Mastering Practice Management: The 12 Essentials for Efficiency

Effective practice management is essential for the success of any accounting firm. Without a structured approach, firms can easily fall behind on critical tasks, jeopardising profitability and client satisfaction.

The key to thriving in this space is balancing job management with a clear focus on key performance indicators (KPIs) that drive results. Let’s break down the 12 essentials for efficient practice management that will help your firm stay on top of operations.

1. Overdue Jobs
Keeping overdue jobs to under 10% of your total jobs ensures a smoother workflow and prevents bottlenecks. Monitoring this ensures that tasks are delivered on time, maintaining a high level of client satisfaction. Overdue jobs can create a ripple effect, causing disruptions in scheduling and making it harder to allocate resources efficiently. Staying below the 10% threshold keeps operations running smoothly and improves team morale by reducing last-minute pressures. For accounting firms, this also minimises client dissatisfaction from delayed financial reports or tax lodgements, which can severely impact long-term client retention.

2. Proposal Jobs
Managing the number of jobs that have progressed due to signed engagements helps you track the conversion of prospects into clients. A robust engagement process ensures that no opportunities slip through the cracks. By staying on top of proposal jobs, firms can keep their pipeline full and gain a better understanding of their capacity to take on new clients. This proactive approach allows firms to forecast more accurately and adjust resources as needed. In accounting, managing proposal jobs effectively means you are always ready to capitalise on new business opportunities while maintaining quality service for existing clients.

3. Tax Returns Lodged
Setting the expectation that roughly 15% of tax returns will be lodged each month creates capacity for value-add work and relieve the pressure on your team. This steady flow also helps keep clients informed and content with their tax situation. Achieving this will create a buffer which allows you to provide higher-value services like tax planning, advisory, and end-of-year analysis, rather than focusing solely on compliance work. It strengthens client relationships and positions your firm as a proactive partner in their financial success.

4. Average Hourly Rate
Calculating this by dividing the total amount invoiced by billable hours worked provides a strong indicator of your pricing strategy’s effectiveness and overall profitability. Regularly reviewing the average hourly rate allows you to assess whether your firm is pricing services correctly and where adjustments can be made. In an accounting firm, maximising the average hourly rate is crucial for staying competitive while ensuring that the firm remains profitable. It’s also a key metric in determining employee performance and ensuring resources are being optimally allocated.

5. Write Offs/Ons
Keeping a close eye on write-offs and write-ons, by comparing the amount invoiced versus the time accumulated, is critical. This reflects how well your team is managing time and resources. Reducing unnecessary write-offs improves overall profitability, and analysing the reasons behind them helps prevent repeat issues. For accounting firms, managing write-offs means striking a balance between client satisfaction and firm profitability—ensuring jobs are completed efficiently without inflating costs unnecessarily.

6. WIP Jobs
Regularly managing Work in Progress (WIP) jobs ensures you minimise unbilled work that could eventually become unrecoverable. Tracking this monthly helps maintain cash flow and operational efficiency. Unmanaged WIP can lead to significant revenue leakage and disrupt financial forecasts, making it harder to invest in future growth. In accounting, effective WIP management ensures timely billing and provides visibility into how quickly jobs are progressing, which is key to maintaining client trust and avoiding disputes over long delays in invoicing.

7. Month End WIP Days
Reflecting on how many days a job takes to be invoiced is essential. Aiming for a one-day turnaround is a powerful metric to keep WIP under control and ensure timely billing. Reducing WIP days also helps improve cash flow by shortening the revenue cycle. For accounting firms, reducing the gap between job completion and invoicing ensures that resources aren’t tied up in long, drawn-out engagements, and that the firm is compensated for its work promptly.

8. Month End Debtor Days
The number of days between invoicing and payment is a critical cash flow indicator. Firms that can reduce this gap enjoy better liquidity, which is vital for growth. In an accounting firm, keeping debtor days low ensures you aren’t waiting long periods for clients to pay, which directly impacts the firm’s ability to meet its own financial obligations. Proactively managing debtor days also reduces the risk of bad debts.

9. Billing/Revenue – Target vs Actuals
Tracking how your actual revenue stacks up against targets on a monthly basis provides insight into the health of your firm. If there are discrepancies, you can quickly adjust your strategies to stay on track. For accounting firms, comparing target revenue to actuals helps keep the firm focused on growth while also identifying potential shortfalls that might require strategy shifts or additional client engagement efforts.

10. Average Revenue Per Client
Dividing the total amount invoiced by the number of clients gives you a snapshot of the value each client brings to the table. This metric helps guide client segmentation and service prioritisation. In accounting, understanding the revenue contribution of each client helps firms optimise pricing, focus on higher-value clients, and ensure that time isn’t wasted on unprofitable relationships.

11. Client Count
Keeping an eye on how many clients your firm is handling at any given time is essential for understanding resource allocation and forecasting future growth. Managing client count ensures the firm is neither overwhelmed nor underutilised, leading to more predictable workloads and better client service. In accounting, understanding client volume also helps you anticipate hiring needs and ensure there’s always enough capacity to handle peak periods.

12. Group Count
Similarly, tracking the number of client groups helps manage resources efficiently, ensuring that your team is not overwhelmed and clients are receiving the attention they deserve. For accounting firms, group count plays a critical role in capacity planning and ensures that related clients or client groups receive consistent services, which helps build stronger long-term relationships.

Ready to elevate your practice management?

If you’re interested in learning more about how you can improve your firm’s operational efficiency and empower your team, sign up for Project95. This program is designed to help practice managers develop their skills, connect with peers, and achieve success in their roles. Register your interest below to join the movement toward better practice management!

Register for Project95 Here.

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