The most comprehensive report on the state of the nation’s largest public accounting firms has been released by INSIDE Public Accounting (IPA). IPA’s 30th annual National Practice Management Benchmarking Report is the largest of its kind, covering firms with fiscal year-ends from June 2019 to May 2020 and boasting a 90% return rate of participating firms.
The report highlights in-depth data from more than 500 accounting firms across the U.S., including 165 firms under $10 million, 257 firms between $10 million and $50 million, and 89 firms above $50 million in net revenue.
“The trends identified in this report represent some seismic shifts in the accounting profession: Technology is advancing. Staffing models are changing. Partnerships are evolving. Pricing models are shifting. Services are expanding. Business models are transforming,” says Michael Platt, principal with IPA. “And we believe that many of the trends discussed throughout the report are accelerating due to the effects of COVID-19.”
THANK YOU TO THIS YEAR’S REPORT SPONSORS!
ADP / ALLIOTT GLOBAL ALLIANCE / MAKOSI / SAPRO / STAR
Some key highlights from the 2020 IPA National Practice Management Benchmarking Report:
- The average billing rate for equity partners is $376 for all participating firms, up slightly from the average last year. Partner rates now exceed $500 for the largest ($150+ million) firms. Rates are highest in the Northeast ($396) and in the West ($395).
- At 28.4%, net income as a percentage of net revenue continues to drop, and organic growth averaged 6.1% for all non-Big 4 firms.
- Overall, average equity partner compensation for all non-Big 4 firms is up $6,500 from last year, now at $502,417, but that varies significantly based on firm size. Professional staff compensation remains steady at an average of $83,014.
- Staff turnover inched up again this reporting year – to an average of 13.7% across all firms – with increases seen in every region of the country. While the largest firms saw turnover remain steady, the largest increase in turnover percentage comes from firms in the $10 milllion to $30 million range.
- Revenue per full-time equivalent (FTE) (including partners, professional staff and administrative staff) now exceeds $225,000 in 18% of reporting firms. As has been the case for many years, this year revenue per FTE is higher in the Northeast than the Great Lakes region by $18,500.
IPA’s 2020 National Practice Management Benchmarking Report provides detailed information in 80+ pages of tables broken out in nine revenue bands and five regional breakouts so readers can easily benchmark their performance against similar-sized firms and within their region of the country.
Understanding practice management benchmarks keeps leaders looking forward. Benchmarking helps leaders evaluate their firm operations compared to those of their competition. Key performance indicators highlight areas for improving processes, considering new approaches, upgrading technologies, increasing profits, and strengthening client and staff loyalty.
For additional insight into the results of the report, access a complimentary executive summary.
IPA also publishes three internal practice management reports covering human resources, firm administration and information technology – all diving deeper into data and best practices within the profession. For more details on these reports, visit our website.