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Your clients need help with spend management. Here’s why.

Note: You can watch this free CPA.com webinar on-demand now. Sign up here.

No matter the size of your client’s organization, expense management can be a repetitive and time-consuming experience. Too often, clients and firms find themselves distracted by chasing down receipts at the end of the month rather than spending that precious time looking ahead and planning for the future. Fortunately, technology is enabling firms to cut down on manual accounting tasks and focus on delivering high-value insights from proactive spend management.

In our recent webinar, Unlocking Better Client Insights with Spend Management Services for Your CAS Practice (sign up to watch this free on-demand webinar now), leading Client Advisory Services (CAS) practitioners discussed how they’re delivering deeper insights and client value through spend management.

Here are some of the biggest takeaways from the discussion.

  1. Spend Management is a Key Service Offering for CAS Firms.

    CAS is the fastest-growing practice area for accounting firms – and it’s on a steep upward trajectory. Why? Clients value the insights, cashflow analysis, and trusted business advice that firms provide. It helps them make strategic business decisions faster and with more confidence.

    As the demand for trusted accounting advisors continues to grow, outsourced spend management presents an opportunity for firms to deliver deeper insights and greater value to clients. In fact, processing and correcting one expense report can cost a business $110 on average.

    CAS firms can help clients not only manage spending across their businesses, but also unlock insights and strategies to proactively fuel growth.

  2. CAS Firms That Leverage Technology Help Clients Make Proactive Decisions.

    Traditional expense management is time-consuming, inefficient, and fragmented. Businesses lack real-time visibility into how money is being spent each month.

    As Logan Nichol, Director of Product at Divvy, a Bill.com company notes, “There are a lot of disparate ways and methodologies of spend. We never have real-time visibility into where every single dollar is spent. Time is wasted chasing receipts…and an employee must wait 30, 60, 90 days to be reimbursed for personal spend. It’s a huge problem that we know exists in the market.”

    It doesn’t have to take a village to consolidate spending in one place. It just requires the right tools. CAS firms are uniquely positioned to help clients evolve their practices through game-changing technologies.

    Divvy Accountant Advisor Program, in partnership with CPA.com, offers an integrated corporate card and software solution that delivers real-time insights into company-wide spending. It eliminates the need for expense reports, inefficient approval flows, and rampant out-of-policy spending.

    As a result, firms are able to have strategic conversations with clients about what is happening across the entire business.

    Dan Luthi, Partner at Ignite Spot Accounting Services, says Divvy is a win-win for accounting efficiency and client relationships. “We are having faster, more proactive conversations. Instead of us searching for a bank record to reconcile a bank account, we can process documentation much faster.”

  3. The Divvy Accountant Advisor Program Empowers Clients and Their Teams

    Oftentimes, expense management requires business leaders to approve every transaction. This can cause delays and create cashflow issues, hurting both the business and advisors.

    With Divvy, business managers can empower employees to control their expenses, increase spending visibility, and eliminate inefficient workflows.

    “It creates a very different relationship between the employee and the employer built on trust. Employees have control over how they should be spending their resources and time,” Luthi notes.

    Firms can set their clients up for success at no cost to the user, unlocking the following benefits:

    • Business leaders can easily issue virtual credit cards with predefined budgets to every employee – immediately improving security and eliminating non-compliance spend.
    • All transactions are synced automatically to the client's accounting software – delivering real-time visibility and reporting.
    • Expense reports are no longer needed – saving hours of time for firms and clients.
    • Receipts can instantly be captured through a mobile app – which means accountants will no longer have to worry about clients walking in with a shoebox full of receipts.
    • If needed, reimbursements are fast, free, and easy.

    Modern spend management, enabled by technology, offers a secure, controlled, and streamlined process. As a result, firms, clients, and their employees are able to collectively make better decisions and refocus their energy on business growth and improved job performance.

Are You Helping Clients Manage Spending?

Many businesses have little insight or visibility into their spending.

CAS firms have an opportunity to provide clients with the technology to transform expense management while providing financial insights and analysis. Divvy keeps accounting firms a step ahead with better forecasting and budgeting for their clients.

Watch the free webinar, Unlocking Better Client Insights with Spend Management Services for Your CAS Practice, to learn the best practices and insights from practitioners on how your firm can move from reactive expense management into proactive spend management.

