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Blog · Alternatives and comparisons · Tax and accounting

How to choose analytics software for tax and accounting: questions, data and traps

How accounting firms should choose analytics software: start from the questions, check the data you hold, ask vendors ten questions, avoid the traps.

By CoviragePublished 24 September 20264 min read
The short answerStart from the questions accounting firms ask every month, not from features. List the exports you already hold, ask every vendor what it needs before the first answer and whether its AI calculates figures, and check that every total reconciles. Then compare the first-year cost, all in.

Most buying decisions for analytics start from a feature list. For accounting firms the better start is the questions that come back every month, the files already on hand, and the traps that make a tool look right in a demonstration and wrong in the first board meeting.

Start from the questions

The question The measure behind it
Which clients pay well below the norm for their size? Fee per client against size norm
Which clients use one service line where similar clients use three? Service lines per client against norm
Which advisory triggers in this year's accounts have not been acted on? Advisory triggers acted on
Who is overloaded this season? Deadline load per manager
Where is realisation lowest? Realisation by client
Which clients are slow to pay, and slow to be billed? Lock-up by client

Any tool you consider should answer these from your data, not from a sample. Ask to see it.

The data you already hold

  • Practice management
  • Billing
  • Client master
  • Workflow dates, current and prior years
  • Filing calendar
  • Budgets
  • Capacity
  • Client accounts and returns

If a vendor needs a warehouse built before it can read these, count that in the cost and the time.

Ten questions to ask any vendor

  1. What does it need in place before the first answer? A warehouse, a data model, a modelling language, a partner? Ask for the list and the typical weeks.
  2. Who does the setup, and who maintains it? Your team, the vendor, or a partner, and what that costs after year one.
  3. Does the AI calculate figures, or choose from computed ones? A language model that writes queries or code can produce a plausible wrong number. Ask what it is allowed to do.
  4. Does every total reconcile to a control figure? Ask to see a bridge that does not sum and what the product does about it.
  5. Can every figure be opened to its rows? An answer nobody can check becomes a debate in the meeting.
  6. What does it cost in the first year, all in? Licences, consumption, implementation, modelling and training, not only the seat price.
  7. How does data arrive, and who holds credentials? A file your systems already export, a scheduled drop, or a live connection with the vendor holding keys.
  8. What happens to the data, and where is it stored? Residency, retention, deletion, and whether names can be replaced with identifiers.
  9. Can we see it on our own data before we sign? A demonstration on a sample dataset tells you little about your own.
  10. What does the tool do when it cannot answer? It should say so. A confident guess does more harm than no answer.

Checks specific to tax and accounting

Ask whether the tool enforces these, and what it does when they fail:

  • Realisation: Time at standard = billed + written off + work in progress
  • Deadline load: Filings due = filed + in progress + not started; every filing has one manager
  • Retention: Opening fees + new − lost ± fee change = closing fees
  • Triggers: Found = acted on + declined + open

The traps

Fee against the norm for size. Fees are reviewed client by client, by the partner who set them. Nobody ranks the whole book against its own median.

Advisory triggers. The firm prepares the accounts, files them, and moves on to the next client.

Deadline load by week. Everyone knows January is busy. Few know that manager C has 40 percent more hours due than available in the third week.

Measures to leave out

Chargeable hours per person, alone. Hours on under-priced fixed fees are busy and unprofitable.

Number of clients. A payroll-only client and a group audit count the same.

New clients won, without onboarding and first-year realisation. Some wins cost more than they bring.

A scorecard

Criterion Weight Tool A Tool B Covirage
Answers our six questions on our own data High
Time to the first answer High
Needs a warehouse or data team Medium
AI calculates figures, or only explains computed ones High
Every total reconciles; figures open to rows High
First-year cost, all in Medium

Where Covirage fits

Covirage reads the exports above, answers the questions with figures our tools compute and check, and is set up for you within a week. See analytics software for tax and accounting compared, AI analytics for tax and accounting and Covirage for Tax and accounting.

For the measures in full, with formulas and exports, read Practice KPIs for tax and accounting firms.

Questions people ask

What should accounting firms look for in analytics software?

The answer to their own questions, from the data they already hold, with every figure reconciled. Features matter less than what the tool needs before the first answer and who maintains it.

Is a BI suite enough for accounting firms?

It can be, with a warehouse and someone to build and maintain the model. Without them, the dashboard shows what changed and the explanation is still an analyst's job.

What data do accounting firms already hold?

Usually: practice management, billing, client master, workflow dates, current and prior years, filing calendar, budgets. Most analytics questions in this industry can be answered from those exports.

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