Inside CAS: From past to future

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Few service offerings can boast the sort of boom that client accounting services have enjoyed in the past five or six years, as technological advances (particularly in the cloud), client needs, and bold practitioners have combined to create enviable growth rates and an entirely new way of looking at how firms serve business clients.

For all its success, however, CAS remain an ill-understood niche, with many accountants unsure what it entails and what it offers for their firms. With that in mind, Accounting Today convened a “virtual roundtable” of cutting-edge practitioners and firm leaders, along with industry experts to shed some light on this phenomenon.

In this first installment of the roundtable, the panelists define CAS, gauge how far it has come, and predict its future; in the second part, which will appear in the next few weeks, they’ll discuss integrating CAS into an accounting practice, and some of the practical issues surrounding that.

How would you define modern Client Accounting Services?

Liz Mason (CEO, High Rock Accounting): Modern CAS utilizes efficient and relatively inexpensive technology to provide back-office support, including near real-time bookkeeping, accounting reporting and analysis, and advice. Modern CAS takes the outsourced accounting department model, bills for the value provided, and partners closely with businesses on financial matters to enable greater growth.

Michael Cerami (Vice president of marketing and alliances, Unlike traditional write-up services, modern CAS is technology-enabled and advisory in nature. The focus is much more on intelligent decision-making and strategy for clients. Service offerings are also more varied than they once were and can include virtual or outsourced controller or CFO services, financial statement preparation services and business process outsourcing. The most successful firms these days also tend to specialize in specific sectors, industries or niche plays.

Hitendra Patil (Director of customer success, AccountantsWorld, and author, “Accounteneur”): CAS means the accountant does all or most of the “accounting work” for the clients.

CAS, therefore, is about services that emerge from various business transactions that have an accounting action attached -- e.g., bookkeeping, accounting, tax, sales tax, payroll, payroll tax, compliance filing, etc. It could also include advisory for finance decisions of the business (e.g., business tax planning).

The clients can use the same technology that accountants use, but only to the extent of processing some “business transactions.” In other words, in CAS it is the accountant who utilizes his/her education, knowledge, experience and expertise to manage “accounting” for the client. CAS makes accountants become more involved, more integral part of the clients’ business processes, like being their in-house accounting departments, with the key difference that the accountants are a few (or a few hundred, even a few thousand) miles away from the location of the business. The important difference, though, is now the clients have the benefits of professional accounting.

In other words, client accounting services happen mostly when business happens (transactional), some before it happens (proactive advisory) and some after it (write-up). It cannot be just “after the fact” (e.g., write-up, audit, etc.).

Carolyn Hall (director, FWRD Services, Wiss & Co.): Client accounting services offers full back-office support through the use of cloud technology. The technology generates real-time reports and dashboards, which allows professionals to provide timely advisory services to clients.

Kenji Kuramoto (CEO and founder, Acuity): At Acuity, we view CAS as the design, implementation and maintenance of a client's accounting function. This means providing them the best accounting tools, proper financial processes, and the experienced people to be able to operate their accounting function more efficiently and effectively.

Erin Vukelich (Client advisor II, JCCS): I would define modern client accounting services, at its most basic, as the recording of transactional data and subsequent analysis of that data. A more complex definition could be the use of technology to streamline data and provide real-time data for analysis. Some accountants choose to include advisory services within the “CAS” term, but I prefer to list that separately as client advisory and accounting services.

What has changed in CAS to make it such a growth area over the past five years or so?

Cerami: Mass adoption of cloud services and the digitization of data have really changed the equation for client accounting services, giving firms better analytical capabilities and more forward-looking information to provide to clients. Maybe most importantly, it’s changed the dynamic between CPA firms and their clients, allowing a much deeper, more collaborative relationship. CPAs can provide more insight – in a faster, more easily graspable way – that offers real value for business owners when they make critical decisions.

Vukelich: I believe the automation of compliance work has made CAS a huge growth area and opportunity. The systems that are now in place to automate everything from payroll filings to sales tax filings have given accountants more time to focus on their clients, rather than focusing on processing the data.

Hall: Technology is clearly the key in the advancement of CAS. In addition, organizations like and many software companies have played an active role in educating the industry on the tools and resources available to be successful.

Kuramoto: Historically, I think the accounting profession saw CAS as just write-up work or a means to better support a firm's tax department. The primary goal of CAS or write-up was to facilitate getting a tax return complete. Modern CAS is now becoming more focused on the business owner themselves and not just as a way to make tax prep for the firm less painful. I believe that business owners experiencing how CAS can make a meaningful difference in their business, and not just around tax time, has been a huge contributor to the growth in CAS services.

Mason: In recent history, the CAS model was not significantly profitable to firms because the tools were not efficient. Firms did CAS services primarily to support tax and not to advise the businesses. Over the last five years, we have seen a revolution of efficient accounting technology. There has been a boom of machine learning algorithms that are smart enough to get us much closer to the dream of “code-free accounting.” Accountants can currently provide this service without a significant amount of manual entry, and focus on giving the higher level advise that we all find fun.

Patil: Prior to the emergence of new technologies, especially the Internet that gave birth to accounting software on the cloud, business owners used desktop accounting software, more as business operations software and less as “accounting” software. There was no easy and fast way for accountants to access that software. As a result, accountants mostly did after-the-fact work, i.e., after business decisions were made and after business transactions were performed. Accountants, therefore, had little say in how business owners decided, even if accountants could have guided them to make better business decisions. “Proximity” was the key for business owners to keep the accounting software, and hence (what they thought was) the accounting work with themselves. Keeping control over money coming in and going out was perceived as accounting work. Most of the work done by accountants was manually done, even when using computer software. Hence the cost of such accounting services was prohibitive for a large majority of small businesses, which constrained business owners to do it all themselves.

