The number of accounting firms offering client accounting services or client advisory services (“CAS”) as part of their professional services is growing rapidly. A CAS practice serves as an outsourced accountant for businesses of all sizes and typically handles anything from bookkeeping to managing cash flow to payroll. More recently, many CAS practices have gone beyond this more transactional or compliance work (aka CAS 1.0) to provide advice and insights, including dashboarding, real-time reporting, and more (CAS 2.0).
For firms looking to add CAS to their service lines or existing CAS teams looking to accelerate growth, there’s a market rife with opportunity. How a firm prepares for and navigates that growth can be the deciding factor in how effective a CAS practice can be for a firm’s overall health.
The Exploding CAS Market
Client demand for advisory services is increasing at an impressive pace. According to the latest AICPA CAS Benchmark survey, CAS grew at a median rate of 20%. This is almost double the 12% rate reported in the previous survey from 2018. Additionally, a 2020 report found that 68% of accounting clients would want their CPA firms to also provide strategic, advisory consulting.
One major factor for this growth is the increasing complexity of financial issues facing businesses. As these companies grow and expand, they face a wide range of financial and strategic challenges, such as managing cash flow, navigating complex regulations, and identifying new growth opportunities. As a result, they are turning to financial advisors and consulting firms for help in addressing these issues and providing valuable business insights to help them navigate their many challenges.
Another factor contributing to the growth of the CAS market for mid-market businesses is the shifting economic landscape. The current economic environment is characterized by increased competition, rapid technological change, and shifting consumer preferences, all of which are making it more difficult for businesses to succeed. In this environment, many mid-market companies are turning to financial advisors and consulting firms for help in developing and implementing effective strategies. Given their closeness to the financial data, CAS teams are prime to be strategic partners who can provide business insights.
Additionally, the use of technology and data analytics are increasingly important for businesses, as they help them in making data-driven decisions and to identify new growth opportunities. This is also increasing the demand for consulting and advisory services that can help mid-market businesses to take advantage of these technologies.
For firms looking to add a CAS service line or for existing CAS teams wanting to grow, the market is rife with opportunity. Many top accounting firms place a large emphasis on CAS as one of their fastest-growing revenue segments. In fact, 90% of firms with CAS offerings claim CAS is “important to the firm’s future” and 80% claim CAS “provides superior revenue growth” and is “attracting new clients.” With proper scaling and strategy, along with a razor-focus on client satisfaction, the resulting profit for the firm (including cross-selling opportunities for new clients CAS brings in) could be significant for years to come.
Accelerate Growth: Building a CAS Practice That Thrives
With so many benefits to building a CAS firm or growing CAS service lines, how can a firm ensure that growth is managed in a way that is both capitalizing on the revenue opportunities and sustainable for the firm long-term?
Get Pricing Right
There are multiple elements to nailing pricing for your CAS offerings for clients. Do you bill based on annual agreements or offer fixed price models? Do you bundle your services to offer clients a menu of options they can choose from or stick to streamlined offerings that you know your firm can handle? How do you properly estimate the time and cost needed to perform what the client requests?
The 2020 AICPA Benchmark survey found that top-performing CAS practices were more likely to bill based on fixed or not-to-exceed-fee pricing (60%). This shows a clear shift in the industry as the 2018 survey showed the majority of practices used time and materials billing (53%). With fixed-fee pricing, firms gain the advantage of consistent, advanced payments that better contribute to the firm’s cash flow than other pricing models. A fixed-fee model also creates a structure that encourages the use of technology and process improvements to reduce time spent and improve margins on these projects.
Setting your rates and pricing models is only half the battle. When taking on new clients, each will bring its own unique set of circumstances, needs, and potential trouble spots that you will have to navigate. One-size-fits-all pricing could land you in a precarious position if you stumble upon unexpected hurdles once you get into the client’s accounting system.
Fortunately, there are tools out there to help. Strongbox, for example, has several CAS clients that use our software during the sales process to fully understand a business’s financials before providing a final fee quote. Strongbox provides an instant 360-degree financial view of a business straight from its own accounting software. Firms can then properly identify areas where extra hours will be required, clearly show the client these areas with auto-generated visuals, and then present a price that accurately represents the work that needs to be done.
Streamline and Standardize
One of the best things a CAS team can do is to implement agile workflows to increase capacity and streamline processes. Scaling up the practice will be easier when the whole CAS team follows the same process, resulting in more efficient work and streamlined training for new employees. Workflow software can help increase productivity and free up capacity to take on additional clients.
Part of streamlining processes is to identify areas that can be automated, freeing up bandwidth on your team to focus on high-value work. To run a profitable CAS firm, you should focus more on advising clients rather than the repetitive accounting tasks that accounting technology can perform for you. When your team can automate repetitive tasks, they have more time to advise clients and prove their value to them. A robust tech stack that tackles your biggest bottlenecks will be your best friend in scaling your practice.
One area in particular for CAS practices where technology can vastly improve efficiency (and thus the capacity for more clients) is in the standardization and automation of regular reporting. Once again, Strongbox comes in handy in these situations. The Strongbox output can be customized to match your firm’s branding so that output and reports can be extracted uniformly across all clients and delivered to clients with a consistent look and feel.
Lastly, streamlining processes should be an ongoing endeavor. Your team will have valuable feedback on what’s working, what isn’t, and what areas are troublesome bottlenecks. Regularly collect that feedback and iterate on your processes for the best results.
Stay Customer Focused
The single biggest resource any CAS firm has is their exciting clientele. Exceptional customer service is key to building a loyal client base. When customers have a positive experience with a firm, they are more likely to come back and recommend them to their friends and family. Furthermore, exceptional customer service shows your clients that their business is valued and that their needs are taken seriously. This builds a sense of trust and loyalty between the them and your team. Providing personalized attention, quick response times, and going the extra mile to meet clients' needs can help a CAS practice build a positive reputation and generate repeat business.
Word-of-mouth referrals from happy clients are a powerful way to grow a CAS practice. However, these referrals are just the beginning. Developing strong relationships with existing clients, strategic partners, and other professionals in the industry can help generate new business opportunities.
Also important to consider here is your firm brand. A strong brand can differentiate a CAS practice from its competitors and attract new clients. This can be achieved by developing a clear and consistent message, creating a professional website, and investing in marketing and advertising. Creating a consistent experience from when a potential client first discovers you to the moment they sign the engagement letter reinforces the value you can provide them. When combined with the streamlined processes after the engagement and top notch customer service, you have a winning combination.
Accounting Technology for CAS Practices
Strongbox is part of the tech stack for CAS teams all across the country, from the Big Four to regional and boutique firms. Large and small, we’ve worked closely with CAS experts to adapt Strongbox to meet the needs their teams have and to help them reach their growth goals. Our output helps teams upskill and deliver consistent results to their clients. We’d love to be a part of your firm’s growth as well. Contact us today to see how we can help you scale up and capture your share of the market opportunities.