Benchmarking accountants Down Under
Recent findings by Australasian accounting industry guru Rob Nixon are a wake-up call for the profession. Rob’s 2011 Accountants Benchmark Report looks at KPIs for accounting firms across Australia and New Zealand, surveying some 540 firms. Check out the opening statement:
“I think the glory days of the reactive accountant who makes $350K plus profit per partner are coming to a grinding halt”.
I could not agree more, although I am not sure it will be as rapid as Rob suggests.
In the report Rob introduces a new KPI called the Sustainability Index. This index measures the reliance of a firm on the partners. It says, if we remove the partners, what does the profit look like. The results will astound you. The survey calculates an index of minus $9 – meaning $9 lost per hour contributed. This begs the question, why have staff, an office and so many clients if there is no money to be made from it?
Rob looks at the effect the cloud has on accountants and he likes what he sees (so do we). All the big tick items are mentioned, like being connected, the benefits of real-time and a 30-40% reduction in the time it takes to produce annual and management reports. Like Rob, I agree that we are seeing a commoditization of compliance accounting and firms need to evolve and make management reporting and business improvement the basis of the relationship.
Rob notes that business owners are now far more savvy and aware of evolving technologies and starting to ask the tough questions. Trouble is most firms do not have the right answers, yet. He talks about a sea of sameness in the industry – perhaps its time to act a little different? The impetus to change is certainly happening in other professional services inlcuding financial planning, banking and the insurance industry. These other groups seem to be branching out into the value added services area. While some accountants recognise this, there’s a danger the profession isn’t changing fast enough.
The good news is there are a lot of great firms out there doing really well. One of the benefits of this free report is the ability of accounting firms to benchmark themselves against the better performing firms. I’m sure you’ll find there are ways to improve your practice, there always are.
You can find the full report here. For a snap shot summary of the numbers (in Australian dollars) click the table below: