By CFO Brew Staff
3 min read
Definition:
Advisory services—or the practice of helping business owners with their day-to-day financial operations—has become a hot growth area for many accounting firms in the past few years.
Who uses accounting advisory services?
Sometimes advisory services are referred to as client accounting services (CAS) or client accounting advisory services (CAAS—because accountants love their acronyms). However they’re titled, advisory services encompass a range of things accounting firms can do for small and medium-sized businesses, from simply handling their bookkeeping all the way to serving as a virtual CFO. For instance, accounting firms might help clients with FP&A; scenario, strategic, or tax planning; setting KPIs; cash flow forecasting; benchmarking; budgeting; and even tech support.
The clients who seek advisory services may not be large enough to hire a full-time CFO but still want a level of strategic support that goes beyond bookkeeping. They may opt to outsource their back-office financial operations entirely to the accounting firm they work with, or to supplement them. Startups without financial teams in place and businesses looking to scale or sell might also pursue advisory services.
In some cases, firms also include advice to individual clients, such as wealth management or estate planning, under the umbrella of “advisory services.”
How much are advisory services growing?
So many accounting firms now offer advisory services that this year, for the first time, Accounting Today asked the firms on its Top 100 list what percentage of their “fee splits” (or the amount of fees they took in from tax, audit, and other areas) came from advisory services. More than a quarter of the Top 100 firms said it was their fastest-growing service area.
Why are advisory services growing?
There are several factors behind the growth in advisory services. Companies have developed software systems with dashboards that give clients real-time access to their financial data. The pandemic and the rise of remote work showed clients that having “virtual” accountants was a viable option. And clients, just like many firms, are struggling to hire accounting and finance talent, and may turn to outside accountants for help.
What are the benefits of offering advisory services?
Many accountants see advantages to offering advisory services as well. The services can act as value-adds that allow them to earn more money from existing clients. And in advisory roles, they’re often able to work more collaboratively and strategically with clients than they would doing only compliance work.