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.
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).
- 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.