Performance Metrics to Keep Your Firm Healthy

by Ira S. Rosenbloom, CEO, Optimum Strategies | Dec 29, 2017

While the rest of the firm is crunching numbers for clients, CPA firm administrators are generally charged with creating conditions to achieve certain performance numbers and results. Whether you are looking at revenues or client satisfaction, here are some potent elements of performance measures to be aware of:

  1. Days Receivable – If days receivable – or days sales outstanding (DSO) – is growing, it means clients aren’t paying you as quickly as they used to. This could mean clients are having financial troubles, that they are not happy with your firm or services, or that your internal team is not being effective with collection efforts.
  2. Average Fee Levels – Take a look at average fees over a several year period. Have your fee levels been flat? Increasing? Increasing by more than the rate of inflation? If you are pricing competitively, flat average fees are a sign that the addition of new services would be important to growth and client commitment.
  3. Demographics – Take a look at the average age of your clients. Is there a trend of growth in clients aged 35 to 45? This is a potential indicator of client sustainability.
  4. Client Referrals – Firms should study and track the number of client referrals, as well as the dollar volume those referrals bring. Look at both historical data and trends or patterns, which can be much more impactful. If your client referrals are growing, it suggests the future revenue stream will intensify.
  5. Pipeline – Inventorying your new business leads is important, but only valuable if your firm has parameters in place for mining and moving the sales opportunities to closure. Leads that are not closed out within 30 to 45 days are not likely to be realistic sources of new business, absent some special circumstances.
  6. Social Media and Website – How is the traffic to your firm’s website? Are you increasing the number of people who follow your firm’s page on LinkedIn? Do you know how to find out?
  7. Project Turnaround Time – Keeping an eye on budgeting and scheduling software specifically to watch for efficiency metrics such as turnaround time can help the firm streamline processes, save money, and maintain client satisfaction.

Tracking the right performance indicators and addressing what they reveal is going to make a big impact on culture and communication, and the level of your firm’s health.


Ira S. Rosenbloom

Ira S. Rosenbloom

Ira S. Rosenbloom, CEO, Optimum Strategies improves the performance, profitability and succession options of small- to mid-sized accounting practices across the Mid-Atlantic region. With targeted expertise in accounting practice management and firm mergers and acquisitions, Optimum Strategies is a trusted leader and consultant.

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