With the rise of digital transformation, the shift to accounting automation and the implementation of new audit reforms, the accounting industry can't seem to keep up.  One way of staying on top of things would be to up-date your accounting firm's performance indicators. 

The term performance, although defined by Sabbar as the degree of accomplishment of the objectives pursued, has several approaches: financial, organizational and social however, each type of performance is different and therefore requires its own indicator. 

During these times of change, it's crucial to have all the right kinds of key performance indicators in place that will help you achieve operational efficiency and increase customer satisfaction. Keep in mind, that change happens regularly and to be able to adapt and sustain in today's competitive environment, your indicators MUST be up-to-date.

Are you using the right KPIs for your firm?

Challenging Tradition 

Classic but Static Indicators

According to piloter.org magazine, "a performance indicator is a measure or set of measures focused on a critical aspect of the organization's overall performance."

Therefore, these indicators help to stay in line with the company's strategy.

Among the indicators inherent to the performance of an accounting firm, we found: 

  • Number of clients
  • Revenue
  • Hierarchy of procedures with clear and defined roles and responsibilities 
  • Number of employees and their skills

These indicators are used by accounting firms to build a solid strategy. For instance, increasing revenue means focusing on maximizing financial performance, increasing revenue could also mean focusing on getting more projects or clients but before taking on more projects you would have to check your team's capacity level to make sure they are available. 

Measuring performance with these indicators is logical: It would make sense to measure financial performance with an increase in revenue. That's obvious. 

What's less obvious would be to measure financial performance with an increase in price or even a cost reduction. It's the same with the number of employees, for example, is a  higher number of employees good for the company's performance/productivity? Not necessarily. The question you should be asking yourself is: What about their skills? That's what is important for performance and productivity. 

This is to say, that your performance indicators should not state the obvious because they won't provide you with new data or information that's essential to the growth of your firm.

A situation that's no longer justified

According to the Order of Chartered Accountants No.21, there are two types of accountants: "A good technician, whose main mission is to produce accounts for "cheap" while maintaining the level of quality or, a true leader, able to manage teams, communicate with customers, create value".

For the last ten years, accounting has taken on a new face due to task automation. This has disrupted the history of the accounting industry and shifting the accounting profession towards consultants/advisors rather than financial techniciens. 

Today, accounting firms are adopting a new approach, the AaaS (Accounting as a Service) concept, by offering a subscription service. The idea here is to make the accounting industry more attractive than ever thanks to: monthly payments, skill tracking, customer loyalty (quickly responding to their requests) and versatility of employees. 

New Indicators For A New Business Model

How to choose the right indicators?

As explained earlier, to sustain a firm's economic health means optimizing your processes and becoming more responsive to the movements within your market. This can all be done with the help of new key performance indicators. Since updating your processes and improving your strategy calls for updated performance measures. 

Here are several  "new" indicators you should think about introducing in your accounting firm:

  • Monthly Recurring Revenue (MRR): Ideal when it comes to subscriptions, it allows you to find out how much the firm will spend each month, and where the funds come from.
  • Customer Input/Output rate: This indicator is very useful for understanding "turnover". Combined with the previously described MRR, you will be able to understand the gain (or loss) associated to each client. Indeed, you can have a positive rate (more entries than exits), but a lower MRR than the previous month indicates that you lost "important" or loyal clients.
  • Level of Skills: For an accounting firm to be able to adapt to change, their employees must be capable of change. Which is why you should always think of developing their skills so that they can exceed your client's expectations.
  • Customer Satisfaction: One of the most important aspects in the professional service industry is to ensure all your clients are satisfied with the level of service being offered, because competition in the accounting industry is fierce and customers are aware of it. They expect highly personalised and dedicated service and could take their business elsewhere if they're not happy.  

What should these indicators follow?

The current transformations in the field of accounting implies that performance must be measured differently, by pursuing objectives that are less intrinsic to the firm.

The idea is to focus on three basic types of performance strategies:

  • Financial performance: This strategy aims to maximize the money coming in each month, the MRR, explained earlier is perfect to understand the cash inflow and their source.
  • Organizational performance: This strategy aims to promote your team's personal & professional development within your accounting firm. It also helps boost the efficiency of the service offered and increases versatility since your teams will be gaining new skills. You'll be able to track/monitor these skills via a Spider Diagram (example below). accounting-spider-diagram
  • Social performance: This strategy aims at putting customers at the center of your plan of action and operations. It will allow your firm to measure its effectiveness at creating value for your clients.

Once the type of performance is chosen and the correct indicator selected, it's about monitoring them efficiently.

Accounting firms moving into a new era should be equipped with powerful tools and adequate communication channels that will help them strive.   

This is all possible through Beeye, a smart planning tool that was created for making accounting firms more efficient in today's competitive environment.

One of our most popular feature is our simple yet powerful dashboards: They help summarize all the criteria used by your accounting firm to efficiently evaluate your performance.

Whether strategic or operational, it is a tool that visualizes information essential to the management of your firm. It is intended to help you analyze the gaps between objectives and results and, enables you to take the necessary corrective actions. 

Here are some of benefits of having such a dashboard: it's interactive, collaborative and presents information that is accurate and up-to-date, facilitating the decision-making process. 

Choosing the appropriate SaaS software can be tricky which is why we wrote an article that will help you make the right decision.