The accounting profession & # 39 ;s landscape is changing quickly and drastically from ever before. The need for CPA firms to deliver traditional compliance services as their only means of long-term growth is no longer possible. Today's clients are looking beyond just traditional bookkeeping, tax preparation and year-end reports; they want business intelligence insights, dynamic forecasting capabilities, and strategic direction. They are looking for advisors who will become trusted partners to help them make sound business decisions through advice and guidance.
The changes taking place in the marketplace today represent a tremendous opportunity for CPA firms throughout the United States via the use of Client Advisory Services (CAS).
In many cases, CPA firms previously relied solely on traditional tax and audit revenue streams, however many have begun to utilize Financial Advisory Services, Outsourced Accounting Services (OAS), Virtual CFO Support, Cash Flow Forecasting, KPI Reporting and Technology Consulting in order to grow their professional service offerings.
When CPA Firms take advantage of the opportunities afforded to them by successfully implementing CAS, they achieve two primary benefits; increasing profitability and enhancing client retention while simultaneously improving their firm valuation and establishing scalable recurring revenue streams.
While technology has positioned CPA Firms to build successful CAS firms, a firm must also possess operational capacity, specialized talent, efficient operating practices & processes, and an ability to scale quickly without exhausting internal resources.
In addition, CPA Firms that successfully build CAS practices increasingly use strategic outsourcing and offshore staffing models to gain a competitive advantage in today's accounting profession. An abbreviation for Client Advisory Services, which is a large group of accounting & strategic financial services that businesses receive on an ongoing basis from accounting firms.
The focus of CAS is to support clients in making forward-looking decisions using current financial information, as opposed to historical information as is common in traditional accounting.
Types of services that fall under CAS include:
- Reporting and preparing the financial statements of the organisation;
- Building Key Performance Indicators (KPIs) dashboards to monitor performance throughout the year;
- Preparing cashflow forecasts for both short and longterm planning
- Assisting with budgeting and planning
- Providing Virtual Chief Financial Officer (CFO) type support
- Providing Payroll administration support
- Providing consulting for technology to be used by the organisation
- Providing sales & use tax compliance support
- Managing the organisations bookkeeping and accounting departments
- Assisting with Financial Planning & Analysis for all operations;
- Providing business advisory services.
Essentially, Client Advisory Services shift the focus of Accountants away from compliance activities and into the role of strategic business partners to the organisations they serve.
Reasons Behind The Rapid Expansion Of CAS In America
More than just compliance, clients are now asking for their accountants to provide ongoing support rather than just seeing them once a year. Examples of the types of questions being asked include: Are we able to hire more employees? Which department is losing money? What steps can we take to improve our cash flow? Are we pricing our services adequately? What needs to happen before we seek funding? As these kinds of questions emerge, CAS will be able to help the firm to consistently provide clients with answers.
Advancements in technology and AI are drastically changing the way firms perform repetitive tasks, such as data entry, reconciliations, and tax preparation processes, and will continue to do so. Due to the decline in revenue associated with compliance work being commoditized, firms have a need for additional higher value services to continue making profits. CAS provides premium advisory revenues which are considerably more difficult to be replaced with automation.
Since tax season is seasonal, CAS provides recurring monthly revenue. As a result of this, accounting firms will have a predictable cash flow which will help to enhance the long-term relationships with their clients. Many firms offering CAS now have moved to a monthly subscription billing approach as opposed to billing on a project basis.
Real-time Financial Visibility Is Essential for Businesses
Due to recent changes in economic conditions, inflation rates, tax laws, and fluctuations within the marketplaces, business owners are looking for methods to manage their businesses better and are looking for assistance from their accounting professionals.
For a company to survive and grow, it needs access to real-time financial information. With the use of a CAS model, CPA firms can become integral partners with their clients in making key decisions.
The greatest difficulty in developing a CAS practice
While the potential for growth is enormous, scaling CAS is difficult for many companies.
The primary issue is a lack of available resources.
Throughout the United States, CPA firms are dealing with:
- Exhaustion of employees
- Increased salaries
- Limited talent pool
- Significant turnover and difficulty attracting experienced employees
- High levels of seasonal workload.
Because of these reasons, it is very costly and challenging to create a total in-house CAS team.
For this reason, many firms have turned to Offshore Accounting Companies and Outsourcing companies for help with their CAS growth.
Offshore Accounting as a Scale Resource for CAS Firms
While outsourcing was previously focused mainly on cost, modern outsourcing also concentrates on scale, collaboration and operational efficiency.
