Module 4 · Business Analysis Fundamentals
The current state in numbers
Measure how things work today before changing them, set the baseline every improvement will be judged against, and find out whether a problem is everywhere or concentrated.
About 25 minutes
The problem
Everyone at Ashgrove agrees that "clients pay late". But how late? Is it getting worse? Is it a few difficult clients, or everyone? Without numbers, a new process could be launched, declared a success at the Christmas party, and nobody would ever know whether it worked.
Before you change anything, measure it. The baseline you set now is the yardstick for every claim made about the change later. It also stops the project solving the wrong problem: if late payment turned out to be three clients, the answer would be three phone calls, not a new system.
The concept
Baseline measures
Choose a few measures that capture the problem, and calculate them from the data you have:
| Measure | Definition | Why it matters |
|---|---|---|
| Average days to pay | paid date − issued date, for paid invoices | how long cash takes to arrive |
| % paid within 30 days | paid invoices paid in 30 days or less ÷ all paid invoices | how many clients pay on time |
| Overdue value | total of unpaid invoices past due | money at risk now |
| Overdue age | overdue value by how long it's been outstanding | how much might never be paid |
Three questions to ask of every measure
- Is it getting worse, better or staying the same? Compare by year or quarter.
- Is it everywhere, or concentrated? Break it down by client type, practice area or lawyer.
- How big is it? Put a naira figure on it, so it can be compared with the cost of fixing it.
A note on definitions
Ashgrove marks an invoice "Overdue" when it's unpaid more than 30 days after issue, but there are no written payment terms. Note any definition like that in your analysis: if the firm later introduces 14-day terms, "overdue" will suddenly jump, without any change in client behaviour.
Example
Average days to pay, by the year the invoice was issued:
| Year issued | Paid invoices | Average days to pay |
|---|---|---|
| 2024 | 59 | 42.4 |
| 2025 | 169 | 45.5 |
| 2026 (to August) | 99 | 47.1 |
It's getting slowly worse, by about 2 to 3 days a year. And the overdue money isn't concentrated in a few bad payers: it's spread across 32 of Ashgrove's 50 clients, companies and individuals alike. That points to a process problem (no terms, no reminders, no routine chasing), not a problem with particular clients.
Walkthrough
- Open
invoices.csvin Excel, Power BI, SQL or Python. Add a column for days to pay (paid date − issued date) on paid invoices. - Calculate the four baseline measures for the whole period.
- Break days to pay down by year issued, as in the example. Then by client type, after joining invoices to matters and clients.
- Age the overdue invoices as of 31 August 2026: 31–60 days, 61–90, 91–180 and over 180 days since issue.
- Write your baseline summary (the task below).
Practice
Practice
For paid invoices, what is the average number of days from issue to payment? One decimal place.
Practice
What percentage of paid invoices were paid more than 30 days after issue? One decimal place.
Practice
As of 31 August 2026, how much of the overdue value is from invoices issued more than 180 days earlier? (A rounded figure is fine.)
Task
8 minWrite a baseline summary of Ashgrove's current billing performance for the managing partner, in 3 to 5 bullets. Use at least four numbers, say whether things are getting better or worse, and say whether the problem is concentrated or widespread.
Your work is checked for
- Three to five bullets
- At least four numbers
- Says whether it's getting better or worse
- Says whether it's concentrated or widespread
- No more than 150 words
Check your understanding
Answer every question to check.