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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:

Outlook 2022: Four Takeaways from Digital CPA

We recently celebrated the 10th anniversary of Digital CPA—the annual conference that brings together the entire accounting ecosystem to glean insights, exchange ideas and network. The energy at this year’s event was phenomenal, with more than 700 forward-thinking practitioners gathering in Nashville and virtually to discuss how they can lead the way within their practices and the profession.

A single continuous theme throughout the event was opportunity. There has never been a better time to be in a firm and supporting clients with these transforming capabilities. As you look towards 2022, I want to leave you with four key takeaways from Digital CPA:

  1. Take Client Advisory Services (CAS) to the next level to fully realize opportunity and explosive growth. New CPA.com research underscores the continued high growth of CAS related to other practice areas, and also highlights the key attributes of the high performance firms. New capabilities in FP&A, business intelligence and other key areas also suggest there’s more room to define and expand the category and build client value. In the coming year, we’ll be introducing new tools and learning opportunities to help firms fully realize the CAS opportunity and make the leap to what we’re calling CAS 2.0.
  2. CPAs + FinTech are a powerful combination. Over the past 20 months, the accounting profession proved its worth, playing a crucial role in helping America’s small business community secure forgivable loans through various business relief programs. FinTech solutions such as the CPA Business Funding Portal were key to streamline the process and elevate CPAs’ role as trusted advisors. Firms are well-positioned to advise clients on financing solutions and the evolution of the Portal with the new term-loan offering reflects the growing opportunity for the profession in business financing advisory services.
  3. Focus on the evolution of client relationships to increase value. As former Tesla and Apple executive George Blankenship remarked during his keynote, the customer relationship is constantly evolving, and firms need to work to build long-term relationships. “Once you get people into your ecosystem and keep taking care of them, the chances of them going elsewhere are really small,” he said. How can firms create exceptional client relationships? By fostering innovation to maximize client value through new technologies and business models, including new pricing structures.
  4. It’s critical to continue to specialize as technology advances. In his keynote, MIT Futurist David Autor discussed the future of work, including how the profession can augment its work by automating manual, rote processes. Doing so will free up accountants to focus on delivering business insights and strategic guidance to clients. Autor’s advice on how the profession can remain in high demand? Specialization. “There’s a scarcity of people who can take data and turn it into useful information. Allocate your efforts towards the area where expertise is needed,” he advised.

The Digital CPA community has always been the embodiment of leadership, embracing innovation and pushing the profession forward. We invite you to be a part of this incredible community in 2022. Best wishes for the year ahead.

Talent is Key for Success in Client Advisory Services

Client Advisory Services (CAS) is the fastest growing area of consulting in public accounting. Building the right team to start or expand a CAS practice can be challenging, especially given the pressures CPA firms are under in general on staffing. But a blend of strategies, such as automation, expanded hiring and flexible work opportunities, can help practice leaders meet their goals and keep team members happy.

CPA.com and the American Institute of CPAs’ Private Companies Practice Section (AICPA PCPS) recently put out our latest CAS Benchmark Survey, which offers insight into the challenges firms face in this fast-growing service line, as well as best practices from top-performing practices. The topline results – a 20% growth rate and profit margins for top performers that outpace traditional practice areas – underscore the opportunities in CAS, which we define as a practice area in which firms advise clients across a spectrum of financial and accounting related decisions, with the goal to deliver higher value and deepen the trusted advisor relationship. When it comes to talent development, the survey’s insights fall into three main categories:

Increased Focus on Recruiting and Retention. Acquiring and keeping talent has been challenging throughout the profession, and broader business trends such as increased turnover (what some call the Great Resignation) are also causing headwinds. On a positive note, our survey found that CAS staff were paid on par with other professionals in their organization, so a brain drain to what could be perceived as higher-reward practice areas shouldn’t be occurring.

We found a majority of firms use traditional online advertising, social media, internal recruiting and campus recruiting to fill their staffing needs. However, top-performing firms (defined by us as those in the top 25% of all CAS practices in terms of net client fees per professional) were more likely to pay a recruitment bonus and rely on internal recruiting than their peers. We also know many non-traditional firms look beyond just CPAs and are recruiting data analysts and others with critical skill sets essential to this category.

When it comes to retention, more flexible working arrangements can be a means to convince staffers to stay. The good news is a majority of firms in our survey (59%) said they adapted to remote work surprisingly well during the pandemic and another 13% reported being completely remote – that’s a solid baseline to build on. Another advantage for the category: Unlike tax practices, CAS work is subject to less seasonality, so work-life balance can be easier to achieve.

One key element for firms to focus on is workplace culture. In a recent AICPA Town Hall, for example, Elinor Litwack, CPA, a partner at GRF CPAs & Advisors, said the firm’s emphasis on shared values and respect within the workplace was a critical driver in its growth.

“One thing that really resonates with us at GRF is leading the ‘people first’ culture,” Litwack said. “We’re nothing without our people. It’s not just a talking point.”

