![4 Factors Driving the Growth of Client Advisory Services in Accounting](https://cdn.caseware.com/wp-content/uploads/2024/02/72-Your-accountancy-firm-online--1080x550.jpg)
4 Factors Driving the Growth of Client Advisory Services in Accounting
Discover the key factors that are advancing CAS in accounting.
The typical role of accountants has evolved in today’s economy. Modern accountants aren’t only number crunchers who record, collect and interpret financial data. Increasingly, they’re also strategic business advisors who leverage their extensive financial expertise to help companies plan for future success and guide them through economic crises. This is why accounting firms are moving into client advisory services (CAS) in large numbers.
They’re doing this not just to follow a trend, but because there is a demand for CAS in accounting in the market. Consider that:
- 75 percent of survey respondents cited in Caseware’s 2024 State of Accounting Firms Trends Report say they’ve witnessed growth in CAS accounting, with 26 percent describing the growth as “significant.”
- a Gusto study revealed that 44 percent of business owners are willing to pay accountants 10 to 20 percent more for financial and people advisory services.
- the same study states that 76 percent of business owners who get regular business advice from their accountants feel this input boosts their competitiveness.
These stats prove there’s ongoing demand for client advisory services accounting. However, the demand did not crop up overnight. As we discuss in this article, a series of factors have contributed to the growth of CAS in accounting.
Before we dive in, here’s a quick recap of what CAS is and what it entails.
What are client advisory services in accounting?
Although many definitions of what CAS is and what it encompasses exist, the term often refers to the different forms of business advice accountants give owners and executives to help them address and solve business-related pain points in various areas. This includes:
- tax planning advice
- budgeting and growth strategies
- people advisory services
- cash flow forecasting
- technology implementation
When you offer CAS accounting services, you position your firm as a business strategy consultant whose core role is business advisory, but also handles essential accounting work by default.
As a CAS practice, your primary driver of growth and differentiator is the advisory, strategy and growth consulting roles. However, you would also complete all necessary accounting functions as a means to an end.
CAS name variants
Some accounting firms prefer CAS (client accounting services) and others prefer CAAS (client accounting and advisory services). While firms can use any variant that best encapsulates their services, CAS is the mainstream version as it spotlights advisory services, which many feel is the future of accounting firms.
Key drivers of CAS accounting
The demand for client advisory services in accounting has been brewing for decades. However, the economic strains that large and small companies were subjected to during the pandemic fanned the demand for business advisory and strategy services. More distressed business owners turned to their accountants to help them survive the crisis.
Even so, the pandemic exposed deep-seated trends that would have sooner or later mainstreamed CAS accounting. Here are the top trends that have popularized CAS accounting in recent years.
1 – Automation of day-to-day accounting functions
Thanks to artificial intelligence (AI), we have reliable accounting automation software that automates functions like:
- accounts receivable
- payroll processing
- journal entries
- financial reporting
- tax planning
- compliance
These tedious and repetitive functions are essential to accounting. Because individual companies can purchase software and automate these tasks, they may not need a dedicated accountant to manage the roles.
However, while AI automates accounting tasks accurately, it cannot correlate a company’s internal accounting position with the industry’s big-picture outlook.
For instance, AI can generate precise financial reports for an accounting period. But it cannot offer customized financial guidance on internal issues like debt restructuring. This is where CAS accounting saves the day.
Businesses need the expertise of a seasoned accountant to design strategies unique to their company. They want their accountant — who already knows their financial positions and future goals — to help them strategize and boost their competitiveness.
Modern companies automate all the functions they can. So, they need less hard-core accounting skills like bookkeeping, but more advisory skills like strategic thinking.
2 – The growing desire of businesses to leverage internal data
Today, most companies have automated data collection. For these companies, however, optimizing their data to glean practical growth insights is the real challenge. There are many variables companies must consider to make sense of their data.
For instance, a company must cogitate on its current and projected commercial position and correlate it with existing and anticipated market trends. This requires a detailed analysis of individual industry trends, such as tech innovations and planned regulatory changes. It includes how economic changes, such as recessions and inflations, affect the industry.
Acquiring enough accurate information about all the nuances that sway an industry’s growth — and how financial data like cashflow projection plays into it — is a time-intensive effort most business owners can’t afford. However, it’s a routine task for CAS accounting firms.
CAS practices have the expertise, technology, personnel and time to research groundbreaking trends in an industry. They tap into their acquired accounting knowledge, explore how a company’s internal data relates to the trends and offer realistic strategies.
For example, let’s say sweeping data regulatory changes are in the works. In such cases, CAS firms should consider how they affect a company’s internal data handling procedures and develop solid solutions for the owner. Business owners seek to partner with such firms to help make data-informed decisions.
3 – Companies are reluctant to hire business strategy consultants
According to the U.S. Small Business Administration, the majority of American businesses are classified as small. This fact implies most of your firm’s clients are small businesses.
Due to cash limitations, small companies are more reluctant to splurge on services they consider secondary, such as strategy consulting. This is unlike their blue-chip counterparts, who may hire multiple consultants.
Although small companies recognize the value of consulting, most lack the resources to pay a dedicated consultant. However, since accounting functions are mandatory, they must handle accounting tasks internally or outsource to accounting firms.
When small businesses outsource accounting roles and get accountants who are more than bookkeepers, they value such partnerships more. As a result, they become more willing to pay extra for advisory services from their accountants because it’s more cost-effective. Also, it spares them the time and energy to look for a suitable business strategy consultant, who does virtually the same job as a CAS accountant.
4 – Accounting firms that don’t pivot to advisory services risk getting left behind
Fear of being pushed out of business also contributes to the growth of CAS accounting. Ultimately, as AI gets better, it will automate almost all accounting tasks. In the future, accounting firms that don’t offer advisory services will have less value in the market and will be overtaken by those that excel in CAS accounting.
In a data-driven world, companies need data strategists to help them exploit their data gainfully and apply it to everyday business situations. Thus, CAS firms must integrate other non-accounting professionals like data scientists into their teams to offer comprehensive advisory services.
Accountants should focus on increasing CAS advantages and delivering more value to customers today as well as in the future.
How Caseware helps firms deliver world-class CAS accounting services
Caseware provides a comprehensive range of software to help you leverage your expertise and provide clients with valuable insights and advice.
From advanced analytics for outsourced internal audit services to accounting intelligence like benchmarking for business consulting, Caseware’s intuitive software helps deliver insights that boost your client’s decision-making and satisfaction.
Because it is built with collaboration in mind, your teams can also be more efficient and effective. Some of Caseware’s cloud-based apps that CAS firms depend on include:
- Caseware Cloud
- Working Papers
- IDEA
- Sherlock
- Accomplish
Request a demo today to see how Caseware’s Client Advisory solution can help your firm transition more seamlessly toward CAS.