Most Important Subject ~ MIS For Business

Jan 14, 2022

As every creature in universe talks and share the information to each other in their language either through sensing, speaking or through the gesture, same way the business talks to its owner or its management using numbers, infographics, data comparison drive through MIS which help the business owner to take complicated decision on time to subsist in the market.

Since the primary goal of any organization is to improve its profitability and to sustain in the long run in highly competitive market. Hence, any business establishment cannot afford to ignore the importance of MIS (Monthly Income Statement).

It is rightly said “What can be measured can be monitored and what can be monitored can be improved”. That’s where MIS comes into picture playing a vital role in improvement of the business organisations

Implementation of MIS

To implement MIS in business process, let discuss the important aspects to cover in regular MIS to help in understand the business trajectory at any given point of time. 

1. Profitability Statement and Balance sheet: Profit and loss statement is performance and Balance sheet is the score card or reward of the business where the owner’s equity is getting impacted.Business owner to look into the revenue stream/Top Line and category of expense in the income statement to derive the positive bottom line. 

2. Cash Flow Statement: Since Cash is the life blood for any business and without it survival is not possible, hence monitoring of cash flow with utmost priority to see the how much cash is entering and leaving your business in a particular period. 

- Operating cash flow cover revenue and expenditure. Operating cash flow is normally referred to as working capital. It is the cash flow generated from internal business operation from the sale of product or service, meeting the operational expenditure. If there is negative cash from operating activity then, its time to look into 

  • To evaluate business model. As your business model is the way your company earns and spends money. 
  • To push the collection team for debtor realization on time. 
  • Investing cash flow cover which covers asset sales and purchases. Management can compare project feasibility of investing in assets or taking it through renting option.
  • Financing cash flow which covers loans payments and proceeds, and owner investments and withdrawals. 

3. Debtor Ageing: Debtor aging allows business to quickly identify the customers that are delinquent in their payments as well as the monetary value that is at risk. As a rule of thumb, a healthy accounts receivable should not have any outstanding payment of more than 60 days. 

For early realization of long due outstanding, discount option can be given to debtor for early payment to maintain the working capital. 

Debtor aging format as illustrated for reference purpose;

4. Compliance and regulatory: Cost of non-compliance is much higher than cost of compliance. Tax and regulatory compliance need to adhered on time and can be monitored with proper MIS. Monthly TDS, GST, EPF regular payment and its return can be tracked through Monthly Compliance tracker and should be part of MIS to have control on it. 

Compliance tracker format as refer below, should be part of the regular MIS


Payment / Return Nature

Due Date

Actual Date


Liability Amt

Actual Amt Paid as per Challan

Excess/ Short Paid

Interest Paid as per Challan

Compliance Status For the month































5. Fixed Assets Register: To safe guard of business fixed assets need to tracked through fixed assets register and assets tagging system. FAR needs monthly review for any addition, deletion and movement from place of installation and sometime periodical physical verification ensure the safeguard from risk of business assets. 

6. Business KPIs: Few of KPIs to be incorporated in business MIS to get sense of business operations. 

I) Cost Revenue Ratio (CRR) 

= Cost of revenue (Total direct and indirect cost)/Total revenue 

Cost revenue ratio means, how much you spent to generate an amount of revenue. So, you can see at a glance how efficiently a business is being run. A lower cost revenue ratio means a business can produce more revenue using lower costs. 

 II) Average Revenue Per User (ARPU) 

= MRR (Monthly Recurring Revenue) / No. of active customers in a month 

The average revenue per user is a key metric for SaaS businesses. It gives you one of the best ways to quickly understand whether your company is moving in the right direction. It's a great way to measure the impact of a new strategy or a pricing change. 

III) Monthly Recurring Revenue (MRR) 

MRR is the amount of recurring revenue you generate from subscription customers. The beauty of MRR is that it makes your revenue more predictable than one-time sales. 

IV)Activation Rate

= Total no. users completing a milestone / total user who signed up for service 

User activation is the moment when your user performs the key events in your product that allow them to experience the value of your product for their use case. Activation is an unformulated metric and every business has to define it for itself. 

V) Cash Runway

 = Cash Balance/ Monthly Burn Rate 

Cash Runway refers, is how many months your start-up has before it runs out of cash. The longer your runway, the more time you have to build and grow your start-up. 


(a) Customer acquisition cost (CAC) = Total Spend on Marketing and Sales / Number of New Customers Acquired 

(b) Customer Lifetime Value (LTV): The LTV is calculated by multiplying the value of the customer to the business by their average lifespan 

CAC is the ratio which refer the total cost related to acquiring a new customer. Ideal LTV:CAC ratio should be 3:1. The value of a customer should be three times more than the cost of acquiring them. If the ratio is close i.e.,1:1, you are spending too much. If it's 5:1, you are spending too little. 

Way Forward/Approach

MIS should be accessible in supplying appropriate and high quality of information from its generation to its users. As important collating the data/information in MIS, is much important to interpret, implement and then execute for effective decision making. MIS helps a company become more competitive. It reports and identifies what is working and what is not.Finally, we believe any organization that use MIS to enhance its decision-making processes should develop effective communication channels between management and information professionals. Good communications then facilitate the task of developing relevant and appropriate information systems. 

In Auxano, being an AIF, we firmly believe on the importance of MIS and regularly follow the process of MIS to monitor the business activity for the better control on relevant information helpful for decision making. It improves the administration of the business by bringing a discipline in its operations as everybody is required to follow and use systems and procedures. This process brings a high degree of professionalism in the business operations. 

The same way we get the process implemented to our investee company for getting regular updates, meaningful discussion and wherever required, help them to achieve their business objective..!

Author(s) :
Rakesh Rana     
Brijesh Damodaran