Accounting advisory services can future-proof your practice. Here’s how.
You’ve heard about advisory, but what is it, really?
The term “advisory services” gets thrown around a lot, so it can be hard to know exactly what it means. “Is this something new?” “Is it different from what I’m already doing?” “I feel like I advise my clients all…the…time!”
I believe advisory services will be the future of accounting and bookkeeping for firms and solo practitioners. Why? For one reason, technology is making compliance work easier. Another reason is that the pandemic has prompted business owners to become more concerned keeping their financials current as they closely monitor cash flow or apply for government subsidies.
So, let’s break down what accounting advisory services really are, what they mean to your firm, and what they can do for your clients.
Who Is It For?
First, you may be wondering whether this is really for you or whether only the “chosen few” are qualified to offer accounting advisory services. Let me reassure you: You don’t need a CPA or an MBA to offer these services. There are countless areas where business owners need guidance, and accountants, tax professionals, and bookkeepers of all kinds can fill that gap.
What Advisory Services Are (and Are Not)
Most of the traditional services we think of as accounting and bookkeeping can be categorized as compliance services. These include keeping up with the books, generating financial reports, and filing taxes—all compulsory for business owners. These services are focused on historical data.
Advisory accounting goes beyond this by examining the present or looking to the future and providing guidance to business owners. With the right direction, they can make better-informed business decisions, increase their profits and cash flow, and avoid potential problems.
Is Advisory the Same Thing as Consulting?
Yes and no.
Consulting services are typically one-off services on an as-needed basis. When the client runs into a problem, they call you up to ask for your help. You consult for a short period (until the issue is solved) and then go back to compliance. You may collect a consulting fee, or—far too often—your client may just assume these 911 phone calls are part of the deal when they hired you.
Advisory services, on the other hand, are built into your engagement with the client. They know you’ll be providing guidance in certain areas and they’re paying a higher fee for the added value of your advice (more on this in a minute).
In one form or another, you’ve probably been doing advisory already. In fact, in a recent study, nearly 60% of accountants said that they offer advisory services. Just what these services look like in those firms, we’ll never know, but to get the best results for you and your clients you’ll want to approach advisory in the right way and make it integral to your offering.
Compliance Versus Advisory
More and more, compliance services are becoming a commodity. There’s little differentiation between the tax returns or financial statements produced by one firm or another, which can trigger a race to the bottom in terms of price. This is why you see so many firms competing on price, or marketing themselves with phrases like “trusted” or “accurate”, which are standard expectations.
This is where advisory services can set your firm apart. You can add real value to your clients’ businesses and help them reach new levels of success, and it all starts with your greatest areas of expertise.
What’s Your Specialty?
What do you do best? What do you know more about than your clients? Where do they need the most help? What matters to your clients?
Advisory services can include:
- Cash flow forecasting
- Tech stack implementation
- Business planning
- Financing and loan applications
- Operations reviews
- HR, payroll, and employee benefits
- KPIs and metrics
- Pricing analysis
- Technology training
- Tax planning
- Improving workflows
It can also mean helping your clients understand complex business issues informed by their accounting. How to drive more revenue, for instance, or how to reduce costs, when to hire, or when to re-negotiate a bank loan. Again, consider what matters to them.
What Advisory Can Do for Your Clients
A few years ago, I was working with a fitness studio owner looking to expand to more locations across the country. We went into our meeting with plans to review the previous quarter’s financial results and then take a look at the forecasts I had created for the next 3 locations they wanted to open. (You can see that I was dabbling in advisory by forecasting.)
When the meeting started, instead of getting right into the numbers, we ended up spending 20 minutes talking about our children, business travel, and the mom guilt that we both felt as female entrepreneurs with children who sometimes have to be away from our families. We spent the next 20 minutes discussing staffing challenges they were currently facing and coming up with a plan to kick off a program that would help motivate employees.
Only then did we talk about the forecasts and opportunities for their 3 new locations, to determine the capital required to grow their business.
That may sound like wasted “free time” chatting with a client and fielding questions, but it wasn’t wasted at all. It was an essential piece of developing trust and understanding. At that moment, she didn’t need just accounting expertise, she needed me to be human.
