Metric definitions as a controlled document
A pack fails when two people use the same word for different arithmetic. The dictionary is the cheapest control you can put on a close.
Short pieces from our work in Singapore. They describe method, not results. Dates use the day-month-year form we use throughout the site.
A pack fails when two people use the same word for different arithmetic. The dictionary is the cheapest control you can put on a close.
A thirteen-week cash forecast is only useful if this week’s closing figure can be tied to the bank. Everything else is a story.
Averaging all costs across all orders produces a number you can put on a slide and cannot use to decide whether a channel should exist.
Volume, price, mix — in that order — and a residual you are willing to read out loud. Anything else is a chart that cannot be defended.
If a quarterly recast means a new workbook, you did not build a driver-based budget. You built last year’s lines with nicer formatting.
Most Singapore organisations we meet already have a monthly file. What they do not have is a sentence that says, for each measure, the source extract, the inclusions, the exclusions, the currency and the cut-off. “Gross margin” is treated as a shared fact. It is usually three facts: ledger gross margin, contribution after delivery fees, and a shop-floor version that ignores central kitchen labour.
We keep the dictionary as a short controlled document — versioned, dated, with an owner on the client side. Changing a definition is a logged event, not a quiet edit in a hidden column. The dashboard is forbidden from showing a measure that is not in the dictionary. That rule sounds clerical. It is the reason a board meeting can spend its time on the residual instead of on whose number is “real”.
Start with eight to twelve measures. Add grain (outlet, SKU, cohort) only when the source can carry it. A definition that depends on a person remembering to recode a journal is not a definition; it is a key-person risk. Write the recode into the extract instruction or take the measure off the pack until that is done.
The usual failure is to copy the P&L month into a cash workbook and then wonder why the bank disagrees. Revenue is not a receipt. A supplier invoice dated in March may leave the account in May. Payroll, rent and tax instalments have calendars that do not care about your reporting period.
We build from invoices and stated terms, then overlay the collection curve you have actually observed — not a textbook debtor-days ratio. Known commitments (payroll, rent, loan instalments, a contracted capex invoice) are named lines. Unnamed “other outflows” are limited and watched. Three paths — base, slower receipts, stretch — are enough; a dozen scenarios is a way to avoid choosing a base case.
Reconcile last week’s forecast close to this week’s bank before you roll the model forward. The residual is the lesson. If you cannot explain it, the next thirteen weeks are decoration. On a retained engagement we prefer a weekly refresh of cash even when the P&L pack remains monthly.
Unit cost, as many ledgers report it, absorbs overhead until every SKU looks almost the same. Cost-to-serve asks a narrower question: which costs move when this order, this outlet or this delivery channel moves? Payment fees, last-mile, packaging, dedicated labour and returns belong in that conversation. Rent on a shared kitchen does not, unless you are actually closing the kitchen.
The work is to write the rule before the model. “After rider fees and packaging, before head-office payroll” is a definition. “True margin” is not. Once the rule exists, the pack can show contribution by channel next to the pack total, so the two cannot drift. If the source cannot identify the fee, the measure stays off the pack until it can.
We have seen F&B groups make roster decisions on a contribution figure that still included central marketing. The figure was not wrong as arithmetic. It was the wrong definition for that decision. The dictionary should name the decision the measure is allowed to support.
A revenue bridge is a walk from last period to this period using the drivers you have agreed. Volume at last period’s price. Price on this period’s volume. Mix if you have a structure that makes mix meaningful (SKU families, outlet tiers, contract vs. spot). FX as a named line if you bill or recognise in more than one currency. Then a residual.
The residual is the point. If it is large, the drivers are wrong or the cut-off moved. If it is unexplained, the minutes should say so. Smoothing the residual into “other income” so the bridge looks tidy is how a pack loses the only information that would have changed a decision.
Do not present a bridge on a measure that is not in the dictionary. Do not switch from net sales to gross bookings mid-bridge. And do not use a bridge to imply that management “caused” a price effect that was a list-price change already in flight. The pack reports movement. Attribution is a separate, labelled comment — or it is omitted.
A driver-based budget is a small set of volumes, rates and headcount that the P&L reads from. When the quarter turns, you change the drivers that have actually changed — occupancy, billed hours, outlet count, average selling price — and you regenerate. You do not reopen every cost centre to negotiate a fresh percentage.
That only works if the original budget was built that way. Retrofitting drivers onto a line-item budget in week two of the recast is how the recast slips six weeks. We would rather spend the annual set-up making the drivers explicit, even if the first budget looks less detailed than the file you are used to.
Hold a change log. A reforecast that silently absorbs a new entity, a new channel or a new cut-off cannot be compared with the previous forecast. Comparison is the reason to recast. On retainers, quarterly recalibration is the scheduled moment for this work — not an emergency rebuild the night before a board meeting.
If a definition, a cash residual or a recast is stuck in your files, describe it in an enquiry. We reply within one business day, Monday to Friday.