Client accounting services is a fast-growing field, but many small business owners are still hesitant to invest in this type of financial partnership. But without a qualified accountant to oversee the financial operations, many of these business owners are on a shaky foundation.
Shifting business demographics may explain why so many professionals are declining these services. Millennials now make up half of the U.S. workforce, and they’re estimated to make up a full 75% by 2025. But millennial business owners are less likely than their Gen-X predecessors to invest in accounting services, opting instead to handle their financials on their own.
If you’ve been hesitant to add financial accounting to your list of business expenses, you may actually be losing money rather than saving it. In fact, businesses that use client advisory services report having higher profits and greater financial insight. An accountant isn’t simply concerned with documenting your finances and filing your taxes. At its core, client accounting services is about making your business more profitable.
What Are Client Accounting Services?
The term “client accounting services” refers to a type of outsourced accounting, usually coupled with integrated technologies like mutually shared cloud software. You’re not hiring a full-time, in-house accountant; you’re instead acting as the client of an accountant or accounting firm that provides customized financial services on behalf of numerous businesses just like your own. Most data is inputted on a secure online server, and client communications may be handled in person or via digital conferencing.
A knowledgeable accountant or accounting team monitors and tracks your financial data in order to identify opportunities and red flags. They can assess your accounts receivable to create a detailed snapshot of customer behavior and advise you on how to more profitably capitalize on those behaviors. They can devise budgets to help you improve your efficiency. They can alert you to industry changes and sales trends that necessitate a shift in your product focus or marketing efforts.
In short, CAS accounting provides you with the expert analysis necessary to make better financial decisions for your business. In addition, most CAS accountants offer a suite of additional services that may include bookkeeping, payroll, business management, and CFO services.
Why Client Accounting Services for Small Business?
Small and medium-sized businesses benefit most from client accounting services for three reasons:
Smaller businesses typically have less of a need for full-time accounting; outsourced accounting can provide the full benefit of CPA-level expertise without the need for a new hire.
Smaller businesses must be especially diligent about their operating costs; a full-time accountant can cost the business almost $50,000 a year on the lowest end of the spectrum. This salary estimate doesn’t even include the overhead costs like payroll taxes and benefits, which can add 20% to your investment. When you factor in the additional cost of a bookkeeper, you’re looking at six figures just for financial services.
Rather than just providing the benefit of one expert, client accounting services firms provide multiple experts—including accountants, bookkeepers, and tax professionals—working on the same account.
Client accounting services provides you with enterprise-level financial insight for a fraction of what you’d pay for in-house help.
How to Choose Client Accounting Services
Once you make the decision to invest in client accounting services, the next step is choosing the right firm. You can learn a lot from browsing online reviews and soliciting referrals from other trusted business owners, but there are a few specific qualities that are especially important when you’re deciding on a firm.
A clearly defined monthly rate. Avoid firms that impose a-la-carte charges based on the services you use in a given month. It’s important to know exactly how much you’re paying up front so you can enjoy the full array of services without being nickel-and-dimed.
U.S.-based operations. Many U.S.-based small businesses are turning to offshore CAS firms because they’re more cost-effective. However, if you’re farming out your accounting to a foreign entity, you subject yourself to certain risks. If your sensitive financial information is compromised or your firm proves disreputable, you don’t have the same protections that you would have when working with a firm subject to U.S. consumer protection laws. In addition, many countries have less stringent requirements for CAS accountants, so you’re often not getting the same level of expertise.
Multiple service options. Some firms offer accounting services exclusively while others offer accounting and bookkeeping. Others take things even further, offering business advisory services and business management. You want to get the most from your investment, so make sure your service package includes both bookkeeping and accounting at the very least.
Timely communication. One challenge with outsourcing is that you don’t always have your accountant on hand to answer questions and address emergencies. That’s why it’s so important to work with a firm that offers flexible hours and reliable communication when you need it. When considering a new firm, take some time to learn about their approach to client services. Are they available on the fly? Do they prefer to communicate via email, via phone, or in person?
A centralized workflow. As previously noted, many CAS accountants are now using cloud technologies to process data from your business and generate reports. Make sure to work with a firm that uses a secure centralized system that’s easy to access from any location—including on mobile phones and tablets.
Most importantly, make sure to work with a well-respected organization that employs knowledgeable financial experts. CPA firms are usually your best bet because they employ the nation’s most rigorously educated accountants. Just ensure that the firm offers client accounting services (as many do not).
Put Your Finances in the Hands of an Expert
Even if you think you’re doing a fine job of managing your finances, you can always benefit from the services of someone specially trained in interpreting financial data. As a small business owner, you want to be especially diligent about giving yourself every advantage so that your enterprise has room to grow and thrive.
Start with an honest assessment of your own business:
How much money can you afford to allocate to financial services?
What are your short-term and long-term financial goals?
Which financial services are most important to you?
What are your frustrations and pain points?
How do you prefer to communicate with your CAS accountants?
Once you’ve answered these questions, you’ll be able to meet with prospective accounting firms and proceed with confidence, understanding, and a unified vision.