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Spend management services - how to price, position and productize for success

Whether you provide accounting as part of your client advisory services (CAS) offering or your service is more transactional in nature, you’re likely ready to move past the reactionary work, inefficiencies, and headaches that come along with traditional client-expense management. In our recent webinar with Summit CPA Group we explored how a leading firm is leveraging a newer, technology-driven approach termed spend management to grow their accounting practice.

So what is spend management technology?

Spend management technology encompasses an integrated platform and corporate cards. The cards are issued to an organization and connected to pre-set budgets and spend caps. Employee card transactions trigger real-time alerts to submit receipts, and expenses are automatically categorized and synced daily to the company’s accounting platform. Accounting firms and their business clients get a web-based dashboard in which to track spend against budget at the department, project, or organization level.

Four benefits of modern spend management

Taking a proactive approach to expense management not only gives organizations control over spending, it saves them a great deal of time and busy work. Here are four of the biggest benefits companies experience:

  1. More Control of Spend - Setting enforceable spend controls with pre-defined budgets will greatly reduce non-compliant spending in the organization.
  2. Significant Time and Cost Savings - Automating receipt matching, expense categorization and reporting prevents time wasted on chasing down receipts, submitting and correcting expense reports long after the fact.
  3. Improved Compliance and Security - Employees and vendors are issued centrally-managed corporate cards, eliminating the need for a shared company card or personal card reimbursement, thereby cutting down on out-of-policy spend and fraud.
  4. Streamlined User Experiences - Organizations get real-time visibility into all spending in a centralized dashboard and transactions sync daily to their accounting platform.

How Summit CPA Group integrates modern spend management into their services

Summit CPA Group is a fully remote firm that has been using their Virtual CFO model since 2004. They have more than 70 employees, including an offshore tax team and a dedicated technology leader. Their 150 clients contribute to a $9-$10M practice with 72% gross profit margins. Summit CPA is able to leverage modern spend management to build a highly-profitable practice.

A tiered subscription services model

Summit CPA clients are offered three tiers of service, ranging from transactional to strategic.

  • Transactional – clients get foundational tax and accounting services; bookkeeping, monthly financial statements and tax returns
  • Controller – clients get a controller who oversees all accounting-related and financial activities within the company
  • Virtual CFO – clients get a virtual team of accountants, CPAs and tax professionals who take a strategic approach to help guide their business to success

The firm has good reasons for offering a subscription-based service;

  • Year-round recurring revenue from their clients
  • Higher margins
  • Ability to offer real-time client insights given their visibility into company financial data
  • Strong, long-lasting client relationships

However, they also recognize the risks inherent in this model - such as the risk of mispricing services and inevitable client-management challenges

Customizing pricing to client needs

In their initial meetings with clients, Summit CPA group identifies their needs and does a deep dive to determine how to best help them, asking questions that include;

  • Why are you seeking our services?
  • What are your needs?
  • Are you replacing someone?
  • What are your pain points?
  • Do you struggle with spend management?

An Excel-based pricing model is shared in this initial client meeting and the monthly subscription fee for services requested is calculated in real-time.

The technology that makes modern spend management possible

Powering Summit CPA’s subscription model is a sophisticated financial technology stack that automates manual processes and frees the accounting team to offer strategic financial insights to clients. A dedicated technology leader is focused on vetting technology options, piloting chosen technologies with small client groups, and integrating technology into client services.

This is the approach that Summit CPA took with Divvy from Bill, the platform that powers their spend management services. Divvy is free-to-use software and corporate cards specifically designed to reduce expense-management inefficiencies for businesses or outsourced accounting firms and CFOs. CPA.com partnered with Divvy to launch the Divvy Accountant Adviser Program, to bring this modern spend-management technology to firms who are looking to meet their clients’ needs for proactive advice and insights around their company’s spend.

With Divvy, Summit CPA takes traditional, static client budgets and operationalizes them. Client employees receive corporate cards and the firm has a dashboard to track client spend across the organization in real-time. Client spend is also synced daily from Divvy into Summit CPA’s accounting software to help the firm quickly prepare accurate financial statements.

Your technology stack is an integral part of your accounting team’s success and efficiency. By utilizing spend management technology, you’ll be able to save time, deliver deeper client insights, and advance your client offerings.

