The nation’s accounting firms are growing more slowly this year than in 2017, according to INSIDE Public Accounting (IPA) 29th annual National Benchmarking Report.
The report, the largest of its kind, is based on survey results from 532 North American accounting firms with fiscal year ends from September 2017 to May 2018.
“While revenue growth has slowed, firms are recognizing that their tried-and-true business models needs a revamp,” says IPA publisher Michael Platt. “Firm leaders are therefore investing in new technologies and services now to help their clients adapt to a business environment that has never undergone such rapid change.”
The report analyzes data from 198 firms under $10 million, 254 firms between $10 million and $50 million, and 80 firms above $50 million in net revenue.
INSIDE Public Accounting’s National Benchmarking Report provides detailed information in 80+ pages of tables presented in nine different revenue bands and regional breakouts so firms can easily benchmark their performance against other similar-sized firms.
- Top-line revenue organic growth fell this year to 4.6% and all growth fell to 6.6%, down from 2017 levels of 6.3% and 8.3% respectively.
- Merger activity remains strong, with 53% of firms above $50 million reporting at least one merger last year. Across all firms, 22% reported at least one merger, with the most merger activity in the Great Lakes region, with 34% of this region acquiring at least one firm last year.
- Billing rates are up for equity partners this year by 3.8% to an average of $358 for all firms. The largest increase was seen in the Great Lakes and Northeast, averaging $339 and $374 per hour, respectively.
- Net income growth averages slowed again to 5.0% for all firms from 5.2% in 2017. Factoring in the effects of mergers, the all-growth rate slowed to 5.8%, down from 6.4% in 2017.
- The average equity partner compensation for all firms is 2.2 times the average non-equity partner compensation.
- The average percentage of female ownership this reporting year is at 19.4%, up from 18.9% in 2017. Among firms above $50 million, the average is 16.5%, up from 15.9% last year.
- Of the more than 10,000 equity partners reported by participating firms, 181, or just under 2.0%, work a part-time or alternative schedule.
- The average percentage of total professional staff with a CPA license continues to inch downward, as the possibilities for non-CPA professionals expand due to more non-traditional services. Some staff simply have not yet sat for the CPA exam, but across all firms, CPAs now make up an average of 56.8% of all professional staff, including all partners.
The IPA National Benchmarking Report is used by managing partners, firm leaders, marketers, attorneys, firm administrators and business development directors to compare their firm’s performance against others, and to uncover trends, ideas and techniques to improve operations.
The 2018 INSIDE Public Accounting National Benchmarking Report covers partner compensation, administrative salaries, revenue by service line, partner workloads, marketing costs, training requirements, realization, retirement plans and dozens of other metrics – both by revenue band and region of the country.
For additional insight into the results of the 2018 IPA National Benchmarking Report, access a complimentary copy of the executive summary or order your 2018 Benchmarking Reports.