Take Accounts Receivable Services to the Next Level
While accounts receivable services have emerged as one of the fastest growing areas of accounting services over the past decade, even pioneers in the industry still have a long way to go, experts at Digital CPA say of this year.
“The challenge is how to elevate, improve and evolve CAS to bring the next level of service, what we call CAS 2.0,” explained CPA.com President and CEO Erik Asgeirsson during a panel at the annual conference, held this week in Nashville, Tennessee. “No company has yet fully optimized the range of services. “
A starting point is that businesses recognize the unique nature of the offering.
“Stop running the CAS department like you run the audit or the tax department,” urged panelist William Pirolli, current president of the American Institute of CPAs and a partner at DiSanto, Priest & Co. in Rhode Island. “No disrespect for them, but they are a different animal. “
Given this difference, CAS practices may require different incentives. “Do you want to grow CAS? You have to change the compensation model to really reward CAS and empower leadership teams, ”said Pirolli, whose firm’s CAS practice now has 15 people and is poised to promote its first partner. “The reason CAS is doing so well is that we finally figured out that we weren’t going to run it like everyone else in the business. “
To get the right incentives, it will be necessary to identify the right measures of success.
“In most firms with a CAS practice, the rest of the company doesn’t necessarily fully understand what the practice is,” noted panelist Jennifer Wilson, co-founder of consulting firm ConvergenceCoaching. “And leaders don’t understand how it’s different and how it’s similar. They try to measure it identically. This is the first mistake, and they hold their practice leader accountable for actions that do not apply.
“With the remuneration of partners and remuneration in general, it must be based on performance,” she continued. “It must be on measures that make sense to the head of the CAS. It cannot be measures that do not. He cannot lead bad behavior. This is an investment practice, and it really is a huge high return practice in business. But the partnership has to understand it and they have to change the way they manage and measure it. “
As an example of the overhaul that still needs to be done around measuring success, Asgeirsson highlighted recent data from CPA.com’s recent CAS benchmarking survey. “One point to remember is that the net fee per professional is not as high as some of the other areas of the practice, and I think there are things we need to consider about this, like strategies for pricing and understanding the value you are providing, ”he said. “We will continue to determine the right KPIs. “
(Listen to our podcast with Erik Asgeirsson and Jennifer Wilson on the latest CAS benchmarking survey.)
Beyond thinking differently, firms that want to optimize their CAS practice must think differently about their clients.
“We have to be very selective with who we help because we’re overwhelmed in capacity there,” Wilson said. “Businesses don’t understand who the ideal target customer is. They don’t understand that we can’t support all the ledgers.
Business leaders don’t always understand the central role of careful curation of their technology stack to maintain practice efficiency, Wilson added.
According to panelist and Digital CPA President Elinor Litwack, who is also an outsourced accounting and consulting services partner at Maryland-based GRF CPA, the need for businesses to stay up to date is even more technologically important. “Technology solutions are essential year over year because you can’t just sit on cruise control,” she said. “The landscape is constantly changing and you have to stay innovative and nimble and be ready to test things to stay ahead of the game. “
For all the work and overhaul that may be required to boost CAS practices, it is well worth it, according to the panel.
“The growth has been phenomenal. I was super excited to see 20% growth in the benchmark survey and to see the margins in that space, ”Wilson said. “It is very important for us as CPA and consulting firms to claim this space because it is in our rightful place. It makes such a difference for customers. … I think it’s a seller’s market for this service, and the need and demand is high because we’re making such a difference to customers.