cas revenues are surging 20 percent, but profits are lagging. discuss.
by 卡塔尔世界杯常规比赛时间
growth in client accounting services appears to be accelerating, but the expansion may underlie simultaneous growth in personnel turnover and trouble in the pipeline of professionals, according to new research.
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the new benchmarking study found a burgeoning median growth rate of 20 percent, nearly double the rate of 2018. net client fees per professional shot up by 17 percent to average $112,293 as cas practices continued to move toward fixed fee and value billing methods.
and apparently, profits could have been even higher.
underpriced services
the survey found that cas practice leaders might have earned even greater profits had they not been underpricing their services.
the study, involving about 100 firms during 2020, was conducted by cpa.com and the aicpa pcps division. notably, the aicpa refers to cas as client advisory services, not client accounting services, the more commonly used term.
one sign of underpricing: the realized rate per hour for all levels in cas came in lower than the rate for all cpa services. in 2020, the rate for cas services among all respondents, top-notch and bottom-notch, was $89. the rate for all cpa firm services was $165.
another sign of underpricing was the high rate of closing cas sales—an impressive 75 percent, indicating that pricing may have been lower than necessary and that practices may have been plucking the low-hanging fruit of work that had less profit potential.
the survey also detected higher profit potential resulting from the high demand for cas. if demand was high, prices could have risen if firms had demanded more.
the survey identified six basic strategies behind the increase in net client fees per professional:
- automation and efficiency initiatives
- pricing increases
- boosting self-esteem in cas sellers
- positioning of service as value-added cas
- packaging and bundling of services
- cross-selling additional services to existing clients
perfect storm of personnel pressure
it’s news to no one that the accounting industry is suffering a perfect storm of personnel pressure.
- accounting enrollments at four-year universities are low.
- staffing turnover is unprecedented.
- baby boomers are retiring in great numbers.
- unemployment is generally low.
- a high and growing demand for new cas services.
only 22 percent of accounting firms are resorting to headhunters to make up for the paucity of personnel. rather, they are deploying a full variety of other tactics.
- 64 percent use traditional online advertising.
- 56 percent use social media.
- 55 percent use an internal recruiter.
- 51 percent use campus recruiting.
- 48 percent offer referral bonuses.
the survey segregated data for “top performers”—those with the highest net client fees per professional—and respondents as a whole. the difference in the use of staff exclusively dedicated to cas was notable. over half (52 percent) of top performers had staff assigned nothing but cas services, while under a third (32 percent) of all respondents did so. none of the top performers had cas staff supporting other services.
given the trickle of talent in the pipeline of incoming practitioners and the boom in cas, firms without dedicated cas staff will be scrambling to serve the demands of the market, the survey said.
top performers investing more in cas
respondents projected a 15 percent growth in cas net client fees for 2021, substantially lower than the actual growth in 2020. projections were off in 2018, however, as top performers expected growth of only ten percent but went to experience growth of 14 percent.
the top performers may be top performers because they are investing more in their cas practice. they invested more in every category, but the most common investments for them and for all respondents, were, respectively:
- vendor training and certification: 84 vs. 65 percent
- vendor conferences: 76 vs. 58 percent
- cpa.com cas workshops: 68 vs. 60 percent
- outside learning for staff: 60 vs. 44 percent
- investment in a marketing plan: 52 percent vs. 46 percent
respondents across the board say their sales pipeline is looking good. twelve percent said projected growth was “off the charts,” and 58 percent said the pipeline supply was letting them “grow the way we want to.”
2 responses to “are you under-pricing your client accounting services?”
mark gleason
what is vendor training? cpas training vendors, cpas training to be vendors, training provided to cpas by vendors? which vendors?
卡塔尔世界杯常规比赛时间 research
thank you for the question.
we could have been more clear about that.
“vendor training” refers to education, usually cpe, provided by vendors to practitioners around their software, its usage, and the technical tax and accounting applications for the software. so, intuit, for instance, provides cpe on quickbooks, and also on bookkeeping, at the same time. they also provide cpe on turbotax, and also irs code and reg.