Client advisory services (CAS) is the fastest-growing service area in the profession (see the sidebar, “CAS By the Numbers”). As the area matures, some firms have moved from solely providing financial CAS to bringing clients deeper business insights. In doing so, they have differentiated themselves by elevating their position to that of strategic business partner for their clients. Learn how — and why — firms have taken this step.
FINANCIAL CAS AND BUSINESS INSIGHTS CAS
Most firms start their CAS journey by offering “financial CAS”: cloud-based financial services, typically delivered through a standardized dashboard of financial information (see the graphic “CPA.com CAS Practice Maturity Model,” below). Financial CAS involves providing accounting services and technologies up through the point of taking on controllership duties for companies that don’t have this expertise in house. It focuses on more transactional accounting and controllership services, such as accounts payable or receivable, payroll, reconciliations, and cash flow management. It offers a historical view of company performance, “but there is a limited ability to help clients make better business decisions,” said John Yeager, CPA, managing director at WP Edge, a roughly 100-person CAS practice arm of 700-person firm Whitley Penn. Yeager is based in Ponte Vedra Beach, Fla.
Many critical technologies — such as cloud-based accounting and financial management software — helped drive the growth of financial CAS. However, as these tools have become more prevalent, “they have become table stakes,” said Missy Thompson, partner, client accounting services practice leader, at Chicago-based Baker Tilly US LLP.
Some firms have taken it a step further. They expanded their services to offer “business insights CAS,” augmenting the financial reporting that is the hallmark of financial CAS with additional insights, which they generate by examining clients’ financial and nonfinancial information and tracking their clients’ progress against industry-specific KPIs. Business insights CAS involves going beyond accounting to help clients “set goals, determine how to meet them, and decide what technologies they need to make smart business decisions,” said Jodie Heal, CPA, president of seven-person firm Heal Accounting in South Thomaston, Maine, whose entire firm is devoted to CAS. “Clients see it as partnering with you for business success.”
Business insights CAS is more than high-level trend analysis based on what the financials are saying, Yeager said. Instead, clients are seeking help in areas such as fractional CFO services, business transformation, financial planning and analysis, and forecasting and cash flow budgeting, as well as how to address industry-specific problems. “They want to know not only that revenues are up but specifically why and how best to react to and enhance that growth,” Yeager said.
CAS 2.0, a methodology and framework outlined by CPA.com, the AICPA’s business and technology arm, provides guideposts to help firms make that step. It offers specific components that can help firms scale as they update their business practices to deliver business insights CAS (see the graphic “CAS 2.0 Practice Strategy Focus Areas,” below).
THE DEMAND FOR DEEPER INSIGHTS
The pandemic has driven increased demand for business insights CAS, said Kalil Merhib, vice president, Growth & Professional Services, CPA.com, which has been raising awareness of the evolution of CAS. As clients searched for new and unique business strategies and to adapt to accelerating marketplace changes, CPAs were able to step in to collaborate with them and guide them. The conversation between CPAs and clients shifted from focusing on providing compliance documents such as tax returns or financial statements to offering advice and insights to help clients navigate the many unexpected developments.
“Clients got a taste of having these types of advisory conversations with firms, and firms got a taste of what it was like to deepen the value and services they can provide as their clients’ trusted business adviser,” Merhib said.
That shift mirrors a transformation that is occurring in companies’ finance function, involving greater digitization and a demand for deeper insights, according to Merhib. “Companies want information faster and more often,” he said. Like CAS practices, finance functions are moving from focusing on data to emphasizing business insights.
Many smaller companies that don’t have CFOs have completely outsourced their accounting and finance functions. In her CAS practice, Thompson’s team provides businesses advice and assistance with strategic planning and management, mergers and acquisitions, and a host of other concerns. “We can offer expertise in many areas, beyond just one person’s knowledge,” she said. “We want to make sure our clients can see the whole picture.”
A CAS team can provide tremendous value, Heal said. “When you can have a team of people with the level of knowledge that a CPA firm can provide, you have a powerhouse of analytic advisers with a breadth of knowledge that most companies can’t afford,” she said. “Our team knows the business in and out.”
CAS PROMPTS FIRMS TO ADOPT A NEW BUSINESS MODEL
To deliver business insights with CAS most effectively, firms can adopt the business practices associated with CAS 2.0, including changing their relationships with clients, reinvigorating their processes and roles, and reimagining their approach to client service.
Getting out of silos
Firms may want to move from a silo model, in which each partner or service area works fairly independently, to a cross-firm approach. At Baker Tilly, for instance, the CAS team takes the lead on engagements, but it brings in experts from different parts of the firm to address specialties as client needs change.
One advantage of this approach is that Thompson’s team can alert other teams to changing client needs. For example, when a client moves to or opens a new location, takes on new employees, or starts a new product line, a firm’s tax or sales tax team may not find out until after the fact. Thompson’s team will inform colleagues on other teams about such changes before they happen, enabling them to get up to speed on client actions and offer advice early in the process.
