Any accounting firm that’s serious about giving clients what they need and value – and raising their own relevance and bottom line – can’t afford to lose out on the tremendous opportunities created by Client Accounting Services (CAS). And if you want to get CAS right, there are 5 essential components that you need to master.
In this post, we will:
- Briefly explain what CAS is, and why it has become more important now
- Dispel four common myths about CAS
- Discuss how you can start offering CAS quickly – and then grow it consistently
- Prepare you to offer CAS with a minimal investment of time and resources by first targeting your existing client base in a systematic manner
- Detail the keys to sustaining long-term profitability from CAS
What is CAS?
Traditionally, CAS means you, the accountant, do most (if not all) of the accounting work for your clients. That means you perform:
- After-the-fact financial statement preparation (also called “write-up”).
- Transaction processing. Processing of AP, AR, payroll, sales and payroll taxes, etc.
- Outsourced CFO and/or controller services. This work entails ongoing, higher-level services to review financial performance and provide input on strategies to improve business.
This definition of CAS is limited in scope. In our view, you are a true practitioner of CAS if you are able to customize your accounting practice for each client to best serve their needs, while maximizing your firm’s profits. Our definition of CAS includes all the services included in traditional CAS and then some. But it goes deeper into identifying the needs of different clients to better serve them.
Accounting clients can be classified into three main categories:
- Clients who write manual checks. This is the traditional after the fact write-up work.
- Clients who want to offload all their accounting work to their accountant. This is Outsourced Accounting Services. (Do not confuse Outsourced Accounting Services with Offshore Accounting Services, which means taking accounting work offshore.)
- Clients who want to perform some of the accounting work (e.g. transaction processing) in their office. In a professional system, accountants work collaboratively with their clients while accountants remain in full control.
A true CAS practice focuses on the needs of the clients in each of these categories and optimizes their processes for each. In this post, we’ll focus primarily on Outsourced Accounting Services (OAS) because that’s the area that’s new to most accountants. We use the term CAS for Outsourced Accounting Services.
Why CAS, and why now?
Let’s say you gathered your accounting clients in a room and asked, “If you love doing accounting, please raise your hand.” How many hands do you believe will go up? Certainly no more than a few. Independent research has confirmed that most small business owners consider accounting work a nuisance and a distraction from running their businesses.
There are three compelling reasons why you should offer CAS:
Clients want and desperately need it.
Using the right cloud solutions, you can offer Client Accounting Services using about the same amount of resources your firm currently uses for client accounting work, e.g. performing trial balance work and preparing financials.
You can grow your profits by 50% and more without adding any clients or staff.
The bottom line is that offering Client Accounting Services is a win-win for both you and your clients. The lost opportunity cost is significant if you don’t offer CAS.
Traditionally, in the desktop era, businesses did their own transaction entry work, e.g., they issued invoices and paid bills, etc. Accountants took that data to perform trial balance work and prepare financial statements. There are multiple problems with this model. Small businesses had to hire a bookkeeper or accounting staff to perform that work. Managing the work internally was a big headache for business owners. Most small businesses had to settle for mediocre staff that produced low-quality work. Accountants ended up spending a significant amount of time fixing the errors clients made. Also, by the time accountants got the data, it was too late for accountants to offer timely advice to their clients. This model turned accounting into a very inefficient commodity service that provided little tangible value.
But the cloud has transformed the ways in which clients can work collaboratively with accountants. It has made integration between multiple applications designed to perform specific tasks possible, resulting in a streamlined workflow. And it has automated some key processes to minimize data entry.
Now, with the right cloud solution, your staff can do everything that your clients’ staff does – only faster, easier and more accurately, all without leaving the office. It is now possible for accountants to leverage shared resources to process accounting work for several clients. All this has greatly increased efficiency and made it possible for accountants to offer highly profitable Client Accounting Services with minimal effort.
As one CPA put it very aptly: “CAS is actually (more) CASH for accountants”.
How do I get started?
Key point here: you DON’T need more resources to offer CAS.
- First, and perhaps foremost, you do NOT need to have the resources of larger firms to start offering CAS.
- Second, and equally important, you don’t need to add more clients to see a significant boost in your bottom line. Offering CAS to your existing clients can increase your profits significantly.
- Also, it is very important to recognize that clients need CAS and if you don’t offer it, you are doing them a disservice and incurring a significant lost opportunity cost.
- And finally, creating a successful CAS practice does NOT require a strategic shift.
There is a common misconception that CAS requires a strategic shift at accounting firms. Our study of firms (of various sizes) that have successfully created a CAS practice clearly indicates that this is not true. Offering CAS is essentially an extension of what your firm currently does. In other words, you do not need to “transform”, “reinvent” or “massively change” your firm to offer CAS. However, you do need to do a few things differently to succeed in CAS.
Preparing to roll out CAS requires 5 things to be done right: