Accountants

Practice Management - Key Performance Indicators - Efficiency

Practice efficiency is a measure of the capability of the operation to convert client work done into billable time such that the client perceives value in the work. The profitability of a client is a measure of the amount of billable work done per client versus the timely collection of that debt.

	YR 1	YR 2	YR 3	YR 4
Gross Fees (GF) [/1000]	1988.6	2048.4	2125.6	2255.3
Number of Partners	3	3	3	4
Fulltime Equivalents	17	17	17.5	19
Staff Salaries & Wages [/1000]	1153.4	1126.6	1126.6	1172.8
Gross Fees Written Off [WIP]	245.80	292.60	289.90	208.98
Revenue Capacity ($)	2,234.4	2,341.0	2,415.5	2,464.3
Staff Turnover	5.88%	5.88%	11.43%	5.26%
Uncompleted Job Days	19.55	23.27	23.14	20.85
KIP Ratio
Partner/Staff Ratio	5.67	5.67	5.83	4.75
Wages to Gross Fees	58%	55%	53%	52%
GF Written Off	12%	14%	14%	9%
Staff Turnover	5.9%	5.9%	11.4%	5.3%
Uncompleted Job Days	19.55	23.27	23.14	20.85
Template Operating Notes Note: This is an example of a spreadsheet template - the following instructions are for when this template is used in a real spreadsheet environment. Gross Fees & FTEs automatically copy across from Profitability sheet. Revenue capacity, Staff turnover & Uncompleted job days are calculated on the accompanying worksheet. It is worth noting that the actual gross fees fell short of revenue capacity and in fact were only 60% of maximum efficiency.

Calculate Revenue Capacity (Enter your data here!)

The following interactive model allows you to enter your own data and calculate your revenue generation capacity!

To use the model, simply click the "Clear" button and enter your figures into the data entry fields. When you are finished, click the "Calculate" button at the bottom of the table and all blue result fields will then automatically calculate. All calculations will proceed correctly whether you leave a cell blank or enter zero.

Rev. Capacity (Year 4)	No.	Rate ($)	Chrg. Hours	Eff. Rate	Total ($)	100% Efficiency
Principals
Managers
Financial Planners
Seniors
Intermediates
Juniors
Staff Numbers
Partner/Staff Ratio
Revenue Capacity

Workflow Turnaround

In order to maintain effective management control over practice efficiency the analysis and measurement should be done over successive years and on a continuous monthly basis as follows: -

A. Successive Years

B. Monthly workflow turnaround

	YR 1	YR 2	YR 3	YR 4
Total Jobs Started	2345	2465	2583	2786
Total Jobs Completed	2154	2226	2334	2544
Jobs Uncompleted	191	239	249	242
Average Jobs per Day [/240]	9.77	10.27	10.76	11.61
Uncompleted Job Days	19.5	23.3	23.1	20.8

	Jul	Aug	Sep	Oct	Nov	Dev
Total Jobs Started	215	223	148	234	195	254
Total Jobs Completed	198	204	141	213	181	216
Jobs Uncompleted	17	19	7	21	14	38
Ave. Jobs per Day [/22]	9.77	10.14	6.73	10.64	8.86	11.55
Uncompleted Job Days	1.74	1.87	1.04	1.97	1.58	3.29