By empathizing, listening, asking questions, and contributing to the conversation in a relatable and authentic way, I was able to uncover the client’s biggest pain points and, ultimately, develop a better financial plan for her that aligned with her goals and values.
It’s Not All About the Accounting
As an advisor, you need to remember that it’s not the spreadsheets and numbers or the work you put in to create them that clients truly value. What makes a real impact is the outcome. The partnership and relationship you bring to the table are a huge part of helping them get where they want to go. Financial reports and data should support client conversations, not monopolize them.
The fitness studio owner I mentioned initially came to me for bookkeeping and taxes. But she became an ongoing advisory client. She later confided that there was no way she would have been able to expand her business and add new locations without us. Developing that “partnership” plus the financial insight made it happen.
Key Advisory Advantages for Clients
When clients know they have you as a partner or integral part of their team, it can reduce their stress about their income and expense concerns, and help them to feel secure about their financial future.
“The intersection of your client’s needs and your skills forms the basis of advisory.”
They can simplify their business and get a better understanding of their finances by collaborating within FreshBooks or another platform. Helping them design the right workflows and tech stack and training them in those tools is a powerful part of advisory services.
Ultimately, advisory services are all about guiding your clients to overcome their biggest problems and achieve their biggest goals. These are unique to every business and the intersection of their needs and your skills forms the basis of advisory.
It’s crucial to remember that many businesses don’t know what they need or what’s causing their biggest problems. They may also be floating downstream, headed toward a waterfall, and be blissfully unaware of the trouble coming their way. This is why advisory needs to be built into your service packages. Often, clients don’t know they need to ask for these services and won’t ask for your help in a consultative capacity until it’s too late.
What Advisory Can Do for You
Advisory services can give you an amazing opportunity to grow, both in terms of income and professional development.
As you take on a more advisory role, you can reduce the amount of time you spend on bookkeeping busywork that may no longer provide you with a sense of challenge and satisfaction. You can do this by passing it down to more junior members of your team or working with clients who handle their own day-to-day books (with the right technology and some guidance from you).
The Benefits of Value-Based Pricing
Advisory allows you to create more value for your clients and increase your prices. If your clients still pay by the hour (27% say they still do), it might be time to reconsider your price structure. Value-based pricing ensures that your clients know exactly what it will cost each month and lets them clearly see the return they’re getting from your services.
Hourly rates, on the other hand, punish you for getting better at your job and don’t reflect what clients are actually paying for.
Finally, advisory services allow you to build deeper relationships with your clients, truly becoming part of their team. This often leads to more satisfying work and more referrals.
Skills Advisors Need
Do you have what it takes to be an advisor? There’s no degree or credential required to offer advisory services. What is required is the ability to help your clients solve their problems and improve their businesses.
Delivering on a value proposition like that requires you to continually grow and develop these skills:
- Big-picture thinking, to envision solutions to your clients’ problems
- Research and evaluation skills so you can poll current clients, evaluate industry and market trends, and follow tech advances
- Innovative thinking so you can turn those trends and patterns into repeatable solutions
Pair these with empathy, curiosity, good communication, and the ability to get to the root cause of your clients’ problems.
You don’t need to be born with these skills. You can identify your strengths and weaknesses and create your own course of study through books, training courses, and mentorship to fill out your advisory toolbox.
The key here is to realize your clients don’t need someone with all the answers. What they need is someone willing to ask the right question (sometimes a lot of questions). They need someone who understands how stressful and isolating it can be to run a business and who will come alongside them and help them solve problems. What they need is a human being. What they need is you!
One Thing You Can Do Today
If you’re convinced that accounting advisory is the way to go but not sure if you have what it takes, I want to encourage you to start taking steps. You don’t need to have “arrived”, you just need to be moving forward and have something to offer your clients.
The best thing to do is to start with one thing for one client. Help them work on their biggest pain point and go from there. If you’re not sure what that is, ask them what keeps them up at night. Open a conversation and use those insights to start creating a solution.
about the author
Twyla is Head of the Accountant Channel and leader of the new Accounting Partner Program at FreshBooks. She’s a CPA with broad entrepreneurial, accounting, and software experience. As the former co-founder of an advisory accounting practice, she knows first hand how to leverage technology and create high-value client experiences. Twyla is committed to empowering accounting professionals and supporting their relationships with business owners.