By the end of 2019, the majority of accounting firms will offer client accounting services (CAS), according to Accounting Today’s annual outlook survey. This trend of offering a broader set of services seems like a win for accountants and their clients, but it also poses a big challenge for companies offering services that may be outside of their comfort zone, both knowledge only operationally.
To guide you, we spoke to over 1,000 small business owners to better understand what they want from their accountant. It turns out that more than 40% of them expect something more from your company. And it might not be that difficult to meet high customer expectations and improve your revenue in the process.
What is CAS, and why is it important?
There have been recent discussions (https://bit.ly/32VrA7c) about how modern accounting firms view CAS and why the industry is changing. A quote from Michael Cerami of CPA.com probably sums it up best: “The mass adoption of cloud services and the digitization of data has really…changed the dynamic between accounting firms and their clients, enabling a much deeper and more collaborative relationship. CPAs can provide more information – in a faster, more easily understandable way – that delivers real value to business owners when making critical decisions.”
To be a bit more specific, we like to define CAS as assisting clients either by facilitating transactions that trigger accounting action or by helping them anticipate the consequences of those transactions. This means it can involve anything from administrative functions like payroll and accounting to more advisory services like tax planning, cash flow projection, or an outsourced CFO practice.
When thinking about CAS for your business, there is no specific checklist to follow, but it makes sense to think of it in terms of synergies: what do your customers expect your help with and what does your business realistically collaborate efficiently and effectively?
What your customers expect from you
In our survey of small business owners, we found that accountants are the most trusted business advisors, period. Clients trust your advice more than their friends and family, more than lawyers, even more than bankers or other financial professionals.
However, this trust also means that they expect a lot from you. They made many suggestions when asked about a range of potential services they would like accounting firms to offer:
Interestingly, business owners who had never worked with an accountant expected to be offered an even wider range of services than business owners with an accountant. And overall, only 61% were completely satisfied with the range of services provided by their accountant.
Find your gateway to CAS
While tax-related activities are predictably at the top of clients’ wish lists, a significant number expect help with activities such as bookkeeping, payroll, PA/AR and financial projections. And a quarter of them want “business advice” directly.
While we see a number of companies taking on all of these tasks (and more), a company looking to expand their practice doesn’t need to become a consultant overnight. If you are considering an expansion into CAS, it is more realistic to think about the following questions:
- Would this add the most value for our customers (and be easy to sell to them)?
- What types of services would make our business more efficient?
- What services can we add without making major staff changes or learning new skills? What will evolve?
- What can we effectively monetize?
If you identify services that meet all of these criteria, you will be in a good position to make life easier for your firm and your clients.
Where to look first
For many companies, the easiest way to get into CAS is to identify cloud-based technology solutions that automate most or all of the new services they intend to provide. Adding largely automatable solutions such as accounts payable/receivables, cash flow management or payroll allows your business to do more, keep cleaner books, have more information about your customers’ activities and add a source of income.
In short, some cloud-based solutions can tick all of the above boxes when done right.
Your business should start its journey down the CAS route where it feels most comfortable, but payroll is something my business OnPay knows well – and it’s something every business with employees should understand – so I can give a bit more information on how it might fit into your practice.
Pay like a first step
Sixty percent of small business owners outsource payroll, and between payroll and HR, they waste nearly 40 hours of bandwidth per month dealing with the back-office side of employee management. That means 40 hours less for market research, product development, customer discussions – or whatever could benefit their business the most. Payroll is also one of the main functions they expect from you.
If you’re heading to CAS by choosing a cloud-based payroll service, you should be able to manage client payroll for them or let them do it themselves properly and more efficiently. For example, we find that customers save approximately 15 hours per month compared to the average small business that does not use a payroll service provider.
The right payroll department will also take care of payroll tax returns and IRS and state tax notices, which should also make your life easier. They can also quickly handle any problems that arise before they end up on your desktop. And the accounting software integrations offered by many payroll providers also make bookkeeping easier, while giving you the big picture if you want to take on a more advisory role with clients.
Payroll isn’t the only place to start, but it’s a great example of how you can add a new service offering that’s a win-win for your business and your customers.
Ultimately, CAS’ goal is to deliver the most value to your customers. Whether it’s through payroll or another service that seems more aligned with your growth plans, taking this step will improve your business.
And the best part is selling these new services to your customers probably won’t take much more than just letting them know you’re ready to help. Most clients will be happy to let you take more tasks off their list and simplify things for tax season. And as our survey has shown, chances are they expect CAS-level services from you in the first place and now is definitely a good time to understand that first step.
Mark McKee is the President and COO of OnPay, the top-rated payroll software company. His 15 years of experience in institutional investing, equity research, private equity and investment banking give him an in-depth knowledge of what growing companies and their accountants need to set up simple and error-free financial practices.