Using Divvy is a win-win for you and your clients.

Ready to get started? Watch our on-demand demo to see how it works!

How spend management can save your clients time and money

It’s the last day of the month and you’re working to close your client’s books so you can provide them with an updated budget and financial forecast. But instead of working on a cash-flow analysis, you’ve spent the last few hours emailing with your client to track down missing employee expense reports and reconcile transactions across five different company and staff credit cards. You’ve also poured over pages of bank statements in an attempt to understand which bills, if any, were paid via wire.

Sound familiar? This has been the way of expense management for decades - firms (and their clients) didn’t have another option. For years, this manual, disjointed and inefficient process has been causing major headaches, not to mention has provided accountants with little visibility or control over company spend.

The good news is that technology has forged a new path forward for expense management. What if we told you there was a way to avoid tracking down late expense reports, miscategorized expenses, and waiting up to 45 days to see how your clients spend their money? Modern spend management could be the answer.

What is spend management exactly?

“Spend management” is the ability to track company expenses in real-time, control spend, and see cash flow in one central location. Instead of looking post-transaction and reviewing a reimbursement flow, organizations get more control and can be proactive in allocating how money is spent.

Offering spend management services to your clients might seem intimidating, but it’s actually quite simple to get started. Read on to see how impactful offering spend management services can be for both you and your clients—and get some simple tips to get started.

Spend management technology - what is it?

Spend management technology encompasses an integrated platform and corporate cards. The cards are issued to your client and connected to pre-set budgets and spend caps. Employee card transactions trigger real-time alerts to submit receipts, and expenses are automatically categorized and synced daily to the client’s accounting platform. You and your client get a web-based dashboard in which to track spend against budget at the department, project, or organization level.

Four benefits of modern spend management for your clients

Bringing expense management into a proactive state is transformative for organizations. It’s a complete shift of mindset: Instead of backtracking on expenses, clients are viewing spend in real-time and even forecasting future spend. Moving into this proactive state not only gives organizations control over spending, it saves them a great deal of time and busy work. There are many benefits of being proactive with expense management. Here are four of the biggest:

  1. More Control of Spend - Setting detailed spend controls with pre-defined budgets will reduce non-compliant spending in your client’s organization. They’ll stay on budget by tracking expenses and monitoring employee card use against predefined policies.
  2. Significant Time and Cost Savings - Automating receipt matching, expense categorization and reporting prevents time wasted on chasing down receipts, submitting and correcting expense reports long after the fact.
  3. Improved Security - The modern spend management approach dictates that employees are issued centrally-managed corporate cards, eliminating the need for a shared company card or personal card reimbursement. Virtual cards can be created for online, recurring expenses, cutting down on fraud.
  4. Streamlined & User Friendly Experiences - With modern spend management software, organizations are not bogged down in manual processes. They get real-time visibility into all spending in a centralized dashboard and transactions sync daily to their accounting platforms.

Spend management is a win-win for your clients and you

As trusted advisors to your clients, they’re depending on you to provide quick, actionable insights that will make a positive impact on their business. Onboarding clients to spend management software will give you real-time visibility into the organization’s spending, allowing you to take a more strategic budgeting approach to meet your clients' goals (see how Steve Cheney’s firm did it).

Not only will your client’s experience get better, your staff will be (much) happier and you can bring on more clients at scale to increase your profitability.

Ready to get started?

CPA.com partnered with Divvy, from Bill to launch the Divvy Accountant Adviser Program to bring modern spend management technology to firms who are looking to meet their clients’ needs for proactive advice and insights around their company’s spend.

Learn how Divvy provides you and your clients with an all-in-one corporate card and expense management solution that’s 100% free to use. You’ll spend less time chasing receipts and more time focusing on your firm’s strategic goals, like building efficient workflows, deepening your relationships with clients and growing your service offerings. Watch our on-demand Divvy Demo.

Create Efficiencies and Secure Talent with Spend Management Technology

Client Advisory Services (CAS) continues to evolve—progressively moving towards a holistic approach to business finance that includes spend management. Why? Spend management supports the ability to view, control, and manage cash flows in real time. Using the right technology, all company spend data is available in one centralized location, providing decision-makers with actionable, on-demand insights that support informed business decisions and long-term sustainability and success.

