By Randy Johnston
Client account services (CAS), also referred to as client advisory services, make your clients happy to see you … when done well. By offering smartly executed CAS, your firm will be able to help owners and managers run their businesses better and more profitably. Hiring you for CAS lets clients focus on the things they love instead of doing the accounting.
CAS can include a variety of services; ideally, your firm should offer three or more in any engagement. Examples of CAS are accounting, bill payment, accounts payable, expense management, document management, document gathering, forecasting, reporting, key performance indicators, payroll, time sheet automation, human resources compliance, sales tax compliance, flow-through tax returns, among others. Please note: you do not have to offer every service named here, and there are certainly additional services where your clients could find value.
CAS can be offered at one of three levels: bookkeeping, controllership, and outsourced CFO. While providing outsourced CFO services is an interesting and profitable practice, it can be difficult to provide leverage on CFO services, which typically include assisting with raising money or obtaining financing, analysis of returns on investment and capital allocation, retirement and executive transition planning, insurance and risk management, budgeting and internal-use-only forecasting, management accounting and other internal-use-only tasks, and investment management. Virtual CFO services are management consulting/management advisory services, and a firm can only provide this service if independence is foregone. It does provide opportunities to help clients with new types of services. If you have a large, profitable audit practice, these clients may not be candidates for your CAS. On the other hand, bookkeeping and controllership CAS may provide a larger, recurring revenue stream than the audit department.
How to Start with CAS
CAS solutions have become a more feasible growth area due to cloud-based accounting and business products that run in a browser. They make multiuser accounting from any location possible.
Consider these items learned by helping firms and associations build out their CAS practices:
- Processes and consistency are overlooked until it is too late. Take the time to define your processes before you onboard your first client.
- Revise your processes continuously. There are some marvelous "how-to" guides in the market, and the free "How to build a highly profitable Client Accounting Services (CAS) practice in 90 days" from AccountantsWorld is a superb choice, as is AICPA's "Setting the stage for CAS success."
- Staff appropriately. Firms that try to run an entire CAS practice with CPA professionals have a hard time getting the profitability right. However, if you use two-year community college or high school graduates who are interested in accounting, you can hire them at great rates.
When it comes to pricing a CAS, first determine the services you want to provide and the rough costs to provide the service, and then set a flat-rate price. Create a service-level agreement (SLA) that specifies what you will provide and what your expectations are of the client. It should be very clear and based on objective criteria, and it often has financial penalties for failure to meet criteria. You will need additional measurement and reporting to be able to track the status of the SLA among your team members, and many practice management products don’t do this very well. Remember that some of the process is automated, so many transactions will be automatically imported from bank feeds and reconciled using bank and credit card rules, so the amount of labor required should be minimal.
Some Potential CSA Tools
Our advice is to only offer services on one accounting system. Be aware that smaller systems will not have the capabilities to handle more complex situations or clients. Some firms evolve into using two systems. On the other hand, you can use a more complex system for everyone, but your costs will be higher and the system will be more complex to learn. These systems tend to be very common: AccountantsWorld Power CAS, QuickBooks Online, Sage Intacct, Xero, and Zoho. Other options include BQE's Core, Gravity Software, QuickBooks Desktop (hosted), and Sage Business Cloud Accounting.
Some systems have almost every feature that you need for a CAS practice; others require several add-on tools. I recommend picking one tool for each service line and sticking with it. Tools are available for accounts payable (Receipt Bank, Entryless, Bill.com, CloudX), expense reporting (Zoho Expense, Tallie, Expensify), electronic checks (Checkbook.io), document retrieval/recognition (FileThis Fetch, Entryless), professional service management (Core), among other service lines you might offer.
We Are Not Done Yet
Listen to your clients' needs carefully while you are trying to assemble an offering. Create an innovation lab, or sandbox, that can be used for testing new applications and techniques. Test the offering with a few trusted clients, and then expand into more of your base. Remember, you don't want to give away the efficiencies gained by reducing fees or prices. Over time, poor competitors are likely to compete on price, but initially you should compete on value. Use the time freed up by the applications to provide a higher level of service, perform more business development, reduce the workload of your team, or allocate the time to other worthwhile projects.
Expect some of the applications to not work out as you expect, and act quickly to set these options aside. Also, remember to package service offerings as a product and to have marketing documentation and procedures to support it. Revise the procedures and offering frequently until you have it finely honed to fit your client base.
Be wary. There are many partially baked offerings out there that aren't really what is needed for CAS. The keys to potential offerings are do they work sufficiently well today to be useful, are they affordable, and do clients and/or your firm have a better experience while using them? If so, you can pursue innovative products today and be ready for the new opportunities of tomorrow.
Here are a few related PICPA CPE courses.
Randy Johnston is a shareholder in K2 Enterprises LLC, a CPE provider to state CPA societies. He also owns Network Management Group Inc., a managed services provider. Concepts for this article were extracted from the CAS session produced as part of the 2018 and 2019 K2 Technology Conferences and Johnston's own experiences working with technology.
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