Q&A

Ed Warren

Ed Warren is the business development director of Dinamis, a firm that provides outsourced staffing to accounting and advisory clients. Warren’s previous experience as a practice growth and business development director within a CPA firm and now as a client accounting services (CAS) consultant gives him valuable insight into how CAS can be one of the strongest growth drivers for accounting and advisory firms over the next decade.

What are areas of opportunity for firms as they come out of the pandemic?

With the uncertain economy and business interruption, small business owners are reconsidering the value of having an internal accounting staff. The most successful CAS firms are billing monthly and delivering services to clients 12 months out of the year, instead of having 40% of their revenue tied up in tax season and 40% in audit season. CAS creates a steady stream of revenue and steady staff utilization throughout the year. While some clients need a CFO who focuses on strategy, they may not need the overhead of a staff and controller in a $5 million company. This could be an especially compelling value proposition in lowmargin businesses like restaurants or in nonprofits concerned about overhead expenses. CPAs already have the labor inputs and the tools for the job. Who has better resources to do month-end close than the people who are experts at accounting work?

How did you go from BD director to CAS consultant?

Competing firms in my market were leveraging CAS and human resources consulting, and we were not. The opportunities in CAS are great, and the profitability is greater. I’m not sure I understood the potential of the practice or how much growth is in that sector until I began to focus exclusively on business development. Depending on your market and industry vertical, an on-going CAS relationship could generate five to ten times the revenue of a comparable assurance relationship. While bookkeeping was once considered a necessary evil, a CAS engagement can and should include tax preparation, tax planning with regular check-ins to discuss other potential needs like succession planning and buy-sell agreements. It’s helping a business prepare for an audit, CFO advisory, month-end close: that’s work where partnerlevel employees are billing out partner level rates for a CFO advisory perspective. There are and will continue to be standalone CAS firms, but CPA firms, especially those with industry niche expertise, will continue to be major players in the space. CPA firms should be considering CAS practices as merger and acquisition opportunities.

How can marketers contribute to advancing CAS practices in their firms?

Business leaders and owners generally understand whether they have tax liability or whether their business requires an audit. However, there are many business owners who don’t understand the potential benefits of CAS. A marketer is in a great position to provide education, outreach and evangelism in addition to traditional marketing support. Client education is necessary for client accounting services. The most successful CAS firms have a significant online presence, and some even have a separate website for their CAS practice. As accounting firms get better at selling CAS, businesses are realizing they don’t need to be in the accounting business and can outsource the accounting to a firm with a CAS specialty in hospitality, dentistry or food blogging.

Do you view firms differently now that you sell to them?

There are a lot of decision-making processes in firms that are slow and unresponsive. What I love about being in a non-CPA firm environment is that I generally consult with one or two people to get a decision. It’s also great to work in a consultative role to help partners and practice leaders grow and improve their firms.

What other areas of opportunity do you see on the horizon for accounting and advisory firms?

There has been a push from firms to be less reliant on compliance services. Firms are looking at consulting services like CAS, valuation services, transaction services and wealth management. The great thing about CAS is it’s an advisory relationship. As clients come to inflection points – saving for college, planning for retirement, selling the business, acquiring a competitor – you’re there as an advisor to help with that process.