What the Top 25% of Accounting Firms Are Doing Differently

Mark: Welcome to another episode of Accounting Insights with Mark and Matt. Joining us today is Julia Thomson from Benchmarking Data and Research. Julia, welcome.

Julia: Thank you. It’s always lovely to be here.

Mark: It’s good to see you again. And welcome Matt.

Matt: Great to see you as well, Mark. Always a pleasure.

Mark: Julia, for the benefit of our listeners, could you give us a quick introduction to what you do?

Julia: Sure. I work at Benchmarking Data and Research and my job is essentially to oversee our data, analyse it and identify the trends and what’s happening with small to medium businesses across Australia. That’s really our speciality.

Mark: Great stuff. In 2026, we partnered with Benchmarking Data and Research to produce The Crunch Report, and Julia, you know that report back to front.

One of the things we looked at was what the top 25% of accounting firms are doing compared with the bottom 25%. What is the biggest difference you see between those top-performing firms and everyone else?

Julia: I love this report each year. This is the third year we’ve produced it, so we’ve now been able to look at trends over time.

The biggest trend is something we’ve seen consistently across all three years. For the top-performing firms, it’s not about having more clients or simply generating more revenue. It’s about earning more per client.

We look specifically at clients per partner, and this year the top cohort had a similar number of clients per partner, but their average fee per client was significantly higher.

The other difference is discipline. When it comes to billing, the top-performing firms simply aren’t writing off as much. They’re setting a price, sticking to it and, in some cases, actually billing more than they originally said they would.

It comes back to both discipline and adding more value for each client.

Mark: So fewer clients, more value from each client and fewer write-offs. It sounds like the perfect storm.

Julia: It does sound a little idealistic when you say it like that. It can sound as simple as, “Charge more, write off less and get rid of the clients that cost you money.”

But the encouraging part is that, year after year, we are seeing firms generally move in that direction. Write-offs are easing, clients per partner are reducing and average billing rates are increasing.

Matt: One of the things that stood out to me when I read the report was that discipline, but also how intentional the better-performing firms seem to be about how they run their business.

It takes discipline to manage write-offs and write-ups properly, and it takes discipline to manage your client base. Mark talks about this regularly. The bottom end of the client base can often be the emotional vampires that take both the fun and the profit out of a firm.

There’s a real takeaway there around knowing what you’re trying to achieve, knowing who you want to work with and not being afraid to say no to clients who aren’t the right fit.

Mark: Absolutely. Emotional vampires. They’ll suck your blood all day and won’t want to pay for the privilege!

Julia, what is something new you’ve seen in the data this year?

Julia: One of the newer things relates to AI.

Three years ago, we were simply asking firms whether they were using AI. Last year, we saw that firms using AI were more likely to sit in the top 25%.

This year, there is effectively no difference between firms using AI and firms that aren’t.

When we looked deeper at that, and at broader industry trends, the difference seems to be in how firms are using it.

The firms seeing stronger results are integrating AI into their systems and processes. They’re using it for automation and efficiency rather than simply replacing an isolated task here or there.

I think that is something we’ll increasingly see across every industry.

I remember speaking at Mark’s Young Guns conference last year and showing a slide that demonstrated just how quickly AI adoption had changed. In 2024, very few accounting firms were using it. Twelve months later, that had completely flipped and the majority were.

I’ll be interested to see where that data goes later this year.

Matt: Do you think the firms that are integrating AI into their systems, rather than just using it as a side tool, are also reviewing their processes more broadly? Could that be contributing to better productivity and stronger results?

Julia: It makes sense as a theory.

What we can see is greater efficiency. The top-performing firms are charging more per client, but they’re also generating more value from every hour.

Productivity is fascinating because the actual number of productive hours hasn’t shifted much over the three years.

Historically, firms have focused on how much time someone bills. But I think that model is changing. It’s becoming less about how much time you bill and more about what you can achieve within that time.

The firms getting more from those pockets of time are likely using AI, automation and better systems together. It’s not AI in isolation. It’s AI as part of the overall way the firm operates.

That’s my assumption rather than something we’ve specifically researched, but the data certainly shows stronger efficiency among the firms getting the best results.

Mark: So there’s no longer a competitive advantage in simply saying, “We use AI.” Everyone is having a go.

