Most professional services firms track revenue. Some track profitability. Very few track the full set of metrics that actually predict whether a firm is healthy, growing sustainably, and positioned for long-term success. After building KPI dashboards for dozens of consulting firms, law practices, and agencies, we've identified the seven metrics that consistently matter most — and the ones you can safely ignore.
Why Most Dashboards Fail
Before we get into the metrics, let's address a common problem: dashboard overload. We've seen firms with 30+ KPIs on a single dashboard, and the result is always the same — nobody looks at it. Information overload leads to information paralysis. The partners glance at it once, feel overwhelmed, and go back to managing by gut.
A great dashboard has 5-8 key metrics that leadership reviews weekly or monthly. Each metric should answer a specific question about the business, and together they should tell a complete story about the firm's health. Here are the seven that consistently make the cut.
The 7 Metrics
1. Revenue Per Employee
This is the single best indicator of a professional services firm's efficiency. It tells you how much revenue each team member generates, which directly relates to your ability to pay competitive salaries, invest in growth, and maintain healthy margins.
Benchmark: $150,000-$250,000 for most professional services firms. Elite firms push above $300,000. If you're below $120,000, you likely have a utilization or pricing problem.
How to calculate: Total revenue ÷ Total full-time equivalent employees (include contractors weighted by hours)
2. Utilization Rate
What percentage of your team's available time is spent on billable client work? This is the engine that drives revenue in any service firm. A team of brilliant consultants with a 50% utilization rate is leaving half their capacity — and half your potential revenue — on the table.
Benchmark: 65-75% for most professional services firms. Below 60% indicates underutilization or overstaffing. Above 80% may signal burnout risk.
How to calculate: Billable hours ÷ Total available hours × 100
3. Realization Rate
Of the hours your team works and bills, how much actually gets collected? This captures write-downs, write-offs, discounts, and collection failures. A firm can have great utilization but terrible realization, which means you're doing the work but not getting paid for it.
Benchmark: 88-95%. Below 85% means you're losing significant revenue to write-offs and collection issues.
How to calculate: Collected revenue ÷ (Billable hours worked × Standard billing rate) × 100
4. Client Acquisition Cost (CAC)
How much does it cost to win a new client? This includes marketing spend, business development salaries, proposal costs, and any discounts offered to win the work. Most service firms have no idea what this number is, which means they can't evaluate whether their growth spending is efficient.
Benchmark: Varies widely by firm type, but your CAC should be recoverable within 3-6 months of average client revenue.
How to calculate: Total sales and marketing spend ÷ Number of new clients acquired in the same period
5. Average Revenue Per Client
Are you building deep, high-value client relationships, or churning through low-value engagements? Average revenue per client tells you about the quality and depth of your client base. A firm with 50 clients averaging $5,000 per year has a very different business model — and very different challenges — than one with 10 clients averaging $25,000.
Benchmark: This depends entirely on your firm's positioning, but the trend matters more than the absolute number. Increasing ARPC usually means you're moving upmarket and building stickier relationships.
6. Gross Margin
Revenue minus direct costs (primarily the labor cost of delivering services) divided by revenue. This tells you how much of every dollar earned is available to cover overhead, pay for growth, and generate profit. In professional services, labor is the primary cost of goods sold.
Benchmark: 50-70% for most professional services firms. Below 45% usually indicates pricing issues or excessive subcontracting costs.
7. Accounts Receivable Aging
How quickly do clients pay you? AR aging isn't just a cash flow metric — it's a relationship health indicator. Clients who consistently pay late may be dissatisfied, cash-strapped, or simply taking advantage of your lack of follow-up. Track the percentage of receivables in 0-30, 31-60, 61-90, and 90+ day buckets.
Benchmark: 80%+ of receivables should be in the 0-30 day bucket. If more than 10% is over 60 days, you have a collections problem.
Building Your Dashboard
You don't need expensive BI software to get started. Here's our recommended approach:
- Start with a Google Sheet or Excel workbook. Build a simple one-page dashboard that pulls data from your accounting software (QBO, Xero) and your time tracking tool (if separate).
- Update monthly. Most of these metrics only need monthly updates. Don't over-engineer real-time dashboards when monthly is sufficient.
- Include trailing 12-month trends. A single data point is meaningless. Show each metric as a trend line over the past 12 months so you can see direction and velocity.
- Add red/yellow/green indicators. Set thresholds for each metric based on the benchmarks above. Green means on track, yellow means watch closely, red means take action now.
- Review in a standing monthly meeting. The dashboard is only useful if leadership actually discusses it. Build a 30-minute monthly KPI review into your firm's calendar.
What to Ignore
Just as important as knowing what to track is knowing what to skip. Here are metrics that frequently appear on dashboards but rarely drive meaningful decisions:
- Total hours logged — without context of utilization and realization, this is a vanity metric
- Number of proposals sent — activity doesn't equal results; track win rate instead
- Social media followers — unless you can directly tie social activity to client acquisition
- Employee headcount growth — growing the team isn't a goal; growing revenue per employee is
Start This Week
You don't need to build the perfect dashboard to start getting value from these metrics. Calculate your revenue per employee and utilization rate today, and you'll already know more about your firm's health than most of your competitors do. Add one more metric each month until you have all seven, and you'll have a management tool that fundamentally changes how you run your firm.
At CleanBooks, we build custom KPI dashboards for every client as part of our controller services. If you want help setting up the metrics and reporting infrastructure to run your firm by the numbers, let's talk.