What client advisory services can CPA firms offer?
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Client advisory services (CAS) offered by CPA firms are ongoing financial, tax, and business guidance services that go beyond compliance work. They help business clients make better decisions about cash flow, profitability, growth, tax strategy, and performance.
Let’s face it: for Certified Public Accountants (CPAs) and accountants, the seasonal influx of business during tax season or busy season, as it’s commonly called, is a huge benefit that can actually keep lights on year-round.
That being said, while some of your clients may only surface annually to get their taxes done, there is a major opportunity for CPA firms to garner more consistent business by offering advisory services in addition to doing taxes and compliance work.
Providing advisory services to your clients helps your firm become a more consistent source of guidance – while also ensuring a consistent stream of business.
Advisory services are a prime opportunity for business growth – and these services may also be low-hanging fruit for your CPA firm to offer. A recent Thomson Reuters Institute survey found that 95% of tax professionals believe their clients already want financial advisory services for their business.
Advisory services is a bit of a broad term and spans a gamut of financial advice. So what exactly are accounting advisory services and client advisory services, and how can a CPA firm build out its offering?
Key takeaways:
- Advisory services include financial and business guidance beyond basic accounting tasks, such as financial planning, wealth management, tax strategy, business growth goals, and profitability best practices.
- Advisory services clients often want include tax planning, business modeling, budgeting, risk management, and KPI reporting.
- Offering advisory services can help firms increase revenue, and AICPA and CPA.com reported that CAS practices saw 16% growth.
- Clients may also be willing to pay more for higher-value advisory work, with Hinge Research Institute reporting that some buyers expect to pay 50% more for an accounting package that includes strategic advisory and consulting services.
- Advisory services typically involve long-term, ongoing relationships, while consulting services are generally more project-specific.
- The right platform can streamline advisory work by automating tasks like proposal creation, engagement letters, client billing, and payment collection.
What are accounting advisory services?
Accounting advisory services are financial and business guidance services that help clients plan ahead, make decisions, and improve performance beyond routine tax and bookkeeping work. You know that being a CPA is so much more than doing taxes and helping your clients with their bookkeeping.
Accounting advisory services encompass a broad territory of financial and business advice. For example, if you’re offering financial accounting advisory services, you’re likely helping your clients with guidance on their investing and wealth management, cash flow planning and forecasting, and more.
Outside of financial advisory services (but closely related and highly important), your firm can also help with client advisory services. For example, since your clients are not tax experts, advisory services for tax planning and strategy, and helping keep on top of tax legislation are huge value-adds to your clients as they grow and/or as tax law requirements change.
Since you already understand their business, offering advisory services to address their growth goals and best practices for profitability can set your client up for success while strengthening the relationship over time.
How much revenue can CPA firms add with advisory services?
Advisory services can help CPA firms create year-round revenue and increase the value of client relationships. CPA firms that offer advisory services can truly be in a win-win situation. Not only is your expert advice and guidance helping your clients become more profitable, but your firm also brings in year-long revenue as a result.
An announcement from the American Institute of CPAs (AICPA) and CPA.com showcased that offering client advisory services (CAS) results in practices seeing 16% growth. They also said advisory services were “the fastest growing service area in public accounting and is projected to continue its impressive trajectory”.
Not only are your clients spending more at your firm, the increased value you offer means you can charge more for your expert services.
According to the Hinge Research Institute, “buyer participants not currently purchasing advisory services indicated they would expect to pay 50% more for an accounting package that includes both strategic advisory and consulting services, and are willing to pay more each month for packaged services.”
You may be wondering: What services are my clients looking for? This CPA.com report indicates the following advisory services are most desirable:
- Revenue growth and business modeling (65%).
- Budgeting (46%).
- Tax planning (38%).
- Risk management (38%).
- Key performance indicator (KPI) reporting (35%).
Understanding what your clients need for advisory services is key to determining which services you should prioritize in your offering. And then, of course, you’ll need to promote those services accordingly. From there, firms can decide how to price and package advisory work; Ignition’s guide to pricing client advisory services covers that next step in more detail.
What advisory services can CPA firms offer?
CPA firms can offer two broad types of advisory services: financial accounting advisory services and client advisory services. Since “advisory services” is quite an umbrella term, let’s break it into those two camps.
What are financial accounting advisory services?
Financial accounting advisory services help clients plan, forecast, budget, and make financial decisions with more confidence. As mentioned above, CPA firms are well-positioned to guide client strategy on investing and wealth management, cash flow planning, forecasting and budgeting.
Financial accounting advisory also encompasses examining your client’s profitability, business entity structure, rental property operations, purchasing or selling businesses, shifts in income and relevant action planning, estate planning, and the like.
What are client advisory services offered by CPA firms?
Client advisory services offered by CPA firms help business clients understand tax strategy, performance, goals, planning, and KPIs on an ongoing basis.Helping clients understand an appropriate tax strategy and planning and offering guidance on relevant tax law is only part of the picture.
For example, many small businesses struggle in areas such as benchmarking against their peers and the accompanying analysis to understand what the benchmarks mean.
As a trusted resource that understands their business, your firm is in a good spot to offer advice on their business goals, strategic planning, and general best practices to sustain or grow their business. You can also help with setting and analyzing KPI performance to get your clients measurable information and metrics that matter.
Advisory versus consulting: what’s the difference?
