By: Andrew Kenney, Journal of Accountancy
Client advisory services (CAS) is the fastest-growing service area for CPA firms, and the rewards can be great.
The median growth rate for CAS services was 17% in 2024, and CAS-related revenue is projected to double over the next three years, according to the biennial 2024 CAS Benchmark Survey, which CPA.com and the AICPA Private Companies Practice Section (PCPS) conducted with more than 200 respondents.
“There’s just such an appetite and need for our service,” said Kane Polakoff, CohnReznick’s CAS practice leader, who’s based in the firm’s greater Detroit metro area office. CohnReznick managed 60% year-to-year growth in 2024.
CAS isn’t just an area of growth for firms. Increasingly, clients are expecting and demanding these services and may even switch accounting firms to find them.
“It’s not really optional,” said Dixie McCurley, partner in charge of growth for outsourced accounting services at Cherry Bekaert in Atlanta. “Clients want more than just tax returns. They want advice, they want scenarios, they really want insights and automations, someone who understands their business.”
Still, many firms remain hesitant to move into CAS, which may require new staff, structures, strategy, and technology — all of which can be intimidating to newcomers.
“If they haven’t done it yet, usually it’s not that it’s not right for them, it’s that they’re not ready for it,” McCurley said.
So, how can a firm ensure it really is ready? The JofA interviewed six experts about key considerations for firms large and small that are considering a move into CAS, with additional information drawn from the CAS Marketing Toolkit produced by CPA.com and the Association for Accounting Marketing.
“What industry vertical am I going to serve? Who are my clients going to be? Who’s going to do the work?” asked Kim Blascoe, CPA, senior director of CAS Professional Services for CPA.com and former leader of the CAS practice at Milwaukee-based Wipfli LLP.
HOW TO PREPARE
CAS is a model in which accounting firms provide outsourced or co-sourced financial operations, shifting the accounting firm’s role from a transactional service provider to an embedded, ongoing financial resource. Services range from bookkeeping and financial reporting to payroll management, automation support, and CFO-level services like cash flow forecasting, tax planning, and industry bookmarking.
The demand for CAS services offers a potent growth opportunity for firms large and small, but a strategic approach to launching, building, and expanding the services is key.
Choose the verticals you’ll serve
It’s tempting to jump straight to questions like what technology the team will need or how they’ll price their services. But those questions are downstream of more fundamental issues: What services will the team provide and to whom?
“In order for this to be a high-profitability, high-margin space, you have to build out your processes,” Blascoe advised. “If you go deep into a vertical, you can standardize how you work … If you don’t do the vertical specialization piece, that’s impossible to do.”
Craig Connell, CPA, CGMA, is director of client accounting and advisory services for Sweeney Conrad in Kirkland, Wash. His team had eight people on launch in 2022 and has since grown to 20.
He credits part of their growth to choosing clients wisely — and not just aiming for volume. The firm generally seeks to provide a “full back-office solution” for companies in need.
Connell has generally avoided industries like hospitality, restaurants, and retail, and other “high inventory” clients. He finds that those businesses often “have a marketing and sales problem, not an accounting problem,” he said.
Building in large part on his firm’s existing client base and expertise, Connell has focused the CAS practice on four types of business:
- Professional services, ranging from medical groups to architects and engineers;
- Construction and real estate;
- Technology; and
- Family offices.
The CAS Marketing Toolkit similarly advises focusing on profitable industries where the firm may already have relationships with organizations, attorneys, and vendors. A vertical can provide a unique competitive advantage, the toolkit advises.
Specialization in a vertical “just gives a lot more context and value,” Polakoff said. When a firm has experience in a niche, its CAS team will understand the business trends facing the client, the technology used in its niche, and even the common language and terms of the business. “It’s so important to have the same nomenclature,” he said.
To prepare for CAS, especially in a larger firm, identify the verticals where your firm already has a strong presence. Alternatively, be prepared to select and develop a vertical to build from scratch.
A competitive analysis can reveal “the strengths and weaknesses of your market competitors,” while a vertical analysis “will help grow authority in your industry or market and help build a more-tailored approach that will resonate with your audience,” according to the toolkit.
Strategic analyses should look at the size of the market, industry trends, and the firm’s positioning.
Identify your ideal clients
It’s not just about finding clients in the right industry. It’s about finding the right clients.
Connell has homed in on businesses that need support as they grow into a new phase.
“We have worked with businesses that require a different level of sophistication. We tend to focus on businesses that have been established, with between $2 million and $20 million of revenue,” Connell said.
Also, clients need to be committed. These partnerships require a special degree of coordination and collaboration, and without buy-in, clients may not be willing to provide the necessary information and access, dooming the partnership.
Kristen Berdar, CPA, leads the CAS team at BST & Co. in Albany, N.Y. Working in a relatively small market, she is less able to specialize in particular verticals — the area simply doesn’t have enough businesses in each industry, Berdar said.
Instead, she searches for the clients who will derive the most value from her services.
“For us, the ideal client is going to see the value in what we do. We want to be part of their C-suite,” Berdar said. “We don’t want to just reconcile their bank account and walk away.”
Polakoff said much the same: “[CAS clients] understand the value. They want to do it for the right reason. They want to partner with us.”
The CAS Marketing Toolkit suggests that ideal client profiles, or ICPs, can be a helpful way to prepare the marketing case for the new team.
Building an ICP entails the following steps:
- Drafting an overall goal, whether it’s attracting high-value clients or increasing sales efficiency.
- Digging into firm data to find common characteristics of valuable clients.
- Identifying pain points and solutions for those clients.
- Compiling the research to show how the firm will serve its ideal clients.
Ensure you have the right people and management structures in place
Successful CAS team members may come from traditional public accounting roles like tax and auditing, but Polakoff and Connell both advised looking to industry for external hires.
