how many of these are you telling yourself?
by hitendra patil
the definitive success guide to client accounting services
why fall in the same trap that other firms have fallen into during their client accounting services journey? if you know what those traps are, you will save significant money and time in establishing your cas practice.
more: identifying the right clients for cas | communicating cas to clients and prospects | 21 ways to adjust your practice in 2021 | which of your existing clients are cas-fit? | the 8-step method for launching client accounting services | how to develop the cas mindset | client accounting services: the definitive guide
exclusively for pro members. log in here or 2022世界杯足球排名 today.
fortunately, the cpatrendlines cas survey identified which are the top five cas killers, for firms of different sizes, that the accounting profession has experienced.
in the next few paragraphs, we will address each of the top five “cas killers” and some ways to overcome them. but before that, let us also look at the results of the cas survey that identified how many firms of different sizes are offering and not offering cas. the following figures show what percentage of survey respondents said they offer cas and don’t and what are their firm sizes:
that translates into how many firms are offering cas compared to the number of firms of similar sizes not offering cas as follows:
| firm size | for every one firm not offering cas |
|---|---|
| sole practitioners | 2 firms offer cas |
| 2 to 10 staff | 9 firms offer cas |
| 11 to 50 staff | 18 firms offer cas |
| 51 to 100 staff | 6 firms offer cas |
| 101 to 500 staff | 9 firms offer cas |
| 500+ staff | 2 firms offer cas |
what these insights from the survey indicate is that cas can be offered by firms of any size, even by sole practitioners. on the other hand, firms of all sizes can get stuck thinking about possible challenges they will face in their cas practices, even before they try offering cas. some firms indicated they tried providing cas but gave up. now, let us see which are the top five challenges that emerged as the cas killers.
the top five cas killers
when asked, “what is stopping you from offering cas?”, here are the top five responses from firms that did not yet offer cas. some of them even wanted to provide cas but could not get started or some started on their cas journey but gave up.
- 16.67% not the right fit for our firm
- 17.42% we don’t have the technology for it
- 19.70% it wouldn’t be as profitable as our other services
- 24.24% our clients aren’t asking for it
- 40.91% we don’t have the staffing for it
let us now examine:
- why these were expressed as the top five cas killers
- why these are not really the hurdles in creating a cas practice
- what you can do to overcome them
cas killer # 5: cas not the right fit for our firm
when can you feel cas is not the right fit for your firm?
if you don’t offer accounting, bookkeeping, write-up, payroll, outsourced/virtual cfo or advisory services, you may feel to start offering these services will take more staff and too much time, effort and cost. it is also because if you haven’t provided these services yet (most likely, you offer only/predominantly tax-related services), you do not have the relevant knowledge/ competencies/experience/expertise to offer cas. again, you might feel it will be overwhelming to get started with cas.
what steps can you take to make cas a fit for your firm?
most likely, if you feel cas is not the right fit for your firm, it is because you believe so. more than “making cas a fit,” you need to identify the biggest hurdles that you feel will stop you from offering cas and recognize that even sole practitioners provide cas. some of these hurdles may be just in your mind, and some may be real. in an earlier post, i discussed some ways you can develop the “cas mindset.” let us take a look at what you can do to overcome the real practical hurdles:
- identify how many of your current clients are buying any of the components of cas from other accountants. such clients are your “captive audience” to sell cas to. you do not need any special marketing effort other than just telling the clients you now offer cas.
- if you feel offering cas will bring in a lesser profit for you compared to the other services you are offering now and hence it is not a fit, take a hard look at your current services and identify what can get more and more automated by technology. in other words, your current revenue and profit can start reducing as technology becomes more pervasive. but the same technological advances are also helping automate many of the cas components, i.e., accounting, bookkeeping, write-up, payroll, outsourced/virtual cfo, advisory services, etc. all of these components now require much less manual work, i.e., time and cost. in other words, the profitability of cas is pretty much at the levels of some of the most profitable services accountants offer.
- if you have mostly individuals as tax clients, it can be a challenge for enhancing your practice to offer cas because you will need to start getting cas clients. but even if just 5 to 10 percent of your clients have businesses or you prepare business tax returns, your biggest positive is that you already have an established relationship that you can leverage for selling cas. this will also get you started with cas and help you establish robust cas processes before you start more marketing.
cas killer # 4: we don’t have the technology for cas
when can you feel you don’t have the technology for cas?
some of the key common reasons why firms believe they do not have the right technology for cas are given below. you may also have similar thoughts because:
- if you have 100 percent desktop-only software or you hardly have any cloud solutions, you will feel that it will not be possible for you to meet the online, real-time collaboration expectations of cas clients.
- you also feel that some/quite a few of your clients need some industry-specific software, and your firm does not have those, or you think it is expensive to acquire such software.
