Statistically, 67% of accountants prefer to automate their practices, utilizing accounting software. It results in increasing revenue, reduction in labor costs, saving time and money, maximizing productivity and minimizing human errors. But how do you define if your investment in software will be worth it in the long run?
What is ROI in accounting terms?
For any outlay of money, a business must make a decision, is it worth it? Accountants calculate return on investment (ROI) to gauge the profit potential of investments in accounting software or past investments’ performance against the costs. The old way of doing calculations was excel tables – quite time-consuming, cumbersome, multi-step process. ROI calculators replace excel tables and reduce getting the valuable insights to a few clicks.
How much you can save depends on the software you choose and the specifics of your practice. These are the important accounting metrics your ROI calculator should be able to estimate to show the potential profitability of investments and cost savings:
- Hours saved and increased to serve more clients and add more billable hours
- Money saved per individual client, business client, workflow automation, document management, billing and information management
- Time to breakeven to estimate how soon and how much of pure profit you will have with a yearly license
- Annual labor costs of running your practice with/without the accounting software
- Calculation results in the accepted in your firm currency
As an example, here is a ROI report generated by the TaxDome ROI calculator to understand the return on investment of implementing TaxDome for a firm. The resulting numbers will vary based on number of clients, labor costs, and more. The end result is provided in a PDF format for stakeholders to make an educated decision.
Why is it important to track ROI?
By using return on investment metrics, you can make educated decisions about your firm’s growth plans. Depending on your firm’s goals, the ROI data allows you to:
- Adequately analyze tools to determine cost/benefit of implementation
- Delve into current cost structure and make improvements
- Develop a strategy and make informed decisions based on reliable data
- Drive cost savings to obtain funding for your firm’s growth
How to calculate ROI for your practice?
We recommend opting in for ROI calculators, designed for the tax and accounting industry to track metrics specific to your practice.
To calculate ROI for your firm, usually, you need to input your firm’s variables in the dedicated ROI calculator form. The more parameters you enter, the more precise the output will be.
Some fields will already contain numbers. These are estimated numbers based on industry metrics, in case you don’t have the figures in front of you.
Once you enter the variables, the system will generate a report (as the aforementioned) with numbers and infographics you’ll receive quickly via email.
Tax, bookkeeping and accounting firms that implement TaxDome save $18,000+ per employee each year. No hidden prices, free and unlimited support offerings, 1-1 screen-sharing sessions and key integrations to maximize your firm’s ROI with every TaxDome license.
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