When leaders at firms with client advisory services (CAS) talk about their ability to use CAS to catapult into deeper, more valuable client engagements, they often talk about financial planning & analysis (FP&A). As firms are delivering FP&A advisory, they’re operating as true partners and advisors, providing insights and support in one of the most sensitive, mission-critical aspects of their clients’ businesses. Once clients’ eyes are opened to the possibilities of FP&A, it completely shifts the client relationship. Clients start benefiting from real insight they use to inform decisions, not backward-looking reports that hardly see the light of day.
Verticalization: A powerful strategy for FP&A practices
Creating client value through FP&A advisory doesn’t just happen. It is the result of careful planning and execution within a technology-enabled, client advisory engagement. And one of the most important strategies for fueling FP&A growth is verticalization – identifying and actively pursuing clients in select industry verticals or micro-verticals. In our recent webinar “How to Scale and Optimize Your FP&A Practice with a Vertical Niche Strategy,” we brought together a number of leaders in FP&A to discuss verticalization strategies:
- Jody Grunden, Partner, Summit Virtual CFO by Anders
- Ryan Tansom, Partner/CRO, Arkona
- Zeb Smith, CPA, Founder and Owner of Zebulon LLC
- Mike Triantos, Head of Partnership at Jirav
In the webinar, these leaders identified some of the most important strengths that verticalization brings to FP&A advisory:
- Marketplace differentiation. When a firm demonstrates and broadcasts expertise in a specific industry, it’s able to set itself apart from other firms. Clients and prospective clients notice, which means new opportunities come to you.
- Specialized client expertise. The more experience FP&A advisors gain in a specific industry, the deeper and more specialized their clients’ experiences becomes. In turn, this leads to greater client confidence and, ultimately, more opportunities.
- Right clients, right fit. FP&A isn’t for every client. By focusing on industry verticals, firms can help rule out clients or entire industries that aren’t a good fit for the firm’s skills and experience.
- More revenue from deeper relationships. Clients taking advantage of FP&A services get more value from their firms – and they’re willing to pay for it.
- Standardization. Clients within the same industry are grappling with many of the same challenges. As a result, firms with a verticalization strategy are able to standardize their products and services to meet similar client needs, at scale.
Data is the key to delivering next-level value
Verticalization opens the door to entirely new opportunities in FP&A advisory when it comes to advising clients on critical key performance indicators (KPIs). When firms focus on distinct industries, they can better hone their ability to use non-financial and operational data that is outside the scope of typical client accounting engagements. Combined with financial data, non-financial data can provide a more holistic picture of the client’s situation, opportunities and potential obstacles.
Which metrics and drivers are unique to the industry? This is exactly the type of information that can help take FP&A advisory engagements to the next level. For example, firms focusing on manufacturers should be prepared to track such information as number of units produced per day or quality control data, to help clients determine how their overall profitability is being affected – and what financial decisions they could make to further improve.
Build on a foundation of technology
In addition to financial data, non-financial data plays a key role in providing advisory-level insights to FP&A clients – and that requires having a tech stack in place that supports both. Creating a spreadsheet network to track and harness all the data necessary to support the firm’s FP&A services is an inefficient, unsustainable approach – one that limits the firm’s ability to scale and grow. Fortunately, modern FP&A technology is designed with many of these capabilities built in – and the flexibility to add capabilities and data tracking/analysis tools that are unique to individual industries.
According to Grunden, their firm uses Jirav for forecasting, relying on the solution as a hub across clients to generate industry-level insights across the customer base. For example, 60% of the firm’s clients in a certain industry may have cash reserves of 10% or more of their annualized revenue – an insight that Anders professionals can share with other clients without disclosing individual client information. “This is the type of advisory-level conversation that’s so valuable to clients, and having the right technology is incredibly important,” Grunden said.
Hear FP&A leaders talk about verticalization in their own words
Hearing leaders speak candidly about their experiences is a must for any firm seeking to launch or enhance their growth in FP&A. The webinar delved into these invaluable insights and caters to firms at every stage of their development, from sole practitioners starting with advisory to established firms looking to provide higher-value services. Watch the webinar on-demand for a deeper discussion on this topic.
To learn more about how you can deliver higher-value advisory services with an all-in-one FP&A solution, please visit CPA.com/Jirav
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About the author: Jeremiah LaRue is the senior product marketing manager of CAS at CPA.com. He has more than a decade of experience supporting the accounting profession as a technical consultant helping to lead firms through technology change.
