7 KPI Metrics to Track at Your Accounting Firm
As an accounting professional, you never miss a number. But have you ever wondered what metrics you might be missing that could predict performance?
KPIs, or Key Performance Indicators, are metrics that demonstrate your company’s performance in various areas. These metrics can highlight areas for success and improvement, as well as provide necessary data to inform future decision making.
Why track KPIs?
Relying on data can make a big difference in how easily and efficiently you achieve your goals, and tracking accounting KPIs can help you arrive at consistent and valuable results. When you track accounting KPIs, you’ll see an impact in every aspect of your business, from revenue to operations to clients.
No accounting firm uses every single accounting KPI, and it would be a waste of your time to try and track every accounting metric. There are thousands of data points you could analyze, and not all of them are relevant to your firm. You’ll want to track accounting practice KPIs that are specific, measurable, and targeted to your accounting firm’s goals in order to get the best data.
How to choose which accounting KPIs track and how to use them
So how do you decide which accounting KPIs to track for your firm’s goals? How do you compare these indicators and choose which will serve your business best?
Get started with a list of your objectives and realistic goals for your accounting firm. Consider whether each goal is specific, measurable, achievable, relevant and time-bound (S.M.A.R.T.). Knowing that each goal directly relates to the end results you want to achieve helps you prioritize the accounting KPIs you want to measure.
You don’t necessarily need to download new software to track accounting KPIs, either. You can use information from the software and applications you already use, like website hosts, social media accounts, and billing software, like CPACharge. These applications and software can provide you with critical information about your business, from finances to productivity to client satisfaction.
__CPACharge’s dashboards give you the firm insights you need to stay competitive and grow your practice. __
Once you’ve decided which accounting KPIs to track, and how to track them, you’ll want to maintain records of your findings. Some KPIs might immediately reveal areas for improvement, but others might require more data over time to indicate trends. With detailed records, you can analyze your accounting KPIs over time and make informed decisions based on the data you’ve collected.
7 Types of KPI metrics to monitor
If you’re unsure of where to start, here are seven types of KPI metrics you can use to measure your accounting firm’s success:
Client Development KPIs
How do you develop a relationship with a new client? How do you maintain that relationship? Track client development KPIs to get a better understanding of how to accelerate or improve your client development. Here are a few metrics you might consider tracking:
- Number of clients served
- Average fee per client
- Number of active clients
- New client acquisitions
- Percentage of high-risk accounts
Client Retention & Satisfaction KPIs
Your clients are vital to your firm’s success. Ultimately they determine your accounting firm’s reputation and bottom line. By fostering solid client relationships, you’ll increase client retention and satisfaction, leading to more client referrals. These client satisfaction KPIs might be useful to track:
- Client retention rates
- Stars in reviews
- Number of client referrals
- Client satisfaction ratings (through surveys or reports)
Marketing what your accounting firm offers can lead clients directly to you. Track marketing KPIs to discover the best methods and strategies for advertising to your specific audience. Here are some metrics for accounting firms to track:
- Number of website visitors per month
- Landing page conversion rates
- Email marketing performance
- Traffic from referrals
- Social media engagement
Healthy finances are at the heart of every business. In order to grow and meet goals, you’ll need steady cash flow. Measuring financial performance can help you achieve your accounting firm’s financial goals and maintain healthy profitability. These metrics can reveal insights that determine future decisions. Keep an eye on these KPIs:
- Profit and loss
- Process costs
- Number of aging reconciliations
- Time to close
- Close quality
- Bad debt to sales ratio
- Operational cost per collection
- Number of invoicing disputes
Employee Performance KPIs
An efficiently working team is infinitely valuable. Creating a performance management system can ensure your accounting firm runs smoothly and continuously generates revenue. Here are some KPIs you can use to measure staff productivity:
- Days to complete monthly close
- Days to complete annual close
- Number of self-identified errors
- Errors detected externally
- Ratio of accounting employees to full time employees
- Time spent on individual tasks
Job Profitability KPIs
Tracking job profitability KPIs can be especially helpful if you’re thinking about specializing. These metrics will help you determine which services are profitable, and which you no longer need. Here’s a list you can use to measure your firm’s profitability:
- Net profit
- Net profit margin
- Gross profit
- Gross profit margin
- List of all completed and active services
- Income per project
Lead Analysis KPIs
How do you acquire new clients? Analyzing leads can help you find prospective clients faster, and decide how you’ll attract new clients in the future. Growing your client base can be essential for growing your business. Consider tracking the following KPIs:
- Cost of acquiring a new client
- Number of new clients specifically from referrals
- Estimated average value of each new client
- Number of consultation appointments
- Number of potential clients converted to clients
We hope this article has helped you gain a deeper understanding of accounting KPIs and why it’s important for your accounting firm to track them. The development of quantitative, outcome-based indicators can help you and your team monitor progress toward meeting objectives and, ultimately, achieving your firm's professional and personal goals.
If you’re looking for more information on managing your accounting firm, download our free eBook “How to Manage your Accounting Firm: Tips to Boost Profitability”.