Client advisory services practices reported a very strong median growth rate of 16% over the previous year, according to an influential benchmarking survey — and it's becoming clearer and clearer what it takes for an accounting firm to be successful in this fast-growing area.
The double-digit growth reported in CPA.com's recently released
Perhaps most important, a clearer set of best practices is emerging among the top-performing CAS practices (those in the top quartile of survey respondents in terms of net client fees per professional), which starts with being very intentional about their business model strategies.
"Our top performers and even those in the top third of respondents are looking at ways to run their CAS business that are different from the way they've looked at accounting businesses traditionally," said Amy Bridges, professional development manager at CPA.com, in a session describing the survey results at CPA.com's annual Digital CPA Conference, being held this week in Austin, Texas. "They're more willing to be innovative and do something different, as opposed to the same thing they've done for the last 20 years."
One of the key attributes of top-performing CAS practices is relying on dedicated staff, with 57% doing that, as opposed to bringing in staff from other departments on an ad hoc basis.
"Dedicated staff are key to continued success," explained Nina Chmura, a partner and team leader of the outsourced accounting systems and services practice at Top 100 Firm Withum. "So much of CAS is monthly, so without dedicated staff, there's not enough time to innovate because staff are moving on to something else, and they don't have the downtime to think about ways to do things better."
(She did note, however, that "dedicated" doesn't necessarily mean they have to be full-time, just that their schedules aren't being dictated by the priorities of some other department in the firm. "We've had a lot of success in bringing on part-time individuals," she said. "It fits with their lifestyles.")
Top-performing CAS practices tend to have been in the business longer, with the two-year mark looking like an inflection point. "If you're in the first or second year," Bridges said, "hang on! It gets better!"
Among the other hallmarks of the top-performing CAS practices:
- They work with the right clients. "They have marketed themselves internally," said Chmura, so partners in other parts of the firm know who is a good fit for the CAS service. (Educating partners is a work in progress, though: "We still have partners who introduce me as the head of bookkeeping.")
- They keep an eye on the right metrics. Net client fees per professional are a key statistic that top-performing practices focus on, but it's not the only one; their potential for growth is another. "They track their pipeline better than other CAS practices," said Chmura.
- They are more likely to charge for onboarding and one-time implementation services. "Think of your initial assessment, or setting them up on systems like Bill.com," explained Chmura. "They're getting higher revenue from one-time services, and slightly lower revenue from recurring services."
- They think strategically about tech. "Top-performing firms are more likely to be really intentional around their technology," Bridges said. "They're generally using fewer GL systems. ... But limiting GLs for the sake of limiting GLs is not the best practice — using the right GLs for the clients you're going after is the best practice." Added Chmura, "Some top performers may be using six or seven GLs, but that's because they're serving multiple industries."
One characteristic that was true of all the respondent firms was an acceptance of remote work: "Fully one in five practices are completely remote," said Bridges, and 47% work remotely 80% or more of the time.
They're also optimistic: Their median expected growth rate for next year is 15% — and that's probably too low.
"Over all the years we've fielded this survey, actual growth has outperformed the projected growth from the previous survey," explained Bridges.
"I call that the 'Field of Dreams' statistic," Chmura said. "If you build it, they will come."
