Most firms either track nothing meaningful or drown in data no one acts on. The useful middle is a short list of numbers that genuinely change what you do next — and, not coincidentally, the same numbers a buyer will scrutinise if you ever sell. Here's the set worth watching, what each tells you, how to calculate the two most misunderstood, and a sensible target to aim at.
| KPI | What it tells you | A sensible aim |
|---|---|---|
| GRF growth | Whether your recurring base is growing | Positive, ahead of inflation |
| Recurring % | How predictable your income is | The higher the better; 80%+ is strong |
| Top-10 concentration | Client dependency risk | No single client dominating; watch above ~10% |
| Recovery rate | Billed value vs value of work done | 90%+ on compliance |
| Lockup (WIP + debtor days) | How long cash is tied up in the workflow | Lower is better; trend it down |
| Utilisation | Productive time across the team | Healthy, not heroic (watch for burnout) |
| Revenue per head | Productivity and pricing | Rising over time |
| Client retention | The quiet driver of everything else | 95%+ of fees retained |
Targets are rules of thumb — set your own against your firm's mix and market.
Revenue quality: the foundation
GRF growth, recurring percentage and client concentration together describe the quality of your income — how much there is, how predictable it is, and how safe. These are the numbers a buyer cares about most, because they determine the value of the firm. A book that's growing, highly recurring and well-spread is a fundamentally healthier and more valuable business than one that's flat, project-heavy and concentrated.
How to calculate the two most misunderstood
Recovery rate = fees billed ÷ the value of the time and work done, as a percentage. Consistently below ~90% on compliance means you're either under-pricing or over-servicing — both fixable. Lockup = (WIP + debtors) ÷ annual fees × 365, giving the number of days' fees tied up before you're paid. High lockup is cash sitting in your workflow and your debtor ledger instead of your bank account — and often a warning sign of billing or delivery problems.
People and clients
Revenue per head is a simple, powerful read on productivity and pricing — if it's flat while costs rise, something needs to change. Utilisation matters, but chase it carefully: heroic utilisation is how good people burn out and leave. And client retention is the quiet driver of everything — a firm that keeps 95%+ of fees compounds; one that leaks clients runs to stand still.
Don't track what you won't act on
A KPI only earns its place if it changes behaviour. Pick the five or six above, review them monthly, and let them drive real decisions: re-price where recovery is weak, chase where lockup is high, diversify where concentration is rising, and invest where growth is stalling. A metric you look at but never act on is just decoration.
From numbers to decisions
That last step — turning figures into decisions on pricing, capacity and growth — is the real job of a finance director. It's exactly what a good FD does for a firm owner. Better numbers also mean a more valuable firm if you ever sell, and they're the evidence base for pricing your advisory and lifting value.
Frequently asked questions
What KPIs should an accountancy practice track?
A short, actionable set: gross recurring fees and their growth, recurring percentage, top-10 client concentration, recovery rate, lockup (WIP + debtor days), utilisation, revenue per head and client retention. These describe income quality, cash health and productivity.
How do I calculate lockup?
Lockup = (WIP + debtors) ÷ annual fees × 365. It's the number of days' fees tied up between doing the work and being paid. Lower is better; high lockup ties up cash and can signal billing or delivery problems.
What is a good recovery rate for a practice?
Broadly 90%+ on compliance work. Recovery rate is fees billed divided by the value of work done. Consistently below that usually means under-pricing or over-servicing — both fixable.
Why do KPIs matter when selling a practice?
Because the numbers that describe income quality — recurring percentage, concentration, retention, growth — are exactly what a buyer scrutinises to set the multiple. Strong, well-tracked KPIs support a higher, more defensible valuation.
Thinking about your next chapter?
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