What Accounting Metrics You Should Track
Struggling to understand what key accounting metrics to track for your firm?
It's common for many CPA Firms, Accountants, and Accounting Practices to have no shortage of metrics and KPIs to track... but the biggest issue is what are important metrics vs vanity metrics?
Vanity Metrics would be anything that is measurable (a common example might be website visitors) but do not correlate with actual growth.
Proper metrics are ones that can indicate future growth (whether it's new clients, client profitability, retention, team productivity, etc)
With that in mind, today we're going to focus on client and workflow metrics and key metrics for accountants.
There are many potential ones to track, including:
- Turnaround time
- Client profitability
- # of services delivered to client
- Team Capacity and resource allocation
- Team productivity and job satisfaction
- Client retention
- Cash flow metrics (AR net 30,60,90)
- Profitability per team member
- Job realization
- New client growth
- Average revenue per year per client
You might have noticed a few KPI's around team management, and the reason we included them is because team tracking can be a critical indicator of client growth, retention, and/or attrition. Since the team and staff will likely be involved in the service offering, and in some cases a common contact point, their job satisfaction can carry over to the quality of work and advisory relationship with the client. If you have a disgruntled staff member who always cuts client conversations short, that is a reflection of your firm or practice. The client will not see the difference, and because the staff carries your reputation, we feel it's important to review team KPIs and metrics as well, especially around job satisfaction and growth.
Today we're going to focus on the main key performance indicators for accountants that is a foundational metric to track...
You might be wondering... why focus on turnaround time (or at least, why turnaround time specifically) when it comes to accounting metrics?
That's because turnaround time signifies much more than just delivery. It can help measure how closely you meet client expectations, which can be attributed to client attrition, word of mouth referrals, and more.
Also, turnaround time can help track team and staff member productivity... which team member is falling behind? Is it because the client work should have a longer turnaround time, or the team member not trained properly, or are they stretched thin?
It's important to measure turnaround time in your accounting practice or firm, and it's critical to measure in your workflow.
We built Jetpack Workflow with these facets in mind. Ready to give it a try? Try our software for free for 14 days and start seeing your workflow improve.