From Tasks to Revenue: Designing a CAS Practice That Scales

The exact amount of revenue left on the table varies by firm, client base, and service model, but it is often substantial. Most firms already have the client relationships, financial data, and trust needed to provide advisory services, they simply aren’t packaging, delivering, or charging for them consistently. As an example, if you’re charging $500 a month for bookkeeping services, this can easily turn into a $1,500 a month engagement.  It’s also important to understand that your existing clients might not fit this model. It’s easier to build this as a new model to new clients (or to your tax clients that you’re not providing accounting or bookkeeping services to). Once you’ve established how you would sell this under a new model “tomorrow,” you can determine if your existing clients have potential to add services and upsell.

The good news is that advisory doesn’t have to start with a full CFO/advisory engagement. Many firms begin by adding a simple monthly financial review, cash flow discussion, KPI review, or planning conversation to their existing bookkeeping or tax services. Even a modest monthly advisory fee can create a meaningful recurring revenue stream, reduce dependence on seasonal tax revenue, and increase revenue per client.

Yes, there are multiple revenue streams in CAS, a few being the clean-up and onboarding. Several firms/practices charge for the analysis and/or wrap it into their onboarding or clean-up fee. You will want to do a prospect analysis of the clients books before engaging with them. The analysis should be done with trailing 12 months of prospect financial data so that you can identify anomalies and seasonality. This will allow you to understand the client’s business, complexity and clearly define the scope, as the intent is to come out of the gate with a fixed monthly fee. Starting with a fixed fee vs. hourly will allow you to have higher margins. We have a section in our engagement letter in the FanCAS-Kit that has language that helps to protect you from losing margin due to client growth.

The onboarding fee is intended for the administrative aspects of onboarding. Setting up any necessary software, adding users, connecting systems to the GL platform, etc. We recommend charging a minimum of $1,500. The clean-up of the data is a separate fee. You will want to do a prospect analysis of the clients books before engaging with them. The analysis should be done for trailing 12 months so that you can identify any anomalies or seasonality. In the analysis you will identify the clean-up work needed and can properly price that service.

Yes, we charge for transfer of knowledge. We want the entire engagement team on calls where we are learning from the client and their team. As an example, if we anticipate having three 1-hour calls with a client, and we have three people that need to be on the calls, we would charge roughly $2,500. Determine a good blended rate for your team. In this example, I used $277/hour, however, don’t present the hourly rate or formula to the client, communicate everything in a fixed fee and as a project. You will also put documentation together from the findings/calls, that can either be part of the fee or could fall into the documentation/internal controls revenue streams.

Sometimes but not often, however, the separate line items need to come with the value that you provide for each. The statement of work in our FanCAS-Kit is overly done intentionally that conveys the value for each line item. We find that once the client/prospect understands the value, they aren’t apt to balk at the separate items.

The pricing doesn’t necessarily change for NPO’s, however, you need to understand the complexity of any client prior to setting a fixed fee. You will want to do a prospect analysis of the clients books before engaging with them. The analysis should be done for trailing 12 months so that you can identify any anomalies or seasonality. This is especially important with NPO’s. You’ll dig into each income statement and balance sheet account to understand the complexity. You’ll want to price for the complexity, the various dimensions, project tracking, etc. You also need language in your engagement letter that protects you from client growth that’s not accounted for in your monthly fixed fee. By doing the analysis, you are clearly defining the scope, down to the number of bank accounts, credit cards, etc. and for anything specific to a NPO.

This becomes a natural process and also industry specific. The general intake process starts with approx. a 1-hour meeting with the prospective client. The meeting should be the prospect talking roughly 90% of the time. Asking questions, such as why they are looking to outsource, what they think is working, what’s not working, gaining an understanding of their business, their accounting complexity, the technology they’re using (more importantly not using, where you can bring efficiencies to them). Side note, don’t name the technology products in your proposal and/or on calls. Also, some technology will be your “secret sauce” that the client won’t necessarily know that you’re using. This coincides with a fixed monthly fee as the efficiencies gained should be your margin, not a reduction in fee to the client. Same with the onboarding meetings, you will spend time creating your initial product but will then be able to tweak for prospects/clients thereafter. As you start to industry niche, these models will become easier to replicate and tweak. Also, make sure to document processes along the way. Save training videos for each client, thus creating process and procedure manuals. The information obtained from the intake and onboarding needs to be captured as a living document so that your teams can easily get up to speed (new hires, when work moves between team members). etc.

