The accounting services global market value was $544.06 billion in 2020 and is expected to reach $735.94 billion in 2025, according to Research and Markets.
In addition, Spotlight Reporting’s Global Advisory Trends Report 2021/2022 found that 91% of respondents feel there is a surge in demand for cloud advisory services. Other research shows that 29% of clients expect to receive advisory and consulting services from their accounting practices, and firms already paying for advisory services have reported their profit margins have increased by a massive 34-47%.
With demand for more nuanced and tailored offerings increasing, it’s no surprise that more businesses are looking to invest in advisory services. There’s a lot of opportunity for accounting firms to move, and move fast, especially as the gaps in the market are yet to be filled.
Offerings built for a modern landscape and business needs
Beyond regular assistance, advisory services is where the accountant provides expert recommendations, options and strategies to help business owners achieve financial and operational goals.
To break it down further, where regular accounting looks into the past, generating financial reports, filing taxes and completing any compulsory tasks, advisory services look to the future to provide guidance and help business leaders make better decisions and avoid potential fallouts. It differs from and extends beyond consulting because it’s based on an ongoing and regular engagement, as opposed to a one-off service.
Advisory services can include a mixture of different offerings, from basic to niche and specialised options. Common offerings are cash flow forecasting, tech stack implementation, budgeting, business planning, financing and loan applications as well as many more.
Accountants are able to tap into their industry experience, share accounting technology and process expertise, and exercise critical decision making around finances. This results in tailored and personalised advice and strategic direction for a business. The value advisory services bring to a business cannot be understated, particularly in small to medium businesses (SMBs) that can’t afford to have a financial lead in-house.
Oftentimes, the positive return on investment, in the form of improved budgeting and forecasting, better understanding of trends within the business and more are all tailored to the specific business’s needs and requirements - clearly outweighing possible barriers to entry.
Bringing enhanced benefits and value to businesses and accounting firms
First and foremost, when accounting firms introduce advisory services into an new or existing arrangement, the degree of information shared, discussions had, and advice offered, leads to a more in-depth and stronger relationship between the two parties, and sets up the pair for a long-term commitment.
Another top benefit is that advisory services can, in many cases, lead to increased revenue. For instance, advisory services is a prime avenue for an accountant to explore more thoroughly the current standing of the business and identify areas of strategic investment or overspending. In taking the necessary steps from here, the business can have the potential to gain higher revenue.
Another obvious benefit of advisory services is that it can aid in the adoption of financial or accounting software solutions that automate manual tasks, or simplify certain processes, freeing up staff to focus on more high level tasks, and reducing the chance of any costly human errors.
Meanwhile, accounting firms can gain a competitive edge in an increasingly saturated market, through extending their offerings and services. Regular accounting and compliance services are becoming a dime a dozen, with many firms offering a similar set of baseline services that are often reducing in price due to the competitive market. Advisory services offer a way to set a firm apart, bringing genuine value to a business, and helping to build the foundation of becoming a trusted partner.
Opening up the conversation - how advisory services functions in the real world
An advisor relationship is more flexible and fluid than an average accounting and client arrangement, and often evolves over time. It’s about taking the time to understand where businesses are wanting to go, and helping them to get there
For instance, a new client may come to an accounting firm requiring assistance with simple bookkeeping, but come to realise they will greatly benefit from implementing accounting software and cash flow forecasting into their processes. Another example in a real world scenario, a new clothing store owner may come to a firm for help in understanding tax requirements and yearly financial reports, but eventually decide they want to open another branch or inventory line and need assistance understanding cash flow and risk reduction.
Alternatively, an ecommerce store may want to better capture their KPIs to gain a clearer overview of what’s happening with the business. This could include sales metrics and analysis, as well as customer metrics. To better understand the likes of the sales conversion rate, average order value, average order per customer etc will all hugely help the business to redefine its strategy and move forward more confidently. However, you can always start with a few key metrics and work from there.
As a firm stepping into the advisory services space, it’s important to remember that business leaders are always looking for ways to improve their processes or strategy, or they may be looking how to recover and grow from adverse situations, and this is always a chance to evolve the working relationship to offer them value outside of the regular tasks.
There are many use cases that highlight a growing need for cash flow forecasting and customisable technology solutions. As an advisory partner, accounting firms can leverage software to capture data from non-financial areas such as sales, operations, HR, marketing and more to provide a fuller picture and deeper insights into business performance, also offering predictions for the future.
Research suggests that technology that can ingest data and provide visual reports makes it easier for businesses to interpret and act on information. With reports that go beyond pumping out lists of numbers to visualise data, business leaders are able to improve performance overall.
Defining what you need or what you can offer as an accounting firm
When accounting firms are considering their advisory services offering, they can look into what they do best, what they know more than their clients, and where clients need the most help.
Firms can start by defining their clients, considering what industry they belong to, how big their business is, what their goals are, what services the firm is already offering, and what services they could offer. By grouping together the services currently on offer and what has been requested by clients it will be easier to identify gaps for where the firm can up-sell and add value. However, it’s also important to remember a client may not know exactly what value-add services they would benefit from - this is where the firm can step in as a trusted advisor.
For example, an accounting firm may decide to bring in automated planning, reporting and analytics as an advisory service. In this instance, the firm may give a trial to existing clients to see how they respond, and help to clearly exemplify the value they could potentially receive every month or period. Regardless of the specifics, what makes great advisory services is the ability to tap into big picture thinking, bringing in creative and critical thinking.
Levelling up your advisory services offering as an accounting firm
When firms embark on their advisory services journey, there are many ways to level up internal understanding and practices, with many educational tools and modules available. For example, Spotlight Reporting’s Transform In Action advisory services education package that shares detailed insights into advisory services, pricing and monetisation, and how to scale a practice over three carefully crafted modules. The education modules also touch on challenges and best practices to ensure operations are aligned with business aims and priorities, and include industry trends to keep participants in the know. Short video content, checklists and templates streamline learning and leave the firm with practical and applicable insights and action points.
What we know without a doubt is that all of the evidence lends itself to the fact that the future of accounting includes advisory services, with the added value obvious and relevant for many industries and types of businesses. For many, it’s helping to make adherence to compliance and regulations easier, keep financials healthy, monitor and improve cash flow, capitalise on business opportunities, and reduce possible risks. At the end of the day, it’s about helping the firm to generate a strong revenue stream while also providing the client with genuine value and direction that can be realised now and developed over time.