Posted in: Growth, Mark's Insights,

As I continue to speak to member firms, it is clear that the pandemic has hit certain geographies and industry verticals harder than others. However, one service line that is near and dear to my heart has really taken hold among firms who do it well. That’s client accounting and advisory services (CAAS).

There’s a lot to say about CAAS, so this will be the first in a two-part series on successful CAAS practices. We’ll start with some discussion of how the pandemic has been shaping CAAS and then take a look at key criteria that can help your firm transform its practice.

One thing I witnessed in 2020 is the separation between the “haves” and “have nots” in CAAS. For over ten years now, I’ve been involved with a digital CPA community that has embraced the cloud and transformed their CAAS practices. At AICPA’s Digital CPA Conference in December 2020, I had the honor of presenting with Erik Asgeirsson, President of CPA.com, during his keynote address about this very topic.

During the pandemic, traditional bookkeeping practices continued as they were but with the added challenges of getting access to client information and getting the work done. Often, when those same clients were asking for help in advisory around government program support or ideas for back-to-work and business strategy, firms didn’t deliver in the same cohesive way.

In contrast, firms that have truly transitioned to a CAAS practice thrived during 2020. Some even had clients who had previously turned down outsourced services calling back asking for help! So, what does a successful CAAS practice look like? Let’s explore some of their defining characteristics.

1. Business model strategy developed and initiated. Many believe that changing the name of their existing bookkeeping operation will solve the business model issue. Not so. Starting with a clean slate and thinking about what it is you want to define, create, capture, and deliver in this service line is critical. The AICPA and CIMA created a great tool for this called the Business Model Framework. I’ve used this over the last few years and am happy to have that conversation with our member firms.

A few years ago, I was discussing this issue with the CEO of a firm that had just been through this process. Their business was entirely tied around CAAS in the old model. They had been performing outsourced CFO/controller-for-hire services along with some standardized bookkeeping. The CEO decided to sit down with his firm down and ask, “If we were starting our business today, what would it look like? Who would we work for? How would we deliver the services, and what resources would we need?” They started with a blank sheet of paper, and when they were done, they looked at what they created and realized they had an entirely new line of business. They even decided to start a separate company under that new model.

2. Selection of industry vertical(s). Part of the business model creation is choosing a vertical that you already know you’re good at or passionate about. It’s important to understand the marketing flow, how the business makes money, and the tech stack that will best serve that vertical. From there, the firm can create a standardized technology tool set, GL, chart of accounts, financial statements, dashboard, onboarding process, and go-to-market.

I spoke to one of our member firms in Europe recently about this exact thing. Their firm created a tool set for physiotherapy practices (known as physical therapy practices in the US). Their practice is thriving and continued to grow during the pandemic. They even decided to move their physiotherapy practice into a separate building because the personalities and the work environment were so different from traditional professionals. The firm is also providing incredible insight into the physiotherapy community and helping clients when they see opportunities to improve operationally. They are now looking to leverage similar insights in other personal service and healthcare-related practices to grow into another vertical.

At Allinial Global we are “all in” on helping our member firms transform and grow their CAAS practice. In fact, this February we will have a firm assessment available for our members to complete to help with CAAS transformation. We also have pilot programs with Sage coming soon and a CAAS workshop on transforming the practice in May. In the meantime, stay tuned for Part 2 and be sure to mark your calendars for our CAAS firm assessment coming in February!


      
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