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How do you measure your practice's productivity?

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Productivity is a key indicator of how well your practice is performing and delivering value to your clients. But how do you measure it? There are different methods and metrics that you can use to track and improve your practice's productivity, depending on your goals, processes, and resources. In this article, we will explore some of the most common and effective ways to measure your practice's productivity and how to use them to optimize your results.

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1 Billable hours

One of the simplest and most widely used measures of productivity is billable hours. This is the amount of time that you or your staff spend on client-related work that can be invoiced. Billable hours reflect the revenue potential of your practice and the demand for your services. However, billable hours alone do not tell the whole story of your productivity. You also need to consider the quality and efficiency of your work, the profitability of your projects, and the satisfaction of your clients.

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2 Utilization rate

Utilization rate is the percentage of billable hours out of the total available hours for you or your staff. It shows how well you are using your capacity and maximizing your income. A high utilization rate means that you are busy and productive, but it can also mean that you are overworked and under-resourced. A low utilization rate means that you have spare capacity and room for growth, but it can also mean that you are underperforming and losing opportunities. You need to find the optimal utilization rate for your practice that balances workload, quality, and profitability.

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3 Realization rate

Realization rate is the percentage of billable hours that are actually paid by your clients. It shows how well you are pricing and collecting your fees. A high realization rate means that you are charging appropriately and efficiently, and that your clients are happy and loyal. A low realization rate means that you are undercharging or overdelivering, or that your clients are disputing or delaying your payments. You need to monitor and improve your realization rate by setting clear expectations, communicating value, and following up on invoices.

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4 Profit margin

Profit margin is the difference between your revenue and your expenses, expressed as a percentage of your revenue. It shows how profitable your practice is and how well you are managing your costs. A high profit margin means that you are generating more income than expenses, and that you have a healthy cash flow and financial stability. A low profit margin means that you are spending more than you earn, and that you have a tight cash flow and financial risk. You need to increase your profit margin by increasing your revenue, reducing your expenses, or both.

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5 Client feedback

Client feedback is the information that you receive from your clients about their satisfaction, expectations, and needs. It shows how well you are meeting or exceeding your clients' requirements and delivering value. Client feedback can be qualitative or quantitative, formal or informal, solicited or unsolicited. It can include testimonials, reviews, ratings, surveys, referrals, complaints, suggestions, or questions. Client feedback can help you measure your productivity by providing insights into your strengths, weaknesses, opportunities, and threats.

These are some of the ways that you can measure your practice's productivity and use them to improve your performance and results. By tracking and analyzing these metrics, you can identify and address the gaps and challenges in your practice, and leverage the opportunities and advantages. You can also benchmark your productivity against your goals, competitors, and industry standards, and adjust your strategies and actions accordingly. Measuring your practice's productivity is not only a way to assess your current situation, but also a way to plan your future growth.

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Amanda Rogers

Director @ WLM Accounting | MBA, FCPA, CA
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We provide staff a productivity target around industry standards which has an allowance for training and meetings and the team has a write off target again in accordance with industry benchmarks. This is straightforward. Our area we constantly working on to improve is our administration and client experience… recently employed an additional client service administrator to improve this. Along with using a variety of software tools including Karbon and GoProposal we are getting there.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you measure your practice's productivity?

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3

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5

6

1 Billable hours

2 Utilization rate

3 Realization rate

4 Profit margin

5 Client feedback

6 Here’s what else to consider

Practice Management

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How do you measure your practice's productivity?

1

2

3

4

5

6

1 Billable hours

2 Utilization rate

3 Realization rate

4 Profit margin

5 Client feedback

6 Here’s what else to consider

Practice Management

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