IPA Data Dive: Measuring Profitability

IPA Data Dive: Measuring Profitability

Excerpted from the 2021 INSIDE Public Accounting (IPA) Firm Administration Benchmarking Report. Now Available.

Measuring profitability beyond the firmwide number can identify strengths and weaknesses inherent in the client base and staff.

Consider the following percentage of firms and their means of tracking profit margin.

  • 67% – measured by client
  • 62% – measured by department
  • 52% – measured by office
  • 48% – measured by staff member

Leaders track many metrics to manage the health of their firm. With whom are these metrics shared? While firms are doing a good job of training their professional staff to look at a client’s financials and assist them as a business advisor, in many firms it’s the case of the cobbler’s son, where non-partners don’t know their own financial numbers.

The following shows the percentage of firms that share key performance indicators with staff beyond the partner group:

  • 62% Net revenue
  • 62% Utilization
  • 62% Realization
  • 42% Net Revenue per Charge Hour
  • 25% Profit Margin
  • 13% Net Income

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