Today, the majority of CPA firms utilize some of The Best Outsourced Accounting Services In The USA to build flexible offshore support teams for their CAS operations.
These teams permit CAS firms to increase their capability while not significantly increasing their operational costs.
Outsourced Bookkeeping Services that Help Support CAS Through Offshore Teams
The primary basis for every CAS engagement is good bookkeeping.
Bookkeeping outsourcing services are increasingly utilized by many firms to efficiently manage their daily accounting procedures.
These services may consist of:
• Reconciliation of bank accounts
• Accounts Payable
• Accounts Receivable
• Monthly closing process
• Financial reports
• Management of general ledger
CPA firms can also use outsourced bookkeeping services to allow their senior personnel to devote more time to providing higher value-added advisory services.
More firms are employing overseas bookkeepers and/or hiring dedicated overseas bookkeepers for continuous bookkeeping projects for their clients.
If you have CAS clients, they will still need support with tax compliance and planning.
As many firms now utilize Outsourced Tax Preparation Services as well as Offshore Tax Preparation Services to manage seasonal workloads more efficiently, the firms have all of the resources necessary to help them achieve:
• A reduction in turnaround time
• Improved workflow
• Capable of handling increased workload during busy season
• To remain profitable
Many firms also hire Offshore Tax Preparers or Expert Tax Preparers to assist with specialized tax engagements.
Audit Support Solutions
Accounting firms are now providing more advisory services along with audit services.
By Outsourcing Audit Assistance Services, firms increase their ability to deliver quality services while having increased flexibility.
Accounting firms today:
• Appropriately engage audit assistance teams
• Use Offshore Audit Support Staff
• Contract Dedicated Audit Support Consultants
• Utilize Outsourcing Audit & Assurance Support Services in North America
Using this system enables internal executives to place emphasis on building customer relationships, along with providing clients with value-added consulting services.
Payroll and Compliance Assistance Services
Payroll has become one of the largest recurring CAS services for CPA firms.
Businesses now have high expectations for an integrated Payroll and Consulting Service from one vendor.
Firms are now taking advantage of:
• Outsourcing Payroll Services
• Outsourcing Payroll Services in the USA
• Offshoring Payroll Services to CPA Firms
• Offshoring Payroll Services to U.S. CPA Firms
In addition, firms are hiring offshore payroll specialists or hiring remote payroll specialists to meet the growing customer demand.
Sales Tax Compliance / Use Tax Compliance
As businesses grow into multiple states, regulatory compliance has become much more complex.
CAS firms are increasingly providing:
• Sales Tax Compliance Service
• Sales Tax Compliance for Multiple States
• Sales Tax Compliance Services for Businesses
These services provide additional opportunities for recurring advisory revenue, assist businesses in avoiding penalties, and provide assurance in terms of compliance risk.
Services Of Virtual CFO As An Essential Component Of CAS
The virtual CFO services segment is one of the fastest-growing segments of the CAS group.
Small and mid-sized businesses may not always be able to afford a traditional in-house CFO, but still require strong financial leadership and direction.
This represents a tremendous opportunity for CPA firms.
Examples of Virtual CFO Services that CPA firms could offer to their clients are:
• Strategic Planning
• Budget Forecasting
• Cash Flow Analysis
• Financial Planning & Analysis
• Profitability Analysis
• Reporting to Investors
• Business Expansion Planning
In addition, CPA firms can provide today's virtual CFO services to help your CPA firm grow:
• Dedicated virtual CFO services for CPA firms
• Virtual offshore CFO services for CPA firms
• Outsourced virtual CFO services
Additionally, some firms are hiring a dedicated virtual CFO professional to provide additional advisory value to their clients.
Creating Scalable CAS Workflows
When firms have the right structure in place by utilizing technology and staffing, they can be very successful in providing CAS.
The following are typically parts of a modern CAS workflow:
Step 1: Collection of Information
Information is provided to cloud accounting systems without manual entry.
Step 2: Bookkeeping and Reconciliation
Routine accounting functions are performed by offshore team members using proven processes.
Step 3: Reports
Monthly reports and KPI dashboards are produced.
Step 4: Analysis and Advice
Trends are examined and senior advisors make recommendations based upon data to help clients remain on the right track and accomplish their goals.
Step 5: Meetings with Clients
CAS Teams meet with their clients on a routine basis to review performance and future plans.
The Growth Of CAS Is Being Driven By Technology
Modern CAS practices are based on technology.