Sharpening Skills. Top-performing firms were far more likely to use dedicated staff for their CAS practices than other firms (52% versus 32%). This focus allows firms to provide better engagement efficiency and increased quality in service delivery.

Our survey also showed an across-the-board increase in training hours for CAS firms since 2018 (37 hours per full-time equivalent position versus 27 hours), and an even sharper increase among top-performing firms. The latter are more likely to have staff attend vendor training or certification programs, sit in third-party workshops or conferences, and otherwise invest in outside learning. Some 68% of top-performing firms, for example, said staff had attended one of CPA.com’s CAS-related workshops for practice development. Jennifer Wilson, partner and co-founder of Convergence Coaching, says core training should include soft skills, such as leadership and communication, which are essential to advisory practices.

Emphasis on Efficiency. Billable and total hours were up over 2018 for CAS team members in our survey, probably due to the net fee growth practices experienced. Introducing automation and repeatable processes is key to maximizing staff. Top-performing firms are more likely to use workflow tools (87% vs 77% for all CAS firms), dashboards and alerts (78% vs 66%) and are also more likely to employ artificial intelligence and robotic process automation.

Top performing firms were also more likely to limit the general ledger software programs their clients use to three or less, simplifying staff training and easing client onboarding. Rather than doing custom work for everyone, they are more likely than other firms to productize service delivery, creating defined, repeatable client deliverables to increase team efficiency, scalability, and margin – and, more importantly, free up staff to focus more on advisory work.

Building your CAS practice

The CAS Benchmark Survey offers a wealth of information on staffing practices that firm leaders can review to see how they stack up against their peers. CPA.com has a number of resources to expand training, from our CAS workshops and certificates to our signature Digital CPA conference, which has a considerable focus on CAS. Moving forward, we’re committed to providing new tools and learning opportunities for firms to move into the next level of CAS, an array of higher-order advisory services we’re calling “CAS 2.0”. Talent development will of course be key to this transition.

Phil Quimby is CPA.com’s Product Marketing Manager for CAS

3 Ways to Future-Proof your CPA Firm

DCPA21 Poster

In these disruptive times, one thing is certain: Change is inevitable. In this landscape, it has become increasingly important for CPA firms to know that they’re taking the steps necessary to future-proof their practices against the uncertainty of the future.

That’s precisely why Jeremy Senften, CPA, CGMA, COO at Rea & Associates and long-time alum of the Digital CPA Conference, sat down with Colette Sharbaugh, Director of Communications & PR at CPA.com, for a special LinkedIn Live. In just around 10 minutes, he shared three ways firms can prepare for the future:

  1. Stay ahead of emerging trends

    Trends are just like the savviest accounting professional: They’re always evolving. But in order to truly future-proof your firm, you must be one step ahead of them. Senften says attending top industry conferences, such as Digital CPA, keep him well-informed on new and emerging technologies. In fact, he and his team implemented Robotics Process Automation (RPA) after hearing about it from both session speakers and peers at a previous DCPA conference. Senften recommends educating yourself on new technology solutions that can create efficiencies in your firm’s workflow and delivery of services.

    Preparing your firm for the future also means anticipating your clients’ needs and the opportunity for new service lines. Senften said his firm had always offered some form of Client Advisory Services (CAS), but through the guidance provided at Digital CPA, the firm learned how to grow and refine this practice area.

  2. Watch what best-in-class firms are doing

    It’s also important to keep tabs on what other firms are doing. Pay attention to your competitors, understand the industry benchmarks, and network with other professionals. Every business is different but when you have a true grasp on the differences and similarities between your firm and others in the same market, you can use that data to great effect. Further, by networking you can hear about practical strategies from your peers that are facing the same challenges as you and build long-lasting and mutually beneficial relationships. Digital CPA has been a great help to Senften and hundreds of other accounting professionals by allowing them the means to connect, collaborate, and learn about topical industry updates that they won’t get anywhere else.

  3. Understand your top challenges – and how to address them

    We all face challenges no matter how big, small, specialized, or experienced our firms are. However, Senften explains that it’s helpful to definitively identify those challenges before addressing them. These days, talent and technology challenges are top of mind for every firm. In order to address these challenges, Senften has benefited from the latest research, strategies, and tips that he’s gleaned from past Digital CPA conferences. The information gained during all the sessions, keynotes, and networking activities has made a significant difference in how he’s addressed these problems. In fact, his firm now has 5-6 employees attending each conference so that they all come back to the firm with different insights that can be immediately implemented into their firm.

It’s clear that the future will always be uncertain, but that doesn’t mean firms can’t prepare. Our Digital CPA 2021 conference, held onsite in Nashville Dec. 5-8 and live online, brings together industry experts and profession leaders to share the latest insights, trends and practical strategies to help you take the steps necessary to future-proof your firm and lead the way within the accounting profession. Register before Oct. 31 and automatically save $100 per person on top of group discounts.

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.