- your current software solutions do not integrate well with each other. hence, you are creating the same data more than once, which increases your cost, slows down your work delivery, and reduces growth and profitability.
- you may also feel that cloud solutions are expensive compared to desktop solutions.
- if your clients are buying accounting and other solutions and giving you, the professional accountant, a need-based access, it means clients control the technology, and your firm is more or less a user. in such cases, clients generally do not have much idea about what difference professional solutions can make.
what steps can you take to overcome the technology challenge?
according to cas survey results:
- 85% of the survey respondents agreed that “cas attracts new clients” (only 3% disagreed)
- 88% agreed that “cas creates new opportunities” with existing as well as new clients (only 3% disagreed)
- 90% agreed that cas is important for their firm’s future (only 3% disagreed)
the real meaning of these results is that the proven profitability and growth potential of cas makes technology an investment on which you make handsome returns. in cas business, technology cannot be treated as a cost. some steps you can take to make technology your firm’s strength for offering cas are:
- move to cloud solutions.
- do a quick study of how those cloud solutions will change your processes. experience shows that the processes become more efficient, effective, and help produce more work per staff, which leads to more revenue and higher profit.
- move as many clients onto the cloud as you can because it will enhance the client experience by making it possible for clients to obtain real-time, online information and insights. it also helps in reducing the time and cost of providing information to clients as the cloud makes self-service possible.
- if you are already using cloud solutions partly, try to integrate different software so that relevant data flows from one to another when needed, on demand or even automatically. the efficiency gains of such integration can be phenomenal.
cas killer # 3: cas wouldn’t be as profitable as our other services
when can you feel cas wouldn’t be as profitable for your firm?
as mentioned earlier, if you feel offering cas will bring in a lesser profit for you compared to the other services you are offering now and hence you may feel it is not a fit, it may be because you may have experienced others providing lower-rate, lower-profitability commoditized services that you believe are actually cas offerings. if so, it is not your fault because there has been a great deal of confusion in the profession about what exactly is cas. in an earlier post, we defined and explained what cas is and what it is not. you may still feel that some of the cas components are low-profit services, but those are like essential building blocks that lead to higher-value, higher-priced and hence higher-profit services that you can sell to the same clients.
what steps can you take to make cas one of the most profitable service segments for your firm?
first, let us see what the survey respondents revealed about cas profitability:
- 77% of respondents agreed that cas provided superior revenue growth. (only 7% disagreed. others were “neutral” because many such respondents had possibly just started their cas practices, and they had yet to compare cas profitability with other services.)
- 62% of respondents agreed that cas provided superior profit growth. (only 10% disagreed. others were “neutral.”)
these figures show that cas is superior compared to other services in bringing in new clients and also in generating profit. i have been regularly interacting with many cas firms over many, many months, and i have seen some key differences in how more profitable cas firms operate compared to others. here are some of the proven ways to make cas profitable for your firm.
- again, take a hard look at your current services and identify what can get more and more automated by technology. for example, i have seen continuously 85-90 percent manual work reduction and the resultant 65 percent reduction in cost and 55-60 percent increase in profit in “write-up” work by deploying just one automation feature, i.e., bank feeds (accounting software pulls transactions data from bank and credit card accounts, intelligently identifies which transaction to allocate to which vendor/payee and hence to which account). and these results were possible with firms using bank feeds for about 75 percent of firms’ write-up clients. what it also did was the double-whammy positive impact on profitability by enabling the same number of staff to process between two to three times more number of clients. in other words, without adding resources or costs, your firm can service many more clients, i.e., achieve revenue as well as profit growth.
- there are cloud accounting and payroll solutions that are highly automated to enable your firm to send out routine, frequent and periodic alerts, notifications and emails to clients automatically on completing some steps in your processes and/or reaching some threshold numbers in clients’ financials, e.g., when should the client have money in the account for an upcoming payroll, when client’s payables or receivable go above or below a certain amount, etc. such “client service automation” reduces the time it takes for your staff to manually identify such important instances and one by one email to the clients. your client service costs can go down quite a bit with such implementations. a ballpark estimate is that it can save approximately one hour per month per client in purely “client service” efforts. now you do the math of how many clients and staff you have, how much annual cost it can save for your firm, and what will be the impact on your firm’s profitability.
- provide a taste of cas insights to your non-cas clients. even without doing full-scale, end-to-end accounting work for your non-cas clients, you may still be able to identify insights that are relevant and useful for such clients. share such insights with them for one or two quarters stating something like, “here are some examples of insights that business owners find highly valuable. these are delivered as part of our silver-cas package. because of these insights, businesses can <provide a list of measurable benefits of such insights> <e.g., save on costs, do their tax planning better, reduce money blocked in inventories, price their products for more profit, etc.>, which more than pays for the nominal additional investment into our silver-cas package.” of course, before doing this, review the financials of non-cas clients to know which clients will greatly benefit from your higher-level cas package. always make sure that you are doing this not just to get additional revenue from your clients but to deliver additional value to them so that they are thankful to you for making them aware that you can provide better help to their business.
