Accounting
The path to profitability for accounting firms: Upsell to advisory
All accounting firms want to be more profitable. But how?
How can accounting firms become more profitable when the commoditization of compliance work is forcing fees lower and lower?
Well, to become more profitable firm owners need to look to new services. Specifically, firm owners need a new service that has higher margins, cannot be automated, is in demand, and is something that a financial professional is uniquely suited to provide.
The perfect answer? Advisory services.
Simply put, advisory services (sometimes referred to as outsourced or fractional CFO services) are a consulting service in which you use your expertise and knowledge to help guide your clients to create a growing and more profitable business. Crucially, advisory services differ from business coaching in two major ways:
- First, you rely on the financial data of your clients to drive your advice.
- Second, you’re already a trusted financial professional. From the perspective of your clients, you’re ideally suited to provide the advice they desperately want.
In a
Advisory as an upsell
A firm using the upsell model of advisory services offers tax, accounting and/or bookkeeping services. However, it has the explicit goal of upselling its clients to higher-margin advisory services.
These firms will either train existing staff to be advisors or they’ll delegate tax and/or bookkeeping work to lower-level staff, and more senior staff will handle the advisory part of the service. The firm’s owner will usually become the main advisor.
Firms that upsell their existing tax, bookkeeping or accounting clients to advisory clients will see an improvement in their profitability because of the simple fact that advisory services have much higher margins than traditional transactional or compliance work.
In the minds of your clients, advisory services are more valued because your clients want (not just need) someone like you (whom they already trust) to guide them on having a growing and successful business.
This is because the firm’s clients already trust their accountant and, once advisory services are explained in detail, clients will be more willing to pay for the advisory service.
It works this way for a simple reason: The client wants your help in having a successful business, even if they don’t know what that looks like until you explain it.
In addition, by upselling your existing clients to advisory services, you can position your firm as a one-stop shop for all of your client’s financial needs. Compliance and advice under one roof — you can never overstate the importance of convenience in a client relationship.
There are many similarities with this type of firm and a firm that offers advisory as an enhancement (which I covered in my
Remember, most business owners don’t really care about compliance or bookkeeping work. It’s something that must be done, a necessity that comes around every month and culminates during tax season. For your clients, it’s a burden that they are happy to offload.
Except now, they know that compliance work is being funneled into a service they truly care about: getting actionable advice from someone they trust during monthly strategy sessions.
This is a great benefit to your clients, as they are getting what they need and what they want. They can be confident that the compliance work is being handled by someone they trust (which is what they need) and that the numbers provided are then being translated into advice that can be used to build a growing and successful business (which is what they desperately want).
From your perspective as a financial professional, you get to offer a wide range of services to your clients, upselling when you can and offering only compliance work as an alternative. More importantly, you differentiate your firm from your competitors, becoming a highly-sought-after firm that provides more than just a commoditized version of compliance work.
Yours becomes the go-to firm, positioned as the only firm a client requires to fulfill their needs.
Another added benefit is that your firm will retain clients longer, allowing you to spend less time and money on marketing and more time on servicing those clients.
By continuing to offer compliance services, you also keep more options open to your firm by retaining clients who only want tax or accounting services. However, you also have the opportunity to upsell these clients, potentially increasing your revenue further without the need for any additional marketing.
“Advisory as an upsell” as a service model is perhaps the most flexible of all the options for the firm owner. You get the benefits of all firm types, while having the flexibility to transform your business into an advisory as a replacement firm with relative ease.
Look for a third article in this series next week.
The Biden administration gave carmakers a partial reprieve in finalizing electric-vehicle tax credit rules intended to loosen China’s grip on battery materials crucial to the car industry’s future.
Starting in 2025, plug-in cars containing critical minerals from businesses controlled by U.S. geopolitical foes, including China, will be ineligible for up to $7,500 tax credits, the Treasury Department said Friday. Automakers will get an extra two years, however, to shore up sourcing of graphite and other materials considered difficult to trace to their origin.
The rules put finishing touches on President Joe Biden’s push to develop an alternative to China’s preeminent EV and battery supply chains. The administration is imposing stringent sourcing requirements for raw materials and components in order for electric cars to qualify for the tax credits that are a powerful draw for consumers otherwise put off by
“These actions provide a strong signal to automakers that we want to see EVs built here in America with components and critical minerals sourced from the U.S. and our allies and partners,” White House Climate adviser John Podesta said.
The two-year exemption speaks to the challenges automakers have had reducing their reliance on Chinese suppliers of materials such as
The Biden administration’s rules don’t allow tax breaks for vehicles with batteries containing critical minerals from foreign entities of concern, a term referring to businesses controlled by US geopolitical foes such as China, North Korea, Russia and Iran. Those requirements take effect in 2025, as proposed.
But Biden has given auto and battery manufacturers some flexibility on this front, too.
Automakers will now have until 2027 to curb the use of certain difficult-to-trace materials from FEOCs, provided that they submit plans to comply after the two-year transition and it’s approved by the government, the Treasury Department said.
“FEOC exemptions for any battery materials should be temporary,” said Abigail Hunter, the executive director of the Center for Critical Minerals Strategy at SAFE, a Washington think tank. “We need a clear exit strategy, lest we continue our dependencies on adversaries and further undermine the competitiveness of U.S. and allied critical minerals projects.”
The rules release concludes two years of work on requirements that already have reduced the number of EVs eligible for tax credits. About 20 models qualify today, compared to as many as 70 previously. Treasury Department officials said Friday they expect the number of qualifying vehicles to continue to fluctuate as companies adjust their supply chains.
Automakers including Tesla Inc., General Motors Co. and Toyota Motor Corp. have lobbied for additional flexibility to meet requirements. A lobby group representing automakers based outside the US praised the additional two years provided for the difficult-to-trace materials.
“It will take time for the global production and sourcing of graphite and other critical minerals needed to produce EVs to match the strict standards required by automakers,” Autos Drive America President Jennifer Safavian said in a statement.
Senate Finance Committee Chairman Ron Wyden, D-Oregon, demanded
The glitch,
“Fixing this error will require identifying all affected Oregonians, notifying them, and ensuring they can be made whole,” said the senator. “In part because of TurboTax’s various guarantees and market share, Oregonians who overpaid due to TurboTax’s error likely assumed the software opted them into claiming state standard deduction to minimize their taxes. That assumption was wrong. And because the vast majority of taxpayers understandably dread filing season and avoid thinking about taxes after it ends, many of those affected will not learn on their own that they overpaid. Intuit must act to inform them and help them get the full tax refunds they are entitled to receive.”
Tiffany Hagler-Geard/Bloomberg
An Intuit spokesperson said the company is currently working to resolve the issue, referencing their tax return lifetime guarantee.
“As part of our
The senator has also asked Intuit for an explanation of how this glitch happened in the first place, as well as an approximate timeline for the steps it took once it became aware of it. He has also asked for a count of precisely how many people were affected, as well as Intuit’s plans for both addressing this problem and what the company will do to prevent it in the future.
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