By Gabriela Cubeiro.
Now that the 2026 tax season has concluded, many forward-looking accounting firms are taking time to evaluate performance and identify opportunities to improve operations.
For most firms, that evaluation starts with revenue – how much money did we bring in? While revenue growth is important, it does not always provide a complete picture of firm health. It is increasingly common to see firms growing in revenue while experiencing pressure on margins, slower collections, and increased operational strain. In some cases, firms are growing revenue, but their balance sheets aren’t showing a similar upward trajectory
To get a true understanding of firm performance, leaders must look beyond revenue growth and dive deeper into other aspects that might be impacting their operating efficiency. Here are five operational benchmarks that top-performing firms use as a yardstick to measure success: profitability, time, cash flow, data, and technology.
Benchmark 1: Net Profit Margin
When business is slow, firms diligently watch every dollar earned and spent. But when billings increase, such as around tax season, firms tend to overlook changes in cost structure, pricing alignment, or the amount of work required to deliver services. Over time, this can lead to profit leakage, which firms may not see if they solely track revenue.
Net profit margin provides a more complete view. It reflects not only revenue, but also how effectively a firm manages pricing, delivery, and cost control. Top-performing firms review profitability consistently — quarter over quarter and year over year — to ensure that revenue growth is translating into improved financial outcomes.
Firms should also assess whether they are consistently capturing the full value of the work performed. Scope creep, underbilling, or misaligned pricing can erode margins over time, even when revenue appears strong. Pricing is often a contributing factor. Firms that have not revisited pricing in recent years may find that they are no longer aligned with market rates, particularly as operating costs increase.
Benchmark 2: Utilization Rate
Utilization shows how much time is spent on high-value client work versus low-value admin and busywork. While firms have historically targeted 75% utilization, recent data from SPI Research shows firm utilization is actually closer to 68%.
Firms need to treat utilization as a performance benchmark, not a byproduct. According to the same SPI report, the profitability “sweet spot” typically falls in the 70%-80% utilization range. To achieve this, many firms use dedicated time-tracking tools to capture billable hours accurately, automate timesheets, and log time by client or service line. That visibility helps leaders rebalance workloads and make hiring and staffing decisions based on data rather than assumptions.
Utilization can look strong at a glance, but deeper analysis often reveals gaps. Without consistent tracking, firms can miss early signs of burnout, bottlenecks, and revenue leakage.
Top-performing firms use utilization as a measure of alignment for the right people doing the right work at the right time.
Benchmark 3: Days Sales Outstanding (DSO) and Cash Flow
Profit means little without cash flow to back it up. Late client payments slow operations, limit flexibility, and increase pressure and anxiety on firm leaders. Yet many firms still accept long payment cycles as standard practice, tying up working capital and masking deeper issues like inconsistent billing practices or weak follow-up.
Top-quartile firms treat collections as a discipline. They invoice faster, set clear payment expectations, and hold teams accountable for timely collections. Research from the American Productivity and Quality Center (APQC) shows that top-quartile performers on DSO collect invoices in about 30 days or less, compared with around 38 days for median firms and 46 days or more for bottom-quartile performers.
Many firms that focus on minimizing payment processing costs may underestimate the operational and cash-flow impact of delayed collections. In practice, the cost of waiting to get paid is often greater than the cost of processing the payment itself.
Client expectations have also shifted. Many clients prioritize convenience and speed, and may delay payment when processes are manual or require additional effort. Firms that make it easier to pay often see faster collections, improved client experience, and more predictable cash flow.
Benchmark 4: Real-Time Visibility and Performance Management
Many firms rely on periodic reporting or informal assessments to evaluate performance. In practice, this often leads to decisions based on incomplete or outdated information. Worse, some firms rely heavily on experience and intuition rather than consistently reviewing key metrics, which can overstate or misrepresent actual business performance.
Top-performing firms take a more structured approach. They identify a small number of meaningful metrics and review them regularly.Importantly, they focus on consistency rather than volume. Measuring a limited set of indicators allows for clearer insights and more actionable decisions.
Establishing this discipline often requires setting aside dedicated time to review firm performance and building it into regular operating routines. Increasingly, leading firms are reinforcing this discipline through automation and intelligent systems that reduce manual effort and improve consistency. By integrating data across core platforms such as finance, CRM, and matter or project management systems, firms can create centralized dashboards that update in real time.
Benchmark 5: Technology Integration Aligned with Workflows
Most firms have adopted a wide range of technology solutions to support their operations. However, adoption alone does not guarantee improved performance. In many cases, tools are implemented but not fully integrated into daily workflows. This can result in disconnected systems, manual processes, and underutilized capabilities – all of which creates inefficiencies that drag down profitability.
Top-performing firms take a more deliberate approach. They align technology with how work is performed, ensuring that systems support efficiency, accuracy, and consistency. For larger firms, the opportunity often lies in evaluating whether existing processes and systems are effectively supporting operations at scale. For small and midsize firms, the focus is often on building consistent habits around using technology and reviewing performance data.
In both cases, the goal is to ensure that technology delivers measurable operational improvements, enables better, faster decision-making, and empowers accountants to focus on high-value client work versus lower-value admin.
Building More Disciplined, High-Performing Firms
Strong accounting firm performance cannot be measured by any single attribute. Rather, it is achieved through consistent attention to several key operational areas:
- Monitoring profitability alongside revenue
- Improving visibility into how time is spent
- Reducing delays in collections and strengthening cash flow
- Establishing regular review of key performance metrics
- Ensuring technology supports, rather than complicates, daily work
Chances are your firm already has data on these operational benchmarks, and is (or could be) tracking them for future assessment. For many busy firms, the primary challenge is finding the time and discipline to review the data and act on it consistently. Having best-in-class technologies for time-keeping, billing, collections and other back-office processes can significantly streamline reporting and bring data-driven insights to firm leaders for better decisioning.
Conversely, going by your gut, focusing on only revenue, or evaluating operational performance based on a single moment in time (e.g., tax season) is akin to treading water on choppy seas – whether you’re up or down, you’re simply keeping your head above water.
As firms look ahead, those that prioritize operational visibility, reinforce consistent habits, and maintain a structured approach to performance management will be better positioned to capture market share, sustain growth and adapt to changing client expectations.
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Gabriela Cubeiro is Senior Vice President of Product at 8am and a veteran product and marketing leader. She previously co-founded CasePeer, the leading case management software for personal injury law firms, and served as CEO through its acquisition by MyCase in 2021.
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