Lagging Indicator
Definition
A key performance indicator that measures an outcome that has already occurred, reflecting the results of past activity rather than the likely results of current activity. Revenue, gross margin, churn rate, and net burn rate are lagging indicators. Lagging indicators confirm what has happened and are essential for accountability and investor reporting but cannot predict future performance without the addition of leading indicators.
Common Misapplication
The most common misapplication is managing a business exclusively using lagging indicators, which means management only learns about performance problems after they have already materialised in financial results. A company whose entire dashboard consists of lagging indicators has no early warning system for deteriorating performance.
FFI Standard Reference
This term is defined and applied in Book 6, Section 6.4: The KPI Framework Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Lagging Indicator. https://ffistandard.org/glossary/lagging-indicator/. 2026.