[IMGCAP(1)]Accounting firms operate in a highly competitive market. If your firm only offers commoditized services like tax preparation, payroll and bookkeeping, you will win and lose customers due to price competition. The good news is that you are in a unique position to offer value-added advisory services.
According to recent USA Today/Gallup polls, accountants are considered the most trusted business professional. That high level of trust enables you to move beyond traditional accounting services and position yourself as a trusted advisor. Offering quality advisory services will ensure the long-term success of your clients.
What’s in it for You?
Helping clients do better business is always a win-win situation, but let’s focus on what’s in it for you. There are three primary reasons why firms are shifting towards value-added advisory services:
1. Increase firm revenue: Business advisory engagements produce additional revenue streams and are more profitable than traditional, compliance-based accounting services.
2. Stop competing on price: Firms that bring more to the table can justify higher rates. Stop leaving money on the table. Command the rates you deserve by offering a higher level of service, and land more “A-List” clients.
3. Deepen client relationships: Help a client do better business and you lock-in a client for life. Quality advisory services help you forge deeper relationships with clients and also boost word-of-mouth referrals.
How Do You Get Started?
We have developed a three-step process to introduce clients to your new service offerings:
Step 1: Identify Key Clients
Start by identifying a short list of key clients (it could be as few as five) who you will start providing business advisory services to. Use the following characteristics to select key clients:
Client relationship: Identify clients that you already have a strong relationship with. You will be more comfortable and they will be more receptive as you introduce new services.
Client potential: Choose clients that have an unrealized potential. You and the client will be able to see tangible results as you help them grow their business.
Owner mentality: Focus on proactive clients who frequently ask questions about improving their business. These clients tend be more appreciative and willing to pay for your professional advice.
Business health: Select a few clients with poor financial health. They will perceive your services as a need rather than an unnecessary expense.
Step 2: The Discovery Process
The next step in the process is to develop a strategy for your firm to approach the list of target clients. According to Sageworks director of advisory services Lauren Prosser, this includes thinking about the needs of each business, what’s going on in their industry, their goals, what resources your firm has to offer them, and ultimately how to communicate those services to them. Such a discovery process could include client surveys or merely conversations with clients to gauge their satisfaction with your firm and understand their business needs better.
Step 3: The Implementation
Once you’ve assessed your clients thoroughly, you are now ready to alert them of your advisory services. There are a few ways of doing this:
The “Sticky Note” Method
Perhaps the most common approach is the “Sticky Note” Method. This method entails inserting a customized or narrative financial analysis report like ProfitCents Snapshot and placing a sticky note on top that says, “I thought you might find this interesting.” This approach is apt because it doesn’t try to push a service but instead generates questions from the client and opens up the door to future consulting opportunities.
Further, according to Sageworks VP of sales Michael McNeilly, “Not every client will respond to the sticky note with an appointment request, but some will, and the cost it takes to generate and print the report is minimal.”
The “Let Me Show You” Approach
A slightly more proactive approach, the “let me show you” approach can also be successful. This approach involves discussing the company’s past and projected future performance. Focus on two or three key points from your findings and use graphs and/or a brief narrative report to enhance your presentation.
This approach is more thorough, but cash flow projection software can increase your efficiency. This approach works best with your inquisitive and proactive clients; often times it will lead to profitable deeper consulting engagements.
Confidence in Your New Service Offering
Think about a doctor’s job for a moment. When he or she walks in and you tell him or her that you are sick, he or she will likely run tests, show you the test results, and explain the results in an understandable language. As part of the diagnosis, you are usually asked a lot of questions about your habits, symptoms, types of medications you prefer, and any allergic reactions you may have. Based on all the information a mutual decision can be made on the proper treatment approach.
The same is true for offering advisory services. You have a wealth of financial expertise and experience that will help the business fix its excessive inventory days, poor cash flow, or accounts receivable issues. But, you still need to run tests with a typical financial statement analysis and you have to ask questions. For example, if your client has problems collecting accounts receivable you might ask the following questions:
• How do you invoice your accounts receivable?
• Do you send collection requests via mail, or do you call them personally?
• What are your penalties for late payments?
Based on these and other questions, you’ll get an idea of how to fix the problems. If you still don’t have the answers, don’t be afraid to do the research to find them. It’s OK if you don’t have the answers right away; just be able to provide them to your client in a timely manner.
Best Practices for Providing Advisory Services:
Provide action items and set goals: Chad Wright, regional consultant at Sageworks, says it’s important to establish relevant goals and action items that should be addressed prior to the next consulting session. Track the client’s results at each meeting and describe how far their company has come since your firm has been working with them.
Don’t forget about nonprofits: It is likely that you are already working with a nonprofit organization or serve as an advisor to a nonprofit board. Don’t forget that you can run financial reports on nonprofits to help them improve organization efficiency. This could include benchmarking their performance against similar organizations in the sector.
Leverage industry data: You likely serve multiple clients from a given industry and have a pulse on the financial trends for that industry. Combining this knowledge with real time industry data is a great way to provide fast and easy deliverables of high value. Companies want to know where they stand and how to improve if they are sub-par.
Pitfalls to Avoid
As you are planning your introduction of advisory services, it is important that you avoid the following pitfalls:
Do not pitch the product as an add-on: One approach to business advisory services that has proven ineffective is pitching advisory services as an add-on service. This means the advice is an optional service that the client would have to pay up front to receive.
For example, a situation to avoid would be to show the client their completed tax returns and then tell them about your firm’s advisory services. According to Sageworks’ Michael McNeilly, your clients aren’t likely to see the value after just hearing an explanation of what you have to offer and therefore won’t want to pay for it.
Don’t go in without a plan: Perhaps the number one misstep in adding these services is to go in without a plan or strategy. People who fall in this category forget to make a list of clients and keep it small enough to manage.
On the opposite end, they may try to run full financial analysis reports on each one of their clients. It simply takes too long and is a waste of resources until you know the client is interested in the service. It’s better to start by offering them industry data reports or those without much customization instead.
Remember to keep it simple: Just because your financial analysis software can provide an eight-page in-depth report doesn’t mean your client needs to see the whole thing. Too much data can be overwhelming and might discourage your client from asking for the next appointment. Instead copy and paste two or three relevant sections into a document for your client to see.
As you can see, the question is not if your firm should provide financial advisory services, but when and how to start. The services are truly a win-win situation for your firm and your clients. By following the best practices above and strategically planning your financial service operations, your firm is likely to increase revenue. Remember to ask the right questions and look for answers when needed. In the highly competitive landscape of public accounting, it’s important to differentiate your firm by providing these services.
Shawn Moriarity is a senior consultant in the Advisory Services Group at Sageworks,a leading provider of private industry data, financial analysis, and risk management software for accounting firms and financial institutions. Moriarity has worked with thousands of CPA firms to implement Sageworks’ financial analysis software ProfitCents for standardizing and documenting regulatory requirements and adding value to client relationships while increasing revenue.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access