Is your firm an advisory hero? With the right forecasting and data analysis tools, it could be. “Firms that haven’t moved in that direction [of advisory services] are kind of missing the boat on the fact that they are sitting on the most powerful piece of information that their clients need help with, which is this wealth of business data,” said Madeline Reeves, director of market development for Fathom, a provider of management reporting and financial analysis tools. “They sit at this perfect apex where they can be the translator, essentially, of that information and provide so much value to their clients.”
Today’s clients are increasingly looking for proactive advice. With clients’ financial data and access to innovative technology at their fingertips, accounting professionals are ideally positioned to fulfill this need and help clients make smarter business decisions.
Judging by the numbers, data is often a tremendously underutilized tool, and for those accounting professionals looking to provide clients higher-value services, there are significant revenue-generating opportunities to explore.
PwC’s 2016 “Big Decisions Survey” of more than 2,100 company decision-makers and leaders found that two-thirds (61 percent) of respondents acknowledged their companies could rely on data analysis more and intuition less. “They don’t consider their own organizations to be highly data-driven. This puts them at risk of being surpassed by their more data-driven competitors, given recent advances in technology and data and analytics techniques,” the survey stated.
“Decision-makers acknowledge it’s not data or analysis that holds them back from making decisions. Instead, they’re more likely to feel limited by a whole host of other factors: availability of resources, budgetary considerations, issues with implementation, leadership courage, operational capacity to act, policy constraints and poor market responses,” the survey stated.
Meanwhile, a separate study on the small and midsized enterprise market found that SMEs are often more nimble and able to act on insight quicker than their larger peers. The research also suggested that many do not shy away from technology.
According to Dresner Advisory Services’ 2018 “Small and Midsized Enterprise Business Intelligence Market Study,” SMEs place their topmost focus on basic business intelligence technologies such as reporting and dashboards. Small organizations are also more likely to engage software-as-a-service and open-source software strategies.
Helping clients — regardless of size — better understand the data they have to mitigate risk and improve business performance can help accounting professionals strengthen client relationships, enhance their competitive advantage and, ultimately, boost firm profitability.
A gateway to greater opportunities
“When we first started in 2008 — [and there’s been] lots of growth since then in the cloud accounting space — what we dreamed for and longed for back then is there’s got to be a better way to share and tell the story about a business’s financials than just the profit, loss and the balance sheet,” said Jeremy Allen, a Fathom user and founder of Seattle- based System Six Bookkeeping, which offers outsourced bookkeeping and accounting solutions for businesses. “Most of our clients have businesses that are a few million dollars a year. So, a lot of business owners aren’t super-savvy when it comes to finance. A profit, loss and balance sheet may or may not be something they know their way around very easily.”
Over the years, the firm sought the ideal solution. They tried various apps, exporting data to Excel, used charts and graphs, and even built various tools for internal use. Unfortunately, nothing fully met their needs and proved scalable.
“We found that it took an hour a month to manipulate and get that report ready as we started scaling. There’s no way that would be a scalable function to do data reporting and visualization for most clients,” Allen said.
About four or five years ago, Allen came across Fathom and today uses the solution to serve most of the firm’s 120 clients. With Fathom, System Six Bookkeeping can, at minimum, provide clients a basic visual reporting of their business. This then opens the door to more complex advisory opportunities such as benchmarking, forecasting, and projections based on a rolling average or based on budget. “The way that it is now helping us change our practice, add more revenue to our firm, and making us better advisors, is that clients see the level of reporting that we can offer,” said Allen.
One tool that Allen has found especially beneficial in better serving clients is benchmarking. “Fathom does offer benchmarking, and we’ve implemented that by benchmarking a client’s companies or divisions against one another (i.e., our franchise clients can compare one location to another),” said Allen. “Overall, the benchmarking tool is very helpful and would be especially well-used if a larger firm were serving a number of franchise clients and wanted to prepare benchmarking reports for them to see how they compare to one another.”
Allen said another way that firms can utilize Fathom’s benchmarking tool is by loading all of their clients into Fathom, then benchmarking them against one another and against certain targets. Allen said this helps a firm see which clients might be in need of additional support.
Joanne Ort, owner of Seattle-based Joanne Ort CPA, also provides clients benchmarking services and said that she finds it “invaluable” to be able to compare clients with industry standards. To do this, Ort uses small-business planning tool LivePlan, from Palo Alto Software.
“LivePlan pulls industry data from Sageworks. So, if I only have one restaurant client, I can use Sageworks industry data,” Ort said.
Joanne Ort CPA is a full-service firm that uses such technology solutions as LivePlan, Fathom, Gusto, QuickBooks Online and Hubdoc to provide clients outsourced CFO services. Ort said this enables her to have a holistic view of her clients’ financial well-being and provide the necessary analysis.