“You’ve got to bring in the right people to support each of those verticals,” Polakoff said. “We have folks who have been in those industries for years … controllers, CFOs, who grew up within those spaces.”
Polakoff focused on hiring from specific industries for each of his team’s verticals, including staffers who would be working at CohnReznick’s offices in Chennai, India.
Don’t skimp on hiring, especially for consulting services that require CFO-level expertise, Blascoe said. “Do not anticipate that your controllers are going to be able to handle your CFO services. It is really important to understand the skill set of people sitting on the bench.”
Equally important is the structure of the team and how it’s managed. Connell found that by reducing the number of clients each team member is assigned to, from an average of more than 15 down to about a half-dozen, the team is able to provide more value to each client.
Team members enjoy getting to focus, according to Connell. “They get more satisfaction the deeper they can sink their teeth into a client,” he said.
CAS work requires completing a large variety of tasks on various deadlines, so it’s crucial to provide clear guidance and objectives to staff, primarily with workflow systems.
“They know how to get their job done, when to get their job done, and who to talk to if they can’t get their job done,” Connell said. He and others advised building out strong internal metrics, with a focus on net revenue per full-time employee, as well as hours spent on tasks.
“Having all those numbers really allows me to dive deeper pretty quickly and address [issues as they arise], because I’m really trying to raise people up to success,” Connell said.
Finally, while CAS work may seem highly tailored to the client, it’s essential to establish standard operating procedures for everything from implementing bookkeeping systems to providing CFO consulting services.
Build your technology stack wisely
Technology has powered the CAS market’s growth. Cloud-based business applications make it easier to connect with clients’ systems and more affordable to implement new software. The cloud is what transformed write-up services into right profitable ones.
“The technology is much more affordable, it’s virtual, the information can be exchanged quickly, there’s a lot more automation,” Polakoff said. “It makes the barrier to entry lower.”
But when it comes to technology, take the time to clearly define your needs and thoughtfully search for the right tech solution for your vertical and clientele. As Blascoe advises, “Do not jump on the shiny new penny.”
Choosing the right technology stack will ensure more efficiency and deliver better results.
“Each vertical has different tech,” Polakoff said. It might, for example, be Sage Intacct or NetSuite in the renewable space, Yardi property management software in real estate, and Unanet project software in the government space.
CAS departments need to work with the specific software their clients use. That can be a substantial investment, and new leaders should carefully consider how they’ll build their technology stacks.
Blascoe encouraged leaders to use a vendor scorecard, with defined evaluation criteria, such as the one available in the CPA.com CAS 2.0 Essentials toolkit. The firm can gather data on vendors, including quality, delivery time, cost, compliance, and internal stakeholder feedback, and use the scores to identify strengths of each vendor and make an informed decision about vendor selection.
“It’s really important to think through your technology piece from the beginning,” Blascoe said.
Berdar advised investing in technology staff. Her firm has an implementation team of two people, with each specializing in a different accounting software package. The pair help connect clients’ data to the firm and implement any necessary software. They also assist with tech training for the firm and its CAS clients.
“We invested in those people so that we could control the deliverables,” Berdar explained. The firm also employs third parties to help build custom connections between software platforms when necessary.
Small firms should think like big ones — and vice versa
CAS isn’t just the domain of midsize and large firms. McCurley, of Cherry Bekaert, previously founded and ran a small firm focused on CAS.
Her advice to small firms: start small, perhaps with just one CAS client. “You don’t necessarily have to have a fully built-out practice to begin with,” she said. “With one client, you can get it right. Then you can go and get the next client.”
This iterative approach can allow a small firm to build up its capacities and identify its strengths more organically, taking advantage of its natural agility as a smaller organization to find success in advisory services.
“I think small firms have a great advantage here. They’re so connected already to the client that it’s easy to turn on [CAS],” she said. “Their advice carries a whole lot more weight.”
Still, McCurley advised thinking “like a large firm” on some topics, especially technology adoption. Larger firms often take a project management approach to building their tech stacks, requiring more due diligence and approvals.
That strategic-minded approach can ensure better decisions on tech and other topics, including vertical and service specialization. “Make sure you’re running it like a business,” McCurley said.
Another advantage small firms enjoy is that they are often more nimble than their larger counterparts. With the speed of growth and the breadth of services that clients may demand, CAS teams need to be able to adapt.
Get the whole firm involved
A successful CAS department will have a mutually beneficial relationship with the rest of the firm, providing more services for existing clients and attracting new clients to the firm. The CAS team may even produce strategic and management innovations that spread to the rest of the firm.
But that beneficial relationship requires that other firm leaders understand CAS and trust the team behind it. Blascoe advises getting senior leaders present and involved before launching the new CAS unit.
“Do the introduction upfront and have them involved,” Blascoe said. Senior leaders should be prepared to support the CAS team — perhaps for a year or more — as they build up their clients and team. “Are we committed to giving the time to those CAS leaders?” Blascoe asked.
Firm leadership also must understand that CAS has some fundamental differences from the rest of the firm. Instead of focusing on billable hours, 90% of CAS practices sell fixed-fee recurring services and strive for maximal efficiency by staff.
“I was challenging people to do the opposite [of maximizing billable hours],” Berdar said. “I was challenging my people to leverage technology to do their eight-hour day in six hours.”
Berdar’s billable hours have dropped from about 1,700 per year to only 500 or 600. At the same time, her CAS practice has shown 47% revenue growth.
She has learned to explain the value of her work in a different way — which may be the most important lesson for any new CAS leader. “You have to be open to change. You have to be open to changing the mindset of how you’re doing business,” she said. “You have to really understand your value and what you bring to the table.”
As seen in the Journal of Accountancy - view here
