Client Accounting v/s Client Advisory Services: The Five Key Differences

I am often asked the question: "How do I show a client the value of my advisory services?" My answer is simple. Let me share the answer in a bit.

In the previous edition of The CAS Newsletter, we discovered The Two Words That Define "Advisory" in CAS. This edition will help you learn how to ensure clients understand the real value of your advisory services.

• Are you planning to start/ already offering CAS and include advisory services in your offering? You can find a proven roadmap, many strategies, and actionable insights to enhance your CAS/CAAS practice in the best-selling book Client Accounting Services: The Definitive Success Guide.

In today's business world, clients want more than just numbers. They want an advisory service that helps them make informed decisions, so they can focus their efforts on growing their businesses and creating value for themselves and others.

Providing advisory services is a very rewarding job, but it can be difficult to ensure that your clients understand the value of your services. As an accountant, you will regularly pitch an advisory services package to a client/prospect. But the client/prospect won't always easily understand why they should pay for it. It is a surefire signal that the client/prospect hasn't (yet) understood the value of your services. More importantly, the client/prospect is not an expert like you to visualize the impact you can deliver.

Three ways to help clients understand the value of your advisory services

There are three main ways for accountants to illustrate the value of the advice they bring to their clients:

A. Know the difference between accounting services and advisory services

If you do not clearly know this difference, your clients will never understand it.

Here are five key differences between "accounting" services and "advisory" services.

1. Undefined versus Defined: The difference between an accounting service and an advisory service can sometimes be more subtle than it might seem. For example, if you're doing something for a company that is trying to figure out how to improve its own processes or increase sales by offering new products and services, and you leverage your insight into their accounting data trends and insights, then you're probably providing them with some form of advisory service. However, if you're helping a company that already knows how to do these things but just needs someone to take care of some specific tasks for them (and then move on), then you're probably providing them with accounting services.
2. Strategic versus Transactional: Accounting services are more transactional and less strategic, whereas advisory services are more strategic and less transactional.
3. Meeting Needs versus Anticipating Needs: With an accounting service, you're trying to meet their needs as they come up during the course of your engagement. With an advisory service, you're helping them anticipate those needs so that they can be met at some point in the future (and maybe even before).
4. For Clients versus For Their Businesses: Accounting services are about getting things done for the clients. In other words, it is about making sure that whatever it is they want done gets done in time, accurately, and compliantly, without much fussing around or confusion on either side of things (the client's end). Advisory services are about getting things done for the business. It is about providing solutions to a client’s business problems. Advisory services tend to focus more on building long-term relationships between organizations/people/projects, etc., which means there's less emphasis placed on doing something specific right away versus improving upon existing processes over time through your experience, expertise, knowledge, and wisdom gained from working together closely over time.
5. Creating versus Maintaining: Another way of thinking about this difference is to consider whether or not your work involves building something new from scratch. If the answer is yes, it's likely that you're providing an advisory service; however, if no, it's probably closer to providing accounting services.

When you are clear about the difference you can/will deliver through your advisory services, it is easier for you to explain the value from it.

A very important thing to remember, though, is to make sure you also explain the impact of your advisory value. For example, state something like, "Over a period of six months or so, we will create clear choices/options for you to reduce your cost of goods sold by X %."

"It is important that your clients understand not only what you do for them but also what happens because of what you (will) do for them". - Hitendra Patil

B. Ask them

"How do I show a client the value of my advisory services?". The simple answer is, "ask them what value they are expecting from you."

More often than not, they're not sure about their needs and goals, or they are not able to express clearly what they need and want. Ask them:

• Do they need advice on how to run their business?
• What does success look like for them and their business?
• What would make them more successful as small business owners?

Only after that, show how your service helps them solve problems or achieve goals that would otherwise be difficult or impossible to do without your help.

C. Do more for your clients than just crunch numbers and file reports

It sounds like a cliché, but it is common pitfall accountants suffer from. It is easy to fall into the trap that your output generates your revenue. Yes, it is a necessary evil, but that will not let your clients truly understand your advisory value.

If your work output generates your revenue, your "impact" generates your wealth! - Hitendra Patil

Some things you can do to "do more," for example, are:

1. Show value to the client by showing them how they are doing financially compared to their industry.
2. Find trends and patterns from their accounting data to explain how their business is running.
3. Relate the trends and patterns to the business decisions they made or did not make. Numbers tell a story. The "business story" is a set of consequences, positive or negative, of the decisions business owners make. In advisory services, you will often provide future decision choices and criteria for them.

What next:

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After you develop your advisory services based on actions and impact, your next step will be to ensure you provide that impact every single time you deliver advisory services. How to ensure that? In the next edition (December 2022) of The CAS Newsletter,?I will share some?new insights on?how to upgrade your clients to higher-value advisory services. Stay tuned...... don't miss the next edition - subscribe here for free now.

CAS has enhanced the practice performance of many firms. CAS does turn into more CA$H for accounting firms. Others have done it, and so can you.

• In the subsequent editions of The CAS Newsletter, I will share many more new, practical insights to make it easier for you to achieve greater success in CAS.
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About The CAS Newsletter:

The CAS Newsletter will uncover insights for success in Client Accounting Services (CAS) - the new revenue & growth segment for accounting firms.?

This CAS Newsletter is a monthly publication by Hitendra R. Patil, the author of the best-selling, accounting profession's first-ever book on CAS:?Client Accounting Services: The Definitive Success Guide. Hitendra has been one of Accounting Today's Top 100 Most Influential People in Accounting for five consecutive years, from 2017 to 2021.