After observing client accounting services (CAS) practices at many firms, Bill Reeb, CPA/CITP, CGMA, noticed a pattern: CAS revenue would grow steadily until it reached about $2 million a year. At that point, many CAS practices would see revenue stagnate.
The problem, he deduced, was that at many firms the CAS practice was the domain of one highly motivated staff member. “Firms can grow from nothing to $2 million in CAS” through the “entrepreneurial mindset of a single committed individual,” he said during a session July 23 at the AICPA ENGAGE 2020 digital conference. But to surpass the $2 million threshold, he said, “the entire firm has to buy in” to the CAS practice.
Reeb, CEO of the Succession Institute in Austin, Texas, and a former AICPA chair, shared ideas for getting firm leadership fully on board with CAS during his session. He also diagnosed issues that can prevent CAS practices from taking off, including the following:
The CAS service line leader and their manager are not in alignment. When developing a CAS practice assessment with the AICPA’s technology arm, CPA.com, Reeb and his partners found “a lot of disconnect between what the line leader thought the problems were and what their boss thought.”
Partners haven’t bought in. CAS, especially more complex aspects such as virtual CFO services, is “a big push,” Reeb said. To succeed, it needs to be part of the firm’s formal strategy and have a budget and staff dedicated to it.
Partners, he said, “need to provide leads to CAS.” If they don’t, “it’s up to the CAS leader to carve out a path and find their own clients. You will have a problem reaching past the power of that single person’s commitment.”
The CAS practice is inadequately staffed. Reeb recommended that, at a minimum, the firm have two people dedicated to CAS full time. “You need a service line leader who can do the internal selling and focus on management and marketing,” he said, and a second person who can handle the day-to-day details. That second person doesn’t necessarily need to be a CPA, he said.
It’s important that the line leader be devoted to CAS full time, Reeb said, because if they only spend part of their time on CAS, they’ll have a tendency to gravitate toward other tasks that they may feel are a higher priority for the firm.
Reeb also shared his thoughts on how he sees CAS evolving. In the near future, he said, firms will need to branch out beyond services that can easily be automated, such as bookkeeping, and into such areas of CAS as controllership services, CFO services, and what he terms “trusted adviser services,” which include strategic and tactical planning assistance, consulting, and attending management and board meetings.
Many firms’ CAS practices evolved out of their existing bookkeeping services, he observed, adding that, “if our true intent is to differentiate CAS from our previous bookkeeping services, we need to offer unique services that tie people directly to our firm and create loyalty.” Firms will need to “move to digital dashboards and advisory-level services because that will differentiate what you do long term,” he said.
— Courtney L. Vien (Courtney.Vien@aicpa-cima.com) is a JofA senior editor.