Helping CAS Clients Manage Inflation with FP&A

With an increase in oil prices, pandemic-driven global supply chain issues and the “Great Resignation” talent crunch, companies and consumers alike are under increasing inflationary pressure. In a recent report from the U.S Labor Department, a key indicator of inflation, the consumer price index (CPI), indicated a 7% increase in 2021. Initial effects of this increase are felt in the form of higher wage costs, increased employee attrition, higher cost of raw materials and an overall lower demand for both B2C and B2B products.

Firms that offer client advisory services (CAS) are uniquely positioned to provide clients with models, forecasts, and budgets to help them navigate their business during times of increasing inflation. Here’s how they can make an impact:

Use modern FP&A Technology to help clients model, forecast, and manage inflation impact

It’s easier to address inflation with financial planning and analysis (FP&A). Here at GrowthLab Finance-as-a-Service (FaaS), we employ an all-in-one FP&A solution, Jirav, to help clients forecast and budget, allowing inflationary effects to be taken into consideration. When it comes to FP&A, we believe that a well-defined strategy is a key first step to take prior to any tactical considerations. Once stakeholders have agreed on a short-or-long term strategy, we can get to work modeling using Jirav. We find that if you put the cart before the horse and try putting numbers down first, it makes it harder to adjust for market conditions, such as inflation. And if you do happen to make it there, it may just be on pure luck, rather than rooted in the client’s concrete goals, objectives, and countermeasures.

When helping your clients define their goals, ask the following questions:

  • Where are you now? What resources (people and/or equipment) do you currently have?
  • Where are you trying to get to? What resources will you need in order to hit your objectives?

By answering these questions during goal setting, you begin to weave in considerations for inflationary pressures. For example, if you conclude that you’ll need to hire 10 new staff members to increase revenue, how much will that cost and when will you bring them on? How will inflation impact the compensation for such individuals? If your client is a service-based business and driving to appointments, how many miles does an employee drive daily? This translates into how many gallons of fuel are required to service the revenue goals, which should then be adjusted based on current (and predicted future) fuel costs, for example.

While the budget consists of more than inflation countermeasures, they are a good factor to keep top of mind. Jirav simplifies this by leveraging of assumptions – for example, you can set a predefined rate for things such as fuel costs. As the model is re-forecasted as the year progresses, that assumption can easily be adjusted, up or down, to reflect reality.

Adding value as a strategic advisor

As a part of your CAS offerings, it’s important to understand how you can help your clients manage inflationary pressures but also convey what it means for their bottom line. Here are some ways to help clients navigate times of increasing inflation:

  • Identify inflationary exposures to their business
  • Build inflationary expectations into your plan
  • Establish a cadence for a Finance Call to identify risks and opportunities to the plan
  • Engage the client in a monthly Ops Call to actively adjust assumptions in the plan based on risks and opportunities

Because we have spent the better part of the last decade in a low inflationary period, many of us don't realize that inflation can eat into your cash. Client conversations should begin with, where are you exposed?

The truth is that every company is exposed when it comes to staffing costs. Secondly, you’re exposed to any expense not locked under contract such as operating expenses. Lastly, for companies that deal with inventory, your cash is immediately exposed via your inventory purchases while your COGS has a delayed exposure to your NOP.

This is where FP&A can help clients manage inflationary exposure. First off, FP&A that is done well delivers an Annual Operating Plan (AOP) to the business every year. That AOP should be actively developed to contemplate increases to expenses that are expected to go up due to inflation. It’s important to remember, not all inflation is bad, especially if you can capture pricing opportunities. Don't forget to review pricing and adjust modeling assumptions.

Each month, FP&A delivers to the client actuals-to-budget reports and analysis. These reports are reviewed during the monthly Finance Call, which is scheduled as soon after the accounting close as possible. This reporting and cadence put business owners in the driver's seat to react quickly when expenses go outside of expectations.

A second monthly client call, the Ops call, is a discussion with the business owner around how to operationally change the business based on the risks or opportunities identified in the Finance Call. The FP&A team will adjust the forecast by rolling forward the plan based on new assumptions identified in the Ops Call.

FP&A services offer a tremendous growth opportunity for CAS practices. Your role as a strategic advisor is more critical than ever in helping clients manage the impact of inflation and reinforcing the value that you bring to the table. Leveraging modern FP&A technology to build forecasts, budget, and financial models instantly is pivotal to your CAS offering.

