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VIEWPOINT: What are your 2014 key performance indicators?


Traditional KPIs include chargeable time, billing recovery rates, bills raised and the quantum of lock up.”

Implementing key performance indicators to grow your profitability

Business financial progress can be tracked by management accounts, but what can accountancy business owners monitor that will directly result in profit improvement?

A key performance indicator (KPI) is a selected measure that provides visibility into the performance of a business, enabling decision-makers to take action in achieving better outcomes. Traditional KPIs include chargeable time, billing recovery rates, bills raised and the quantum of lock up.

Here are some options for you to factor into your management as 2014 beckons:

  • Average fee per client: Many engage new clients without applying any new client selection criteria, but the more profitable firms have a client selection process. One component is determined by having an initial minimum fee policy and then seeking to offer additional services to clients. What is your average fee per client? How do you plan to increase this?
  • Timeliness of service: Often the garage returns a car after a routine service on the same day. The restaurateur provides your first course, hopefully, within 20 minutes of ordering. But how long do clients wait for their accounts? I have worked with a number of firms that have monitored the total time taken from the time the records were made available to when work was completed. One firm recorded their percentage of time on the job at 65% and in six months reduced this to 35%. Remember – you manage what you monitor. Improve timeliness and you will reduce lock up.
  • Tax saved: Our market proposition tells clients that we save tax. Why not track the tax you save clients – maybe you are saving your clients more than R10 million? This is, after all, one of the main reasons clients pay fees – believing they are not paying one rand more than is necessary.
  • Workload: Owners should be delivering somewhere in the region of a minimum of 2 400 hours a year. Of these, 1 200 being chargeable helps deliver good bottom line results.
  • Hours managed per firm owner: A well-managed firm should have a minimum of 7 000 chargeable staff hours to manage per firm owner.

Will managing these KPIs improve profitability? Yes, yes, yes.

And finally, what plans do you have in place in your firm? Here are a suggested range of plans and policies for 2014:

  • A strategic plan, including service development
  • A marketing plan
  • A disaster recovery plan
  • Core values
  • A partner code of conduct

Author: Mark Lloydbottom


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