Client accounting services: Three ways to develop this emerging revenue stream

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Accounting is an age-old profession. CPA firms still leverage the proven practices and processes that have been developed and refined after decades of trial and error, risk/benefit calculations, and business modeling exercises. And yet, the rapid pace of technology innovation and its impact on the accounting industry cannot be ignored. Disruption to business models, operations, processes and staffing practices abound.

Technological advancements are forcing CPA firms to rethink their tried and true business models in favor of new approaches such as operating as a cloud-based practice and even developing new service-based revenue streams. The rapid rise of client accounting services. or CAS, which can range from strategic services such as succession planning to transactional services such as bookkeeping, is perhaps one of the most hyped opportunities for CPA firms today.

Historically, accounting firms have focused on taxes and billable services, but that model makes for consolidated workloads, stressful “busy” seasons, and jam-packed tax workflows. By offering client accounting services, firms can not only spread tax workflows through the year but generate a stream of recurring monthly revenue. It’s not a golden ticket, but it’s pretty close! An industry survey from 2016 noted CAS revenue already accounted for 10 percent of overall revenue at CPA firms…and that number will only increase as adoption continues to intensify.

While CAS is a fast growing and profitable business segment for CPAs, the challenge is that such a shift in a business model feels monumental. New technologies, new staff and even re-training existing staff, all while the business must operate “as usual,” can be overwhelming.

Here are three practical ways your firm can get started today and take advantage of this burgeoning revenue stream:

1. Determine your niche

Most CPA firms are generalists, offering a wide scope of services to mainly local clients. Some firms do align themselves with an industry focus such as construction or manufacturing, but by and large where a firm is located defines where they do business and who they do business with.

For client accounting services to really work, CPA firms need to determine their niche, which can easily coincide with their geographical location and local clientele. Operate out of Austin? Perhaps you have a roster of high-tech clients. Based in Boston? Real estate developers may dominate your customer list. Focus on those clients and try to only bring on new clients if they are in one of your industry focuses.

Becoming niche-specific will allow you to standardize charts of accounts, providing a much-needed gateway to automation and developing comprehensive benchmarking data. The key here is standardization. Creating a blueprint for how accounting is done for a specific sector of businesses will translate into service opportunities as specific challenges — faced by that market and that market only — need to be addressed. It also ensures benchmark data can be compiled at a greater level of insight. Understanding those market dynamics is a huge selling point for many customers as it communicates your firm’s value far beyond a simple close of the books.

2. Your accountants are now your sales team

Prepare for people to get uncomfortable. Your teams, on the front lines with clients day in and day out, are effectively your sales team for CAS. That’s right, you may not need to hire *new* sales specialists, but rather rethink the roles of some of your accountants already in the fold. Any CPAs who currently serve in an advisory role will inevitably find themselves in a position to sell services and communicate the value of their work to clients — especially as automation becomes more prevalent across the firm. Investing time and resources into helping them be successful will be critical to making CAS a tangible revenue stream. No one is better versed to sell to your existing clients than the people already intimately familiar with their business and their challenges. This advantage cannot be overstated as underscoring your firm’s value to clients will make them more likely to follow your advice on things like changing their chart of accounts, financial institutions or business structure to be more financially efficient.

3. Embrace the technology disruption

Cloud computing. Artificial intelligence. Predictive data analytics. Technological innovations are everywhere, and it can be overwhelming to sort through what advancements matter most to your firm amid the noise. Embrace the chaos by focusing on the solutions that can provide you with the opportunity to automate and streamline functions. What tasks are most time consuming? Which accounting practices are the costliest to your organization? Where are the typical bottlenecks in your workflow? By answering these questions, you will be able to better evaluate what technology applications can make an impact.

Ultimately, any technology that offers the opportunity to automate and streamline processes will set you on the right path. It will free up your accounting staff (or should I say sales team?) to focus on advising clients on their business, not following process-based work.

Retooling a CPA firm to capitalize on new technology and new revenue streams while still serving clients and executing existing operations is no small feat. The beauty of client accounting services, however, is that you can incorporate much of the resources and know-how you already have on hand and turn them into a monthly recurring revenue model. By focusing on the markets that matter most, with the people on staff who are ready to move into an advisory role, technology can help amplify the opportunity by alleviating those time-intensive processes. CAS is already redefining traditional business models and propelling firms of all sizes and specialties to more growth. Join them.

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