CA firms can efficiently serve more clients using cloud accounting platforms, automation tools, and AI driven reporting systems.
Examples Of CAS Technology Stacks
• QBO
• Xero
• Bill.com
• Gusto
• Avalara
• Power BI
• Fathom
• Karbon
• Hubdoc
While technology can be helpful, it is not sufficient to successfully run a CAS Practice.
Successful CAS firms integrate technology with a highly productive accounting team and strong client communication.
How CAS Impacts Wealth Of CPA Firms
CAS is revolutionizing both service delivery and also, the valuation of CPA firms.
Firms that have been successful with CAS typically enjoy:
• Increased client retention
• Increase in recurring revenue
• Improved profit margins
• Increased firm value
• Less seasonality
• Create stronger relationships with clients
• Create more opportunities to sell to existing clients through cross selling
Advisory services also generate significantly higher realization rates than traditional compliance services.
How a CPA Firm Transformed Their Business via CAS
Consider a mid-sized, that has approximately 250 business clients.
Historically, the CPA firm focused primarily on tax compliance and year end accounting services.
The Firm experienced the following challenges:
• Employee burnout during tax season
• Difficulty acquiring experienced staff
• Limited recurring revenue
• Low levels of advisory services engagement
Following the launch of a CAS division through an Offshore Accounting Company, the Firm had the ability to:
• Develop Outsourced Bookkeeping Services in the USA
• Provide Offshore Tax Preparation Services to CPA Firms
• Offer Payroll Outsourcing Services
• Revise Financial Planning & Analysis support
• Launch Virtual CFO Services
Within 2 years the CPA Firm was able to achieve the following:
• 40% increase in the amount of recurrent revenue
• Reduced overtime pressures during tax season
• Increased client retention
• Decreased turnaround times
• Increased profitability per client
The most important thing for the Partners was to spend more time providing advice to their clients versus dealing with operational bottlenecks.
Clients' Reasons for Choosing CAS Firms
The trend in business is toward choosing firms that provide support proactively rather than, after the fact, and are there when it's needed to help. Clients want to receive:
• Timely Financial Information
• Assistance with Making Better Decisions
• Immediate & Ongoing Financial Information
• Guidance Regarding Cashflow
• Having Technology Integrated
• Help with Developing Strategic Plans
Because CAS firms are able to integrate themselves into the client’s operations on a deeper level than just through providing day-to-day accounting assistance, their relationships with clients are much more substantial and sustainable.
What's Next For CAS
For CPA firms who are focused on growing, having a CAS offering is no longer optional.
It is also becoming a vital component of long-term competitiveness.
In the next 5 years, we should expect to see:
• A significant growth of AI-driven automated accounting solutions
• An increased number of collaborations with offshore firms and associates
• An increase in the number of Subscription-based Pricing models
• An influx of Virtual CFO Services
• An increase in the need for strategic advisory services
• Increased expectations from clients regarding receiving timely financial information
The firms that choose to adapt early will receive an extraordinary competitive advantage within their respective markets.
Selecting the Best Outsource Partner
All outsourcing companies differ from each other. CPA firms need to ensure they choose an outsource partner that understands:
- U.S. GAAP
- CPA firm processes
- Information security/compliance
- Cloud accounting applications
- Communication/Cultural expectations
- The ability to provide scalability
The best CPA firms and their Accounting Outsourced partner will function as an actual extension of the CPA firm and have the following characteristics as far as both firms are concerned:
- Process Optimization
- Quality Assurance
- Integration with Teams
- Transparency
- Long-Term Relationship
Conclusion
The field of accounting has begun to undergo a transformational change.
Although compliance work will continue to play an essential role, firms that provide both compliant and strategic advisory services will capture the market share in the future.
CAS enables CPA Firms to enhance client relationships, provide repeatable and reoccurring sources of income, and develop scalable and highly profitable long-term growth.
The process of scaling CAS effectively necessitates having the correct combination of individuals, procedures, and technologies.
As a result, an increasing number of CPA firms are utilizing:
• Remote CPA Outsourcing Service Providers
• Offshore Staffing Solutions
• Outsourced Accounting Services for U.S.-based CPA Firms
• Offshore Accounting Services for CPA Firms
• Offshore Virtual Assistance Services
• U.S.-based Outsourced Accounting Solutions
The objective is not only to save money.
The objective is to develop a modern and scalable advisory-driven CPA Firm for future success.
Firms investing in delivering CAS today will be at the forefront today as accounting firms adapt to the shifting landscape of the accounting profession.