“As a business owner, you need to know, if you’re selling product, which products you are making money on and which products are you not making money on. If it’s a service, the same thing: Which services are you making money on and which ones are you not making money on?” said Ort. “I think that your profit margin should be a minimum of 15 percent and, if it’s not, we need to look at all of your numbers and see what we can tweak. There are certain key metrics that I look at for all of my businesses; one of them is profit and one of them is gross margin. Those two, I think, are key numbers. I can look at those numbers with my clients and know if something is wrong and fix it as quick as possible.”
Added Ort, “Because I work with a lot of creative professionals, if I hand them a profit and loss statement or a balance sheet, I get the deer in the headlights look. It’s just a bunch of numbers on a piece of paper. With Fathom, I can give them visuals. Especially to a creative person, pictures just make a lot more sense. It doesn’t scare them.”
Echoing the sentiment is Tom Gabbert, managing director of Indianapolis-based mAccounting. The firm provides outsourced bookkeeping and CFO services and leverages data analysis tools to help drive efficiencies and provide clients greater business insights.
“When we sit down with a client at the end of every month when we are doing a financial review meeting, we are presenting their information in a really nice-looking package that has dashboard widgets, graphs and charts, and visually pleasing information. It’s also accurate. It’s getting pulled off of the system in an automated way,” said Gabbert. “A package like we produce today would have taken us three or four hours; now we can do it in under an hour. Most of our time that we are spending on that is more adding custom comments and insights and things we want our client to pay attention to and, again, not making sure the numbers are right, formatting it and doing things we would typically do in Excel. So, it’s been a huge game-changer for us.”
Fathom recently introduced a new reporting tool that Gabbert said he finds especially beneficial. The vendor has also simplified the interface and enhanced the performance of its original analysis tools.
Meanwhile, Host Analytics, a provider of cloud-based enterprise performance management solutions, is striving to make finance a more strategic and dynamic part of every enterprise.
In August, the vendor unveiled a host of enhancements, including more powerful financial modeling, a more customizable interface, faster and more granular drill-through reporting, and greater flexibility and ease of use in its planning templates. “We spend a lot of time listening to our customers and working with their teams to understand what really matters, and then we give it to them,” said CEO Dave Kellogg, in a statement.
Kerman Lau, vice president of finance for cloud business planning and analytics software provider Adaptive Insights, said he is seeing greater demand among accounting professionals for reporting and analysis tools. “Now more than ever, they are looking at doing a lot more analysis around the results of the company. A lot of the legacy ERP platforms out there aren’t really made for doing reporting and analytics, they are really made for recording transactions. A lot of our own customers are looking for other areas to apply the Adaptive platform [and] it is typically in the accounting organization because they do have a significant need to do reporting and analysis and oftentimes they don’t have the right tools,” Lau said.
Enhanced audits
Accounting firms, like Seyfarth & Seyfarth CPAs, a two-person practice based in Malone, N.Y., that provides auditing services, are also benefiting with more efficient and effective audits.
“Things like sampling have changed a lot. It used to be you’d call up and say, ‘What are your first and last check numbers?’ Then you’d do a random number generator and generate a sample. Now, I get the data files and I can look through it or I can stratify it. I can use [Caseware Idea] to generate the sample and then spit out an Excel file, which I can send to the client to pull and turn it into my workpaper. A lot of things are much easier to mechanize now,” said firm partner Carl Seyfarth.
He added, “It shows [clients] that we are trying to stay up on the cutting edge, so to speak. A lot of firms in our area aren’t using stuff like the data analysis software. Some are but I think a lot [of them] are a bit slow to adopt it.”
Equipped with a broad range of audit-relevant tasks and statistical tools and features, CaseWare Analytics’ CaseWare Idea Data Analysis software is designed to make it easy to analyze very large datasets; import data from virtually any source; automate data analysis tasks; zero in on anomalies; identify trends, duplicates or unusual transactions; track the steps in an analysis; and visualize results.
“Visualization is very popular now,” said Alain Soublière, chief product strategist for CaseWare Analytics. “That was not the case a few years ago. Now, it’s very popular. People want to see, graphically, if there are outliers, if there are risks and to find areas that seem to be odd based on historical data or comparing that with the market or similar industry businesses.”
Soublière said that firms can also conduct a mood analysis of social media data, like from Twitter, using the programming language Python. “We are looking at tweets and also social media to see what is the mood, basically, of those tweets. Are they negative? Are they positive? It is searching for specific words that are negative, neutral or positive. And, at the end, we can tell that there’s a trend, for example, in social media for that specific company that is negative or positive. … It’s a new risk that in the past auditors didn’t have to worry about.”
There’s no doubt that advancements in technology are changing the game for firms in their pursuit of helping clients make better, more informed business decisions. As noted by Kirstie Tiernan, data analytics managing director in the advisory practice of Top 10 Firm BDO, accountants need to be ready to change.
“It is a pivotal time, I think, in this world to shift from data manipulation, even though that’s not what half of us went to school for — to actually being much more value-driven and really using the scope that we know to increase revenue and to drive business,” Tiernan said.
