Upselling Client Advisory Services: Beyond the Buzzwords

By KATHLEEN HOFFELDER, NJCPA SENIOR CONTENT EDITOR

Client advisory services (CAS), also referred to as client accounting services, have been providing a way for organizations to receive practical, hands-on solutions to increase cash flow, create opportunities for expansion, reduce costs with automation and more efficiently use data and analytics to monitor business needs. In short, CAS has grown up to be the youthful, energetic sibling in a family of well-established accounting and tax client offerings.

Upselling CAS, or increasing services offered to traditional tax and accounting clients, has been popular. But is there room to continue to upsell more services, and is upselling CAS needed to be competitive?

The answers depend. Indeed, those who have started offering CAS have shown a steady bump in revenue. As noted in a December 2021 Journal of Accountancy article showing results from a Client Advisory Services Benchmark Survey from CPA.com and the American Institute of CPAs’ (AICPA) Private Companies Practice Section (PCPS), “Client advisory services (CAS) practices saw a 20% growth rate in terms of net client fees per professional during fiscal year 2019 and the first few months of 2020.” That growth, it explained, outpaced the 12-percent growth CAS practices reported in 2018, when the inaugural benchmark survey was conducted.

A global take on CAS also showed an increase. According to a Spotlight Reporting 2021/2022 Global Advisory Trends Report, which included more than 600 responses from accounting professionals worldwide in July and August 2021, almost 80 percent of respondents plan on offering or expanding advisory services in the future, and only 25 percent considered themselves a traditional firm, offering tax and compliance services.

So, which CAS are being upsold or considered leading contenders today? Outsourced accounting and CFO services, workflow, risk management, advanced KPI reporting and business valuation services, to name a few.

“The services that clients are most interested in are generally more complex,” explained Christopher R. Cicalese, CPA, MSTFP, associate partner at Alloy Silverstein Accountants and Advisors. To him, providing business performance insight like that of a CFO is popular.

Hayley Mayer, EA, a principal at Prager Metis, has also seen interest from clients in CFO services. “Many times, clients require assistance with a more-customized financial reporting package which is a natural for our CFO advisory services,” said Mayer. “It’s an easy sell if the client currently has temporary staff handling their bookkeeping or if they are looking to reduce the amount of bookkeeping needed. Outsourcing is also a great way for the client to save money as they will not have to cover the cost of employee benefits and employer taxes,” she added. “It can also be an easy sell if the client currently has a part-time employee only coming in a few days a week; in this scenario, the client could benefit from CAS in that they would receive services more frequently since they are not dependent upon someone being present in the office.”

Retirement planning, wealth management and trust/estate planning are also in favor as additional services. “With a large, aging population of business owners starting to look at the approaching future, many are focused on maximizing and preserving their wealth for themselves during retirement as well as for their future generations,” said Sean P. Breheney, CPA, MBA, principal at PKF O’Connor Davies, LLP. Utilizing client information that they are already engaged to review, he said, helps them highlight areas of need and/ or exposure as well as how to provide the services that would fill those areas of need.

However, Breheney cautioned that upselling can be either an easy or a difficult process. “Which path you are able to take depends on when you decide to take the jump. Approaching the subject of additional services and how you are able to assist with them can be much easier if it is done during a quarterly review, tax planning meeting or even as a part of routine tax preparation,” he explained.

NEW WAYS TO BILL

The move to add new service offerings automatically lends itself to new billing structures, which can complicate issues with clients accustomed to hourly billing. CAS generally requires instituting a valuebased approach to billing as opposed to the more traditional hourly billing. According to the Journal of Accountancy article citing the CPA.com/AICPA survey, 28 percent of firms had value billing in 2020 for their CAS, compared with 10 percent in 2018. Also in 2020, 60 percent of respondents noted having fixed-fee pricing (which is usually per month), compared with 40 percent in 2018.

The timing of when to switch to such a new fee structure also needs to be considered to have the best results with clients. “If accounting firms switch their billing structure before the five-year mark, buyers are more than twice as likely to comply with the new arrangement than buyers who have been with an accounting firm for five or more years,” according to a 2020 CPA.com/Bill.com/Hinge Research Institute report on Business Model Trends for Accounting Advisory Services.

NOT FOR EVERYONE

Though attractive, upselling can cause challenges if a firm is not staffed accordingly or ready for the challenges that those new service offerings may entail. “Upselling is not necessarily for everyone, as you need to make sure you have the capacity and expertise to perform the services at your standard,” added Cicalese. “Potentially, by upselling additional services without the capacity, you could provide a bad experience to the client and harm your professional reputation.”

And not all industries are easily adaptable to CAS methods and procedures. As Mayer noted, “a client in the real estate industry may require specialized software that your current staff is not trained in. It’s important to consider that if the client is not satisfied in this instance, you might not only lose the client for CAS but also as a tax client.”

She believes upselling these services is still necessary to compete. “Providing a one-stop shop simplifies things for the client by having their whole team under one roof. Ideally, if you already have a trusted relationship with a client, they will be more apt to consider you for other services they may need,” said Mayer.

Breheney cautioned that firms should not rely on upselling alone, however, to remain competitive in today’s marketplace. “I do not believe that it is necessary to upsell clients in order to survive competitively, though it can be of use in the absence of an effective marketing strategy. Gaining attention for oneself in such a market is achieved by showing your potential client base how you are different compared to your competition, by the added value you create with the services you provide,” he explained. “Upselling, while a valuable tool for any CPA, does not allow for a similar impact.”