The 2016 IPA Firm Administration Report

The 2016 IPA Firm Administration report engaged participation from more than 130 firms, contains 70 pages of tables and graphs, and includes information from 41 firms above $30 million, 22 firms between $20 million and $30 million, 44 firms between $10 million and $20 million, and 27 firms under $10 million.

A few observations are worth noting.

CLIENTS / WORKFLOW / ACCOUNTS RECEIVABLE

  • Less than 1% of participating firms guarantee a specific turnaround time for tax returns.
  • Credit cards are acceptable for payment by 83% of firms.
  • Sixty-three percent of firms charge interest on overdue accounts receivables, with the average charging 1.25% monthly.
  • Less than 1 in 15 firms report outsourcing some portion of tax return processing work, with the majority of those coming from firms greater than $30 million in revenue.
  • Eighty-five percent of participating firms have a formal client acceptance process.
  • Only 3% of firms sell receivables to a third party.
  • Forty-three percent of firms indicated that they do not know or do not track their percentage of annual revenue “in the pipeline” at any given time. Of those that do track, 39% say that it’s between 0% and 5% of their annual revenue, while 16% indicate it’s more than 15% of their annual revenue.

FIRMWIDE METRICS / PROFITABILITY

Measuring profitability beyond the firmwide number can identify strengths and weaknesses. Consider the following percentage of firms and their means of tracking profit margin:

71% By Office
70% By Department
65% By Client(s)
47% By Staff

Philosophical differences exist among many firms on what information should be shared with staff.

  • Fifty-five percent of firms share top-line numbers firmwide.
  • Firmwide utilization is shared with all staff in 36% of participating firms.
  • Realization is shared with all staff in 34% of all participating firms.

FIRM GOVERNANCE

  • Fifty percent of firms report that their structure is more like a corporation than a partnership.
  • 74% have updated partnership agreements within the past three years with 26% of those doing so within the past year.
  • Only 44% of firms have a written / formal succession plan in place for all equity partners.
  • One in 14 firms have a succession plan for their high-level administrative staff.

View the 2016 Executive Summary and Pre-Order the 2017 Firm Administration Report.