CPA_Practice_Advisor_July_2020 - 6

FROM THE TRENCHES
Do You Have a Clear CAAS Vision?
IT IS A pleasure to see so many CPA firms embrace the vision of Client Accounting Services
(CAS). Although bookkeeping services are not as structured in the U.S. market as they
are around the world, CPA firms have developed successful bookkeeping practices for
small businesses. Other firms have chosen to provide higher-end controllership and
outsourced CFO services. But now, let's talk about CAAS.
We have enjoyed our role in the
evolution of CAS in public accounting.
Hopefully, you have directly benefited
from our work in our K2 CPE courses
and as guest speakers at conferences.
It has been a pleasure meeting many
of you while consulting and assisting with the framework of alliances
promoting CAS, as vendors that have
created small business accounting
products for both industry and the
accounting profession, and advising
firms on how to build CAS practices.
It was clear to us from the beginning that there were multiple levels
of offerings with increasing sophistication. It was also clear from the
beginning of building CAS practices
that firms should have three or more
services to offer clients. By providing
more services, clients would choose
more, and the firm would become
"sticky" since clients would be reluctant to leave a firm that had become

JULY 2020 ■

so important to their operations. Value
pricing and billing the clients via ACH
in advance of providing the services
evolved in our thinking before the
year 2000. It was probably only in the
last 15 years that the idea of levels of
service of bookkeeping, controllership,
and outsourced CFO coalesced into our
models so clearly that firms can be
successful providing one, two, or all
three of the levels of service. You can
see evidence of this in past columns.

BUT THE TITLE OF YOUR
COLUMN IS CAAS. WHY
IS THAT?
CAAS stands for Client Accounting
and Advisory Services. The AICPA
is considering this far better term.
One of the regrets I have from the
last 35+ years of trying to help firms
provide services beyond the compliance services of tax and audit is that
I did not promote advisory services

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more. Most clients need and want
guidance from an outside professional advisor. It is challenging to
run a small business, and it is easy
to be distracted by external sales
attempts, false trends, and pursuing
the latest great idea. Many business
owners are entrepreneurs who love
what they do but are not that good
at making the right decisions to run
a small business well.
A much better name would have
been Client Accounting and Advisory
Services (CAAS). CAAS is visionary,
while CAS is operational. Both are
management-oriented, but advisory
work takes more vision and flexibility.
Further, advisory work requires more
knowledge of business fundamentals.
CAS leverages existing accounting
knowledge and feels more like compliance. In fact, some CAS offerings
function more like grease. They make
all the compliance work slide together,
including financials and compliance
forms like 941s, W2s, 1120s and 1065s.
In past articles and consulting, I have
spent too much time talking about
how to make reporting easier. How to
make numbers flow from one system
to another is tactical. We have probably
not spent enough time on the strategies
on how to make the numbers appear.
CAS may be like grease, and Advisory is like the engine. Or CAS may be
like the assembly line workers, and
Advisory is like a factory. CAS is the
how and Advisory is the why. That is
why you will see me consistently use
CAAS for helpful client service unless
I mean CAS or unless I solely mean
Advisory. You see, CAAS goes together
like bread and butter, bagels and cream

RANDY JOHNSTON

EVP & Partner
K2 Enterprises &
CEO of Network Management Group, Inc.
randy.johnston@cpapracticeadvisor.com
@RPJohnston

cheese, or a strong marriage relationship. One is not better than the other;
they complement each other and make
something that is even better.
Unfortunately, COVID-19 forced
many firms into advisory work for PPP
and SBA loans right in the middle of tax
season. Some practitioners reluctantly
set aside their tax and audit work for
4-7 weeks while assisting clients with
loan applications, furlough decisions,
stay at home orders, and more. Later
more advisory work appeared with
how to handle repayment or forgiveness of the PPP loans and how to return
appropriately and safely to work. As
of this writing, some businesses and
firms are still in work at home mode,
and some will embrace a new normal
after discovering productivity gains of
not commuting to an office every day.
Further, much of this advisory
work was reactionary, and not
planned as a service offering. Worse,
some firms decided to give valuable
advisory work away because they
believed it was the right thing to do.
Some firms will never get paid for the
advisory work completed because the
businesses they were trying to help
simply failed from a lack of cash flow
or other decisions made during the
pandemic. I continue to tell people I
am not the moral judge, and you can
choose to give away services, but if
you want to make gifts to your clients,
perhaps an invoice showing the value
with a write-off to zero would have
been a better strategy.
But the more important point
is that advisory work exists almost

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CPA_Practice_Advisor_July_2020

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