Julia: I wouldn’t necessarily say there’s no competitive advantage. Firms that aren’t experimenting with AI should absolutely be looking at how they can use it safely.

But I think the better question is to look at the firm as a whole and ask, “Where can we create efficiencies?” Then determine whether AI is the right solution.

It shouldn’t be about using AI for the sake of it.

Mark: Julia, did The Crunch make any commentary around the shortage of accountants?

It seems to be the perennial problem. Matt and I were in Asia recently and it’s the same there. It’s very difficult to find good-quality staff onshore, and we know a lot of firms are also looking offshore.

Did that talent shortage come through in the report?

Julia: Definitely. It’s one of the major trends, although I feel like we’ve been talking about the accountant shortage for years.

When something remains a shortage for long enough, eventually it just becomes the way you do business.

What we’re seeing now is the industry adapting. Firms are using more offshore teams, investing in technology and working with fewer clients while generating more value from each one.

Technically, yes, there is still a shortage. Forecasts suggest we’ll need more accountants than are currently coming through the profession.

But the practical question is: what do you do about it?

The data says there’s a shortage, but in reality firms are adapting. You’re both on the ground talking with firms every day. What are you hearing?

Matt: I see it very much as the new normal.

I don’t know whether we can even classify it as a shortage anymore. Technically it is, because the demand is there, but we’re not going to fill that gap any time soon through the traditional channels.

With the firms Mark and I work with, the conversation has shifted to: we can’t wave a magic wand and find more people, so what other options do we have?

That might be offshoring or other forms of outsourcing, but it’s also about reviewing the end-to-end process of how work gets done.

A lot of firms are asking whether doing something the same way for 20 years means it’s still the right way to do it today.

Can we get queries to clients more efficiently? Can we use the data already available through cloud accounting to get ahead of the work rather than constantly waiting? Can we reduce productivity leakage and get more from the team we already have?

That brings me to something else in the report. You mentioned that the higher-performing firms are generating more fees per client. Did the data show whether that is coming from a particular form of advisory?

Julia: Yes, absolutely.

Business advisory is an area where the top performers are generating significantly more revenue than the bottom 25%.

It’s worth explaining how we define the top and bottom 25%. We’re looking at net profit margin after applying a notional salary per full-time equivalent partner. That allows us to compare firms more consistently.

When we look at compliance versus non-compliance revenue, the proportions are actually quite similar across firms.

Most firms are earning around 65% to 70% of their fees from traditional tax and accounting compliance.

It’s the remaining 30% that gets really interesting.

For the bottom-performing firms, around 30% of those non-compliance fees are coming from bookkeeping. That’s more administrative work, which business owners often don’t perceive as being as high value.

For the top-performing firms, around 40% of their non-compliance fees are coming from strategic business advisory, and just over 30% from self-managed superannuation.

They’re moving into more specialised services and areas that help business owners make decisions about their business, rather than simply helping them with the day-to-day administration.

Matt: That’s exactly what I was interested in.

My theory has always been that it can be difficult to make the right margins on bookkeeping unless you are extremely efficient. There can also be a lot of scope creep.

Bookkeeping is obviously a valuable service and it’s the foundation of much of what we do. If the bookkeeping isn’t right, there’s a lot of rework later.

But firms offering it need to think carefully about how they make it efficient, how they prevent scope creep and how they maintain the right profit margins.

The specialist work is also something firms are going to have to consider more closely as AI increases.

What is going to become commoditised? And what is the work clients will continue to value because a machine can’t simply do it for them?

Julia: I love the topic of specialisation because I think the accounting profession is ready to move much further down that path.

Look at engineering. My partner is a structural civil engineer who specialises in buildings. Then you have environmental engineers, mechanical engineers, robotics engineers and so on.

You see the same specialisation in law and marketing.

Accountants are dealing with an enormous amount of new compliance, while business owners themselves are facing increasing red tape and accountability.

As part of the report, we looked at the weight business owners are feeling from that increased responsibility, and they’re looking to their accountants for help.

A lot of it is new. There are laws and requirements emerging around areas such as AI, and business owners often don’t know who to turn to.

I think specialist accounting and business advisory are only going to grow.

