Three Kinds of Firm Data Worth Capturing

Your firm’s business model is built on the answers to three questions: who you serve, what you sell them, and how you deliver it. When it comes to data insights, most accounting firms can pull a report on the second one, but numbers on the first and third are harder to come by. And those two happen to be the basis of advisory.

If you've been discussing advisory for a few years without much to show for it, understanding who you serve and how you deliver your service offerings can make all the difference. But both have to rest on a solid foundation of easily accessible data about your firm in order to be truly actionable, let alone transformative.

Firm productivity data

From its first introduction into the market more than 25 years ago, practice management software has been good at four things: time, billing, projects, and tasks. If you remember the old way of doing things (the static spreadsheets of the past vs. today’s dynamic dashboards), you appreciate how easy it is today to see how many hours go into a client, what you realize against those hours, what you’re actually billing, and which work has been finished versus still sitting open.

Those four remain the backbone of any set of firm metrics worth tracking. And yet, as of 2024, only 46% of accounting firms have access to an at-a-glance dashboard in a practice management solution. The others rely on fragmented, legacy systems or spreadsheets for daily workflow management.

Technology data

Do you know which general ledger each of your clients is using? QuickBooks Online, or a new alternative? This information lives inside the head of someone in your firm, or perhaps multiple someones. But have you thought to capture it somewhere and make it centrally accessible in your client management system?

You may have never thought of keeping a record of the technology your clients rely on, because it doesn’t seem like it would count as “data.” But this information maps directly onto the "how you deliver your services" part of your business model.

You’ve presumably decided which tools your firm does and does not want to support, and you can't move a single client onto your preferred software solutions until somebody has bothered to record what they're running today.

Imagine handing a staff member a list of every client currently sitting outside your supported tech stack. That’s a migration plan. The firm that finishes that migration will run much more efficiently than the one still propping up whatever each client happened to buy years ago, not to mention the one that couldn’t tell you which clients are using which systems.

Business soft data

The third category of data you should be capturing has a tendency to swirl around most firms without ever quite landing anywhere concrete. You know a given client is a partnership, since that much shows up on the return. But does that partnership have a buy-sell agreement, and if it does, has anybody funded it?

Somebody at your firm probably knows the answer, but unless it’s been added to a data field, you can't sort it, filter it, or run a report against it. So it never gets captured, it never gets reported on, and nobody ever acts on it.

Talk about a missed opportunity. Imagine the impact such data could have if only it were captured alongside the rest of the client’s data.

Finding your ideal clients in the data

Here's where the capturing starts to pay for itself. A partnership with no buy-sell agreement is a chance to make that client better. An agreement nobody funded is a second chance at the same thing, and you’ll never notice either opportunity if the data doesn’t get saved in the first place.

Pair that with what you already know about profitability, and you can begin doing the thing most firms only talk about, which is curating the client list deliberately. Which clients actually make money for you? Which ones match the work you want to be doing more of?

Time is a finite resource, and the overwhelming majority of it goes to compliance work, simply because compliance is what the calendar demands of you. Meanwhile, what clients want is for the firm to be thinking about them and serving them holistically. Those two things reconcile only once a firm has both the hours and the recorded information to work that way.

From recorded data to advisory services

I'd argue that advisory stalls at most firms for reasons that have less to do with expertise than with recall. It's easy to fall into the trap of treating advisory as a skills problem, and firms spend real money training their team on things they may not especially need.

Better Everyday co-founder, John Mitchell, shared a story about an accountant friend of his who had always felt “a mile wide and an inch deep in his firm,” until he started leveraging data in a more holistic way. “I've been doing this a really long time,” the accountant told Mitchell, “and I feel re-energized by going deeper.”

Mitchell’s verdict? “Capturing the data is the gap between being able to pull off advisory services and just talking about it.” And I’d add this: Everything your team understands about a client deserves to live somewhere other than one person's memory.

Data floats around a practice like something invisible, and giving it a single place to land can be the one thing that separates the firms that successfully deliver advisory services from those still thinking about it.

Sponsored Content: This article is generously brought to you by one of our valued sponsors. Their support enables us to continue delivering expert insights and the latest industry trends to our dedicated community of accounting professionals.