How to use KPIs to strengthen your advisory services

KPIs measure progress towards specific goals. You can use them to help your clients run their businesses better.

An accounting firm owner looking at  KPIs on their computer

What do your clients want?

Try to think from the perspective of your clients. What are their primary goals? What are they striving to achieve?

All of them want to improve their business operations and become more competitive. You can help them with strategic advice. In fact, your clients expect you to help them.

It's great to be considered a financial expert by your clients. But if you're going to help them become more profitable, you'll need to offer more than just basic services.

Whether you're an accountant or a bookkeeper, you'll need to offer advisory services. This means setting goals with your clients and helping them achieve those goals over time.

To offer effective advisory services, you'll need to know your clients' businesses inside out. KPIs can help you do that.

What are KPIs?

A KPI is a key performance indicator. It's a way of measuring the important aspects of a business. Different areas of a business will use KPIs for different purposes. For example:

  • Production managers may focus on project completion dates, deadlines, quotas and costs
  • Customer service managers would be interested in call times, ticket completions and service ratings
  • Sales team managers are likely to focus on conversion rates, sales per employee, and revenue per sale

So KPIs are core statistics. They can help measure progress towards business goals – whatever those goals may be.

The benefits of KPIs

Key performance indicators have lots of advantages over other ways of measuring business performance. For example:

  • They simplify complex data into easily understood metrics
  • They help decision makers assess the current situation – and act on it
  • They enhance employee focus as a KPI is a clear, obvious target that anyone can understand and aim for
  • They can reduce conflict – at least sometimes – as it's hard to argue with solid numbers compared with opinions or theories
  • They clarify job descriptions – employees given specific KPIs are less likely to be confused about their roles

All of this is great for the business. But KPIs are good for your accounting or bookkeeping firm too:

  • They help you identify specific areas of your clients' businesses that need help
  • You can provide more value for your clients, by spending time acting on data instead of collecting it
  • You can demonstrate clear, quantitative improvements to your clients' operations

Which KPIs should you monitor?

Your clients' businesses will all be different and many will have their own internal KPIs. They will measure different areas of their business, as we described earlier. Luckily, you don't need to worry about those.

That's because there are some KPIs that you can apply to every business. Here are some that your accounting or bookkeeping firm can use:

  • Net profit (total revenue minus total expenses): The bottom line for a business. It shows how much revenue is left after all expenses have been paid.
  • Net profit margin (net profit divided by total revenue): Shows how effective a business is at generating profit from revenue.
  • Gross profit margin (revenue minus cost of goods sold, divided by revenue): Helps determine if the business is pricing its goods and services properly.
  • Sales growth (comparison of sales figures over time periods): Gives clues about the rate of growth of an organization. It's wise to include factors such as revenue per salesperson and year-over-year comparisons.
  • Current ratio (current assets divided by current liabilities): Shows the overall solvency of a business – in other words, how much more it's earning than spending.
  • Receivables aging (chronological report of unpaid invoices): Useful for diagnosing cash flow issues. Receivables are classed as assets, except any that have to be written off for non payment.
  • Performance of service or product: Sales and revenue can vary greatly from one product or service to another. So it's important to identify where sales growth is taking place. Selling a greater number of less profitable items isn't always good news. That's especially true if it's at the expense of selling more profitable items. This KPI also helps you rank products in terms of sales revenue performance.
  • Sales target: Measures how many sales of a product or service occur during a specific time period. It's best if individual targets are set for specific products or services. Results can be compared with sales goals and past performance.
  • Staff productivity: It doesn't matter whether it's salespeople or other staff members. This KPI helps you track the contribution of each employee to business revenue.

Make sense of KPIs

With so many KPIs to take into account, you'll need fast access to them. Having this information at your fingertips is a powerful resource. It's good for business owners and for their accountants or bookkeepers.

What you need is a dashboard. This is a display that will give you all the important client KPIs in one place. Good accounting software can help you here.

Dashboards give you an overview of your clients' financials. But they can do more than that. They can also give you:

  • quick access to any KPIs you select, including recent sales and expense activity
  • the ability to drill down easily and view specific transaction details
  • customizable interfaces, so each user can change their dashboard to include KPIs that are relevant to them

Check your KPIs from anywhere

It makes sense to access KPIs using cloud-based accounting software. Cloud software is online, so you can access it from anywhere using a laptop or other mobile device. It has other advantages for bookkeepers and accountants:

  • Real-time financial data and bank account balances
  • Automated data entry, so you don't have to waste time on repetitive, error-prone work
  • Better drill-down and reporting activity across a wide variety of KPIs
  • Easy-to-use sharing tools so you can collaborate with your client

KPIs and cloud accounting software complement each other perfectly. You could still use one without the other, of course. But together they give you accurate insight into your clients' financial situations.

Convince your clients to use KPIs

Many of your clients will already use KPIs internally as they're a popular method of measuring performance. Some of your clients will also have basic metrics about their business, thanks to their accounting dashboards.

If your clients are familiar with this type of performance measurement it’s a good idea to have a plan. Here’s how you could persuade them to use KPIs:

  • When: Whenever you're next scheduled to meet or communicate with your client. It makes sense to get started as soon as possible. Plant the idea of KPIs in your clients' minds as soon as you can.
  • Where: Client meetings are a great way to do it. Face-to-face meetings let your client ask questions and understand the benefits KPIs can offer. Also, meeting your clients helps strengthen your relationships with them which increases trust.
  • How: Take your latest client report with you. Use the data in the report to pull out some example KPIs and present them to your client. Explain how these KPIs are measurable, achievable and have a fundamental impact on the business. Use a few charts or graphs, and compare the past with the present – and the possible future.

KPIs give you insight that can be acted upon

Getting insight into your clients' businesses is one thing. Getting them to act on that insight is quite another. If you use KPIs you can do both.

KPIs are measurable and quantifiable, so it's easy to produce numbers that show how well (or poorly) a business is performing. And KPIs are well established and used commonly in business.

Offering advisory services means you will become more valuable to your clients. You can tell them exactly where they are today, where they need to be, and how to get there. Using KPIs, your accounting or bookkeeping firm can take its services to the next level.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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