Outside of a CAS engagement, “clients may not typically ask if you can help them in acquiring a company, [for example,]” Yeager said. If the firm is serving as the company’s adviser, however, those kinds of conversations are more likely to take place, enabling the firm to bring in its transaction advisory services team.
Moving away from the billable hour
To accelerate the move to business insights CAS, firms can opt to move away from the billable hour and instead adopt subscription or other methods of recurring billing for bundled services, based on the value of the service and not on how long it took to perform. These services may be categorized into tiers of productized service offerings, according to Merhib. The new business model will also mean that recruitment, compensation, and career paths for CAS staff will change because, among other reasons, accomplishments and goals are no longer measured in hours billed, Merhib said.
Adopting new roles
In a firm practicing business insights CAS, firm member roles are often significantly different from those in a traditional firm. Heal’s firm, for instance, has revised its organizational chart and job descriptions to build a team that best serves its verticals, she said. Nonfinance people — whether in house or contractors, such as technology experts — collaborate with firm members. “Staffing is a big puzzle that we’re constantly shifting, based on client needs,” she said.
As the type of CAS skills a firm needs continues to evolve, “we have to know how to pivot, particularly as technology changes at a rapid pace,” Heal said. “A lot of our training focuses on change management.”
Increasing scalability
Making the leap to business insights CAS requires a growth mindset and firm leaders who understand the market landscape, including the competition from non-CPA firms, according to Merhib. To create a strong foundation for business insights CAS, he recommended that firms first invest in optimizing their existing financial CAS practices by making internal processes and use of technology consistent and repeatable.
Improving client education
Because it is so groundbreaking, firms should be prepared to introduce CAS to clients. “Clients know they’re not getting what they want, but they can’t articulate that need,” Heal said. “They want a more organic relationship that many clients find difficult to explain.” As a result, firms should be sure to detail the services they can offer, the advisory role they will play, and the benefits their partnership will bring.
When it comes to services, Thompson advocated for building on what you know. Start by examining your existing client base and consider where you can provide the best value. “Ask yourself questions about which industries you want to work with, what size of client, and what stage in their life cycle,” she said. Then consider which dashboards and key metrics can provide value to those targeted clients.
Revamping tech strategy
Given technology’s pivotal role in any CAS practice, firms will need a tech strategy not only for client services delivery but also for standardizing firm systems for greater efficiency. Firms providing business insights CAS create templates for services so that teams can learn faster, processes can be streamlined, and firms can offer more consistent service to clients, Merhib said.
Firms should also find the right tech solutions for specific client industries. That allows the firm to deliver deeper, more customized advice and help clients seek new ways to automate functions so that finance leaders or company owners have more time for analysis and planning, Heal said. As a result, “it’s important to broaden skill sets around technology,” she said.
With that in mind, firms should decide what kind of infrastructure is needed — in terms of systems, reporting, and platforms — to enable their advisory component.
WAYS TO LEARN MORE
As a small firm practitioner, Heal networks with other CPAs to answer questions on practice issues, such as technology, client service, and staffing. “We share the good and the bad,” she said. Given the high demand for CAS services, she doesn’t feel competition with other CPAs. “We want to see each other succeed,” she said.
Heal urged smaller firms to investigate the many related resources available to them on CPA.com. Merhib also recommended finding out about resources or networking opportunities offered by state CPA societies, firm associations, and the Digital CPA community.
BECOME THE CHIEF VALUE OFFICER
As business owners move to build on what they learned during the height of the pandemic, CAS 2.0 is helping them take advisory services to the next level. “Focusing on delivering business insights CAS positions the firm as the chief value officer for that client,” Merhib said. “It gives the firm a seat at the table.”
CAS by the numbers
According to the most recent data from CPA.com and the AICPA:
■ The 2020 CAS Benchmark Survey found that firms grew at a median rate of 20%, almost twice as fast as the 12% reported in the 2018 survey and more than three times the average practice growth of 5.7% reported by other 2020 CPA firm benchmark surveys.
■ In 2020, the mean gross profit margin for CAS was 47% for top performers and 34% for all respondents.
Watch for the results of the 2022 CAS Benchmark Survey, conducted by CPA.com and the AICPA.
About the author
Anita Dennis is a New Jersey-based freelance writer. To comment on this article or to suggest an idea for another article, contact Courtney Vien at Courtney.Vien@aicpa-cima.com.
AICPA RESOURCES
Online resources
CPA.com CAS practice area resources
CAS Benchmark Survey
CAS Questions Everyone Wants the Answers To
CAS Workshops
Report
Frictionless Finance: Driving Data to Value, AICPA & CIMA, Deloitte, and Workday
LEARNING RESOURCES
CPA.com Client Advisory Services (CAS) Roadmap Workshop
Live online — Dec. 13–19
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 your firm achieve success in client advisory and accounting services.
CONFERENCE
Join us this year in Austin, Texas, or tune in virtually Dec. 4–7 and dive into the latest strategies, emerging technologies, and data trends impacting the accounting, finance, and advisory roles.
CONFERENCE
For more information or to make a purchase, go to aicpa.org/cpe-learning or call the Institute at 888-777-7077.