Major benefits of spend management

Spend management doesn’t have to be fragmented or complex. But when you think about how many businesses handle company spend today, that’s their reality. A typical client is likely dealing with multiple, siloed spend channels, i.e. personal cards and reimbursements, corporate cards, ACH bill payments, wire transfers, and cash.

One of the primary benefits of spend management is that it enables clients to control spend by empowering employees and business leaders with real-time insight into budgets so they always know where they stand. Advanced technology supports this, providing full visibility from the initial transaction to close.

For accounting firms, spend management advisory enables them to secure and retain top talent. New accounting graduates are looking to deliver value-add services—where they can proactively build relationships with clients. Spend management brings staff in early on advisory-level work.

Firm enablement with spend management

As a forward-thinking CAS practice owner, Steve Chaney, CEO and Owner, Chaney & Associates, knew he needed to find a solution to eliminate manual processes so he could grow and keep both employees and clients happy.

When Chaney started his practice in 2002, his firm operated within a mostly manual model. So manual, in fact, that the firm had a courier service to drive around and collect documents from clients. One of the firm’s main pain points was credit-card tracking. Clients were using corporate or personal credit cards and that meant following a tedious manual process to track expenses, leading to a slow monthly close.

Fast forward to today and Chaney & Associates runs a fully-automated operation since implementing spend management software. Staff love it because they're working within streamlined, uber-efficient workflows. Clients love it because it supports higher-value advisory services and full visibility into data.

The boost in efficiency allows staff to now spend more time supporting clients with advisory services and growing the firm’s client base.

On his integration of spend-management software, Chaney says, “Now we are always in front of spend management instead of behind it. That’s what technology has done for us. My staff can lead clients in real time instead of constantly being 45 days behind.

Attract and retain skilled staff

In the years before Chaney’s move to an automated environment, staff weren’t exactly thrilled with firm processes. Spend management tasks–like coding and following up on expenses–were time-consuming and frustrating to no end.

For years, a client would request financials for a board meeting, then staff would have to rush - trying to aggregate 45-day-old financial statements. Getting assistance from clients was challenging since they could not provide receipts, credit-card reconciliations, or coding. As a result, staff had to log into disparate client credit card accounts to find needed information.

Today, staff have an organized, real-time dashboard where all their clients are listed and credit cards are managed. Credit card reconciliations are processed weekly so data is always current. Chaney admits that the firm couldn’t have gotten to this point without the technology.

Take your advisor role to the next level with Divvy’s spend-management technology

Steve Chaney offers real-world proof that you can successfully transition away from monotonous, manual processes—no matter how long you’ve been working that way. Spend management provides firms with another high-value advisory service through which they can develop deeper client relationships. Additionally, spend management enables staff to work closely with clients at an advisory level, keeping existing staff happy and creating a competitive advantage with new hires.

So, what is the secret to Chaney’s success in implementing spend management advisory? Technology. Chaney and his staff leverage Divvy, a free integrated software and corporate card from BILL, to reduce expense-management inefficiencies and meet clients’ needs for proactive advice and insights around their company’s spend.

Learn more about spend management and how the Divvy Accountant Advisor Program can support your firm in adding this service to your offerings by watching our on-demand demo webinar.

How Technology Can Mitigate Increased Sales Tax Complexity

The sales tax compliance landscape is becoming more complex, according to Mike Bernard, Chief Tax Officer, Vertex, who spoke at an AICPA Town Hall event. Changing sales tax rates and rules pose substantial registration and compliance challenges to all companies, especially smaller businesses with tax “departments” of one or two professionals.

Having tax technology tools in place helps tax departments keep pace while limiting the risk of non-compliance and visits from auditors. In our work with companies of all sizes, we see sales tax engines becoming a table-stakes requirement.

