This is my complete guide for accounting advisory services in 2021.

In this guide, I’ll review:

  • What accounting advisory services are
  • Why your firm should offer them
  • The top advisory services to offer in 2021

So if you’re looking to offer advisory services in 2021, you’ll want to check out this guide.

Let’s get started!

What are Accounting Advisory Services?

Every accountant seems to have a different definition of what “advisory services” consist of.

To keep things simple, I’ll define them as any service that provides advice to your clients.

When you deliver services focused on compliance, you are preparing the financial statements, dealing with accounting and financial reporting issues and filing any statutory filings with the appropriate authorities. But if you handle complex accounting and analyze the numbers, discuss them with your client, help them look forward and/or help them better plan their affairs, this then shifts into the sphere of advisory work.

As such, these services can consist of simple discussions with your clients all the way to full-blown financial reporting and modeling (and everything in between).

Why Should You Offer Accounting Advisory Services?

The biggest reason to offer them is because there’s a need.

And if there’s a need, then demand exists.

Demand equals revenues for your firm and a stickier client relationship.

I know there’s a need because:

First, based on my own personal experience running an online accounting firm, 9/10 small business owners I worked with were pretty clueless when it came to using their own financial data to drive decision making. It was clear they didn’t know how to come to decisions around protecting their assets, minimizing their risk or using the data to drive growth.

Second, the data supports my personal experience.

Xero commissioned an independent study of 800 small business owners in Canada and found that a large swath of business owners, namely Millennials and Gen Z received failing or poor grades on basic questions that tested for financial literacy:

xero financial literacy accounting advisory services

And from the very same report, the top business goals amongst Millennials were:

With the survey reports indicating low grades in financial literacy due to not having knowledge in technical accounting nor any finance teams at the company to help, without outside help reviewing complex accounting and reporting, achieving these goals will be difficult.

This then presents a large opportunity for accounting firms since most clients don’t have finance teams in place.

Add to this the fact that another recent Xero study polled 250 accounting and bookkeeping firms and found that those that offer advisory oriented services generate around 65% more per client than strictly compliance-focused firms:

xero canada 3

To summarize why your firm should offer accounting advisory services:

  1. Clients aren’t able to perform this kind of work themselves since they don’t understand technical accounting
  2. The top goals in 2021 for a large chunk of businesses are all related to advice on financial data
  3. Your firm can add a significant amount of money to your top line

The Top Advisory Accounting Services in 2021

Below you’ll find a few advisory-oriented services that I think make a ton of sense given the current economic climate which also support the facts found in Xero’s report on financial literacy.

1) Include Health Check-Up Calls with Every Client

It amazes me how many clients only hear from their accountant once a year after their year-end has passed.

Today’s generation of business owners want constant feedback. They’re hyper-connected people. And getting info, tips and professional advice once a year from their accountant on accounting and reporting matters is not sufficient.

In fact, another Xero report that polled 1,500 business owners found that one-third of millennial business owners didn’t hear from their accountant more than twice a year:

millennial accounting advisory services

A simple fix?

Include scheduled check-up calls with your clients in every one of your plans to review financial reporting and technical accounting.

I like this kind of service because it’s super simple and it allows you to check-in with your clients at regular times during the year to help you and your client stay ahead of the ball.

There’s nothing fancy required to the service:

  1. Offer semi-annual, quarterly, monthly, bi-weekly or weekly health check-up calls. In a three-tiered pricing model, your Gold service tier might include weekly calls whereas your Bronze service tier may include semi-annual or quarterly.
  2. Review all financial reporting issues before the call and come to the call with a few talking points.
  3. Chat with your client about what’s new with their business and review your talking points.

That’s it.

This is an easy, valuable advisory service that gives your client insight into the numbers and to bounce ideas off of you and it arms you with information to maintain a closer, stickier relationship with your client.

2) Make Your Cash Flow Forecasting and Budgeting Repeatable

When many think about advisory services, they think that they’re not scalable.

But that’s not true.

If you productize the services properly, they can be extremely scalable.

And my favorite services to scale are cash flow forecasting and budgeting services if you can make them repeatable.

Clients love them and they can be incredibly easy to offer.

Not only that but the 2 top business goals listed by millennials in Xero’s report fit squarely into the definition of budgeting and cash flow forecasting:

Here’s how you can turn cash flow forecasting and budgeting into something repeatable where you can charge a monthly price:

First, charge a once-off price to develop a 12-month forecast/budget (or whatever time horizon you prefer) based on previous financial reporting and future assumptions. There is some work required to get the model in place depending on the level of detail you decide to go into.

