traditional reports stop short of what businesses need.
by hitendra patil
client accounting services: the definitive success guide
if you are wondering whether client accounting services (cas) needs a different set of reports, you are in the right place. at the same time, it may be confusing how you can produce reports that are different than those your software provides out of the box.
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cas is about the outcomes of your work, from the clients’ perspective. cas outcomes are useful, insightful, and advise clients in ways that routine, traditional reports cannot deliver. the outcomes you provide from your cas offering need to relentlessly focus on the relevance, usability and importance from your clients’ point of view. one of my ex-clients, an experienced and expert cpa from san diego – who had mostly high-net-worth individuals with multiple businesses as his clients – told me, “after 19 years in practice, i realized that small to medium business entrepreneurs are not really concerned with managing their balance sheets. it is the job of the accountant.”
sure, cas reports will include traditional reports like income statements, balance sheets and so on. but that is just the baseline. cas is more than just the baseline. as a professional accountant, from all your work for the client, you need to deliver the outcomes that can contribute to enhancing the client’s business. you need to present outcomes in ways that the client can find actionable, i.e., the client should not have to do too much of thinking, “what exactly does this mean and what should i do?”
let me share a real-life example here to bring clarity about how cas outcomes are different than traditional accounting reports. one of my ex-clients, a cpa firm that specializes in restaurant accounting, not only established different cas processes that leveraged their niche expertise but it also turned those processes into cas reports that restaurant owners cannot live without. here is what the firm provides to clients:
traditional accounting reports
- profit and loss (income statement)
- balance sheet
- payroll report
- payables report
- sales report
- inventory movement and valuation
- bank, checks and credit card reconciliation reports
cas reports
- profit and loss (income statement) – with monthly and year-to-date comparisons
- payroll report – with labor cost, and kitchen labor cost as a percent of total payroll cost; cash, credit card and total tips as a percent of cash and credit card sales, respectively
- payables report – with multiple aging reports, and vendor statements reconciliation
- sales report – daily, weekly and monthly sales reports that provide a detailed breakdown of food, liquor, beer, wine, non-alcoholic beverage sales, gift certificates sales, food tax, liquor cost and net sales
- inventory movement reports identifying the fastest- and slowest-moving inventory items and the percentage of each inventory item to the overall valuation (at cost) of total closing inventory
- weekly, one-pager restaurant financial performance report – giving sales data summary, labor cost and departmental distribution, tips reporting data, food cost, liquor cost and profit-and-loss data – and the “prime cost percentage,” which is the most crucial indicator of the bottom line of a restaurant business
now, take a look at the non-cas and cas reports mentioned above. all of the cas reports give restaurant owners an instant insight into the business trend of their restaurants, how much to pay to which vendor and when, keep control on labor cost, which items are selling more and what is their contribution to total sales, and the most important management control insight. this prime cost report shows all the key costs that constitute the majority of any restaurant’s core expenses. because these prime costs define a restaurant’s profitability, a restaurant owner cannot afford to wait for a month or more to know what the prime costs are. hence this firm provides a weekly report.
if you noticed, all these cas reports provide actionable intelligence to the restaurant owners. if need be, the restaurant owners can course-correct on the fly to control the factors that can easily hurt the restaurant’s viability. in other words, these cas reports provide the ability to restaurant owners to make data-backed business decisions, and also identify which of their immediate past decisions were good and which ones hurt them. all put together, this helps restaurant owners become better at managing and growing their restaurants. imagine what can happen if such cas reporting is not available to restaurant owners.
to be able to provide all such reports, insights and outcomes that help clients make critical business decisions, the firm has implemented appropriate internal processes to capture the relevant data elements at the time when the firm does the bookkeeping. “you control the books, you control the business” and “start with the end in mind” are the mantras followed.