Advisory work is usually ongoing, while consulting work is usually project-specific. Do you want a one-time contract with a client or a long-term business partnership? That is, essentially, the difference between advisory and consulting services.
Advisory services | Consulting services | |
| Term of engagement | Long-term basis. | Short-term basis, for a specific project. |
| Objective | Providing counseling and advice on a variety of challenges or business needs. | Addressing targeted client challenges or projects. |
| Relationship with client | Aimed at fostering long-term business partnerships. | Typically a one-time contract or short-term engagement. |
| Suitability | Well-suited for CPAs to foster deeper, lasting relationships with clients. | Suitable for firms with the expertise and staffing to address specific client projects. |
| When to offer | When the goal is to establish lasting client relationships and provide ongoing support. | When targeting specific client challenges or when project-based expertise is required. |
While both advisory and consulting services help your clients address their queries and challenges with expert advice, the difference is typically in the term of engagement. A financial or business advisor usually works with clients on a long-term basis, providing counseling and advice on a variety of challenges or other business needs. On the other hand, a consultant typically works on a more limited scope, for a shorter length of time and on a specific project basis.
Should CPA firms offer advisory services or consulting services?
Advisory services are usually better when the goal is recurring, long-term client support, while consulting can still fit targeted projects. The benefits of offering advisory services make this a great way for CPA firms to gain longer-term, more predictable business. Financial and client advisory services are a great strategy to deepen client relationships and ensure you see them outside of tax season.
This isn’t to say consulting services are off the table or not beneficial to CPA firms. Depending on your firm’s expertise and staffing capabilities, offering consulting services to address targeted client challenges or projects can be an “and”, not an “or”.
However, if your goal is to foster deeper, lasting relationships with your clients, advisory services are the way to go and well-suited for the kind of work CPAs do and the services your clients need.
Who should CPA firms hire or train for advisory services?
CPA firms should look for professionals with technical qualifications, client knowledge, interpersonal skills, business acumen, and a learning mindset. Clients seeking advisory services are looking for a partner in their business who can work closely with them to understand their business and offer tailored guidance. In addition to regular meetings that go over essential topics such as revenues, P&L, and taxes, advisors must take a consultative and forward-thinking approach to help clients craft and implement the right business practices.
As such, when hiring or training your team for accounting advisory, see to it that they possess both technical expertise and the ability to think strategically. Needless to say, investing in a professional staff who can fluently address your client's challenges, concerns, and goals will lead to better client relationships.
Remember, the success of advisory services hinges on customer satisfaction and repeat (and referral!) business. When hiring someone to fill the CPA/advisor role, look for:
- Professionals with the required qualifications and certifications for their advisory role. For instance, with tax planning advisory, you might want someone who is an Enrolled Agent.
- Skilled accountants who understand the clientele you serve.
- People who love people – interpersonal relationships are key here.
- Individuals with sharp business acumen.
- Lifelong learners – they’ll need to acquire new skills as the business environment evolves, and you don’t want to hire someone with a fixed mindset.
Should my CPA firm offer accounting advisory services?
CPA firms should consider advisory services when clients need ongoing guidance beyond compliance work. If you’ve made it this far, you likely see the benefits of offering business and/or accounting advisory services to your clients. After all, if the majority of tax professionals believe their clients also want advisory services, they’re probably on to something that’s worth looking into.
If you’re interested in offering advisory services, Ignition has got you covered. Launching advisory services is simpler with Ignition’s built-in features that automate and digitize proposals. Quickly price and package advisory and compliance services in your proposals, so all clients have to do is select the right option for them.
Ignition also simplifies how you create engagement letters that clearly outline the terms of your agreement. Use Ignition’s legally-vetted engagement letters or upload your own. From there, clients can easily sign them online, so the entire process is streamlined and you can start delivering value right away.
Ignition also empowers CPAs to get paid faster through robust client billing features that support various payment capabilities – including fixed fees, hourly rates, and recurring billing. So whether you’re selling advisory services as a subscription or as an hourly service, you can manage and automate billing to ensure timely payments.
Launch advisory services with confidence
Price, package, and bill advisory services with Ignition's proposals, engagement letters, and billing tools.
FAQs
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Client advisory services offered by CPA firms are ongoing services that help business clients make financial, tax, and operational decisions. They can include tax planning, business modeling, budgeting, cash flow planning, benchmarking, KPI reporting, and strategic planning. Unlike one-off compliance work, CAS is usually built around a continuing relationship where the CPA firm helps the client understand what the numbers mean and what actions to consider next.
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CPA firms commonly offer advisory services such as tax strategy, budgeting, forecasting, revenue growth planning, business modeling, risk management, KPI reporting, and cash flow planning. Some firms also advise on profitability, business entity structure, rental property operations, estate planning, and buying or selling a business. The right mix depends on the firm’s expertise and what its clients need most.
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Advisory services are typically ongoing and relationship-based, while consulting services are usually tied to a specific project or short-term challenge. A CPA advisor may meet with a client regularly to review performance, plan for taxes, and support business decisions over time. A consultant may focus on solving one defined problem, delivering a project, or providing targeted expertise for a limited period.
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CPA firms can package advisory services by grouping recurring services such as tax planning, budgeting, KPI reporting, and business review meetings into clear service options. Each package should spell out what is included, how often the firm will meet with the client, and how the client will be billed. Ignition can support that process by helping firms create proposals, generate engagement letters, collect online signatures, and manage billing for fixed fee, hourly, or recurring advisory services.
