Profitability Roadmap: Unveiling KPI Mastery and Insights
In the dynamic realm of accounting, efficiency is an essential piece of the puzzle. In order to ensure success, the following become imperative:
- Being indispensable
Recently, the Metrics that Matter Webinar brought these points to the forefront, revealing how accounting firms can decode profitability through the establishment of precise KPI’s and strategic insights.
Dashboard Insights Founder, Ryan Richardson, was pleased to welcome industry leaders to the discussion, including Director of Business Depot, Rebecca Mahalic, along with Director of Future Advisory, Jason Robinson, and Founder of Journey, Trent McLaren.
Here we reveal the critical insights shared by these experts that can reshape modern accounting practices.
Tailoring KPIs to Your Firm
Experts reminded us that KPIs aren't a one-size-fits-all solution. KPIs should be tailored to align with the specific goals and nature of each firm.
Dashboard Insights Founder, Ryan Richardson, emphasised this by dividing KPIs into four key areas:
- Partnership Level: Focusing on top-line, bottom-line, and client service metrics.
- Manager Level: Balancing top-line focus with a production-oriented approach.
- Accounting Level: Shifting towards self-focus while maintaining billing as a key metric.
- Administration Level: Prioritising accountability through metrics like database management and timesheet completion.
Understanding these nuanced levels of KPIs enables firms to measure progress effectively and drive growth in a direction that resonates with their unique organisational structure and aspirations.
Ryan went on to further explain the partnership level, which is highlighted by a ‘three-pronged focus’: top line, bottom line, and client service. Here, KPIs like billing, profitability, efficiency rate (or average hourly rate), and the essential service matrix take centre stage. These metrics form the bedrock for assessing the firm's financial performance and aligning strategies accordingly.
Empowering Growth through KPI Optimisation: TNM Consulting
Dashboard Insights was born out of an accounting firm, TNM Consulting, to solve typical problems of professional services business such as operational and reporting efficiency, workflow, and WIP management.
The success journey of TNM Consulting was shared during the webinar, showcasing the transformative power of effective KPI management.
Starting as a modest 10-person team, they navigated their trajectory with a focus on managing key metrics efficiently, overall visibility, and team empowerment. Their growth story, scaling to today's team of 35 illustrates the symbiotic relationship between vigilant KPI tracking and business expansion.
For TNM Consulting, the manager level introduces a production-oriented approach while maintaining a focus on the top line. Here, metrics like billing, productivity, recoverability, and work-in-progress (WIP) days take precedence.
Having a data-driven approach, like TNM Consulting, ensures not only a profitable business but also streamlined operational efficiency.
Understand How Firm Time Is Spent
Rebecca Mahalic from Business Depot shared sentiments from all experts about the importance of tracking each team member’s time.
For a firm with a keen focus on growth and productivity, making sure that the team is doing their timesheets is critical. There also needs to be those responsible for ensuring this is accounted for and making timesheets a key metric.
In this inflationary environment where pricing and profitability is so important, there is value ensuring every single minute that people are spending is the best minute that they can be spending in the business.
Culture Matters For KPI Tracking
Jason Robinson of Future Advisory recognised that a culture shift to track timesheets and activities was a tough but necessary step to enable:
- Profitability. Stricter focus on higher profit services and controls on time spent to improve quoting, enable a more helpful sales process and make a team more efficient.
- Team empowerment. Once the team gets how it all bolts together, using the data to the bigger picture of what a successful business looks like, man, then they are all of a sudden working smarter.
- Client engagement. With a clearer vision on what it takes to run a successful business, it’s easier then to go and talk to clients about the value of the service being delivered.
Collaborative Excellence: The Power of Community within the Industry
The webinar celebrated the essence of collaboration within the accounting industry. A united community, merging to discuss challenges, triumphs, and best practices, amplifies collective knowledge. Professionals openly sharing experiences, failures, and breakthroughs foster a culture of continuous improvement.
This collective wisdom enriches the industry's knowledge base, and creates a thriving community poised for overall success.
The accounting level brings a self-empowered approach, encouraging accountants to delve into their activities while still keeping a billing focus. Key metrics include job turnaround time, income tax lodgements, and work-in-progress (WIP). This granular focus empowers individual accountants, ensuring they are accountable for their contributions.
Guiding the Path to Success Through KPI Mastery
The webinar illuminated the path to success through KPI mastery. The true potential for firm growth and productivity is unlocked by recognising the nuanced ways KPIs can be tailored to the specific firm DNA.
An invaluable tool to make better decisions is leveraging Dashboard Insights. This sophisticated platform offers real-time data visualisation, enabling quick identification of job statuses, resource allocation, and potential bottlenecks. This is particularly helpful to gain confidence with:
- Pricing and profitability - Firms must understand their costs, particularly in their fixed-fee engagements. Dashboard Insights know that firms struggle to price engagements based on real data. With inflation running hot, Dashboard Insights support firms in repricing their clients and better understanding what service lines are profitable.
- Job & Client Visibility - Firms often struggle to have visibility over work-in-progress and job status. This often results in issues of “pick-up, put down”. Many firms carry WIP with the hope of billing it. Dashboard Insights identify problem areas, and address these before jobs are closed and to help close jobs quicker.
KPIs Sailing to Success
KPIs are somewhat similar to the art of sailing (Bare with us... It’s a metaphor worth sharing). It's about setting the right course, adjusting your sails according to the wind, and, most importantly, leveraging the power of a well-knit crew (and the accounting community!). With KPIs serving as a compass, we navigate the seas of accounting, steering our ships towards profitability, efficiency, and sustainable growth. That sounds alright, doesn’t it?!