Then, you would include monthly/quarterly/semi-annual/annual maintenance of the budget or cash flow forecast. You would have a meeting every period, depending on the plan the client is on, and update the budget or forecast to take into account changes occurring in the business.

If you’re updating a budget, you could also perform a budget vs. actual analysis as part of the service:

budget accounting advisory services

So upfront, yes, there is a bit of work to get the model in place, but after that, updating and maintaining the model periodically is super simple (but still very valuable to the client).

3) Coach Your Clients

I’ve learned a thing or two about coaching over the past few years as I transitioned from firm owner to accounting firm coach.

One of the top things I learned is to specifically understand “the gap” and then to help these business owners close “the gap.”

What is “the gap?”

It’s simply understanding where someone is now and where someone wants to end up, specifically.

For instance, if you have a client that wants to hit $5M in revenue and sell their company in 5 years, and right now they’re only at $1M, we now have a clear understanding of the gap.

Then it’s up to you and your client to devise a plan to get there.

And along the way, you will help guide your client, keep them on track, challenge them, hold them accountable and act as a sounding board.

To me, this is the pinnacle of advisory as you provide services to help your client reach their ultimate desired destination.

Not only that, but I believe that your clients need this kind of service. They need someone to challenge them and someone to push back at their assertions, thoughts and ideas.

The reason for that is because most of your clients aren’t financially literate enough to handle decision making on their own.

What was interesting about the Xero survey on financial literacy was that these business owners thought they were financially literate:

xero financial literacy perceived accounting advisory services

But in actuality, we already saw that millennials and Gen X received poor grades when they were actually tested.

What’s even scarier is that these same business owners that thought they were financially literate actually gave themselves the below scores when it came to “trust in sources of information for business financials”:

They think they’re financially literate and they trust themselves as a source of financial information, but their test results indicate otherwise.

This is a dangerous combination.

The good news though is that these same business owners give their business advisors equally high trust scores:

business advisory accounting advisory services

This statistic puts you in a great position to therefore act as your client’s coach.

If you’re looking for a simple coaching framework that you can offer on a subscription basis, you can adopt an approach that an app called Clarity uses.

First, it integrates with Xero to pull in your client’s 7 basic financial KPI’s to show them where they are right now:

Second, you would hold a meeting with your client and indicate what their financial goals are to define where they want to be. With steps 1 & 2, we have defined “the gap”.

In the below example, I indicated that our client was seeking a 22% increase in revenues which would result in 60k additional profit and cash:

And then third, you would work with your client to develop a documented action plan:

You would then meet with your client periodically to help them in areas they are struggling in, provide your insights and challenge their assertions.

Coaching is a super scalable accounting advisory service if you model it properly.

I know it’s scalable because I offered a model very similar to this in my online coaching program designed for accounting firms. It’s high margin, high value and not time-consuming.

4) Develop and Offer Online Courses

The big thing I’m into right now is how accounting firms can develop passive income streams. I learned a lot about developing my own scalable coaching offering (as mentioned above) that combines coaching, community and online courses and I’m seeing a ton of smart, creative firms doing similar things at the moment.

As an example, Susan Boles offers virtual CFO services to coaches, consultants and agencies to help them with their finance functions.

The problem she realized was that a lot of the services being offered were not being well understood by her clients. So she developed an online course priced at $495 called Not Rocket Finance to help them get up to speed on accounting issues and financial reporting along with others matters so that she can then upsell them on to her virtual CFO services.

Here’s an overview of what’s covered in the online course:

In this online course, over and above helping with accounting and financial reporting challenges, she’s giving profesional advice to business owners in a new (but exceedingly popular) kind of format, doing away with emails and phone calls. Once the course is developed, it’s all profit from there on out.

I’m also seeing others sell courses for $1,500 and others turning things into a subscription model.

The point is, when you provide services of this kind in 2021, there are now other models to deliver the service.

Watch this space.

Accounting Advisory Services – Over to You

I hope you enjoyed this 2021 guide. I believe the services mentioned above are highly relevant to what clients need help with in this day and age.

Now I’d love to hear from you.

Do you have a favorite advisory service?

What do you think of the online course model?

Do you prefer financial reporting based advisory?

Which advisory service will you be implementing first?

Let me know by commenting below!