Why business advisory is a key future service offering

This article was current at the time of publication.

In a year that surely feels like the longest on record, accountants have played a vital role supporting clients navigate an unprecedented economic crisis.

For many practitioners, the pandemic accelerated changes that were already in the pipeline, such as broadening their offering to include business advisory services. For others, it highlighted the importance of evolving the business to keep up with future — and changing — demands.

An accounting business of the future will be expected to offer more than compliance services and demand for advisory work is emerging as a key factor shaping the public practice of tomorrow. But how can you incorporate it into your business?

A focus on the future

Following CPA Australia's My Firm. My Future report, which identified key themes crucial for accounting firms to consider as they respond to change, CPA Australia recently released a series of four practical guides designed to help practitioners prepare for the future.

One of the guides focuses on incorporating advisory — a service that looks set to grow in demand.

The My Firm. My Future report shows that about one third of consumers and small-to-medium enterprises (SMEs) expect to need more services from their accountant in the future and about one in five would like them to offer business advisory.

Demand in the market is clear. For instance, while only 13 per cent of clients surveyed currently use their accountant as a virtual CFO, an additional 20 per cent would like to do so. This would more than double the existing service level.

Getting started

Peter Knight FCPA, director of Knight Partners, says incorporating advisory services does not require an "out with the old, in with the new" approach. His advice is to begin with your existing skills.

"I always recommend starting with what you already know and then spreading into other areas," Knight says. "Budgets and cash flow management, setting financial targets, rolling forecasts and business planning are skills that you'll already have, and they can become the fundamental advisory services [to] build on."

Knight recommends considering the needs of your existing client base, demand within the broader market, and services that are of greatest interest to you as a practitioner.

A challenge, however, is that not all clients know what they need, or how to ask for it. To determine their interest, Knight suggests offering a free needs analysis to existing clients.

"It's a face-to-face meeting to talk about their issues, strengths, weaknesses, risks, funding challenges, and succession planning, based on a prepared list of open-ended questions," he says. "It's also a good exercise for building the relationship with clients because it shows them you are interested in all parts of their business and will help you to shape your services."

Expanding your services

To improve your understanding of clients' needs, Knight suggests holding planning sessions for the core areas of their business — governance, marketing and sales, people and operations, and administration and finance.

"Each of these areas has a financial impact," he says. "What I love about the accounting profession is that we get two year-ends — financial year and calendar year. When you're talking to clients in August or September for a year-end wrap-up, you can start planting a seed for a planning session. January is the obvious time because it kicks off the calendar year."

Planning sessions can lead to quarterly meetings to discuss budget, cash flow and a SWOT (strengths, weaknesses, opportunities and threats) analysis, Knight says.

"Link the timing of the quarterly meetings with their BAS preparation, because it's a goldmine of information," he says. "For example, you could prepare a line graph of their sales compared to last year as the first talking point."

Building better business practices

New service offerings must be supported by new systems and processes. Mike McHenry, principal of Seamless SMSF, says it's important to understand your strengths and weaknesses before making significant changes.

McHenry suggests preparing detailed timesheets for two months and documenting the process behind tasks to assess productivity and efficiency.

"You need to get a handle on what is actually being done," he says. "Understand this on a micro level, and then categorise the functions based on which are repetitive, which can be automated and which can be outsourced. Once you've got those three categories, you can start putting processes behind each task and every process should be tested and signed off."

Much lower level, repetitive tasks that do not require human intervention — especially those that don't generate revenue, such as booking meetings, invoicing and onboarding clients — can be automated via technology. Other smart tools, such as practice management software and a customer relationship management system, can create transparency and efficiency across your business.

McHenry recommends closely monitoring systems and processes to ensure they are supporting success.

"Every month, we report like we're reporting to a board," he says. "We measure everything, including errors. This way, everyone is informed of how we are going, because at the end of the day, we're all aiming for a common goal." Incorporating advisory services can help to future-proof your practice and deliver more of what clients need.

"There's a lot of change right now and I think a lot of accountants are quite daunted by the idea of introducing advisory services because they think it involves going back to the drawing board," Knight says.

"If they've been doing tax and compliance for many years, they often think that's the extent of what they know. But I think most accountants already have most of the knowledge they need to make the change."