For additional resources and strategies on how to approach FP&A meetings and advisory discussions, leverage the following CPA.com resources:

 

 

10 startup companies leading innovation for the accounting profession

Each year, the AICPA and CPA.com invite early-stage companies worldwide to apply to participate in our Startup Accelerator. The program, launched in 2017, invests in and helps early-stage startup companies grow throughout the accounting ecosystem so they can help transform the accounting profession. The program also provides us with direct line of sight into emerging trends to help round out our overall mission to build an innovation ecosystem.

In a recent LinkedIn Live, CPA.com VP of Strategy and Innovation, Kacee Johnson, announced the participating members of the 2022 cohort. This select group of early-stage companies is developing a variety of solutions across audit, AI, risk reporting, education, and environmental, social and governance (ESG) issues.

As part of the program, these companies get exclusive access to a highly regarded panel of experts and advisors, which includes senior CPA.com and Association executives. Additionally, the companies receive a $25,000 grant and the opportunity to showcase their solutions at AICPA Engage, the profession’s largest conference.

“We’ve seen over the past decade how emerging technologies evolve practitioner skillsets,” said Johnson. “The Startup Accelerator was born from the recognition that we can help those companies who are making a difference for the accounting and finance role, and it allows us as an organization to lean-in to different categories to better understand future disruptive trends.”

2022 Cohort

The 2022 Startup Accelerator features the following companies and solutions:

  • AuditMiner – The Omaha-based company’s solution leverages automation to streamline and standardize audit workpapers and templates, increasing the quality and consistency of Employee Benefit Plan (EBP) audits across a CPA firm.
  • Once Accounting – (formerly BaCo Tech) - Managing clients’ records across multiple platforms can be challenging. Dallas-based Once Accounting is a client integration platform that seamlessly incorporates records into a firm’s tax or accounting solution
  • Fieldguide – Based in San Francisco, Fieldguide is an automation and collaboration platform that streamlines the end-to-end engagement workflow for modern risk assurance and advisory firms.
  • LumiQ – The Canadian-based company offers a native podcast app where engaging conversations with business leaders count as verified CPE or CPD credits. CPAs and accountants can earn credits on their commute, at the gym or walking their dog.
  • Knuula – Client Engagement Letters can be time-consuming and difficult to customize. Knuula, based in Frisco, Texas, streamlines the process by enabling firms to easily customize, distribute and manage client engagement letters.
  • Caesar Sustainability – The remote-based company offers a comprehensive data collection and management platform to centralize workflows and data storage for ESG reporting
  • ESG Trust – The San Francisco-based company’s integrated data management solution identifies ESG risks opportunities, measures standards, and maps stakeholders to the value chain, streamlining ESG information gathering and collaboration.
  • GoodLab – Based in San Francisco, the company’s ESG performance management and compliance software enables organizations to transform their ESG data reporting engine to deliver actionable insights and data to management, investors and customers.
  • Sustain Life – The company’s SaaS platform helps companies across industries reduce their environmental impact by providing ESG tools that enable the measurement and management of their carbon emissions.
  • Standard Carbon – Carbon is the newest asset class in ESG reporting but has yet to be recognized on the balance sheet. Standard Carbon, based in Winnipeg, Canada, aims to change that by leveraging AI to deliver transparent, carbon offset assurance statements.

How do these companies fit into the accounting ecosystem?

AuditMiner, Once Accounting, Knuula and FieldGuide provide solutions that help accountants work more efficiently, accurately, and effectively. LumiQ allows CPAs a unique way to consume content for CPE or CPD: podcasts.

With growing customer demand for sustainability, Environment, Social and Governance measures (known in short as ESG) there is tremendous opportunity for accounting and finance professionals to lead the way. Fostering innovation in the ESG space, the 2022 Startup Accelerator features a second cohort of ESG-focused solutions. Caesar Sustainability, ESG Trust, GoodLab, Sustain Life and Standard Carbon all contribute to the accounting ecosystem in supporting, reporting on and tracking ESG initiatives.

To learn more about the AICPA & CPA.com Startup Accelerator program, view this LinkedIn Live video or visit cpa.com/accelerator.

Want to hear more about the 2022 Startup Accelerator companies? Follow CPA.com on Twitter, LinkedIn or Facebook.

