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Playbook

Accounting firm KPIs: read your numbers every month

For owners who see revenue but not what is behind it. You finish with the handful of numbers worth watching, a benchmark to read them against, and a monthly habit.

At a glance

  • 3 steps
  • 2 min to read
  • An afternoon to put in place
  • 1 template included

What you’ll walk away with

  • A short list of numbers, each with a written definition and a source
  • Your two weakest numbers, read against a benchmark
  • Twelve months of numbers side by side, and a monthly review in the diary

Learning check · before you start

What do you already have in place?

A few quick questions, so you can skip the steps you have already done. Each one has a line explaining what it means. Not sure, or never heard of it? Choose “Not yet / not sure”: that is where most firms start, and the playbook walks you through it.

  1. Do you track a short list of numbers about how your firm is doing, beyond revenue and profit?

    For example revenue per staff member, how many days it takes to turn work into cash (lockup), or how many clients you keep each year. Most firms track five to nine, each written down so it is measured the same way every month.

  2. Have you compared those numbers with other firms like yours?

    A benchmark is a published average for firms of a similar size and region, such as an industry survey. It shows whether a number is normal or a problem.

  3. Do you already sit down once a month to look at those numbers?

    A booked hour each month, looking at the same numbers from the same reports, and leaving with one thing to change.

  1. Step 1: Pick the numbers that matter

    Done when: Each number has a written definition and a source in your systems.

    Your task choose five to nine numbers to track (your key performance indicators, or KPIs), write a definition and a source report for each, and record the definitions before you enter any figures.

    How to do it, and what to read

    Choose five to nine numbers and write a definition for each, so this month is measured the same way as last month. A starting list: revenue per full-time equivalent, lockup (work in progress days plus debtor days), realisation, utilisation, client retention and profit after a notional wage for you. Next to each, note the report it comes from, such as the work in progress report in your practice management system or aged receivables in your ledger. Enter the definitions in the KPI tracker before you enter a single number.

    Learning check

    What would you do? Pick one; every answer is explained.

    You are setting up a spreadsheet to track your firm's key numbers each month, such as revenue per person and lockup (how long money is tied up in unbilled work and unpaid invoices). What goes in first?
    Lockup is how many days of work sit unbilled or unpaid: work in progress days plus debtor days. Your manager calculated it one way last month and a different way this month. What fixes it?
    You have chosen the handful of numbers your firm will track each month, such as lockup and revenue per person. What do you write next to each one?

  1. Step 2: Compare against a benchmark

    Done when: You know which two numbers are furthest from the benchmark.

    Your task put each of your numbers next to a published benchmark for similar firms, pick the two furthest away, and write one line on why for each.

    How to do it, and what to read

    Find a published benchmark for firms of your size and region, and read its definitions before its numbers: firms count lockup and capacity differently, so a gap can turn out to be a definition. Put your figure next to the benchmark for each number. Pick the two furthest away and write one line on why, in your own words. Say your debtor days sit well above the benchmark: the cause might be invoicing late, loose payment terms or slow chasing, and each one has a different fix.

    Learning check

    What would you do? Pick one; every answer is explained.

    You compare your firm's numbers with a published benchmark, an industry survey of similar firms. Your lockup (the days of work sitting unbilled or unpaid) looks far worse than the benchmark. What do you check first?
    Debtor days measure how long clients take to pay your invoices. Yours sit well above the benchmark for similar firms, and you have checked the definitions match. What do you write down?
    You want to see how your firm's numbers, such as revenue per person and lockup, compare with other firms. Which benchmark should you use?

  2. Step 3: Make it a monthly habit

    Done when: A monthly review is in the diary with the one-page view attached.

    Your task book an hour on the same working day each month, pull the numbers from the same reports, and keep twelve months side by side.

    How to do it, and what to read

    Pull the numbers on the same working day each month, from the same reports, and keep twelve months side by side in the tracker: the trend tells you more than any one month. Book an hour for the review and keep it. Each number has a decision it can trigger, such as invoicing on completion when work in progress days rise, or rescoping your lowest-realisation clients at renewal. Leave every review with one change to make, and check at the next one whether it moved the number.

    Learning check

    What would you do? Pick one; every answer is explained.

    Utilisation is the share of your team's paid hours spent on client work. You track it monthly, and this month it dips. What do you do?
    Work in progress (WIP) days measure how long work sits before you bill it. Yours have risen for three months in a row. Which change is most likely to bring them down?
    You are finishing your monthly hour reviewing the firm's key numbers. What should you leave with?

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Your one-page summary

Your answers, choices and decisions, on one page

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Accounting firm KPI tracker

The KPI definitions and a 12-month tracker sheet. Excel (.xlsx).

Get the template

Frequently asked questions

Which KPIs matter most for an accounting firm?

A short list you will actually read: revenue per person, lockup (work in progress plus debtors), write-offs, client profitability and capacity. The benchmarks guide explains each one.

How do I compare my firm with others?

Use a published benchmark for firms of a similar size and region, and compare the definitions before the numbers: firms measure lockup and capacity differently.

How often should I look at the numbers?

Monthly, on the same day, with one page and one decision. Quarterly is too slow to catch a lockup problem before it reaches cash.

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