When advisory services are not enough

When it comes to running a full-service accounting firm, the practices that are creating the most value for their clients know that advisory and compliance must go hand-in-hand. It’s not a case of OR. It must be a case of AND.

In the last few years, we have seen an odd phenomenon. Advisory has been “introduced” as a new concept that accounting firms must adopt in order to stay relevant in an age of technology and automation. 

But I believe that great accountants—those who have great relationships with their clients—knew the value of advisory in their practice long ago. Unfortunately, this phenomenon of the heightened focus on advisory has come at the expense of compliance. And that has hurt the industry. 

It implied that you needed to choose what kind of firm you wanted to be, and state which “team” you were on. And that you could only do one or the other well. 

And that’s just not true.

In the past year, as many businesses struggled just to stay afloat, I noticed the focus for many shifted from growth and expansion, to simply survival. From wondering how many new stores they should open, to if they could cover payroll next week.

These businesses needed to know what government relief programs they were eligible for and what funding options were available. In order to access those funds, they had to be up-to-date with their income tax filings. To get the help they needed, their compliance work had to be done.

According to the dictionary, compliance is “conformity in fulfilling official requirements”. The definition of advisory is, “giving information and recommending action to be taken.” 

But, what is the quality of the information given to clients when official requirements haven’t been fulfilled? How will clients know how to make business decisions if the requirements are taken care of—but they don’t know what their financial metrics mean? 

Neither compliance nor advisory is enough on their own for a client to meet the minimum requirement of being compliant as well as financially literate. 

This is why compliance and advisory must go hand-in-hand.

In 2020, Canada saw over 250 federal and provincial regulatory changes within payroll guidelines alone. And with a larger country and more complex regulatory system, the climate in the United States is just as, if not more, challenging. 

Although many firms usually manage payroll within their bookkeeping or accounting service segments, 2020 required compliance specialists to keep up with the sheer volume of changes.

We saw:

• An increase in the segmentation of payroll services as a specialized service line within firms

• Facebook groups for payroll administrators grow astronomically

• Small businesses become the fastest-growing segment of the Canadian Payroll Association

• Webinars discussing payroll compliance changes become some of Wagepoint’s best-attended

This shake-up in the payroll world has created opportunities for accounting firms that understand that payroll is not simply a bookkeeping task, but a specialized stream for compliance. Providing strategic advisory services upon the solid foundation of compliance is the best way to deliver beyond your clients’ expectations.