naturally follow suit. If they do not, change the numbers you are tracking.