How Does Your Firm Stack Up Against the Competition?
Source: AICPA CPA Insider
The following includes excerpts, reproduced with permission, from an article by Blake Christian.
Goal-setting is critically important to establishing personal, department, and firm strategy. Managing partners or department heads must evaluate the past performance of their team and individual team members against their potential performance levels.
The AICPA collects various benchmarking data, as do some accounting publications.
Sample statistics and benchmark measures available from these sources include:
- Net revenue growth rate
- Net revenue per charge hour
- Net revenue per equity partner
- Net revenue per professional
- Net revenue per square foot
- Firm utilization – chargeable vs. total hours
- Percentage billable for professional staff
- Charge hours per professional
- Personnel costs as percentage of revenue
- A/R management – days outstanding
- WIP management – days invested
- Net income as a percentage of revenue
- Net income growth rate
- Net income per charge hour
- Net income per equity partner
- Average equity partner compensation
- Average non-equity partner compensation
- Average professional staff salary
These industry benchmarks will vary by geographic region and firm size, but being able to compare statistics at a partner-by-partner level, as well as against comparable firms, can assist leaders in identifying both risks and opportunities in their firm.
This data can be developed into customized dashboards, which can provide management with important evidence that shows whether or not the firm and its partners are performing below, at, or above their peer groups. In addition, this data can provide line partners with real-time information about where they should be focusing their efforts. These insightful statistics also can be invaluable in evaluating past performance, as well as establishing achievable future partner and firm goals.
For the complete article, read “The benefits of benchmarking for CPA firms.”
From AICPA CPA Insider, December 2, 2013, www.cpa2biz.com.