What is Finance-as-a-Service (and how to start offering it to your clients)?

The average CPA or accounting firm currently provides some level of transactional and recurring services to their client.

Traditionally, CPA firms offer tax and other compliance services and tend to offer these in a transactional framework. Increasingly, firms are providing bookkeeping and controllership accounting services on a fixed-fee, recurring monthly basis and often refer to this as Client Accounting Services (CAS). 

Many CPA firms are repurposing teams and adding CAS services to their offerings.

But we would like to push firms into moving, not just to a CAS mindset but to a Finance-as-a-Service (FaaS) mindset. This requires not only a shift in thinking from compliance to opportunity, but also a shift in resources (hiring a different persona) that dedicates time away from compliance.

What is Finance-as-a-Service?

At GrowthLab, we have a fantastic team and excellent client base that relies on our monthly accounting services.

Yet clients want more.

And we deliver this by providing Finance-as-a-Service. FaaS provides clients with services across the accounting, controllership, planning, finance, and tax value streams under one roof. What is truly unique about FaaS is the inclusion of planning and finance within the service offerings. 

I like to think of it this way: accounting is all about having good hindsight; planning is all about foresight. You can’t plan without solid accounting. 

How to offer FaaS to your clients

The three actions you need to take to start adding more foresight to your services (by offering FaaS), and driving more value to your clients and firm are grounded in a framework called Cadence, Rigor and Team.

For the purposes of this explanation, I’m going to work backwards.

Part 3: Team

You need to recruit for different capabilities. This means hiring finance and analytical team members in addition to your traditional accounting and tax team members. 

This answers the question of ‘who is delivering?’

Moving from a traditional model to a FaaS framework will require you to make two major changes:

  1. That you look for a different persona in your team

  2. That you commit dedicated resources to the FaaS department

Recruiting and retaining people is one of the key pillars to success in any service-based business. When adjusting services, we also need to ensure we’re leveraging the right capability for the services we are delivering. 

At GrowthLab, as we have built the planning and finance offering, we have found that delivering a great financial model, for example, requires a different persona than delivering a bulletproof balance sheet.

In planning, you need someone who can deal with ambiguity and future uncertainty. You may already have an employee that has the right attitude and aptitude to deliver on finance and business strategy, but overall, you will need to start recruiting and hiring a different profile in order to build a strong FaaS service offering.

Either way, don’t cross-utilize them (both existing or new employees) with tax or accounting. Focus their time 100% on the finance and planning services and clients.

Part 2: Rigor

This part refers to productizing your services—define and scope your services while delivering value on a fixed monthly fee. 

This answers the question of 'what are you delivering?'

You need to focus on standardizing what you are delivering to FaaS clients. You want to be able to standardize the deliverables just like you do for tax and audit so that you can leverage your time by leveraging your team to complete the work. 

Without this ability to leverage your team, you will quickly find yourself deep in the weeds of client work, unable to get out of your own way, and not making money. 

To build a productized FaaS offering, you need to standardize: 

  • Your planning and finance tech stack, and 

  • Your deliverables

At GrowthLab, our FaaS packages are built around two variables: 

  1. What parts of the annual strategic business cycle are we helping clients manage?

  2. How often are we meeting with clients each month? 

All of our FaaS packages include building an annual operating plan (AOP) and a monthly meeting. 

The monthly meeting agenda is standardized. We review actuals-to-budget and discuss with management the operational and strategic changes that may need to occur to stay on budget. 

Additional deliverables (long-range planning, monthly reporting, cash flow planning, etc.) and additional meetings can be added based on client needs.

Part 1: Cadence

This refers to your accounting and finance calendar. You need to deliver around a consistent monthly cadence of meetings and due dates. 

This is the answer to ‘when and how often are you delivering?

It’s important that you set the monthly and annual cadence. This is something that comes as second nature for most CPA firms and staff, yet often is thrown out the window when advisory services are offered. 

To start a FaaS offering at your firm, you need to define the cadence for the client rather than have the client define the cadence for you.

The team delivering the FaaS service sets the schedule. This promotes alignment between the client’s expectations and what the team can deliver. Without cadence, your best efforts to build a FaaS practice will fail because you will not be able to leverage the dedicated team that you recruit.

Giving clients what they need

Providing compliance services for many CPA and accounting firms has always been a natural entry point to starting a new practice. However our (and your) clients value what they really need: accounting, financial management, and CFO advisory. 

This requires not only a shift in thinking from compliance to opportunity, but also a shift in resources that diverts time away from compliance. By valuing the Cadance, Rigor & Team framework, you will be better-placed to build a FaaS offering for your clients.