- the cas survey results also revealed that on average, non-cas firms provide six different types of services, whereas cas firms provide an average of 11 services. in other words, cas firms develop capabilities to provide nearly double the number of services to generate more revenue and profit from their clients. to clarify, non-cas and cas firms of similar sizes provided this information, which indicates that cas firms do not necessarily have far more number of clients, but quite a few of their clients buy more number of services from the firms. if the cas firms did not offer such additional services, those clients would have obtained such services from other firms and ultimately become clients of such other firms. an example of how this works is a cpa firm from salem, indiana. in about five years, the firm increased revenue by about 75 percent, and cas/cfo services make up 65 percent of total revenue (up from 25 percent earlier). the firm now has clients in 20 different states (earlier mainly from indiana and a couple of bordering states). but the strongest indicator of the cas success is that the firm’s total number of clients has not changed, which shows that the firm is able to generate more revenue from the same clients because of cas capabilities. i have interacted with this firm’s owner multiple times, and i know the firm has not increased its staffing much. in other words, the firm’s profitability has increased too because of per-staff revenue going up much higher. hence, for increasing your firm’s cas profitability, invest in creating capabilities to offer more types of services.
- you will also read about how remote staffing/outsourcing and offshoring can not only help you overcome staffing challenges but also address profitability concerns.
cas killer # 2: our clients aren’t asking for cas
unless you are providing only tax return preparation services only to individuals, you can, and should, make sure your clients learn about the many benefits of cas.
in a previous post, i mentioned the quick one-question poll that i sent to randomly selected people. i had no clue if such people bought any services from accountants. the question was simple: “what word comes to your mind when you hear the word accountant?” about 46 percent of the respondents said “tax” and about 26 percent said “balance sheet.” that means a total of about 72 percent of respondents think “tax or balance sheet = accountant.” perceptions are (perceived) reality.
if you have ever felt “if i had only known …” or “if i knew then what i know now …,” you know that human beings many times “don’t know what they don’t know.” human beings learn in three levels: we don’t know what we don’t know, we know what we don’t know, and we know what we know.
when it comes to cas, the lowest-hanging fruit is the clients who don’t know your firm offers cas. their perception is stereotypical – accountant = tax and balance sheet. therefore, it is first required that you take efforts to change your perception in the minds of your clients. it is easy to begin to do so by just making clients aware of which other services you can provide to them and what are the benefits of each of your services.
how do you make them aware without sounding like you are merely advertising your services (which can be perceived as you are concerned only about your firm’s revenue)? let’s see.
when can you feel your clients do not need cas because they are not asking for it?
if your clients are not asking for cas, it is not their fault. either they do not know you offer cas, they do not know the benefits of cas or both. if your clients are not asking for cas, you can feel they don’t need or want cas. it is not your fault if you think so. if you have business clients that are mainly very small businesses and you can see they can’t afford to pay for cas (most likely most of them balk at any price increase you propose or they always haggle about pricing), it is because you are stuck in a vicious cycle – you don’t offer more services, so your new clients are only those that want to buy just basic services – and you can’t escape this cycle unless you attempt to break free. because you don’t offer insight-producing services, you do not know much about the real issues your business clients face, and hence you do not see that they actually need cas. if you cannot see their needs, the clients will rarely be aware of all the value their accountant can deliver to them. such factors can make you feel “clients are not asking for cas,” but the truth is, “clients do not know you can offer cas, and they can benefit more from cas.”
what steps can you take to make your clients aware of your cas capabilities?
once you develop additional capabilities to offer cas, the next step is to make clients aware. it is not about merely announcing to all clients and hoping they line up. here are some steps you can take to make your clients aware of your cas offering and also attempt to do so in a way that can make clients recognize such services are relevant to their business.
- analyze the financial statements and tax returns of your business clients to identify which clients are cas-fit. revisit the earlier post in which i described the easy ways to identify cas-fit clients and the not-so-easy ways to identify cas-fit clients. (also reach out to me to obtain my cas-fit assessment wizard.)
- try to identify trends in such cas-fit businesses that your cas offerings can help improve, e.g., can you help reduce costs, can you help improve cash flow, and so on. it is easier to make such clients take notice of cas benefits.
- for the general announcement of your cas offering to all existing clients and new prospects, it is important to not just state “what” are your cas but also provide examples of cas outcomes, e.g.,
- sample reports
- description of insights and how such deliverables help make which business decisions
- the timeline of delivery of such insights
- what are the components of your advisory services and how they help, etc.
