CAS firms focus on advisory accounting services rather than a compliance-heavy service. But, what exactly is it? Learn more here.
1 min read
Lauren Miller is a content writer for Canopy.
By now, you’ve probably heard of CAS, CAAS, advisory accounting, accounting and advisory services—or whatever you want to call it! This trend in the accounting industry transitions to a focus on advisory accounting services rather than a compliance-heavy service. But, what exactly is it? We’ll break it down for you here.
First, let’s get our acronyms straight. There is still debate in the accounting community about whether or not this model is called CAS (Client Accounting Services) or CAAS, with the extra A representing “advisory.” For our purposes, we’ll refer to this model as CAS accounting.
Now that we know what to call it, let’s learn about what it is! Historically, accounting businesses have been focused on the compliance side of things. More recently, firms have been adopting a different model of business with CAS. According to the CPA.com & AICPA PCPS 2018 CAS Benchmark Survey Report, the 5 most common client accounting advisory services offered are: financial statement prep, accounts payable, CFO/controller advisor services, budgeting/forecasting, and payroll services.
Instead of focusing on just the nitty gritty i.e., taxes, transactions, and things that have already happened, CAS firms also focus on the future and try to help their clients stay proactive and make the best decisions for their business holistically. Think of the compliance side and the advisory side as complimentary services that go well together. Compliance is the cake, and advisory services are the icing on top.
Instead of constantly hounding your clients for the right documents, the work becomes more of a partnership and the accountant is seen as part of the business’ team. Accounting firms looking to adopt advisory services into their strategy don’t need to offload their compliance clients—these clients are still great and it’s OK to have both advisory clients and compliance clients.
When CAS firms are looking for new clients, it’s important to ask “How can our services help you on the compliance side AND the advisory side?” Rather than making sure the tax return is simply turned in on time, CAS firms ask themselves “Can we look at this tax return and actually add further value and perspective?”
Finding a niche client base can be helpful when adopting a CAS model, since it allows you to provide more service to your clients, considering you’ll quickly become well-connected in that niche market and be able to provide expert advice.
CAS firms are about changing the narrative about accounting—you’re no longer selling your time, you’re selling your knowledge and expertise. That’s why CAS firms typically bill their clients upfront with a subscription, or value-based pricing model, and outline exactly what services their clients will be receiving. This allows the accounting firm to have year round cash flow and get paid before the work is done. For the client, there’s no hidden fees, the communication is clear and the relationship is able to evolve to a partnership between the client and the accounting team.
According to the CAS Benchmark Survey, CAS accounting firms are growing at double the 5% median CPA firm growth rate reported by the 2018 AICPA PCPS and CPA.com Management of an Accounting Practice (MAP) firm benchmarking study. With the benefits of offering Client Advisory Services to both the accounting firm and the client, it makes sense that the industry is seeing an increase in these types of firms.
If you’re looking to stay ahead of the competition (and keep up with the industry) it might be time to start considering adopting advisory services to your accounting firm. Does your firm offer CAS? Let us know in the comments below.
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