The why, what and how of CAS

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If you are an accounting firm owner/partner, you do not want to miss the emerging, growing and profitable opportunities in client accounting services.

Before we get to why, to ensure that we are on the same page, let us agree to a description of what CAS is.

The types of services offered under CAS can vary; just for the purposes of this article, let us agree that there are three main categories of CAS offering:

1. After-the-fact financial statement preparation. Also called “write-up,” where the client has already written their checks, issued invoices, and taken cash receipts. A member of the accounting firm’s staff enters the data into a general ledger to produce a financial statement.

2. Transaction processing. This is where the accounting firm issues invoices for a client, processes accounts payable and cuts checks (or processes electronic payments), processes payroll, pays employees, pays payroll taxes and more.

3. Outsourced CFO and/or controller services. This work entails a higher-level CPA/accountant (often a partner) meeting with the client’s management on a regular basis to review financial performance and provide input to strategies to improve business. It included regular, frequent interactions with the client to support financial and business decision-making, in near real-time with after-the-fact, but certainly not just or only after-the-fact.

The why before the why

Before we get to why firms can’t miss out on CAS, we need to know why business owners buy accounting software, even when their core business is not accounting.

In the years prior to the Internet, obviously accounting software was only desktop software. Businesses used it to run their business processes. To issue checks, to record income and for some other processes. Business owners predominantly did transactions processing, leaving the financial accounting, and compliance, to professional accountants. More likely than not, business owners had no option but to get the transaction processing done themselves or by their staff, many times by those who had no accounting education. No wonder, then, that business owners sending “messy books” to accountants was a common experience.

Business owners had accountants come to their office and do the "real" accounting. Or they gave "accountant’s copy" of the software to their accountants – for “cleaning up” and “making adjustments.”

It was not possible for business owners, their staff and the outside accountants to work together collaboratively in real time, or even near real time, on the same accounting database, unless all of them were at the same office/premises.

The result was inefficient, expensive, inaccurate, outdated accounting information – used mainly for compliance purposes, and only rarely for any timely business decision-making -- and invariably, messy books. More importantly, business owners perceived that they can do what accountants do – and that perception commoditized the pricing/fees for accounting services.

Fortunately, the birth of the Internet planted the seeds for the birth of cloud.

The cloud enabled accounting software to be shared by business owners, their staff their outside accountants, at the same time, anytime, from anywhere.

Yet business owners and their staff mostly continue to use accounting software to run their business -- to issue checks, to record income, and and so on -- even when it is possible for professional accountants to do everything that desktop software forced and constrained business owners to do.

The cloud makes it possible -- no, it makes it inevitable for the smart business owners to focus on their core business and let professional accountants take care of accounting, including transactional work (to be done accurately).

This new possibility gives rise to CAS opportunities for accountants to work in collaboration with business owners, in real time.

CAS is one of the fastest growing new revenue segments of many Top 100 Firms -- but the CAS opportunity is actually more relevant and more available to smaller accounting firms!

Why is CAS a great new opportunity?

Here are some of the key factors that make CAS a greater opportunity for accountants; and for their clients too:

  • As accountants process transactions in real time, in collaboration with business owners, the sheer increase in interactions – and the new ability of accountants to help business owners make timely and better business decisions – means CAS is a much more “sticky” service. It is not easy for business owners to replace or recreate the value that CAS delivers.
  • As more and more “advice” is given, more frequently than before, accountants become top of the mind, and that helps truly elevate themselves as their clients’ “most trusted advisors.”
  • Previously, outsourced accounting, which was essentially after-the-fact work, was considered as an expense. Therefore, business owners wanted to reduce the cost of it. Now, as CAS delivers more decision-support intelligence, the value that business owners receive from their accounting information makes it a win-win. Increasingly, clients will not perceive accounting purely as a cost.

How to roll out a CAS practice

There are a number of steps you’ll want to take to get started in CAS:

  • Adjust your technology stack: This is the foundational requirement for you and your firm to ride the CAS wave. It cannot be done overnight, but you need to start making assessments and evaluations of the technologies available and, more important, how the nature of businesses of your existing clients can benefit from these newer technologies. With the “app economy,” your total cost of technology can become higher, so you’d want to examine how comprehensive your main accounting software is.
  • Look for integration and automation possibilities: No single accounting software will have all the features that make sense for each of your clients. Therefore, you will need to examine the use of other add-on solutions that can integrate with your main accounting software – thereby giving you the efficiency gains of possible automation. You might even need to use more than one main accounting software solution depending upon your clients’ businesses.
  • Create your CAS packages and decide on pricing: Your CAS offering must be seen and understood by clients as something more than the transactional services you currently offer. Make sure you show the contrast between them. CAS is essentially relevant to growing businesses, not very small ones. To cater to a spectrum of businesses of varying sizes, create packages ranging from basic CAS to comprehensive CAS, and price them accordingly.
  • Plan your staffing / re-skilling of current staff: For CAS, you do not necessarily need more staff, certainly not as much as you may fear. Your new technology stack will release significant efficiency in your processes. It is possible to manage 100 percent more number of clients in your current staffing. Imagine the impact on your firm’s bottom-line.
  • Educate your clients: On new possibilities, including cost benefit, professional real time-collaborative accounting benefits. Help them see and understand the “before and after” difference.
  • Client service/collaboration/communications: A successful CAS practice requires increased interactions with clients. You must leverage new tech tools to reach out, communicate and collaborate with clients more frequently. Some accounting software can help you automate client notifications (by email/text) based on customized triggers set up in the software.

What next?

Each accounting practice is as unique as the firm owner’s experience, expertise, belief system and thoughts. But the one common thing is that every accountant has a genuine desire to make their clients more successful. CAS is the opportunity, the platform, the means to help accountants turn that desire into a tangible service.

Start small. Move a few chosen, progressive-minded, existing clients onto CAS. To identify clients that fit, you can look for those who have a significant number of sale invoices and bills, those who provide goods or services on credit terms to their customers, those who have plenty of inventory items, those who do some processing to convert inventory into products, and so on.

Learn from the experience. Adjust your processes, reports and communications based on the initial experiences. Then roll out CAS to more clients -- and offer CAS upfront to all your leads and prospects.

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