CAS: A live reality show of your client’s business

Numbers tell a story. Do you agree?

If you are a professional accountant providing accounting services to clients, what is the story you tell your clients when you deliver them their numbers periodically?

Before the emergence of the internet, entrepreneurs used desktop accounting software. Unfortunately, there was no easy way for accountants to access that software. As a result, you mostly did after-the-fact work. You had little say in how business owners made decisions, even if you could have guided them to make better business decisions. Now, with collaborative, real-time, online sharing of the same accounting software, accountants can work with business owners while and even before they make their business decisions, not just after.

Therefore, these new cloud-enabled client accounting services require that you work more in the present and for the future of your clients’ businesses. CAS makes you become part of their business processes.

In CAS, stories hidden in the numbers matter far more to your clients than the numbers derived by doing just after the fact/write-up work. Why? Let me tell you a story in your firm’s numbers.

The No. 100 firm on Accounting Today’s 2020 Top 100 Firms list earns approximately $208,000 per employee (including partners) per year. The average revenue per partner is roughly $2.1 million per year. The firm makes nearly $20.5 million a year from accounting and advisory services.

Now, compare these numbers with your firm’s numbers. What story do your numbers tell?

Are your numbers better? Congratulations! You are already doing great.

But if you thought, “What is that firm doing differently?” and are now concerned about your firm’s numbers, let us dive in a bit deeper.

Context is generally hidden in relative situations/measurements/metrics. That is true for the numbers in any client’s business. A monthly financial statement in isolation may probably tell the what (as of a certain date), but not the how or why. Numbers need to be related to that client’s numbers from the previous month and quarter and year. That will tell a story of how the current numbers came to be and why.

In my latest book, “The Definitive Success Guide to Client Accounting Services (CAS),” I describe the difference between an “incomplete story” and a “complete story” that financial statements can tell. When you just describe the numbers in financial statements, that is the incomplete story. You are leaving it to the client to draw the inference and conclusions from the numbers. To tell the complete story, you need to describe the numbers and provide the underlying "how and why" narrative behind them, ideally using the words that the client will think in their mind on hearing/seeing those numbers.

But these tactics are neither the starting point nor the ending point in the story. You should only use these tactics to deliver clarity in the story that the fundamentals of the business are reflected in its numbers. And then, just as the No. 100 firm’s numbers provided you some context, your client’s numbers need context with the industry or profession in which your client operates.

So, what are the fundamentals?

CAS is much more about doing client accounting work in the present and for the future than just writing up the past. Of course, past numbers can help gain some post-facto wisdom, but clients may or may not appreciate the value in such after-the-fact numbers. CAS, on the other hand, by its very nature, can help you uncover and tell the current story of the client’s business in near real time for the client to make better business decisions, course correct, avoid costly pitfalls, identify critical business decisions, etc.

In other words, CAS can be a live “reality show” of your clients’ businesses. As a result, you have an uncensored, constant, real-time view of the good, bad, and (hopefully not) ugly close-up view of their businesses. CAS, therefore, empowers you to derive timely, relevant and meaningful actionable insights that give your clients a chance to make better judgments to reap more substantial rewards.

Hence, CAS is about the classic fundamentals of any business: profitability, cost optimization, financial analytics, demand and supply equations reflected by sales trends, inventory and the costs thereof, the resources/human capital required to do business — and how they add value to the products/services/business investment, cash flow management, etc. Fundamentals help and guide business owners to better prioritize their allocation of precious capital — money/human capital/time — to the causes and initiatives that can yield superior returns. But these fundamentals are not visible until your firm does all the work necessary to create the base data from which you can derive useful information and insights. Hence, CAS involves doing almost all of the “client accounting.”

You, the professional accountant, are the professional who is best-suited to help your clients strengthen the fundamentals of their businesses. If you let them come to you only after the fact, your ability to help them grow and prosper diminishes.