[IMGCAP(1)]One of the growing interests for accountants is expanding their firm’s services to include financial advisory.
The transition from compliance to consulting makes sense. Tax season is just that, a “season,” and nearly 60 percent of respondents to a Sageworks survey indicated they saw an increase in total revenue by adding financial services to their accounting practice. If you have already made this transition or are thinking about it, it is important to understand your clients’ pain points.
One such pain point is the confusion behind identifying ways to effectively grow their business through the management of financial resources. Helping your client plan and implement the ways they acquire and use financial resources to grow their business can be beneficial to deepening your professional relationship.
Here are three ways you can help your clients acquire and manage their financial resources:
1. One simple and, if well managed, surefire way to introduce more capital into the pockets of your clients is a business rewards credit card. Whether using a national bank, regional bank, community bank or credit union, there are numerous cards that can help your client leverage their credit to create capital. Credit cards, whether for personal or business use, can add value to businesses because of the rewards they offer. Some provide higher rewards for travel, gas, restaurants or online purchases, among others.
2. Equity, in the first few years of operation, can be beneficial in establishing the base of your clients’ operations. Advise clients to look for business partners or help connect them with investors in their region. Investing personal assets can also be a helpful route to gain working capital; however, the riskiness of the business should be determined before advising this option.
3. Loans for small businesses are another avenue that you can advise clients to use. Although some banks have largely pulled out of loans of less than $1 million, there are still lenders like Bankers Healthcare Group that provide different types of financing to businesses in various industries.
For example, Bankers Healthcare Group offers commercial working capital loans from $20,000 to $500,000 that can be used to increase cash flow, make expansions and improvements, perform marketing services or fulfill a number of other needs. They also offer loans for business startups, which have been used to open wellness centers, patent development, ice cream parlors and developmental disability computer software. Lenders like this, and other companies like Funding Circle, are great resources to advise your clients to use.
The advantage of working capital is obvious to some degree. Having capital on hand will allow your clients to pursue the opportunities that will help develop their presence in the market. Whether they’re purchasing equipment that helps decrease their days in inventory or investing in progressive technology, working capital can provide your clients opportunities that were at one time difficult for them to consider.
When considering moving into an advisory role, it is helpful to know the benefits of making the transition. One in four tax professionals offer financial advisory services to their clients. The number one reason small business owners switch accountants is because of their lack of proactive guidance. By adding financial advisory services to your firm, you will remain competitive and mark yourself as a proactive industry leader.
Zach Meyer is a consultant at the financial information company Sageworks. For more information on loans and financial advisory services, see Help Business Clients Win Loans: The Accountant’s Guide.
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