CAS Questions Everyone Wants the Answers To

For any firm considering starting a client advisory services (CAS) practice, or just looking for ways to refine and grow one they’ve already launched, there are some obvious questions.How should our pricing work? How should the practice be staffed? What types of technology investments should we plan on making? You get the idea – fundamental, important business-plan level questions. We’ve already published insights designed to help firms thoroughly consider and answer those questions, including our most recent CAS benchmark survey drawing from the insights from practitioners across the US, a detailed white paper on establishing and running a successful CAS strategy, and much more.

On our recent CAS Top Performers webinar participants posed many of these questions to our panelists – more than we had time to answer. Below are answers to some of your peers’ top questions that can help inform your CAS processes and decision making.

  1. 1) Many CAS practices focus on industry niches. Won’t clients ask how we can provide the best support and advice to them when we’re also helping their competitors?

If your CAS practice explicitly focuses on specific industries, sectors, or other niches, then yes – some prospective clients will probably ask. Fortunately, there’s a good answer. “Some (prospective) clients don’t like the idea of our working with their competitors,” says Beth Allen of Greer Walker. “But then they learn the benefits of the knowledge we can share across similar clients, without breaking confidentiality. Ultimately, that value outweighs any initial concerns.”

  1. 2) How should CAS practices amortize investments in developing new service offerings and efficiencies that aren’t specific to clients?

Firms with CAS practices typically don’t track or amortize the cost of CAS service offering development related investments. Instead, they establish monthly pricing based on overarching time and materials estimates. The goal: Billing based on the value delivered rather than on month-to-month costs that could shift. “The idea is that if we invest time on the front end, we’ll recoup it on the back end”, says Scott Lazarone of Faulk & Winkler. “For example, newer clients shouldn’t receive a discount just because we’re becoming more efficient,” Jason Miller of Dean Dorton notes, “When it comes to IP (Intellectual Property), we don’t amortize or track it. We treat it as something that we can generate from serving one client, then leverage with others – that way, all clients benefit equally.”

  1. 3) I know good staffing is a key part of a successful CAS practice. What are the best practices for finding and retaining CAS talent?

The best place to look for talent may be internally – CAS could provide the perfect opportunity for professionals who are already on your team and open to new challenges and a chance to develop new skills. “We’ve had tremendous success in staffing our CAS practice with assurance and tax folks who are looking for something new,” says Beth Allen. Scott Lazarone says, “We have a lot of people who were previously on the audit and tax sides, but want a more consistent workload year-round, with less overtime at peak times. For these professionals, CAS offers a great blend of CPA work and industry-level experience. Meanwhile, both the firm and CAS clients benefit from people who understand what clients need and expect from the firm, and how to deliver it.

Entry-level CAS positions are a different story – some firms recruit for these positions out of school. “When we recruit out of schools, we’re looking for degreed accountants or finance majors,” says Jason Miller of Dean Dorton. “For experienced hires, we tend to look internally.”

Just as in other parts of the business, it’s important to have clear career progression milestones in place for CAS professionals. “All our teams have a clear career path, from Finance and HR to Marketing, Office Administration, and IT,” says Jason. “CAS is no different.”

  1. 4) How will CAS clients assess the value of our offerings?

“What would it take for us to do this work on our own?” This is the most fundamental calculation clients are making as they engage with your firm’s CAS offerings. It’s not just about the cost of hiring someone to take on these tasks, either. Anyone in that role will need dedicated technology solutions in order to do the job right, which also adds the cost of ongoing tech support in addition to whatever it takes to purchase the solution. And what if that person leaves? When clients start asking questions like these, they will often conclude that engaging with a CAS provider is the most efficient, least risky approach over the long term.

There’s also the issue of competition – clients may be looking at other firms who offer the same services for a lower price. “We’re frequently asking ‘what do our competitors charge for this service’”, says Scott Lazarone. “If our price is higher, what additional value are we generating for clients? We need to have a good answer – and we need to make sure we convey it to the client.”

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  1. Got more CAS questions?

If you’ve watched CAS’s upward trajectory in the profession and want to take steps to build or grow your CAS practice, we have a breadth of resources to guide you. Visit our CAS resource page to access our latest surveys, workshops, on-demand classes and tools, including our new firm self-assessment, recently recognized by Accounting Today as a top educational resource for 2022.

