Banner image for Scaling New Heights 2024, the premier accounting technology conference in the United States. The image features the conference theme and dates.

5 Ways Accounting Firms Should Think About Analytics and Metrics

Carl Coe
Posted by Carl Coe on May 4, 2023 7:40:30 AM

A good accounting service has a strong grasp on data: not just reports and financial documents from their clients, but internal metrics that reflect on how the business is being run. In today’s era where cloud software is available to track almost every different angle of any organization, accounting firms have many options for how to manage and interpret their own relevant data.

Although it’s difficult to offer very specific guidelines for analytics since accounting firms can vary dramatically in size and scope, we have found that the five perspectives below can help offer some clarity into your management of internal business numbers.  

By time period

Accounting firm metrics are typically broken down by quarter or month. When you sort your analytics data by a specific window of time, it gives you a snapshot of how the firm is doing in that timeframe. Understanding your analytics data by time periods is the foundation for iterating on anything in the business – you have to know what was going on in the past before you can plan for the future. Viewing data by time period is also a fairly basic sorting option that almost every major analytics program or software tool has available.

By specific accounts

Organizing and analyzing your company’s metrics by specific accounts you work with helps you identify which (if any) clients are taking up an inordinate amount of resources to complete basic accounting service tasks. One great category to consider when looking at data by individual client accounts is communication frequency. How many times do you have to email, call or message the client before something gets done, and vice versa? 

Communication slowdowns are one of the biggest drivers of inefficiency in the accounting world. If you’re experiencing these or other challenges with a particular client, it’ll likely show up in the data. From there, you can decide how to address the issue and whether it makes sense to continue working together.  

By client type

This approach is similar to the one described above, but instead of drilling down to metrics from individual clients, data is collected and grouped together from one broader type of client. This approach to sorting can help you start to identify the patterns that determine which kinds of companies you should be aiming to work with, and which ones you should avoid. This kind of perspective is particularly important when creating targets for your company’s sales and marketing. Depending on the nature of your business, data on which clients are most profitable can also shape the direction of your main client offerings – products or services.

By employee

Many accounting practice owners and managers might feel like organizing and tracking internal data specific to employees amounts to overanalysis and micromanagement. But we’re not suggesting you closely scrutinize every minute of work billed by your team. Instead, use broad patterns in the data to see where certain members of your team may be more skilled than others. For example, are there certain quarterly accounting tasks that senior team members tend to finish more quickly than newer staff? 

Tracking data by employee (or employee type) will help you get a sense of where you may be able to help your team improve their skills. Whether they’re part-time or full-time, contractors or hired employees, everyone working for your firm will appreciate an opportunity to improve their professional skills. Year after year, “development” is listed as one of the top factors in employee engagement. In other words: using data to help your team get better is just as beneficial to them as it is to your firm.

Compared to targets

This perspective is universally applicable, especially when you have been collecting data on your business for a significant length of time. It’s great to have a lot of data about your firm, but it’s ultimately meaningless if you don’t view it in the context of where you want to be. The exception here is if you just started keeping track of a certain type of data and haven’t yet established a baseline. For example, if you’re using a new CRM tool and want to compare the number of outgoing emails to the number of emails you expected to be sent, it’s probably best to wait at least a few months to gather a meaningful sample size that allows you to set a realistic target.

Final thoughts on how accounting firms should manage data

In the digital era, it’s easy to feel a little overwhelmed by the huge amount of software tools, raw data, and analytics available to help accounting firms stay locked into internal operations. The key is to have the right perspectives and expectations from your data so that you can drill down into what really matters for your team.

One of the best ways to highlight the analytics and metrics that matter for your firm is to incorporate a comprehensive accounting practice management software suite. The best of these tools will let you customize your view of analytics to align with what matters most at your firm so that you can use data for its most important role: guiding your business to effective choices that lead to improved profitability, employee engagement, and client satisfaction.


Sign up and stay plugged into the education, news pieces and information relevant to you.

Subscribe to The Woodard Report today! 

Do you have questions about this article? Email us and let us know >