7 tips to increase your revenue with client accounting services

August 4, 2021 2:13 PM

Growing your client accounting services practice can be challenging. With the increase of remote work, digital transformation, and a growing desire to outsource among potential clients, competition is increasing. Simply reducing your rates compared to the other guy just isn’t a profitable business model. If you want to increase revenue for your CAS practice, you may need to rethink your entire strategy.

Here are seven tips you can use to increase your revenue and margins for your CAS practice.

Find your niche

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Many CAS practices start by taking on any client regardless of industry, fee tolerance or complexity. This approach means your client base could include businesses as diverse as an internet retailer, a law firm, an organic farm, a veterinary practice or a construction company.

While it is possible to build a successful practice as a CAS generalist, it comes with costs: lack of differentiation, lack of perceived value-add and commoditization of services. There are always going to be other providers that can be nimbler and have lower overhead than traditional CPA firms. If your only differentiator is a price, you will lose.

This is why many of the market-leading CAS providers start out as single-niche practices. As you become an industry veteran, you’ll know the metrics that are most important to your industry sector and be able to replicate these offerings as your practice grows.

After declaring your niche and developing a profitable client base, consider adding an additional industry vertical. You can do so organically or by acquiring another practice or practice leader with deep experience and connections in the vertical you’d like to pursue.

Create a growth plan

Even if you’ve been a tax or audit practitioner for many years, starting a CAS practice is a different ballgame. You will need to start with short- and long-term goals.

Depending on your desired audience and market conditions, many startup CAS practices aim for clients to bring in $3,000 to 5,000 per month allowing you to quickly reach an annual run rate of $300k with only five $5,000 per month engagements! After reaching that first goal, you may want to double first-year revenues in year two and choose something less aggressive for years three through five. Keep in mind as your practice doubles in volume, your team will get more efficient so increasing revenue at this rate probably won’t require doubling your staff.

Think like a general manager

In an industrial model, general managers were concerned with engineering, manufacturing, product design, quality control, sales and marketing, and profitability. In the world of CAS, those elements correlate to technology, operational efficiency, effectiveness, client satisfaction, revenue generation and profitability.

Technology is all about optimizing your tech stack. This includes your general ledger platform, accounts payable, accounts receivable, payroll and probably document management and workflow tools. Operational efficiency is all about making it easy for your team to close the month for clients, deliver financials and offer advice and support. Product design is all about delivering the right service offerings for your key clients.

In the context of CAS, quality is all about procedures and checklists for ensuring procedures are followed. Whether your revenues are driven by a business developer or a partner, you should implement and manage a pipeline. You’ll also need to make sure the content on your website and social media platforms will attract prospects looking for your services.

Finally, make sure you’re pricing your engagements appropriately. CAS should be one of the most profitable segments of your advisory service line. If your margins or net fees per client aren’t where you’d like them to be, you may need to raise your rates or look at the cost of your labor. While no general manager directly manages all these areas, it is essential they ensure these areas of the business deliver the desired results.

Create a sales and marketing plan

Since the entry-level client CAS market is dominated by low-cost providers, CPA firm-based and independent CAS firms led by CPAs should focus on the middle and premium tiers of the market. Regardless of which industry vertical you choose to pursue, you must provide the requisite perceived value to maintain your target pricing and margins.

You’ll need to determine which marketing tactics work best for your practice, your market, and your chosen area of specialty. According to Bonnie Buol Ruszczyk of

BBR Companies

, it is important to start with a strategic marketing plan that identifies your ideal markets, sets measurable objectives, and identifies the tactics you will use to reach your preferred audience. You must also make sure you have someone who can execute and reevaluate your plan as you grow.

Find a staffing model

It is important to determine not just how you will deliver the services, but who will do the work. Since client accounting services are often priced at lower rates than typical tax and audit work, it is often not practical to have senior staff members take care of the day-to-day activities. Many practices have benefited from offshoring the routine tasks like processing invoices, accounts receivable and payable, expense coding, and bank and credit card reconciliations. Some have even moved more complicated controllership tasks overseas to increase margins and scale quickly during times of rapid growth.

Document your processes

Going back to our first tip, this is where developing an area of specialty can really pay off since it allows you to develop a uniform approach to your chart of accounts, revenue recognition and inventory valuation.

Ryan Lazanis, creator of the

Future Firm Accounting Podcast

and the Future Firm blog, notes that the key to scaling a cloud accounting practice is to have a defined business model with a defined customer base. You should create productized services, and you must have mapped processes.

Documenting processes is an important first step but building and scaling an effective and efficient CAS practice requires moving beyond sheer documentation. It involves hiring the right team members and leaders and evaluating the best tools for the job.

Be anticipatory

Daniel Burrus, author of "

The Anticipatory Organization

," says technology is dividing the world into disrupters and the disrupted. The disrupters are firms offering outsourced accounting services, helping their clients focus on the core competencies.

If we accept Burrus’s premise that successful organizations embrace hard trends, then CAS providers should embrace offshoring and automation as integral to firm growth and profitability.

Here’s one of the data points from Hinge Marketing’s latest research on high growth firms: 25% of high-growth firms have CAS as a service offering (as opposed to 9% of low growth firms). If you implement some or all of these tips, you should see revenue and margins grow for your CAS practice.