Harnessing the Power of KPIs: A Guide for CPA Firm Owners

By Julie Smith and Glenn Dunlap

As a CPA firm owner, you understand the importance of delivering high-value insights to your clients. One of the most effective ways to do this is by discussing Key Performance Indicators (KPIs) and industry benchmarks. This not only provides your clients with a clearer understanding of their business performance but also strengthens your advisory relationship with them. 

The Role of KPIs in Business Advisory Services

KPIs serve as a compass, guiding businesses towards their goals. They provide a quantifiable measure of performance, allowing businesses to assess their progress and make informed decisions. For CPA firm owners, understanding and discussing these KPIs with clients is a crucial part of the advisory process.

For instance, consider a business owner who is unsure about their Accounts Receivable (AR) days. If their AR is at 70 days while their industry peers average 35, it could be a potential red flag. However, if their cost of goods sold or compensation is significantly higher than the industry average, the 70-day AR might be financially acceptable. Without benchmarking against industry data, it’s challenging to understand what these numbers truly mean. 

Leverage Technology

Compiling benchmarks, analyzing KPIs, and building forecasts used to be extremely time consuming without the right technology. Now there are solutions like Peerview Data that automate this process and turn your client’s financial data into actionable insights, so CPAs and advisors can focus on strategic planning with the client rather than number crunching. 

In addition to providing a standardized chart of accounts by industry, Peerview Data also enables you to model ‘what if’ scenarios, helping your clients understand potential outcomes of different business decisions. For example, if a business aims to reduce material costs, you can model the effect of this change over time, providing your client with a clear picture of the potential impact.

The Importance of Mid-Year and Fourth Quarter Meetings

Mid-year and fourth quarter meetings are ideal opportunities to review your clients’ KPIs and benchmark them against industry standards. These meetings are part of being proactive, allowing you to identify gaps or areas for improvement and discuss strategies to address them. 

As a business advisor, part of your role is to help business owners stress test their businesses under potential future conditions. What if you reduce staff? What if raw material costs rise 10%? These are key conversations to have during planning meetings.

The Power of Insights

At the end of the day, benchmarking gives you insights that have value for clients. And insights lead to better decisions. 

As a CPA firm owner, your role extends beyond just providing accounting services. You are a business advisor, a guide who helps clients navigate the complex world of business performance and decision-making. By harnessing the power of KPIs and utilizing tools like Peerview Data, you can deliver higher value to your clients, strengthen your advisory relationships, and ultimately, run a more successful and profitable CPA firm.

The EmpowerCPA™ Approach

EmpowerCPA™ is a proven system that helps CPA firms achieve operational excellence and higher profitability. It empowers CPA firm owners to run their firms like a business. By implementing the EmpowerCPA™ POWER model, you align your team with your vision, implement successful changes, and leverage tools like Peerview Data to improve operational efficiency and profitability.

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