2-minute read To effectively manage an offshore accounting team, you must first need to have a set of metrics to gauge performance. You can’t, after all, manage what you can’t measure. Tracking key metrics is vital for growth. It is a step forward in achieving your goals.
Are You Meeting Your Objectives?Key performance indicators (KPIs) provide a standard of measurement for efficiency in a firm. They offer the most crucial pieces of information so organisations can see if they are on track in achieving their goals. When setting up your offshore accounting team, it is important to identify your key metrics as early as possible. Make sure that they are aligned with your business goals and to spend enough time to really hone in on what your firm needs. Well-designed metrics can be looked at as tools that can help you navigate towards success. These will give you a clear picture of where your firm is currently at and will assist you in gauging the level of performance of the team as a whole.
What Metrics Should You Use?
Gross profitCalculated by deducting direct fee earning labour from revenue (Revenue – Direct Fee Earning Labour), gross profit will help you determine your costs and how they are eating into your profits. This will help you know if you still have money to cover operational costs. Your gross profit will help you know if you need to make certain changes, like raise fees or cut down on certain costs.
Average hourly rateThe average hourly rate is the total hourly compensation for all employees divided by the number of hours of all team members. This is an important metric for businesses that offer services.
Turnaround timeThis is important because it determines just how efficient a firm’s processes are. Gauging the number of days it takes to do a job from the first time it’s introduced until it’s completed can help understand ways to improve ways on how you do things at the firm. It can also give you a glimpse of just how productive and efficient your teams are.
ConclusionUnderstanding metrics will help you assess how efficient your firm is. Through these, you will be able to identify things that you are doing right and issues that you need to improve on. Make sure that you determine a baseline across key metrics and that you review them monthly, quarterly and annually. Consider the average hourly rate as the number one metric because this pushes the profit and the productivity dial together. Metrics are useful in decision-making. They can minimise the complicated nature of organisational performance and improve performance. Get the latest accounting industry updates in your inbox. Subscribe to The Ledger blog now. Or listen to our podcast series, The Offshore Accountant for first-hand stories on offshoring journey.
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