Traditional accounting involved a single accountant with a range of expertise. This included after-the-fact financial statement preparation; processing transactions, AP, AR, and bookkeeping, bill payments; ensuring payroll and tax compliance; reviewing financial performance and providing strategic input on improving the business.
With the increasing volume of work and growing complexity, it is becoming necessary to seek the help of highly specialized experts.
How is Client Accounting Services (CAS) different?
The main objective of CAS is to present your firm as more than just an accounting and taxation service provider. A comprehensive CAS practice manages a wide spectrum of services necessary for running a business efficiently. This includes managing payables, receivables, cash flow, payroll, banking, taxation, trial balance, financial statements, and periodic regulatory compliance.
The approach to CAS should always be to maintain the optimum balance between client requirements and business growth. The first step to this is understanding which category each client belongs to:
1. Traditional after-the-fact write-up work for clients writing manual checks
A small percentage of accounting firms still pay their employees by writing manual checks and make payments through debit and credit cards. This generates a large amount of data entry for low-paying product services. The objective should be to make this more profitable.
The best way to do this is by bringing in automation. Start by downloading all the transactions in the electronic form right into your accounting system. This could potentially reduce data entry for the after-the-fact write-up by about 70-80 percent, making after-the-fact write-up more profitable.
The tax season crunch resulting from these write-up clients dumping everything on your desk at year-end is a very real possibility. Automate and consistently update transactions to keep producing financial statements monthly or quarterly. This will spread out the work throughout the year reducing the year-end stress.
Automation will also help you deliver profit and loss insights faster than ever before. Through the data collected, real-time insights will help in better business navigation. Additionally, if you are not on a monthly retainer, the faster you deliver the service, the faster you can bill for it.
2. Transaction processing for clients needing to perform some of the accounting work.
This category of clients run some of their business processes off accounting software. For example, paying bills, generating invoices, or reorder inventory items. However, this is less “accounting” work and more “business transactions processing”.
Prior to the internet, these softwares were not mobile and restricted to the office premises. This resulted in a disconnect between accountants and their clients leading to client errors. With the growing popularity of the cloud, working collaboratively with your clients simplifies the process. A chart of accounts can be set up and appropriate accounts assigned to vendors and customers. With differential access, client errors can be significantly minimized.
In addition, CAS also notably increases your ability to manage clients’ cash flow and offer better strategic advice on financial management.
3. Clients wanting to offload all accounting work to their accountants
This is outsourced accounting services, the primary growth area for CAS. A majority of clients would prefer to offload the entire accounting work to their accountants. This proved to have higher hassles and lower margins and accountants were reluctant to take this up.
Cloud computing streamlines the process, making it more accurate and in half the time, making outsourced accounting highly profitable.
Strategies to boost CAS
- Management needs to make an effort to implement a CAS culture at the firm.
- Partner with the outsourced accounting services provider to help implement daily client accounting.
- Leverage the necessary technology based on your current requirements and future plans.
- Set up a fixed cost retainer relationship that allows for a defined service plan.
- Cross-sell the services and products in your repertoire to grow your clientbase.
- Train personnel to implement and handle CAS appropriately.
A survey of 1,700 companies that outsource accounting reported that CAS saves them time.
In addition, CAS companies also stated that the advice from their accountants helped them to increase profits and revenues. In collaboration with your client, technology improves the information flow between your clients enabling the mindset of an “in-house” accounting department for the client.
Looking for help in transforming your accounting firm? CPA Innovations is a one-stop solution when it comes to accounting and finance back-office services. We partner with accounting firms to help them enhance their productivity, efficiency, and profitability. With world-class processes, a highly qualified and experienced team, and robotic process automation, we are here for you every step of the way.
Please reach out to us today for your free consultation.