We’ve all been talking broadly about how the accounting profession is changing, but how exactly can accounting professionals monetize these changes?
To get an idea, let’s look at the most current trends in how accounting firms are bringing in revenue. In the recently released 2018 U.S. Accounting & Bookkeeping Industry Performance Report from Xero, it’s clear that the key to doing well is to move toward online accounting software.
The survey indicated that firms average billing rate was $6,300 per small business client and brought in $100,940 on average per employee. Meanwhile, firms that made the most of online accounting software billed an average of $10,375 per small business customer and brought in $204,200 per employee. These firms also experienced nearly double the growth rate, from 14.9 percent to 28.3 percent.
Digging a bit deeper into the survey, it’s clear this increase comes from two main sources. First, with more clients using online accounting applications, these firms can service more clients per team member. Second, firms that offer online accounting to their customers have more opportunities to sell consulting and advisory services that up the overall client value.
Here’s what those services can look like:
An obvious piece of expertise to monetize is your knowledge of accounting software. Many businesses are looking to make the move to using online accounting software, but aren’t sure where to start. Or maybe they’re already using QuickBooks Online, Xero, or Sage and they are looking for an expense management or billing solution that will integrate.
Offer the service of helping your clients design and implement accounting technology stacks customized for their business needs. This is a great lead-in to a subscription upsell, while also being an excellent one-off service you can offer to clients who are unlikely to become long-term.
Subscription services are becoming a more accepted way for companies of all types to provide services. Accounting professionals can move away from an hourly billing model to offer their clients a much better value while stabilizing their own bottom lines.
A subscription service could be bundled together with an accounting software subscription, where your firm makes sure basic information is available to the client on a dashboard, then help the client strategize about KPIs and targets on a monthly basis. Or, clients could pay a flat fee for access to your team whenever they need — which is a great solution for a client who always seems to be in crisis mode.
With a subscription model comes the opportunity to add premium levels of service to help your clients customize what they need. For example, you could offer faster processing deadlines, greater availability, weekly reports, and other perks at premium levels.
Consulting & Advisory Services
When you hire a lawyer, you understand you’re paying for their knowledge, not their time. A similar transition is happening in our industry. When accounting professionals position themselves not just as proficient with accounting software, but as a valuable part of their clients’ business, they can begin monetizing their expertise as a consultant.
The recent survey points out that firms which provide advisory services earn a considerably higher revenue per client than firms that only offer compliance services. Look to your existing clients to help you choose which advisory and consulting services to specialize in.
What questions do your clients most ask your advice on? Where have you developed the most expertise?
Some ideas include:
Business strategy: budgeting, cash-flow forecasting, tracking KPIs
Startup and entrepreneur mentoring
Business intelligence and performance benchmarking
If your skill set includes higher-level strategizing and planning functions that would normally be filled by a Chief Financial Officer, you may also want to consider offering virtual or outsourced CFO services. Many small business owners and start-up founders realize they could benefit from having someone in this role, but simply aren’t in a place where they can afford it.
Embrace the Paradigm Shift
All of these new revenue models are possible as a result of the shifting paradigm in our profession. Small businesses simply aren’t seeking someone to run their numbers — they’re looking for mentoring, business insights, budgeting advice and expert assistance.
The accounting firm of the future will be to fill the role of that trusted advisor. Is your firm ready to take on the mantle?
AccountingWEB and Xero are proud to present this content through a four-part series. Xero shares in our commitment to help bookkeeping firms better serve their clients and drive growth. Learn more at xero.com.