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7 Ways Small CPA Firms Can Maximize ROI


Like every business, CPA firms invest a lot of time and money into making sure they are viable, vibrant practices poised for success and growth. And, like other businesses, CPA firms are well-served by taking a long look at return on investment (ROI), especially as it pertains to their significant monetary investment in personnel and time that comes from focusing on client service.

Oct 9th 2020
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Does your firm make it a priority to calculate and communicate ROI and set targets for what you want to achieve? An ROI target may vary from service to service, from producer to producer and from client to client. But learning how to enhance the yield on time and talent is the key to optimizing ROI.

Here are seven ways to target and enhance ROI at your firm:

1. Budget Engagements

Client engagements, from communications to service times, need to be planned and budgeted. Budgets should be included in your time management system and alerts should be programmed for those times when budget milestones are met.

The more disciplined and supportive the budgeting effort is, the better the outcome. Time management systems are becoming much more robust, and they should be leveraged for more than just entering time and billing.

2. Package Billing

Certain functions and deliverables are simply worth more than others. Time charges based on an hourly rate are not a proper reflection of the actual value of that service and, in turn, will not generate the right return on talent or time.

Use a stated fee as much as practically possible. Where appropriate, package services together and state a fee for the package. Hourly fees are still necessary for some jobs and some clients, but, unless you have value-added rates and standard rates, you will not realize the full ROI potential.

3. Recalibrate the Client Mix

Another way to enhance ROI is to examine your clients and the services you provide. Teeing up your firm with clients who have similar needs and requirements that tie to your areas of expertise will upgrade the yield on time and expertise.

The more proficient you are, the more efficient and valuable you become. Limit the services that don’t match your expertise, as well as the time servicing clients that require work outside of your skill set, unless you see the real potential to offer those services to others.

4. Integrate Compensation and Production

The best way to motivate performance and gain strong return on talent is with an objective and transparent formula for calculating compensation. Make data the major driver of compensation decisions, allowing room for drivers of discretionary compensation, which will pave the way for new skill requirements and utilization.

Compensation should also be tied to formulas and multiples of billable and non-billable personal production benchmarks, which should be set for all of your team members. Tasks and projects should have a value and their completion should generate dollars of compensation.

5. Optimize Gross Profit

The most significant line item for cost-to-run is about much more than the salaries and benefits of the CPAs. Build your pricing around all the costs it takes to service clients including technology, education, marketing, base salary for owners and support salaries. Run your practice so you are creating profit and recovery on your full investment, not just the most significant investment.

6. Develop a Mutual Expectation Profile

The more your people evolve and increase their skills, the better they will be able to care for clients and the more likely it will be to retain both clients and staff. Reducing turnover and increasing skills are excellent ways to control investment and improve yield. Align your management goals with the hopes and expectations of your team members to set the stage for an effective (and mutual) endorsement of the implementation and its results.

7. Gain Business Intelligence

The more you know about your current clients’ priorities and level of satisfaction, the better positioned you will be to address the success of your business model and assess the need for further (or different) investment. Poll your clients throughout engagements and at the end then probe what provokes them.

This investigation and exploration will go a long way toward better understanding your current clients, will help facilitate better business decisions now and will inform the way you do business and serve clients in the future.


Having an emphasis on and transparency around ROI targets and achievements will make your firm stronger and better position it for internal or external succession down the road. A firm-wide focus on enhancing ROI is a universal best practice that should be adopted by CPA firms of all sizes.

The original article appeared in the fall issue of the Pennsylvania CPA Journal.

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