Changes to the accounting industry and business advisory services are more than just water-cooler chat. In fact, the industry is abuzz with firms that are adapting their client offering to include value-add services as technology is making previously lucrative services obsolete.
Business advisory is the umbrella term being used for these services. But what exactly is it and how can firms implement it seamlessly into their client offering?
3 Levels of accounting services
Accounting services can be differentiated into three separate, but not altogether equal sectors:
The first of the three, compliance-based services, involves offering only the necessary services to keep clients compliant with the law. And keeping clients above the law is the very basic task of any accountant worth their salt.
Tax advisory, assurance, and bookkeeping, are examples of what’s typically known as compliance services, and these are usually billed by the hour.
But firms that offer only compliance services are now facing diminishing revenue and fewer customers as cloud computing streamlines and automates these processes.
Performance services are services provided to monitor the health and performance of a business.
This section of the accounting pyramid is more involved in the here and the now, though it’s a step towards the final stage.
Growth profitability – that is, tracking the profit potential of a business – as well as business intelligence analysis, are the sectors that define this sector. It tends to be larger firms that operate in this area as they have invested more time, and money, in beginning to expand their client offering.
Because this section is a stepping stone to future-focused business advisory services it makes sense for accounting firms to begin offering performative analysis first, giving them a chance to understand what the customers want and how they react to value-add services.
Business advisory is the final tier of the accounting pyramid. Business advisory involves reporting on performance as well as advising on strategic plans, risk assessment, and succession plans.
In fact, Xero’s 2018 Accounting and Bookkeeping Industry Report found that firms each made an average of £124,600 from advisory services in the period of 2017-2018. For larger firms (pacesetting firms with 300+ clients) this number was more than tripled to £382,700.
The three pillars of the accounting world are being reconfigured – with some bearing more weight than others. Business advisory is slowly becoming the strongest option when it comes to the services offered by accounting firms.
A whole new world, and it’s shining, shimmering, strategic.
Small businesses want, and need, someone to help them understand their numbers. Not everyone has passed the CPA exam or equivalent accounting qualification. Just as not everyone understands that profitability doesn’t necessarily mean viability.
For firms, the final frontier isn’t financial reporting, but instead, business advisory. With advanced financial knowledge, and an insight into your clients’ business strategy, providing that advice is the obvious next step.
But providing clients with strategic business planning services is not as time-consuming or complicated as it sounds. Instead, with the proliferation of tech-based solutions, accountants can easily bridge the gap between their knowledge and the clients’ needs.
Invest in tech
This technology is not the modern world gone nuts, but instead a continuation of accountancy’s centuries-long relationship with technology.
Keeping up to date with all things technology is now the difference between keeping clients and losing them. In fact, firms that use technology will grow an average of 11% more over a ten-year period than firms that don’t.
With compliance services falling by the wayside and the demand for advisory increasing tenfold, now is the time to invest in technology that efficiently and effectively allows you to help your clients. And the number of accounting firms that invest in tech is growing, as they become future-focused for both themselves and their clients.
Become the trusted advisor
Modern technology plays a vital role in incorporating advisory services into your firm. But the ability to have a frank conversation with your customers is worth its weight in gold.
Increased reliance on technology can make it easy to forget one of the pillars of good practice: communication. Remembering that your clients neither have your experience, nor your knowledge, is vital to maintaining a strong relationship.
For those without a background in finance, accounting jargon can be the equivalent of speaking in tongues. Keep it simple, and your clients will thank you for it.
Overcoming client objections
With open communication, and integration with value-add technology, you can begin to provide essential strategic services. But for some clients, moving to tech-solutions can be daunting.
It’s your job as the trusted advisor to walk them through the transition. After all, you’ve probably been there yourself.
Making yourself available to train and mentor your clients is just as valuable as integrating technology. Knowing exactly what the cloud can do for you, and your clients, means that you’ll be better able to encourage them to use it.
The world of accounting has always been changing, but this time the expectation of clients is changing alongside it. People want more information, faster.
Integrating essential technology to deliver advisory services to your clients is rapidly becoming part of what it is to be an accountant. But allowing yourself to be a trusted advisor takes more than just using the software available.
Asking the right questions, listening to the answers, and providing advice, will set you on your way to becoming invaluable.
Float for advisory services
Float is an accounting software add-on that integrates with QuickBooks Online, Xero, and FreeAgent. Providing intuitive, efficient, and accurate cash flow forecasting, Float allows accountants, and business owners, to gain a deeper insight into the movement of their cash.
Bridging the knowledge gap between the accountant and the need of the business owner, Float can become part a crucial part of your advisory services by presenting the visual future of your client’s cash, and forming a crucial talking point between yourself and your clients.
Sign up for a free trial of Float and find out what it can do for your firm, and your clients!
Will Accountants Exist in 20 Years Part 1
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