8 insights from top-performing CAS practices

Choose both clients and software programs with an eye to efficiency and repeatability.
By Courtney L. Vien

IMAGE BY SERGII IAREMENKO/GETTY IMAGES
IMAGE BY SERGII IAREMENKO/GETTY IMAGES

Client advisory services (CAS) has proved a growth area for accounting firms. According to the second Client Advisory Services Benchmark Survey from CPA.com and the AICPA Private Companies Practice Section (PCPS), CAS practices grew by 20% in terms of net client fees per professional between 2018 and 2020.

CAS can be "a growth engine for the profession," said John Yeager, CPA (inactive), managing director of the outsourced accounting practice at Bennett Thrasher in Atlanta. Accounting has traditionally been dominated by audit and tax, but CAS, he believes, is becoming "the third leg of the stool."

But running a successful CAS practice requires CPAs to adopt a different mindset toward client service. Accountants offering CAS, a term that incorporates a spectrum of services including controller and CFO services that support business advisory for clients, generally stay in closer touch with their clients throughout the year than they would doing tax or audit work. To perform this work most effectively, CPAs often must adopt different software programs and processes, track time and work differently, and bill for services differently.

How can firms best manage this shift to advisory work? The CAS Benchmark Survey shed some light on this question by identifying the top-performing CAS practices — the top 25% of survey respondents with the highest net client fees per professional — and tracking what they did differently. Below are best practices identified by the survey, accompanied by advice from leaders from four of the top-performing firms:

1. Move away from hourly billing

Many firms have moved away from hourly billing in their CAS practices. When clients are billed by the hour, Yeager said, they can feel "like they're on a meter" and be reluctant to call their CPA firms with questions for fear of being charged. But CAS relies on a close relationship between CPAs and clients, and it isn't as effective if clients are hesitant about getting in touch.

What's more, many CAS clients are small businesses, and they appreciate the "budget certainty" of a fee that stays constant from month to month, Yeager said.

Many top-performing CAS practices use various forms of fixed-fee or value billing, though they may still bill a minority of their clients by the hour. All four of the firms cited in this article charge clients a fixed monthly fee based on the estimated hours their engagement will require, as well as its scope and complexity. When determining pricing, all four of these firms also take into account the value the engagement will bring their client, and they factor in what it might cost a client to do the work they provide in-house.

Another advantage of moving away from hourly billing is that it allows firms to use package pricing. Offering clients a "menu" of service options helps them see what you have to offer and determine what they do and don't need, said Beth Allen, CPA, partner and head of client accounting services with GreerWalker. Her firm gives clients a choice of three packages, which clients can then customize by adding or omitting services. Jason Miller, director of business consulting services with Dean Dorton, said his firm likewise allows clients to choose from three pricing levels: full outsourced accounting ranging from day-to-day transactions (such as bill paying) through CFO services; day-to-day transactions only; or outsourced controller and CFO services only. The latter option works well for clients who have in-house bookkeeping staff but want more advanced advisory services, said Miller, who works out of the firm's Lexington, Ky., office.

2. Establish dedicated CAS staff

Many top performers have found that, for a CAS practice to operate most efficiently, it helps to have staff who are devoted solely to CAS. In the CAS Benchmarking Survey, in fact, a median of 56% of top performers said all their CAS staff worked entirely on CAS, versus a median of 43% of all respondents.

CAS staff can be more effective when they're not dividing their time between CAS and other areas of the firm, Miller said. CAS is "not a service that you can just do part time," he said. "You can't disappear [from the CAS practice] during busy season. This is an every-month, all-year-long type of job."

3. Restrict the number of general ledger software programs you support

In the CAS Benchmark Survey, a median of 88% of top performers supported no more than three general ledger (G/L) software programs, versus a median of 79% of all respondents. Limiting the number of G/L programs you use makes for greater efficiency because it reduces the amount of time staff need to spend learning new software.

"Identify the technology you need to use to be efficient and understand it, implement it, and stick to it," advised Scott Lazarone, CPA, partner at Faulk & Winkler in Baton Rouge, La. "Whenever we have clients that follow our tech stack, it's so much more efficient and more enjoyable for both our internal staff and the clients." His firm occasionally accepts clients that don't use one of their two main G/L systems, he said, but does so with the caveat that fees might be higher as a result. "Our desire is that eventually we can move [such clients] to one of our preferred programs," he said.

Other top-performing firms, including Miller's, turn down potential clients who aren't willing to switch to their platforms. "We hold to that because we believe we deliver better service with the right tools," he said.

4. Invest in staff

Hiring the best staff, treating them well, and ensuring they get the training they need are, naturally, best practices for any accounting firm. Top CAS performers, though, stress the importance of staffing to a high-touch area such as CAS. "We recognize the fact that in order to service our clients well, we need to service our staff well, so we need to give them the tools that they need to do their jobs effectively, and maintain sufficient capacity to where everyone's workload is spread out and they don't become overwhelmed," Lazarone said.

Top performers also emphasize the need for training and development. In the CAS benchmarking survey, top performers said their staff took a median of 44 hours of CPE or training per year, versus a median of 37 hours for all respondents. Allen, whose firm has offices in Charlotte, N.C., and Greenville, S.C., said that her staff are trained in CAS processes and software but also receive training in their niche areas and take part in a continuing education program sponsored by the alliance her firm belongs to.

