Client accounting services driving revenue growth

Client accounting services (CAS) is becoming an important revenue category for public accounting firms of all sizes, with larger firms seeing it gain a significant slice of their revenue pie during the past two years, according to a survey from the AICPA Private Companies Practice Section (PCPS) and CPA.com, the Institute’s marketing and technology subsidiary.

The percentage of net client fees provided by CAS, which includes outsourced finance and accounting services and other back-office support for clients, more than doubled for firms in the largest revenue segment tracked by the 2016 National Management of an Accounting Practice (MAP) Survey, initial results of which were released earlier this fall and showed top-line revenue growth among firms of all sizes.

Among firms with revenue of at least $10 million that offer virtual CFO and other client accounting services, CAS accounted for 9% of net client fees, up from 3.9% in the 2014 MAP survey. The CAS category also produced double-digit percentage gains in the next two largest MAP segments—firms with annual revenue of $5 million to $10 million and those with annual revenue of $1.5 million to $5 million.

“It’s safe to say that nearly 10% of revenues in the profession are focused on client accounting,” said Mark Koziel, CPA, CGMA, the AICPA’s executive vice president—Firm Services, who discussed the survey results at the 2016 Digital CPA Conference in Las Vegas. “And depending on the size of the firm, it may be more or slightly less, but overall it’s a strong category on its own. Tax and audit continue to be the number one and number two revenue categories, but client accounting demonstrates growing significance to the profession.”

Among firms that offer CAS, the percentage that the category contributes to the top line ranged from 20% for the smallest firms (those with revenue of less than $200,000) to 8.5% for firms in the second-largest revenue segment.