Firms everywhere are adapting to the needs of their clients by offering client advisory services (CAS). For businesses that don’t have a strong financial background, this is an invaluable service that helps them plan for the future and for accounting firms, it’s a big revenue opportunity.
Expanding financial planning and analysis services (FP&A) into your client advisory offering is the key to a top-tier service. Here’s how to do it.
Financial planning and analysis (FP&A) is focused on providing reports and building models for planning for the future. It often includes the following:
A strong set of FP&A reporting deliverables help businesses monitor their performance against predictions and support them in adapting to the actual outcome.
You can think of FP&A as providing all the information a business needs to feel confident in their understanding of their finances. The reporting paints the picture of what has happened and any budgeting or planning gives them a north star for any future decision-making.
There are four components of an FP&A service you should provide:
If you manage to provide each, you are providing a full suite of FP&A services. But how does this tie into your advisory services?
Ideally, your FP&A services expand on the typical advisory services. You go from providing the usual accounting services like bookkeeping and accounting to a more extensive FP&A service.
Accounting Today defines advisory from two different perspectives. For accountants, it’s providing a full suite of financial services and data that have value. For clients, it’s having that information turned into a language they can understand so they can act on those insights.
FP&A services both describe the past and predict the future. You are working with the business to give them all their financial information in a clear and intuitive package. They use this information to make their own business decisions.
You can expand on FP&A reporting deliverables by bridging the gap between the data and the insights that can be found. It means working with real-time and future forecasting data, often powered by the cloud, and turning it into a language the business understands.
When providing insights, try to go beyond the reporting. Look to your experiences to provide additional context to why something is forecasted to be a certain way. Being able to pinpoint a reason as to why is invaluable to your client and helps them change paths.
Let’s go through the four components of FP&A and how you can work these into your client advisory services.
What it is: Using historical data to describe what happened
How to tie into advisory services: Through your explanations of what happened, explore alternate scenarios using a “what if” framework. Use budget variance and actuals versus forecasts to paint a picture of where things did or didn’t go as expected.
Examples:
What it is: Explaining the why behind what happened
How to tie into advisory services: After going through the descriptive analytics, start providing possible explanations. Tie outcomes to business decisions that were made and the logic behind them. What logic was correct and provided the right outcome? What wasn’t?
Examples:
What it is: Looking into the future to determine what will happen
How to tie into advisory services: Using forecasts and financial models, show what the potential future will be if their decision-making framework remains the same. This is your opportunity to provide tips on what to change if something is causing a hitch.
Examples:
What it is: Providing steps to take to meet a future goal
How to tie into advisory services: It’s time to flex your knowledge and provide tips on how your clients can achieve their goals. Perform scenario simulations to illustrate how changes in their operations can help them get there.
Examples:
When you provide both FP&A and CAS services together, you’re giving the business both the framework to make decisions and starting points for decisions to be made. This delivers the ultimate value to your clients who struggle with a lack of financial reporting and insights from prior experiences.
Providing both FP&A and CAS to clients is a big revenue generator for accounting firms. In order to be successful with FP&A Advisory you need to commit yourself and the firm to a long-term strategy.
Having a full suite of FP&A tools purpose-built for bookkeeping, accounting, and CFO firms is a game-changer for firms offering these services. Using automation and integration, it’s easy to update monthly models, and pre-built reports and dashboards can standardize and scale the outputs across your firm.