There will be an increasing need for accountants who can help business owners make decisions and navigate this increasingly complex environment.

It becomes less about, “How can I help keep your books up to date?” and more about, “How can I guide you through this complex web of compliance, AI and automation?”

Matt: I wonder whether the specialisation might also be around industries or particular types of clients.

It could be specialising in startups, family businesses or businesses with two to four owners, rather than necessarily specialising only in a technical service.

It comes back to being intentional and deciding what you actually want your firm to do and who you want to work with.

Traditional accounting firms have been fortunate in some ways because compliance work has continued to come through the door. Mark says it all the time: we have one of the greatest industries in the world because we do work clients don’t necessarily want us to do, but they have to pay us to do it and someone else will tell them off if they don’t!

But as more of that work becomes commoditised, firms need to be much clearer about where they’re creating value beyond keeping the government happy.

Mark: It’s interesting that some smaller firms are focusing on what I call “safe advisory”, which is bookkeeping.

There can be a strategy behind that. If you’re doing the books digitally, you have more current and representative data available for advisory.

But the real strategic work is helping clients build a bigger, better, more profitable, cash-flow-rich business that is worth more tomorrow than it is today. That’s the sweet spot.

I’d encourage firms to get the bookkeeping side under control and make it efficient, but we also have to ask what AI and robotics are going to do to bookkeeping over the next few years.

Advisory is something I’ve specialised in for years. It’s also something almost every accountant says they do, but it tends to be the first thing put aside when everyone gets busy.

If you genuinely want to offer strategic advisory services, you almost need to do a strategic advisory exercise on your own firm first. You need the right systems, processes and people in place before you take it to market.

Julia, we spoke earlier about productivity. Accountants love measuring productivity and making sure everyone achieves the targets that have been set.

You mentioned that the numbers haven’t really improved over the last three years. Is that right?

Julia: Yes. We’re looking at productivity in terms of billable hours, separately from the hourly billing rate.

It’s an interesting issue for accounting and professional services generally because historically productivity has been about hitting 60%, 70% or 80%.

But it’s becoming almost impossible to hit some of those numbers now.

There are more internal meetings, administration and compliance requirements. At the same time, we’re increasingly saying that business owners and partners should actually reduce their traditional productivity because they need more time to think about and work on the business.

Over the past three years, productivity rates have been remarkably consistent, and there isn’t actually a huge difference between the top and bottom-performing firms.

When we look at chargeable staff, the top firms are slightly more productive.

But when we look at equity partners, the partners in the top-performing firms are actually slightly less productive in the traditional sense.

That suggests they’re spending more time thinking about and developing the business and less time simply working on client jobs.

I think we may need to change the way we measure productivity in future reports because AI is changing what productivity actually means.

If someone previously spent two hours manually working through financial information and that can now be automated, how do you compare that with someone completing the same outcome much faster using technology?

Bookkeeping is another example. If someone spends two hours entering information manually, are they more productive than someone using technology to automate that work?

We need to think about how we measure productivity in a way that is actually useful to firms.

Should productivity increase? Should it decrease so people have more time to think about the business? Should we be helping firms move towards a four-day work week rather than simply asking people to grind away for more hours?

Mark: I find it fascinating that partners in the better firms are doing less work on the tools, because that has been my target for years.

Partners should be developing new opportunities and looking after existing clients. They should be helping clients build wealth and creating opportunities for the firm.

We can get too comfortable sitting in the office doing what we’ve always done. A little bit of disturbance is probably a good thing.

Julia: I’d actually like to see those productivity numbers for partners fall further.

Partners are still averaging around 50% productivity when measured through billable hours, and I think that is too high.

There needs to be more time spent “humaning”, getting out and talking to people, building relationships, thinking about the firm and mentoring younger staff rather than simply sitting behind the numbers.

Chargeable staff are sitting somewhere between 60% and 70%, which has been consistent over the past three years. That feels more appropriate, although perhaps even that should reduce somewhat to create more time for training and developing junior staff.

It’s an interesting conversation across every professional services industry at the moment, and accounting certainly isn’t the exception.

Matt: I think there’s an opportunity for firms to start “downskilling”, and by that I mean getting skills further down through the team as quickly as possible.

That frees partners to work on the strategy of the business, win work and spend more time training their people.

