Module 17 — Corporate and Financial
KPI Interpretation Guide
When to pay attention and what to do next
A practical reference for the GLT. For each of the five core KPIs, this guide defines what healthy looks like, when to watch, and when to act. Use it in every monthly financial review.
KPI 1: Staff Cost to Gross Profit Ratio
Target: approximately 55%
Healthy
50 to 55 percent
The business is operating efficiently. Monitor, no immediate action required.
Watch
55 to 60 percent
Early signs of inefficiency. Review utilisation and recovery. Identify whether the cause is overstaffing, underutilisation, or weak delivery control.
Act
Above 60 percent
Margin is under pressure. Investigate immediately. Check underutilisation, overstaffing, delivery inefficiency, and whether freelancers are correctly included in the calculation.
Also watch
Below 50 percent
Potential overwork. Risk of burnout or quality deterioration. Review team capacity and workload distribution.
Key insight: this is the outcome metric. If it moves, something underneath has already shifted. The first question is always: what changed in utilisation or recovery?
KPI 2: UxR Efficiency
Target: typically 70 to 85 percent
Healthy
75 percent and above
Strong delivery efficiency. The team is using its time well and billing it effectively.
Watch
65 to 75 percent
Some leakage in utilisation or recovery. Identify which of the two is the larger gap and address it.
Act
Below 65 percent
Significant capacity or revenue loss. This will be visible in the staff cost ratio. Immediate investigation required. If utilisation is low: too much non-billable time, poor planning, or idle capacity. If recovery is low: scope creep, poor pricing, over-servicing, or write-offs.
Key insight: two numbers that look acceptable on their own can create an unacceptable outcome when multiplied together.
KPI 3: Net Profit Percentage
Target: approximately 20 percent
Healthy
18 to 25 percent
Strong and sustainable. The business is generating the profit needed for reinvestment and resilience.
Watch
12 to 18 percent
Pressure building. Review staff cost ratio, overhead growth, and pricing discipline.
Act
Below 12 percent
The model is not working as expected. Deeper investigation required across all cost lines.
Key insight: net profit reflects the combined effect of all leadership decisions. A declining margin is rarely caused by one thing. Look at staff costs, overheads, and pricing together.
KPI 4: Debtor Days
Target: 30 days or fewer
Healthy
30 days or fewer
Good cash discipline. Revenue is converting to cash quickly.
Watch
30 to 45 days
Collections slowing. Review invoicing timing and follow-up process.
Act
45 days or more
Cash risk building. Likely causes: invoicing delays, lack of follow-up, or weak payment terms in client contracts.
Key insight: if you collect late, you are effectively financing your clients at your own expense. Every additional day of debtor days has a real cash cost.
KPI 5: Cash Reserves
Target: three months of operating costs
Healthy
Three months or more
Stable. The business has the buffer it needs to make decisions with confidence.
Watch
Two to three months
Limited buffer. Monitor closely. Prioritise collections and margin improvement.
Act
Fewer than two months
High risk. Review collections, margin, hiring pace, and discretionary spend immediately.
Key insight: cash gives you time to make decisions properly. Without adequate reserves, every problem becomes a crisis. With them, most problems become manageable.
How to Use This Guide in the GLT Meeting
Each KPI owner answers three questions: what changed, why it changed, and what we are doing about it.
The rule: no reporting without interpretation. No interpretation without action.
If a KPI is in the watch zone: name it clearly, state the cause, and commit to a specific action before the next meeting.
If a KPI is in the act zone: do not proceed to other agenda items until ownership and a timeline for resolution are agreed.
