Aaron Sullivan
Can you imagine a world without acronyms? Communication would without a doubt be more of a chore, and it would take longer, too. Indeed, acronyms are fantastic. But FWIW (for what it’s worth) — for an acronym to be truly effective, it must be defined and clear for everyone involved.
Let’s take NFT, as an example: Non-Fungible Tokens are all the rage in the world of blockchain, but NFT also means “nutrient film technology” to hydroponic farmers. But there’s more — it’s also the shortened version for the National Foundation for Transplants, an important organization that shouldn’t be mistaken for farming or blockchain!
The financial industry has its fair share of acronyms, too. “CAS” is one example with (at least) two definitions:
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Client Accounting Services
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Client Advisory Services
For the most part, if you see us at Botkeeper referencing “CAS,” we’re referring to “advisory services.” But that doesn’t fully address the nuance. So, to help clarify, we wrote this short article to bear out both definitions in more detail and hopefully provide a resource that really explains what we mean when we talk about CAS (and how your firm can better serve your clients through CAS).
WFA! (Without further ado; okay, we admit that one’s a bit of a reach...)
Client Accounting Services (CAS)
Accountants understand these services well. If you’re not that versed, here’s a short “real-world” definition. Imagine a small-to-medium sized (SMB) business; maybe it’s on the larger end of the spectrum. They probably have a full accounting department, a team of financial professionals to handle things like:
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Bookkeeping
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Bill payment
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Budgeting
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Invoicing
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Accounts receivable
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Managing payroll
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Tax prep and filing
For businesses who haven’t brought their financial department in-house, they often employ accountants, CPAs and/or accounting firms. These firms offer a range of CAS services and become the outsourced finance team for business clients.
The Three Types of Firms Offering Client Accounting Services
Of course there are more than three types of firms (forgive the oversimplification here), but many firms bear resemblance to one of the following (or a mixed bag of them):
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Tax and Audit: Some accountants cut to the chase for the most sought-after services: tax preparation and bookkeeping. Other services may be on the website, but the bread and butter is tax time.
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Multi-service model (hourly billing): All of the CAS (accounting) services listed above are on the table. Closing clients means a detailed discovery call and estimate of hours. The struggle is managing things like scope creep and capacity issues with your team.
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Productized service model (set price billing): This is grouping services together into a range of packages. For example, three tiers to give businesses a choice based on what they need and the stage of the company.
Fintech + Client Accounting Services
Automation, AI, and machine learning are familiar terms in the world of financial technology (fintech). And there are a lot of apps and software that cater to both the personal and business sides of things from the financial perspective.
Accounting firms use certain tech to improve their own business by reducing overhead, improving team performance, and better managing capacity. In many cases, these tools take on the more redundant tasks (thank goodness).
Tasks like:
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Automating data entry and report creation
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Handling basic bookkeeping
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Reducing the need for spreadsheets and manual formulas in things like forecasts and budgets
The more complex services still require a human touch. When used to its full potential, automation allows firms to add higher-value services to their menu — improving revenue and profitability.
Client Advisory Services (the Other “CAS”)
Now we’re getting into the juicy bits with client advisory services. For a bit of context, let’s go back to the real-world business definition of the other CAS (accounting). Imagine that same company with the whole financial department doing all those things listed.
They likely have a CFO who runs the finance department, chooses metrics to track company performance, and offers advice to other members of the executive team (based off of the financial health of the company).
Accounting firms who offer advisory services perform like an outsourced (or virtual) CFO for companies who aren’t ready for a full-time executive salary.
Some of the more common advisory services include:
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Advanced reporting: This includes developing a cash flow forecast, choosing/finding/tracking metrics (both financial and nonfinancial), and even putting it all together in a dashboard.
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Accounting system development: Some companies are growing quickly and need help developing an entire accounting system (like the other CAS). Firms advise, or even create, the entire set of accounting services (and often fulfill them).
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Investment/debt: Sometimes, it takes outside funds to grow or keep up with demand. A professional’s advice to attract investors or choose the best debt is vital for overall success.
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Mergers and acquisitions: Merging, acquiring, or selling is a huge process with plenty of financially-related caveats. Advisory is crucial!
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Decision-making: Other big decisions happen all the time. Hiring, changing locations, inventory planning, choosing the best locations/markets to expand into, etc.
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Tax planning: One of the most logical services to offer is tax planning. With so many firms handling tax prep, offering to plan next year’s tax burden is an easy conversation to start.
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Pricing and profitability: Lots of nuance and connection between the cost of goods sold (COGS), pricing and profitability. Developing reports to show the best price range is a valuable service.
Note: This isn’t a comprehensive list; there are many more advisory services, and even those mentioned include granular individual services!
3 Common Reasons Firms Don’t Maximize Advisory Services
So with all of these options for offering advisory services, why aren’t more firms doing it? Good question! There’s not always a singular reason, but we’ve talked with a lot of firms and have whittled it down to these most common explanations.
Lack of Partner Buy-in
No need to mention the fear of change causing internal struggles. If you’re interested in adding advisory to your list of services, other firm leadership might push back.
Some don’t see the difference between typical accounting services and using that data to give advice. Others believe you charge for work and your thoughts/experience aren’t something people want to pay to get. Still, others are just afraid of change or think the process might not be worth it (because they don’t know how to get started).
Solution: Show partners the benefits of advisory to improve the revenue per client, better serve clients, and improve the culture of your organization.
Requires Increased Communication
Beyond the initial scope of the client relationship and handling deliverables, client communication is often at a minimum. But the term “advisory” promises the need for increased appointments and conversations.
Calculating and reporting are primarily introverted activities, while gleaning, investigating, and conveying insights from that data is more extroverted.
Solution: There are a number of solutions, but a few include developing templates (e.g., email templates), scheduling regular meetings, and using visual reports to make financials easy to understand.
No Capacity, Low Bandwidth
The other two reasons are hurdles to a healthy advisory firm, but this one is detrimental. Low capacity and bandwidth mean:
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Poor quality of work
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Missed deadlines
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Unhappy clients
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Stressed-out workers
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The list goes on!
Bottlenecks and project management are a few of the biggest issues plaguing accounting practices. But they’re not insurmountable.
Solution(s): If you’re not tracking capacity, that’s the first step toward a solution. From there, it’s about:
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Workflow design: There’s so much that happens between client onboarding and regular deliverables. Workflow is how the workload moves through your firm. Without a clear process for services, bottlenecks develop, and things slip through the cracks.
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Determine roles: There’s no way around it: people have certain strengths and weaknesses, and no one’s the same. Setting generic roles and responsibilities isn’t the best for a firm wanting to fire on all cylinders, and it often leads to wasted potential. Organize your team to capitalize on strengths while mitigating weaknesses.
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Automate redundancy: Repetition and accounting go together like peanut butter and jelly. The good news is, so does automation technology. Use tech to offload some of the most redundant tasks, opening you up for those advisory services.
CAS and CAS, Clear?
Hopefully, this explanation makes sense of the double-definition acronym. Admittedly, there’s more to each concept, so this is simply the tip of the iceberg. But the first step toward being able to offer CAS — advisory — services is understanding the difference between advisory and CAS accounting.