how to define and refine your cas processes.
by hitendra patil
client accounting services: the definitive success guide
we know the outcomes that are important from the client perspective can, and should, define your firm’s client accounting services processes.
but how do you create your firm’s cas-specific processes? where should you begin? how would you know what to change and what to add to your processes?
more: cas reports are better. here’s how. | help your clients run their businesses better | cas tech stack depends on cloud use | five ways to profit from cas | cas is a value pitch | accountants are perfect for virtual cfo roles | raise client expectations with cas | the why behind your cas why | who is the professional?
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it is both difficult and easy to create your firm’s cas processes. it will be difficult, not impossible, to ask if you do not have reasonably deep insights into what your clients need and want. it will be easy if you have periodic interactions with your clients.
here are some guidelines to get you started on creating your firm’s cas processes:
start with the end in mind. review your current set of accounting reports that you deliver to your clients. take a hard look and think through from the client’s perspective. if you were the client and your accountant gave those reports to you, what would you do? keep in mind – clients do not have the accounting expertise you have, so they look at the reports differently than you. what are the business decisions they can make using the reports your deliver? more importantly, what are the business decisions they cannot make because your reports do not provide the information/insights to support such decisions? if there any critical business decisions your clients should make, you need to identify those and create information that will help them make those decisions. now work backward to identify process steps that will ensure you have the data to develop such insights. take the example of my restaurant accounting cpa. the firm delivers food, wine, liquor, beer, supplies and labor costs reporting. other than labor, some vendors provide all other things. the bills issued by such vendors need to be broken down into such “categorywise” costs, and not data entered as one invoice-one payable entry. the end result changed the bills processing procedure at this firm.
identify which common questions your clients are asking. another technique to create your firm’s cas processes is to identify the most common questions your clients ask – after they see the accounting reports your firm delivers. (if they are hardly asking any questions, they are most likely not cas-fit clients.) either the answers to those common questions are not there in your reports, or you have not coached your clients on how to understand the accounting reports or both. when you identify that your reports do not contain some key elements, start working backward to the processes that produce your reports. add those steps that are missing and then regenerate the reports. make sure your reports now contain all those missing aspects.
identify business decisions. review the accounting reports you are about to send to your clients. can you relate the most critical numbers in those reports to the business decisions your clients have made, or not made? as a professional accountant with reasonable experience, you will have at least a gut feel about the impact of business decisions, or lack thereof, on the financial numbers of the clients. now identify what could have helped your clients make better and more timely business decisions to make those numbers better or avoid some pitfalls. which information/insights could have helped your clients have better business results? now work backward and identify at what point in time which information should be created from your processes. implement those changes and create more frequent (not just the end-of-the-month statements) “insights delivery” to your clients so that they can make better business decisions and avoid bad choices.
tell the story of the client’s business. accounting is the language of business, and financial statements tell the story of how the company is doing. take the financial statements of your client and try to tell the story as a narrative of how the business did in the last month. don’t just describe the numbers in words, e.g.,
“your company’s profit declined from 16 percent last month to 14.5 percent this month.”
when you describe the numbers, you are leaving it to the client to draw the inference and conclusions from what you tell the client. instead, use the words that the client will think in his/her mind. make it conversational. you want to sound like an advisor or consultant, not an accountant. in the same example quoted here, you can say something like:
“your company’s profit declined from 16 percent last month to 14.5 percent this month, but your sales in the same period increased from 13 percent to 19 percent. your lower-cost products/services are selling more this month. the cost of goods sold for such products/services is higher than that of your other products – meaning profit margin is lower in your faster-selling products/services. you should focus on selling more quantities of other, more profitable products or take steps to reduce the cost of your fast-selling goods.”
the story you tell should be the narrative going on in the minds of your clients. that makes clients respect you as the most trusted advisor because they observe that you “get it.” now, to be able to tell the story like that, do the reports you produce give you enough insights? if not, identify the storyline making insights, work backward and find out the process steps that need to be changed to produce such insights.
one simple formula to use to structure your “insights” is the what-why-what formula:
- tell the “what” (your profit declined).
- tell the “why” behind the what (you are selling more low-profit goods).
- tell the “what” the client can do in the situation (take steps to reduce the cost of goods sold).
with this approach of storytelling through the what-why-what formula, work backward to find out where in your process steps you can identify these what-why-what insights. if needed, change/adjust the process/steps to be able to create such insights.
cas processes and timeline
cas is not the typical end-of-the-month, after-the-fact reporting. cas, to be more valuable for the clients, needs to deliver more frequent insights and outcomes to your clients. how frequent? each of your client’s business type, industry, business life cycle stage, growth trend, etc. can help you determine how frequently you should deliver insights and outcomes from your cas processes. a rule of thumb applicable to clients from many different industries is weekly cas reporting. if any client’s business has a business model that creates a gap between payables and receivables, supply lead time or seasonality of business volume across the year, such clients generally are well served by weekly cas reporting. that does not mean you should not send critical alerts only on a weekly basis. for example, if you observe that the client is likely to miss some important payments unless some of the receivables are collected, don’t wait. reach out and send such alerts. accounting software with intelligent automation can actually send out such alerts without any manual intervention from you or your staff.
once you identify such insights that are valuable for your clients, work backward to review your process steps. add/adjust the steps to produce and relay such useful information as and when it emerges. be in your client’s shoes. if you are the client, would you not take steps to avoid such instances, which lead to the failure of making required payments in time? don’t wait for the end-of-the-period reports to be compiled.
technology and your firm’s cas processes
earlier we discussed how you could evaluate your firm’s technology stack for your cas offering. if you assessed that your firm’s technology stack is not ideally suited for cas, it is critically important that you decide about your cas technology first before altering your firm’s current processes. it is because newer, more advanced, more mature and artificially intelligent technology solutions that make integrations and collaboration more possible can significantly reduce repetitive, duplicated process steps. once you identify such efficiency- and productivity-enhancing opportunities in such technology solutions and implement those at your firm, some of your processes will transform as a result. the remaining parts of your firm’s processes can be easier to analyze from the cas angle. also, such solutions can give your firm new abilities to deliver newer, more useful, more relevant outcomes to your clients. you will need to take into consideration which processes/process steps your firm will need to provide such new outcomes to your clients.