Why specialization is the key to firm growth

Personalization is no longer a ‘nicety’ for today’s sophisticated customers – it’s a requirement.

Leading-edge firms recognize this evolution and are creating tailored service offerings for clients. These firms are moving away from “generalist” services to practice areas specializing in one or a few industry verticals. This shift to niche practices enables them to deliver deeper expertise and strategic guidance through insights such as industry KPIs, benchmarks and business strategies.

Types of niches
Building and growing a niche practice offers many benefits, but first, let me explain the two primary areas of specialization— practice area and industry vertical.

Firms that specialize in practice areas have expertise in how to offer and implement a particular service offering such as Financial Planning and Analysis (FP&A), Client Advisory Services (CAS), Sales & Use Tax or Cybersecurity services.

Firms that specialize in industry verticals have deep knowledge in advising businesses in a particular market segment. Examples include restaurant/hospitality, agricultural, financial institutions, real estate, healthcare or professional services, among others.

Some firms have gone so far as to specialize in both a practice area and industry vertical, positioning themselves as leading subject matter experts in particular industries for specific services. For instance, a firm might specialize in outsourced accounting & CFO services for microbreweries, or SOC examinations for SaaS technology companies.

Increased efficiencies
Regardless of whether your firm decides to specialize in a practice area or a vertical or both, a key benefit is the opportunity to realize numerous operational efficiencies.

As staff is focused on just one industry or practice area, you’ll have more capacity to truly understand your client’s business – the important trends and sector disruptors, as well as their customers and competitors. You’ll also be better positioned to invest in new technologies and systems that create and enhance efficiencies. And since multiple clients will benefit, you can justify the time and expense associated with implementing new technologies.

Firm specialization also makes marketing your practice easier and more effective. You’ll know the right vernacular to target prospective clients and can achieve a higher return on investment on marketing spends because you’re focusing on the right messaging, channels, and keywords.

Improved quality
It’s no secret that specialists create higher quality output. By focusing on a specific service line or industry, you naturally establish a body of knowledge and deep expertise from your experience and repetition. It also results in a more consistent and quality work product and the ability to spot errors when they arise.

Technology also helps drive quality. Whether you automate work deploying robotic process automation (RPA) or other capabilities such as machine learning and artificial intelligence to process industry specific data, you remove the human (mistake-prone) element from the process, thereby increasing quality.

Greater Value
The ability to deliver clients insights on how their KPIs compare against industry benchmarks is a key value of specialization. Restaurant clients, for example, might be interested to know their competitors’ average check amount, tables turned per hour, peak traffic by meal and the takeout versus dine-in variation by day or time. Likewise, subscription or SaaS-based companies would be interested to see how they stack up against their industry’s customer acquisition cost, lifetime value of customers, customer churn, and more. As a subject matter expert in your client’s industry, you’ll be well-versed in benchmarks, putting your services in high demand and positioning you well to charge a premium fee.

Creating a niche practice
If your firm is offering general accounting services to a broad array of clients across a variety of industries, now is the time to assess how to focus on a few key specializations. Consider these steps to build your niche practice:

  1. Assess your resources. Ensure your firm has the presence and reputation to specialize without overextending you or your staff. Also explore opportunities to partner with other firms to build a niche.
  2. Be strategic in selecting your niche. Analyze your revenue to see if a particular type of client or industry is making up a significant portion of your revenue – then spend more time developing business in this area. Consider also building a niche based on you or your firm’s interests or hobbies – passionate employees deliver the best work.
  3. Establish yourself as a subject matter expert within your niche. Learn the issues impacting your niche clients – then create a solution. Seek out opportunities to be a guest speaker or author for industry events or publications.
  4. Ensure firm alignment. While your firm may have several focus areas, it’s important that partners and staff understand the strategic vision and goals for the niche practice. To identify staff, it’s not necessary to recruit those with your niche industry knowledge. Hire smart people and then teach them the industry.
  5. Promote your niche. Don’t just rely on your reputation – branding and marketing should be critical components of your outreach strategy. Many niche practices have also secured their preferred .cpa web domains, including dentist.cpa, church.cpa and forensics.cpa, to promote their firm’s services to target clients.

For more tips and strategies on how to accelerate your firm’s journey towards a thriving niche practice, leverage the following CPA.com resources:

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.