4 KPIs Every Bookkeeper Should Know

I've been doing a lot of work with my mentoring students and members surrounding KPI tracking recently. Helping them to figure out what success really means to them, determine what metrics are the most valuable to their business, look at how to benchmark them, set objectives, and create action plans relating to how milestones are going to be achieved. 

Over and above standard KPIs like revenue, cashflow and profit, some of the other critical numbers we look at include:

Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is the predictable revenue that you expect to receive each month on a recurring basis. This revenue can include income received from your clients or from other streams, such as software subscriptions or referrals.

Revenue is normalised into monthly amounts so you can gain a smooth, consistent and predictable look at recurring revenue trends in your business.

Average Revenue Per Client (ARPC) 

Average Revenue Per Client (ARPC) measures the average amount of revenue generated by each client. It is a useful metric for businesses looking to improve their profitability, identify opportunities for growth, and increase the value they offer to clients.

Profit Per Client (PPC)

Profit Per Client measures the profit generated by each individual client. To calculate PPC, determine the revenue generated from the client, and then subtract the direct costs associated with servicing them.

Team Productivity

Measuring team and employee productivity has become a critical (and somewhat controversial) KPI for bookkeeping and accounting businesses in recent years. With many employers now adopting a remote workforce, it can be challenging to keep track of employee productivity and ensure that work is being completed efficiently and effectively. Additionally, with many practices adopting fixed fee or value-based pricing strategies, measuring employee productivity is critical in order to effectively manage scope creep and profitability.

There are some in the industry who believe that we should do away with time tracking. And while I believe in establishing a business based on value, rather than time, based mindset, I also think that we still need to be able to measure the productivity of our team as a marker of profitability. And that involves tracking where and how time (one of our biggest expenses as a service provider) is being spent in our organisation.

Tracking and Dashboarding KPIs in Your Bookkeeping Business

The other important factor to consider is how these metrics are going to be monitored and reported on in your business.

There is no point doing all that leg work to determine the critical numbers behind your business, set goals, and put together action plans, if you don't have the means to track progress and remain accountable. Many accounting and finance solutions provide KPI dashboard features, and there are some great business performance solutions available (like Fathom, Calxa, or Power BI) that you can integrate.

I'm a huge believer in utilising technology to integrate and automate your systems - it is the key to unlocking true operational efficiencies, productivity, and profitability. Though finding the right system for you does take a little time, and it comes at a cost.

If you're not quite ready to take the leap into automation just yet, don't let this get in the way of gaining clarity of what's really going on in your business. You can create simple and effective KPI trackers and dashboards using excel, like the one I shared with Academy members this week. These are easy to set up, customise and update, and will help you stay across the key drivers behind your business until you're ready to go down the automation road.

If you have any questions about KPI tracking or dashboards, feel free to send me a DM or leave a comment.