5. Secure buy-in from firm leadership

In top-performing CAS practices, firm leadership not only understands the value of CAS but has also aligned firm strategy and goverance to support CAS growth, said Kalil Merhib, vice president of Sales & Client Services at CPA.com, the business and technology arm of the AICPA. Ensuring that your firm's leadership understands the value of CAS practice will benefit your practice, Lazarone said. At his firm, he said, "everyone has bought into the idea of CAS and knows how profitable it can be," which has led to "a very strong pipeline for internal referrals," he said. "The tax partners, the audit partners, they understand CAS, they value it, and when they see an opportunity, they generally jump on it pretty quickly." He recommends that non-CAS partners learn "what exactly CAS is, why it's not bookkeeping, how you price it, and how you evaluate it."

6. Be selective about which clients you accept

CPA firms know that accepting clients that aren't a good fit will likely lead to conflict sooner or later. That's especially true for a CAS practice, where CPAs work so closely with business owners. CAS practices are also most successful when they use software to automate routine tasks, and so clients who balk at converting to a practice's software system might not be ideal.

"CAS works when you can take the same processes and [use] them across multiple clients," Allen said. If, during the proposal process, a prospect says they don't want to use your systems or process, it's a sign that you "just need to kindly not move forward," she said.

Lazarone's firm has found that clients who are too fee-sensitive usually aren't right for its CAS practice. "We believe that to provide the service how it needs to be provided, and to be a true adviser, we need to be ingrained in [a client's] business. In order to do that, we're not going to have the lowest fees" they'll find, he said. His firm is transparent about this with prospects. "We're very honest with them and tell them that we're not the cheapest but we believe we provide a better service," he said.

Clients who aren't looking for true advisory services aren't right for his firm either, Lazarone said. "If they're adamant that they only need bookkeeping, and they're not looking for a true partner in their business, that's when we know it's not a good fit," he said.

7. Focus on a few main niches

Concentrating on a limited number of niches or verticals will allow your staff to develop expertise in those areas, something that's harder to do if they work with a wide variety of clients. When you home in on a niche, you build confidence in that area. "Those are the areas we know we're good at," Allen said. "We can provide the most advice to those clients because we have other clients who do the same thing."

When you work within a niche, you can also replicate processes that work for multiple clients across that niche. Miller said that his staff has built similar dashboards and set similar KPIs for clients within the same industry, without having to recreate them from scratch each time. That, he said, helps keep costs down.

8. Educate clients on CAS and its value

Many clients aren't aware of what services CPA firms can offer them beyond bookkeeping and compliance, and how these services can boost their businesses. "So many of them come to you saying, 'I need bookkeeping,'" Lazarone said. "But often they need a lot more than that."

Yeager recommends talking to the client about their needs, and he cautions not to assume that clients will know what they need from you, because sometimes they don't. Asking questions such as "What are you trying to accomplish?" or "What are your pain points?" can "evolve into more value for you and the client," he said.

Firms should also educate staff on the value proposition of CAS — what it is and what it is not, Merhib said. Staff should be able to differentiate (and articulate) CAS from traditional accounting services, as well as set proper expectations with clients about the value it can bring them. One benefit of doing so, he said, is they will then be more likely to identify potential CAS clients and refer them to the CAS practice.

Looking to the future

This is an opportune time to ramp up the advisory services your firm offers, Allen said. The COVID-19 pandemic taught CPA firms and clients alike that they could work successfully remotely and made both more comfortable with the cloud technology upon which CAS relies. And, as Miller pointed out, during a tight labor market, clients who struggle to hire in-house finance staff may find a ready solution in outsourced accounting.

In the future, Allen, Lazarone, Miller, and Yeager all said that they see their practices moving in the direction of offering more true advisory services. "This practice area for our firm, and I think for many firms, is the next wave of where the profession is headed," Allen said.

"There is tremendous opportunity for firms in CAS," Merhib said. "As the service line continues to evolve from a focus on compliance and the processing of historical, transactional data to providing next-level anticipatory advisory services and business insights to clients, we anticipate CAS growth will only continue."

To comment on this article or to suggest an idea for another article, contact Courtney L. Vien at Courtney.Vien@aicpa-cima.com.


AICPA RESOURCES

Articles

"7 Tips for Starting a Client Advisory Services Practice," JofA, Aug. 1, 2021

"Remove Roadblocks to CAS Practice Growth," JofA, July 28, 2020

"Professional Liability Spotlight: Minding the Expectation Gap in a CAS Engagement," JofA, Aug. 1, 2018

"Client Accounting Services Driving Revenue Growth," JofA, Feb. 1, 2017

Podcast episodes

"The 4 Pillars of Starting or Growing a CAS Practice," JofA, Oct. 21, 2021

"What to Know Before Offering Client Accounting Services," JofA, April 21, 2020

Online resource

CPA.com Practice Area Resources: Client Advisory Services

White papers

Accelerate Into Advisory (member login or registration required)

Setting the Stage for CAS Success


LEARNING RESOURCES

Client Accounting Advisory Services Certificate

The Client Accounting Advisory Services certificate helps firms demonstrate their expertise in the fundamental client accounting service deliverables.

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CPA.com Virtual Client Advisory Services (CAS) Roadmap Workshop

The CAS Roadmap Workshop helps firms develop a plan to build a CAS practice or expand an existing client accounting service line, using a proven and tested practice development approach to help firms achieve success in client advisory and accounting services. Offered once a month.

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