How to define your accounting advisory services

While compliance work is still at the core for most firms, advisory services offer potential advantages when it comes to implementing value pricing and improving the customer experience.

The advantages offering accounting advisory services can bring to your firm include:

Offering a wider range of services: One benefit of advisory services is to open new revenue opportunities with additional offerings. You’re not limited to bookkeeping and year-end tax prep.

Potential for higher profits: As technology allows for automation in many “number-crunching” tasks, firms can use that freed up time on more premium-priced consultative services.

Year-round relationship: With advisory services, you have the opportunity to engage with your clients throughout the year providing insight into their business. This opens doors to long-term relationships and referrals.

The challenges of accounting advisory services

The benefit of compliance work is you have clearly-defined expectations with the client. They know what they’re paying for. You know what you’re providing. It’s much easier to provide a repeatable service with compliance work.

The challenge is creating the structure of compliance work while providing the value of advisory services.

If your advisory services are vague, you’ll spend 10 hours per month on one client, and 1 hour per month on another providing the same service. And you can’t grow your firm unless you have repeatable systems for your service. 

How do you take something more relational like advisory services, and make it more transactional? It starts with defining the deliverables.

Where accounting advisory services can go wrong

Ultimately, your deliverables are what you agree upon at the onset of a project or client relationship. No more, no less.

Unfortunately, that means that the responsibility is on you to make sure you and your client are on the same page. Early miscommunication will cause frustration on both sides throughout the relationship.

When you’re setting the parameters for your accounting advisory services, these are the three most challenging areas (and also the most important):

1. Defining project scope

Clients and service providers have a fundamental conflict of interest: The clients want as much work as possible for the lowest price. Naturally, service providers would prefer the opposite.

Of course, that’s no one’s fault. But it means that your clients will try to get as much out of you as possible. If you don’t set a clear project scope at the onset of your engagement, you’ll find yourself overworked, underpaid and resentful.

2. Managing the client’s expectations

Every client will have different expectations for their engagement. Communication is one area that often becomes problematic.

Some clients will want you to hold their hand throughout the whole process, while others will give you more room to run.

Either way, if you don’t establish your client’s expectations upfront, you run the risk that they’ll be dissatisfied with your performance at the end of the engagement. That can lead to more work on the back end or even a loss of business if things are unfixable.

3. Establishing a proper price point

It’s easy to place the burden of making the client happy on your shoulders and accept less than favorable terms, especially when times are tough or your company needs the business.

But receiving fair compensation for your services is just as crucial to the success of an engagement as meeting your client’s expectations.

If you don’t set a price point that represents the value provided to your client and the work you put into the services, the business relationship will never last.

How to define accounting advisory services

Fortunately, all of these challenges are a lot easier to deal with when you’re aware of them before the beginning of an engagement.

Knowing is half the battle since it allows you to prepare far in advance. Notice warning signs when they arise and take proactive steps to minimize their impact.

Of course, the other half of the battle is proper execution, so here’s what you should do:

1. Leverage systems and repeatable processes

Whatever business model you’re operating, systems are the best way to build efficiency and grow at scale. They’ll save you time, mental energy and money in the long run.

For an advisory service provider looking to systematize their deliverables, you might:

• Create packaged offerings: One of the best ways to make sure your client understands what they’re signing up for is to create a handful of service packages. Standard practice is to have a basic, balanced and premium package with clearly defined terms that clients can select from. For advisory services, this might be as simple as 5, 10 and 15 hours a week of your time respectively.

• Refine your pricing strategy: The asking price for your services is obviously important, but how you arrive at that number can be even more so. If you sell your services at a flat monthly rate, you’ll be especially prone to scope creep unless the terms of the project are very clearly defined. Make sure you nail your pricing strategy to avoid leaving money on the table.

• Create a contract template: Build a template for your engagement letters and project contracts. They should include a detailed scope of work, communication frequency, and pricing rules. If you have enough experience offering a particular service, you could even include contingencies for common issues. When the client asks you to add something to the scope of work, it’s helpful to be able to say “here’s what we agreed that would cost.”

Whatever form of advisory you offer, there will be repeated processes that you can automate or create templates for.

For example, tax planners may have flat rates for different types of returns, while cash flow forecasters may build budget templates for particular industries. Of course, the more experience you have delivering your accounting advisory service, the easier this becomes.

2. Set expectations from the first communication

Your earliest interactions with each client will set the tone for the rest of the engagement, not to mention your business relationship.

Your client will have specific goals that they want to accomplish when they hire you. You should enter your earliest negotiations with an understanding of what those are likely to be, whether they’re possible and what you feel comfortable promising them.

So in addition to a general understanding of the scope of the project, make sure that you go into initial negotiations with intentional definitions and explanations for:

• Short-term and long-term project milestones

• Preferred frequency and means of communication

• Pricing and service package that’s best for their goals

3. Stick to the terms you agreed upon

All of your preparation and boundary setting will mean nothing if you don’t hold your ground when push comes to shove.

Some clients will be respectful of the valuable resource that is your time from the beginning. But there will always be those clients that will test your limits, and if you give them an inch they’ll take a mile.

Of course, it’s not always easy to tell a client no, but it’s a lot less difficult when you have a document that clearly defines the terms of the relationship.

In fact, citing the contract is probably the best way to avoid arguing with a client over anything. While it may feel like you’re avoiding responsibility by blaming the agreement, it’s an easy line to draw.

Ninety percent of the reason to have a contract is so that you can use it to squash disagreements later on, so make sure you’re holding your end of the bargain to avoid being a hypocrite.

Taking the next step

If there’s a single defining trait for successful advisory service providers (besides being good at what they do), it’s clarity.

The best in the industry clearly define the scope of every engagement from its onset and stick to that agreement. If either party needs to alter the scope, the issue is directly addressed, discussed and documented. 

So to clearly define your advisory deliverables, make sure you express your expectations, document the same from your clients and make sure that both parties are on the same page.