As an industry, we can become too focused on technical work. We might try to cram all the technical training into one day every quarter, rather than asking how we make each hour more valuable to the business.

Everyone should be doing work at the right level while also developing the capability to take work from the people above them.

You can see some of that happening in the top 25%. Their partners’ productive hours are coming down and, importantly, they’re not worried about that. It’s actually something to celebrate.

In many firms, particularly sole practitioner firms, the bottleneck is still sitting on the partner’s desk at review.

That is challenging because, as practitioners, there is a lot of responsibility attached to signing work off. But if we invest the time in developing our people to the point where we trust their output, that’s where the freedom starts to come from.

We also have to become comfortable with not being the smartest person in our own business. That can actually be a wonderful thing.

Julia: I like the term “downskilling”.

AI creates an interesting challenge here because it can increasingly perform many of the lower-level tasks junior accountants traditionally did.

That creates a potential threat to graduate recruitment. Firms may decide they don’t need as many graduates because AI can complete those tasks.

But we will still need mid-level accountants.

You can’t stop recruiting graduates and then, five or ten years later, wonder why you can’t find people with five or ten years of experience.

So that downskilling and development pathway becomes incredibly important.

Matt: I was speaking to someone in the profession about exactly that.

If AI takes junior work away, we could be robbing ourselves of more competent people five years from now because they won’t have developed the fundamentals people traditionally learnt early in their careers.

You can’t get to the point of delivering high-level advisory without having the accounting foundations firmly in place.

I’ve always said you go to university to learn how to talk the talk, but you don’t learn how to walk the walk until you’ve done your apprenticeship inside a firm.

The opportunities to learn in the way many of us did are becoming narrower because of AI and machine learning.

Julia: I’m going to find a study on exactly that and send it through so you can share it with listeners.

When we talk about AI replacing jobs and reshaping industries, this is one of the really interesting threats for professional services. What happens to the people coming into the profession at ground level and what does that mean for the future?

Matt: The final question we wanted to cover today is what you see coming down the line over the next few years.

What should accounting firms be looking out for?

Julia: We touched on this earlier, but with all due respect to firms, I think many probably don’t fully appreciate what is hitting business owners at the moment.

There is so much change coming through that affects the everyday business owner.

There is also a real risk that business owners are increasingly getting their financial information from people who aren’t qualified accountants. We’ve even seen the ATO having to tell people to stop doing their tax returns based on advice they’ve seen on TikTok.

Where I think the accounting profession is increasingly needed is as genuine support for business owners.

It goes beyond tax and traditional compliance. It’s about helping people navigate the journey of running a business.

We’ve done quite a lot of research into stress and wellbeing within accounting, and we’re seeing similar patterns among business owners.

We’re also seeing fewer people wanting to run businesses because of the red tape and responsibility involved.

Australia has always been a small and medium business nation. Over the next few years, I think firms that can genuinely help business owners navigate all of this and run better businesses will have an incredibly important role to play.

That is where I’d like to see the profession go.

Mark: You won’t get any argument from the two of us there.

Julia, I’ve really enjoyed the discussion. Thank you very much for your time.

Julia: It’s always a pleasure. It’s great to bring the numbers and real life together.

Mark: If our listeners want to put their own firm through The Crunch or get a copy of the general report, where should they go?

Julia: Head to benchmarking.com.au/thecrunch.

You can download a free sample report to see the type of data we collect. If you’d then like to benchmark your firm against the other firms participating in The Crunch, you can do that there as well.

Matt: We’ll also put the link in the show notes.

Julia: Brilliant. And I think people can hear a little more about it at the Fearless Leadership Program. Was that a good segue for you?

Mark: Well done!

And don’t forget the Fearless Leadership Program on 29 and 30 October at QT Gold Coast.

If you’ve been to Young Guns and are looking for the next step in leadership, or you haven’t been to Young Guns but want to develop your leadership skills, this is the event to come along to.

It’s a bespoke event and we’re restricting it to around 50 people. We’re already well over two-thirds subscribed, so there aren’t many spaces left.

We’d love to see you there.

Julia, thanks again.

And everyone, keep your eyes and ears open for the next edition of Accounting Insights with Mark and Matt. Thanks for listening.