Sometimes it seems like everyone is talking about Advisory Services. But what are they? What do people mean when they talk about accounting advisory services and is it something you need to be doing? How do you deliver these services? Let us explore some of these questions.
What Are Accounting Advisory Services?
In one sense, you and every accountant and bookkeeper have always been providing some sort of advice to your clients. It might be reminding them that a particular tax return is due or how to code a transaction. For example, setting up the right business structure has long been something that accountants have advised on.
However, in the modern world of accounting, that’s not what is generally meant by Accounting Advisory Services. Yes, those services technically involve the giving of advice, but they still come more under the term of Compliance Services.
Advisory Services is generally understood to be providing services beyond traditional compliance services.
Often, you will find, the distinction is one of looking forward with advisory services which is contrasted to the backwards-looking view of compliance. Of course, life’s never quite that simple. Compliance services involve looking to the future needs when recommending a business structure or in the case of tax planning. Accounting advisory services look to the past to measure performance when looking for a guide to the future.
The role of the advisor, as it is currently used, is like a combination of the traditional management accountant and a coach. In essence, as the management accountant you provide the information needed to guide the running of the business. Whilst as the coach, you take that information and guide the business owner to achieve their goals.
Who Needs Accounting Advisory Services?
Most small and medium businesses can benefit from some level of advisory service. On the other hand, some of your larger business clients tend to have this type of expertise in-house. However, even then, consider the revenues the large consulting firms earn from this sector.
Your smaller business clients often don’t have financial skills in-house. Or they don’t have the skills and knowledge to grow a business successfully. You probably see this every day that many business owners have the vision and desire but need help with some of the practicalities of managing the business. They don’t have the experience of managing budgets and cashflow forecasts; they may not understand the best way to finance asset purchases or the right level of inventory to carry.
Business owners need accounting advisory services to supplement their own skills. It fills the gaps in their knowledge and helps them succeed and grow.
There are some key ingredients that you will need to set the foundations of your accounting advisory services.
1.Understand the Advantages
Trends in the industry suggest advisory services are at the foundation of providing a better customer experience. There are many advantages when you deliver advisory services including:
- Deepening Relationship: Having access to your client year-round is a great chance for you to better understand their business. This will form the basis, on which you deliver relevant services will form the foundation to a long-term relationship.
- Increase Revenue: Advisory services open new revenue opportunities. These services are a diversification to the already existing taxation and compliance services your clients are enjoying.
- Higher Profit Margins: Setting up your advisory services so they can be automated will allow you to repeat the services with ease. Using technology is the key ingredient here to deliver advisory services. The time you will save on these services can be directed to higher-priced consultative services.
These are the key reasons you will want to roll out accounting advisory services. Complementing your compliance team, adding these specialist services will make you a economically stronger firm.
2.Select the Right Type of Service for you?
The best accounting advisory services for you are the ones you are comfortable providing. Of course, it will boost your revenue opportunities! One of the benefits of advisory services is that the work is easily repeatable. There’s some effort required to produce the first budget or cashflow forecast, for example, but monthly or quarterly reviews after that are easy.
Advisory services also keep your clients close to you. Your style of advisory will be unique, and your client will stay with you as long as you continue to help them grow their business. Changing a tax accountant is relatively easy and people do it regularly. Therefore, expanding the services you provide will ensure your clients stay longer.
3.Define your Advisory Services
It is important that your client’s expectations meet yours. Ultimately, defining the scope of work and required outcomes is paramount to a happy relationship. So, being well prepared for rolling out these specialist services is half the battle. There are a few areas you will need to manage pro-actively to make this a great experience for both your firm and your clients.
- Prepare a clear Scope: Law and accounting services often get a bad wrap for being charged at a superior rate. The traditional service delivery billed at an hourly premium naturally discloses the charge fee. instead, it is important to disclose the value your client will receive. Focus on the benefits that are included as part of the package.
- Communicate clear Expectations: Establish your client’s expectation from the outset to help delivering a successful service. After that, walk your client through the initial process so they know what is coming up. For you to deliver a good outcome you will need some input from the client. Having communicated this clearly will get the project off on the right footing. And, prevent a dissatisfied customer. In addition, don’t forget to continue communications throughout the process to keep the client engaged.
- Have a clear Pricing Strategy: Taking some of the points made previously into consideration, you may be better served with a fixed fee pricing model. Value pricing adds to clarity in setting expectations for your client. After that, the benefits are easier to communicate. In turn, the client can tick off their list of specific goals they have set out to achieve when they entered into this project with you.
How to Deliver your Accounting Advisory Services?
Start with what you know and what you can do well. Just talking to your clients about what’s happening in their business will get you going and you can expand your services from there.
A good way to start is to offer your clients a regular health check of their business. This can include:
- Are the books reconciled and up to date?
- Review the debtor, creditor and inventory levels and consider if they are appropriate. Or ask the client if they could be improved.
- Calculate simple KPIs like the Working Capital ratio and see if that reveals potential problems.
Some of your clients may need to improve their systems. Whilst other, may need a simple budget. Most will benefit from a cashflow forecast. There are many possibilities. At the end of the day, pick the services that are right for you. And, of course, your clients.
Providing accounting advisory services doesn’t mean you have to know all the answers. This means, it is as much about asking your clients the right questions. Essentially, it will get them to think about what’s happening with the business and how to move forward.
Talk to your clients and get started. After that, the rest will follow. Katrina Aarsman of Pure Bookkeeping wrote a good article for us with great tips on getting started with business advisory services.