Rippe & Kingston, LLC defines Profitability Accounting as an allocation process that measures the gross and net contribution to the Firm’s profits of a given revenue stream.
It is an Accounting analysis, which calculates a series of direct and
indirect rates per timekeeper per hour allocated to a defined revenue stream to
measure gross and net contribution to Firm profits.
A
Systematic Approach for Measuring the Profitability of the Firm…
- Identify Revenue
- Identify Direct Costs
- Identify Indirect/Overhead Costs
- Apply Direct and Indirect Cost to Revenue
- Reporting Summary or Detail at Multiple Levels, including Office, Department, Practice Group, Area of Law, Timekeeper, Client, and Matter
- Real Time...Results through Yesterday’s Cash Receipts
Are you using Profitability Accounting as a Financial Management tool? If not, have you considered how using Profitability Accounting might help your Firm?