- till such time clients and prospects do not feel “that’s me / that’s exactly my situation” and “how do you do that?,” awareness about your cas offering is not going to be strong. it will take some iterations and experimentation in communications until you get it right.
- in general, tell the “what” (which cas components you offer) and the outcome (what clients receive) but not the “how” (how you produce the insights and the outcomes). you want clients to come and ask you, and pay you for the “how.”
- as you develop more cas capabilities, do intentional marketing to get new cas-fit clients.
cas killer # 1: we don’t have the staffing for cas
the #1 cas killer that emerged from the cas survey results is, unfortunately, also the most misconceived perception. it is a myth.
the cas survey results showed that even solo practitioners offer cas. the number of firms that provide cas is significantly higher than those that do not offer cas, for firms of all sizes. cas firms provide about twice the number of services compared to non-cas firms. “staffing shortage” or “lack of relevantly competent staff” are not the reasons why you should not offer cas. let us see why.
when can you feel you don’t have the staffing for cas?
you may be a solo practitioner or have less than a handful of staff. you may be predominantly offering tax preparation services, and you get the books done just to keep clients’ financial data tax-ready. you may be offering low-cost write-up services because a majority of your clients are (very) small businesses and mom-and-pop shops. with a business model like that, your staff’s competencies are limited to basic services. in such situations, you can feel either you don’t have enough (number of) staff or your team is not trained enough, or both, for your firm to provide cas.
what steps can you take to overcome staffing challenges (perceived or real)?
the cas survey results clearly indicated that smaller firms are far more active in offering cas. over the years, i have personally interacted with hundreds of firms that make much higher revenue and profit per staff than firms that struggle. and the key reason is such successful cas firms have optimized their technology, processes and staff competencies. in many cases, the number of clients serviced per staff is about two to three times more compared to that served by similarly sized non-cas firms. some of the proven ways in which firms optimize to overcome the cas staffing challenges are:
- automate your processes. successful cas firms minimize manual data entry and duplication of data entry across multiple solutions. they do so by leveraging newer, intelligent software solutions and also by implementing integration between the various solutions they use.
- look at each stage of your work processing steps. identify at each process step if there are opportunities to automate, e.g.:
- can you “fetch” source documents and information instead of receiving those by mail or email from your clients? for example: bank feeds, sales data from point of sales (pos) systems, employee data from human resource (hr) solutions, employee time and attendance data from time clocks, etc.
- can you “process” some work automatically? e.g., bank feeds integrated with accounting software, hr and time clock solutions integrated with payroll software, etc.
- can you automate “reports and insights” generation? e.g., alerts and notifications based on threshold values set up in the software, automated system reminders for upcoming payrolls or overdue receivables or cash balance going below a certain amount, and so on.
- can you automate “client service delivery”? e.g., automatic mobile and email delivery of relevant alerts and notifications to clients, automated emailing of standardized yet customized reports on completion of some process steps, use of client portals and client mobile apps to let clients self-serve to reduce the workload of attending to routine, recurring information demands of clients, etc.
- in essence, examine the end-to-end cycle of each service you offer and find opportunities to minimize manual work. the time so freed up will help your team to acquire more knowledge to become more competent in providing more and higher value, higher-priced services.
- remote working and work-from-home culture is here to stay after the experiences with the coronavirus-impacted world. not just accounting firms are moving much faster to the cloud, but the so-called “old-school” clients have also experienced self-service technologies and are coming to expect them going forward. self-service is a non-intrusive experience that clients (humans) feel in control of. when you provide your clients with the ability to do so, you are enhancing their customer experience. remote staffing, including outsourcing/offshoring, can not only reduce your overhead costs (e.g., no need to pay for office space) but also expand your firm’s service hours because such remote staff can be in different time zones. also, remote staff can already be experienced in multiple services and can reduce the time it takes to expand your cas offering.
- many small business clients use “accounting” software to do just basic business functions, i.e., write checks, issue invoices and, in some cases, review financial dashboards. collaborative cloud solutions can enable your firm to provide such clients only those functions, so they do not mess up the books (clients are not professional accountants). it means your staff need not do the processing of such basic transactions. the same goes for payroll. in my experience, several business owners want to be in control of how many hours the staff should get correctly paid for (entering the time and attendance data into payroll software). no wonder many payroll firms provide clients such collaborative access to “offload work back to the clients.”
- and one compelling thing that many firms do not do to reduce manual processing steps is that they do not question the very need of each process step. some process steps can be completely redundant or are used to create data records that are not legally required to be kept or are not of any material use to anyone. if asking the question “why do we do this step?” gets you answers like “because it has always been the process” or “because my manager told me to do so,” it is time to dive right in and fix it.
with this awareness about the pitfalls that can derail cas journeys of accounting firms, and the knowledge of how to avoid such pitfalls, let us see how to move forward in preparing your firm for cas.