2020 Vision: Plan your Xero-Driven Advisory Practice Now
While it’s mid-year – not New Year – for your client files, CPAs can leverage the “best foot forward” phenomenon that calendar new year brings to promote high-value cash flow advisory services in a way that is comfortable and profitable for both parties.
Leverage Tech Time Savings
Xero enables CPAs to use cloud tech to increase accountant value to their clients. Accountants reap time savings, and connectivity eases the pain of compliance work. However, let’s focus on growing your practice once you’ve optimized time and tedium. You could bid for more clients, but likely you and select clients are ready to start a meaningful and profitable advisory relationship. So, growth doesn’t necessarily mean more clients, but deeper and more mutually valuable client relationships.
Xero + Apps Bought You Time – Here’s How to Spend It
Done right, cloud-connected processes seem nearly miraculous in their time savings compared to the tedium of manual ten-key and data entry. How you use that time savings is critical – the goal is not to cut time-costs (or replace time costs with software costs) but rather to use that time savings to cultivate growth and profit.
Truth is, CPAs do not realize a higher ROI on annual compliance work with cloud connectivity – the margin simply isn’t available. Instead, whether we’re at the business end or the finance end, we all strive for a connected ecosystem because we innately recognize CFO-style advisory as the ideal professional/client relationship*.
Ease Into Successful Advisory
While you might consider easing into your first advisory engagement by offering the service to your existing clients who are really struggling with their business cash flow, there’s folly in that approach. Instead, objectively select the ideal cash flow client so that the CFO/advisory formula is workable. The ideal client is one who:
- Has smooth workflows and trained personnel surrounding all aspects of the accounting workflow
- Has a minimum annual revenue of $1M+
- Would benefit from and value a weekly touchpoint around cash flow advisory
Having selected clients who might be open to an advisory relationship with you according to the criteria above, analyze their file looking for the following red flags that indicate they require additional cash flow troubleshooting. Here are some common cash flow challenges to look for:
- Disordered or aging AP/AR
- Bank overdrafts or fees
- Credit card usage
- Line of credit usage
- Shareholder loans or investments
Repurpose Saved Time
You’ll need the time you’ve saved as advisory proves to be challenging and uncomfortable work for starting practitioners. Be prepared to provide enough time for the relationship to flourish – about 50 – 75 personnel hours for Year 1, and 50 hours per year beyond that.
Client list in hand, block time to call clients for a discussion around these red flags and to discuss how advisory can help them succeed in 2020. Set a new engagement that covers cash flow management from a CFO perspective for an additional service fee; set expectations at the outset that touchpoints should be brief and weekly.
*By Dryrun’s research, advisory services are the most often advertised but seldom delivered offering on a CPA webpage – interpret this to mean that you know clients need it and ask for it, you’re just not entirely sure how to deliver it).
For more information on any of the above steps and to continue the conversation, visit dryrun.com or send an email to email@example.com.