Key performance indicators (KPIs) are easy to derive and understand, and they help executives track the health of the entire business. Most companies already track a number of KPIs, such as days payables outstanding (DPO), days sales outstanding (DSO) and days inventory outstanding (DIO), and hold certain finance and operations stakeholders accountable for them.
High-level working capital metrics such as DSO are an essential part of any working capital improvement program, but only a part. While KPIs can indicate how well a specific area of the business is operating, they do not necessarily explain why the business is succeeding or struggling. Only an investigation into working capital processes and how the resulting numbers affect operations can enable analysts to discover the why behind those numbers.
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