It all was changing over the last few years. Now, with collaborative, real-time, online sharing of the same accounting software, accountants can work with business owners, not just after the business decisions are made by them, but actually, more so, while and even before they make those business decisions and undertake business transactions.

More and more business owners are now aware that the cloud helps them keep the proximity and control, and at the same time, professional accountants can work with them in real time. These possibilities did not exist before. Also, the cloud hastened the progress of automation and integration of various software solutions required by businesses, which has reduced the complexity, and hence the time, efforts and costs required to process business transactions. Automation and integration have benefited both the business owners and the accountants, because professional accounting services can be obtained at more reasonable costs as technology has reduced the manual “work” and hence the costs. Professional accounting work, and insights from it, have become more affordable for millions of smaller businesses that were not engaging accountants before. It created more opportunities for business owners to focus on their core business and outsource accounting to professional accountants. The demand for “client accounting services” has therefore multiplied in recent years.

At the same time, the same automation and integration progress, coupled with newer technologies such as artificial intelligence and machine learning, has made it possible for accountants to gain from efficiencies, reduce their costs and time taken to produce work, and focus on higher-value, higher-priced business insights and advisory services. Such higher-value services invariably help clients’ businesses become more successful, thereby increasing the demand, and revenue, from existing clients as well. The net revenue and net profit per client from CAS is reported to be about two times that from non-CAS clients. This win-win reality has propelled the entire demand-supply equation of the CAS market to new heights.

Cerami: It’s also a great business for CPA firms to be in. We did a benchmarking survey last year on CAS practices involving 119 firms, and we found the median growth rate for the firms’ most recent fiscal year was 12 percent, or more than twice that for overall firm growth. Many firms have launched in recent years that are strictly standalone CAS practices, too, and they’re thriving. The message is clear: Clients value the enhanced advisory role that CPAs play in modern client accounting services.

Where do you see CAS going in the next five years?

Kuramoto: I believe CAS will grow at an ever faster pace over the next five years. Accounting talent has always experienced low unemployment rates relative to the rest of the economy, and right now we're probably at the lowest all time Accounting unemployment. I don't see that changing in the next few years. While great news for those in the accounting workforce, it's problematic for businesses who need that accounting talent. CAS, especially when paired with great technology, represents one of the best ways to fill that accounting talent gap for businesses so I think we're about to see even stronger growth in the next five years than we've experienced recently.

Mason: I love this question! Our industry is changing at a rapidly increasing rate, so I am grabbing my crystal ball here. My vision for CAS requires the technology companies to continue their investment into innovation. I foresee a technology stack that is seamlessly integrated to provide real-time bookkeeping where a bookkeeper is just managing exceptions not data entry. In five years I see predictive analytics being available for accounting data; predictive analytics in accounting being the result of artificially intelligent systems processing the historical data set, industry information, and economic information, among other available information, to project what the financial future of a company may hold.

As a CAS professional, I would take those predictions, utilize the automatically generated projections and data visualizations, and advise my clients on how to move forward from a financial capacity with their businesses. We will become the interpreters for the financial AI, ensuring the systems were taking into account all qualitative and quantitative data to provide realistic scenarios. People will always want to talk through these results with other people, so we will continue to be a valued part of business operations.

Vukelich: I believe as we see even more automation in compliance, we will see a significant influx of practitioners moving into the CAS arena. Technology is going to continue to outpace expectations, and as the tools become more powerful, we will find ourselves doing less and less of the day-to-day data processing and move into financial analysis and internal/operations process review. We’ve moved away from the traditional “looking-backwards” model and have moved into reviewing real-time data. My hope is that we move beyond the real-time data to start truly looking forward. Firms that offer compliance work already do this in regards to tax planning, but why shouldn’t we also do this for other goals a client may have?

Patil: Over the next five years, I see the evolution of both CAS and the resulting impact:

  • About three out of four firms will offer full-scale CAS.
  • At least 50 percent of firms will service clients nationally, without being physically present in multiple states.
  • About seven out of 10 small businesses will work with accountants, mainly because of the wider availability of CAS, and the competitive price-to-value/price-performance ratio. Think of the total market size for accounting services!
  • The components of services that make the CAS package will evolve to include more business process management services, than just purely “accounting” types of services.
  • Technology will evolve more to further reduce manual efforts to do accounting work – which will release more “advisory capabilities and capacity,” and profitability within accounting firms.
  • CAS will more likely than not lead to better success for accounting firm clients, and hence that growth will lead to revenue and profit growth for accounting firms, without the need to add too many new clients i.e. client mix of firms will change to mostly A and B types of clients.
  • “Accounting work” will be done mostly by professional accountants while their clients -- i.e.,business owners -- do business!

Cerami: We’ll continue to see more specialization in CAS offerings, and more technology innovation through automation. As the service line matures, we’re also going to see more standardization, both in terms of how success is defined for CAS practices and the type of skills that will be needed by practitioners. is involved in both of those efforts. As I mentioned before, we launched our first CAS benchmarking survey last year so we can help develop a common language on success metrics, which has been lacking so far in this area. As we refine the survey in future years, firms will be able to have better insight into peer versus peer key performance indicators for CAS, which we think will help move the category forward as the value proposition becomes clearer. And on the skills-for-practitioners side, we offered the first certificate program for client advisory accounting services with the AICPA, and I expect we’ll see more definition in the types of skills and competencies that CAS practitioners will need over the next few years.

The second half of the roundtable will appear in the next few weeks.

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