We don’t recommend your dedicated CAS team take on bookkeeping only-clients. We do, however, understand that the bookkeeping needs still exist, therefore we recommend bifurcating those services with a separate accounting person/bookkeeper or team. The bookkeeping clients tend to be quarterly or ad-hoc based on when clients send information and/or for the sole purpose of the tax return. You also tend to not have direct access to the clients systems with the bookkeeping/write-up clients, meaning you have control when you or your team can complete the bookkeeping services. This is hard to manage when you start to build and scale your CAS practice as CAS clients are monthly and you can more easily control the timing of when your team works on each client given you have access to their systems and data. As the CAS person or team builds a book of business, it’s hard to take on the extra work needed for the tax busy seasons. You also want to protect yourself or your team from having too many busy seasons. CAS is a constant pace each month throughout the year with December and January being the busiest.

It’s important to have set/established roles and responsibilities between the client’s in-house team and your team. Given that you are going to generally be responsible for issuing month-end financial statements, you need to be able to lock down the periods. We require any adjustments to prior periods be sent to us for us to change. You put your practice at risk if you don’t lock down periods as data can change, your client could be using/sending data to financial institutions and you have no idea what changed. We don’t give the lock-down password to the client and all of this language is in our engagement letter in the FanCAS-Kit. Also if you don’t lock completed periods, you/your team will spend copious amounts of time trying to find what changed, which kills your margins and is hard to recoup from the client.

You can structure this in a few ways. First by having a Master Services Agreement which consists of all necessary/standard legal language that covers all services offerings (tax and CAS). Several firms use MSA’s and place a 3 year term on the MSA. You would then accompany the MSA with separate Statements of Work. The SOW should be written so that it can be in place until a new SOW is established/signed (as it might not be annually). Assuming the client’s scope of work doesn’t change, this works. You also need language in your SOW that protects your fee/margin if the scope does change. We have this language in our SOW in the FanCAS-Kit. You can also put in a standard annual price increase, such as 7%, that covers COLA. Another structure, while still having all of the above language, could be to use an engagement letter rather than MSA and SOW. Overall the intent is to not have to send annual renewals if you don’t need to. The existing document in place covers services until a new document is sent/signed.

I love this question as this is how Michelle and I started our CAS practice.  Given we were both at a high level with experience, we were able to service the clients between the 2 of us.  It gave us time to learn and implement technology.  Once we had a good amount of clients, we then hired at the senior level, pushing work down that didn’t need to be done at our level and we had worked through the nuances of the technology and were able to help and answer questions to the new team member(s).  An important part of this is that the 2 people are dedicated to CAS. It’s hard for tax people to do tax and CAS given the tax deadlines.  CAS is a monthly consistent (daily/weekly/monthly) model and requires a response/service model that doesn’t necessarily align with using shared staff.

No, not necessarily the entire blueprint, however, building a scalable CAS model requires a shift in thinking as there are various pieces to the puzzle. We find that firms/practices struggle when they set up CAS in the same manner that they set up their tax practice. This is why we were passionate about building the FanCAS-Kit, as our goal was to hand over the “box” of content and knowledge needed to understand the various pieces to the puzzle. It’s nice/somewhat easy to convert a tax compliance client into a CAS client, as you already understand their business, the shape of the financial data that comes to you for tax return preparation, what they’re missing or struggle with. Also, this increases tax planning opportunities/revenue.

There’s not a problem, however, there are certain key aspects to consider. First, if you offer attest/review services, the CAS services will be subject to peer review. Most practices offer tax and advisory but you need to be careful and thoughtful in how you build the CAS practice, as the most successful practices don’t share staff between the two business lines. It’s hard for tax people to do tax and CAS given the tax deadlines. CAS is a monthly consistent (daily/weekly/monthly) model and requires a response/service model that doesn’t necessarily align with using shared staff, given the multiple tax busy seasons and client demands. CAS feeds right into the tax practice and also enhances the tax advisory services that you can offer given the insight you have from the CAS side. We are also finding that tax practitioners are concerned with AI and how that’s going to change their tax practice, so adding CAS is a great way to retain or replace any lost tax revenue.

The AICPA has revised rules for CAS to fall under the consulting guidance AR-C Section 70 rather than SSARS 27