Given that post-Wayfair sales tax rules require far more companies to collect and submit sales taxes, it’s useful to keep the following developments in mind as you evaluate whether a sales tax engine can help ease your clients’ compliance burden:

  • Increased sales tax activity in local jurisdictions: In 2021, the average county, city, and district sales tax rates each increased while there were 197 new district taxes implemented, the second highest number in ten years.
  • Auditing activity has intensified: Sales tax audits have returned to pre-pandemic levels of frequency. These newly aggressive auditors are looking closely at remote sellers to assess their compliance with economic nexus rules and registration requirements that have come online since the 2018 Wayfair ruling.
  • Tax automation continues to advance and improve: Sales tax engines replace manual data-collection and compliance work by automatically updating the latest tax rules, rates and logic and by making accurate tax determinations and calculations. These solutions integrate with ERP systems (or general ledgers) and eliminate the need for in-house tax research. Advanced sales tax engines also integrate with procurement applications, e-commerce platforms and other tools in the expanding ERP ecosystem.

Keep these developments in mind when you find new sales tax compliance requirements getting too complex. Stay current on sales tax regulatory and enforcement trends. And remember, technology by itself is not a silver-bullet solution. Documenting workflows for your clients’ transaction tax environment can help to identify strengths and areas for opportunity and growth. Visit CPA.com/SUT for more expert sales and use tax guidance.

Are Your Clients Waiting for ERTC Funds? Be Their Hero.

There’s a good chance some of your clients qualify for the Employee Retention Tax Credit (ERTC), a refundable tax credit that rewards businesses up to $26,000 per employee. But many who qualify for the credit are waiting in frustration for the IRS to issue the money. Between high interest in the credit and historic capacity issues at the IRS, significant ERTC delays are the norm today. According to a March 2022 report in The Wall Street Journal, “employers are waiting as much as six to 10 months for the IRS to process claims.” For clients who were depending on those funds, that’s a big deal.

A new way to help your clients fast: ERTC loans

ERTC loans are now available through the CPA Business Funding Portal, the business financing solution from CPA.com and fintech leader Biz2Credit that’s used by 6,000+ CPAs and small business advisors. The portal was created to support CPA firms helping clients secure government-backed business relief through the Paycheck Protection Program (PPP) and helped businesses obtain approximately 40,000 PPP loans totaling more than $1 billion in business relief. Since then, it’s expanded to include additional financing types such as term loans, working capital – and now, ERTC loans.

The new ERTC loan option allows you to fill a pressing need for clients immediately, so they can put this critical funding to work. Features of the all-new ERTC Loan include:

  • Loan amounts up to 65% of ERTC total
  • Approval in 5 days or less
  • Useability for a broad range of business expenses
  • Interest-only repayments for up to 12 months
  • 6 – 36-month terms

The CPA Business Funding Portal empowers you to expand your Client Advisory Services (CAS) offering into Financing Advisory Services – applying your knowledge as a trusted advisor to help clients secure financing that enables them to reach their overall business goals faster and more efficiently. The ERTC loan is a perfect example of how a firm can add client value and increase firm revenue through this service.

Why should clients go through you, their accountant, for financing?

Sure, they could go to a bank and secure a loan the old-fashioned way. But there are numerous benefits unique to the portal which add value to your client’s financing experience:

  • Streamlined process and fast turnarounds. This is a fintech-driven solution, so both firms and clients can avoid the hassle of navigating the endless back-and-forth of traditional lending models.
  • Improved bankability for clients. The success of the PPP showed that businesses working with CPAs are better positioned, more prepared and qualify more quickly for lending than businesses that go it alone. The result? Better rates and loan structures for clients working with CPAs.
  • Expanded access to a wide range of financing. Financing products such as term loans, working capital, commercial real estate loans, and ERTC loans are all available to your clients through the portal. SBA 7(a) and SBA Express loans are expected in a future release, making it possible for firms to support and advise clients with a full portfolio of fintech financing products.

Plus, firms can add an extra revenue stream by earning commissions and receiving annual benefits. Multiple earning models means your relationship with your client works exactly how you want it to. Some firms offset costs by earning commissions on client applications that are funded. However, for firms receiving commissions, disclosure is often necessary. Other firms decide to opt out of receiving commissions and offset costs through a holistic client billing strategy. You can truly customize your path on your financing advisory journey.

To learn more about how you can help your clients reach their business goals through financing advisory services, visit www.cpaloanportal.com.

A Closer Look at Our Startup Accelerator Companies

The CPA.com/Association of International Certified Professional Accountants Startup Accelerator is an annual program that finds, invests in, and guides early-stage tech companies with solutions that support accounting and finance professionals. This blog series provides a deeper look at the five companies in the 2021 cohort.