Five key mindsets to build a successful CAS practice

by Roman H. Kepczyk, CPA.CITP

July 31, 2020

Before, and even during this COVID crisis, the most significant discussions about CPA practice transformation have been around the addition of advisory services heralding the future of the accounting profession. Whether it be astute advisory practice partners, industry consultants promoting training courses, or the major accounting application vendors touting advisory solutions, any accountant paying attention has seen a blaringly consistent drive towards firms expanding upon their traditional client accounting services. They are doing this by optimizing technology and adding ‘advisory’ to their practices to become Client Accounting AND Advisory Service (CAS) practices. If your firm has not already made this transition, now is the time to get everyone on board by openly discussing the factors driving this evolution.

The cloud is the new accounting information platform

While expanding upon our ‘Most Trusted Advisor’ status has been advertised for the past two decades, it is only getting traction now as the convergence of technologies is rapidly disintermediating traditional compliance services. We have all experienced the increasing capabilities of our accounting applications, the ubiquitousness of superfast Internet access, and the continuously lowering cost of computer equipment while the processing capabilities geometrically increase. These technology drivers have pushed virtually all business information into a cloud environment where automation and application integrations can replace many of the rote manual processes performed by traditional client accounting practices. Firms are finding that by integrating payroll, A/P, A/R, and inventory applications with accounting products in the cloud, they can create real-time information systems that help clients identify problems in real time. Advising clients on how to connect these tools using APIs (application program interfaces) and machine learning is the first step towards building an accounting advisory practice, followed by building dashboards that help clients visualize information, identify opportunities or head off problems which leads to the strategic components of building the practice.

Specialize to be competitive

Providing advisory services requires specialization; the days of being a generalist firm (master of none) are numbered as the cloud does not respect geographic boundaries. Every niche, segment and industry has accounting firms that specialize in that specific area whether it be construction, real estate, medical, professional or even the cannabis industry. These experts are learning the industry nuances and specific business applications that niche uses and they will compete for that business. It’s up to you to look deep in your client base to identify the top industries where your firm already has experience and growth potential and to learn the industry best practices and cloud applications that support that niche.

Advisory requires lifelong learning

The rate of technological change in every industry is increasing at a faster and faster pace. Identifying and explaining such changes to clients, whether it be business information or process solutions is the root for providing advisory services, but this requires you to proactively study that industry and the tools that create this business information. It will require you attending industry events and reading industry journals to identify new trends, new opportunities and to be willing to unlearn, pilot and standardize what you have learned so it can be shared across your team and your firm. Remember, to be able to advise your clients you must stay ahead of them - that’s why they pay you.

Build out your team for success

For assuring niche success, we have long discussed the ‘famous person’ concept which states that if you are viewed  as one of the top three advisors to a specific niche, you will always be asked by clients to propose for their service needs. Building an advisory practice requires not only having the expert technical skills but also facilitation, project management and rainmaking skills to support that practice which if you want to grow, requires a team effort. Doing an honest self-assessment of current team members will identify the skills in place as well as those that need to be learned, hired or outsourced.

Everyone needs to be onboard

Moving from a compliance to an advisory practice requires that everyone on the team is truly onboard with the transition and not just giving lip service. You will need to provide training and resources that are appropriate to each individual’s learning style and to evaluate their progress toward team goals.  You may find that personnel who are unwilling or incapable of evolving to the required advisory skillsets may be better suited to work in other business environments where their skills are still viable. Finally, you must not only assess team members, but other owners and make sure that the firm’s compensation and buy-out agreements are in alignment with the advisory direction of your practice. Compensation agreements that reward individual performance go directly against an advisory team mindset and owners that are close to retirement will sometimes optimize their buy-out in the short term instead of what is best for the firm in the long term.

Advisory is the future of accountancy.  Understanding the needs of clients and the technologies driving this practice transformation will help you build your team to provide the services they need now and in the future.

Also, make sure you participate in the 2020 CAS Benchmark Survey which is now open! Learn how your CAS practice stacks up to others in the profession and receive access to personalized, detailed reporting in the survey platform.

Roman H. Kepczyk, CPA.CITP, CGMA is Director of Firm Technology Strategy for Right Networks and partners exclusively with accounting firms on production automation, application optimization, and practice transformation. Roman is also the author of the 2020 Edition of “Quantum of Paperless: A Partner’s Guide to Accounting Firm Optimization,” which is available for download to members of the AICPA PCPS section.