How to decide if Client Accounting Services (CAS) is right for you?

There is no one-size-fits-all accounting solution. Accounting needs vary based on the business size, present requirements, and future plans. 

CAS is suitable for:

What aspects of accounting can you outsource?

1) Managing Accounts Payables and Accounting Receivables

Aligning accounts receivable (AR) and accounts payable (AP) ensures that your business receives and makes timely payments. This is an integral function of accounting that companies can outsource accounting services. Having an expert look at all the details allows for the payment process to be smooth.

CAS allows for up-to-date records to be maintained providing transparency of funds. This includes: 

• Invoice generation, expense reports 
• Order management and customer payments
• Forecasting and reporting of funds 
• Vendor queries and processing 

2) Bookkeeping

Cloud-based accounting and digitization have streamlined bookkeeping to a large extent. At Sentient, we ensure our accounting professionals are capable of handling large volumes of data. With relevant certifications and up-to-date information, your business’s accounting is in safe hands. This includes:

• Expense records and ledgers
• Currency and entity consolidation
• Latest software setup for accounting and bookkeeping 
• Subscriptions and renewal management 

3) Generating reports

All financial documents for cash inflow and outflow need expert supervision. By leveraging our Client Accounting Services, you have a reliable team of certified accountants looking into all the details. This ensures data-backed analysis and reports, which will help in developing financial strategies and budgeting services. 

4) Controller Services

The team of certified professionals at Sentient will provide a comprehensive outline of the financial health of your business. These will generate transparency offering a clear picture to all stakeholders. Additionally, our team provides support during audits by providing detailed financial reports and KPI reporting reducing overhead costs.

5) Cost Accounting

When outsourcing your accounting process to our team, we work closely with your business’s R&D and manufacturing divisions. The professionals comprehensively analyze the manufacturing and supply chain to ensure it is cost-efficient and budgeted accordingly. By doing this, the actual cost of the product (along with its manufacturing) or the service is understood and analyzed. 

6) Forensic accounting

Our teams are skilled at running through large volumes of data to identify fraudulent or inaccurate transactions. When handling sensitive, confidential data, we ensure data security through breach-proof security. 

7) Tax filing and reporting

Having a team of certified professional accountants ensures taxes are accurately filed on time. As professionals well versed in current regulations, we will ensure your tax returns and declarations are filed on time while maintaining compliance. 

8) Payroll processing

With the development in technology, we have the latest and most efficient payroll software. Leveraging accounting automation at this juncture allows for a hands-free routine that ensures error-free and efficient functioning. 

The benefits of CAS

1) Cost-effective

The cost of CAS is much less than hiring a full-time employee. Companies fail to consider the time spent in looking for professional accountants. Time equals effort and money, both of which can be now spent on mission-critical tasks. With business owners looking to cut down on labor costs, taxes, office supplies, and benefits for full-time or part-time employees. 

When companies outsource accounting services, they only pay for what is needed.

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2) Saves time

As businesses grow and expand, the management and key personnel spend time on administrative tasks such as bookkeeping and accounting. 

CAS gives time and resources back to the company bringing focus on devising business strategies. This will drive higher revenue and better relationships with customers.

3) Access to expertise

CAS allows companies to hire professionals with the specialized knowledge, certifications, and skillsets required at an affordable price. These professionals need to keep upgrading their skills and qualifications to stay competitive.

In addition, it streamlines the process as only the best and the most effective practices are employed, ensuring faster progress. 

4) Scale-up 

CAS providers are capable of scaling up the services based on need without any lag. For instance, if the tasks require more than one personnel, the service provider will provide the additional workforce. This eliminates the need for a stringent recruitment process.

With flexible charges, based on need, the hours can be scaled-up or scaled-down without interruption.

5) Automation technologies

Accounting automation software saves time, reduces risks, and minimizes human errors. Automation offers real-time reports that assist in detecting potential problems and mitigating them early. Additionally, it reduces the likelihood of in-house fraud.

As an SME trying to cut down on costs, CAS allows access to the latest technologies and processes. These simplify compliance and improve efficiency. 

Sentient Solutions for Accounting

Today’s digital landscape necessitates maintaining relevance. At Sentient Solutions, we are aware of what will have the most significant impact on the company. Our goal is to save your time, effort, and money by supplying information that drives business growth through informed decisions. 

Business intelligence drives critical decisions and is a game-changer. We level the playing field through access to competent personnel and advanced technology. 

Reach out to us to get future-ready. 

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If the focus of a CPA firm isn’t the profit margin, then you are doing yourself a disservice and limiting the amount of value you bring to your clients. 

A critical component of healthy financial management is knowing and understanding your profit margins. For CPA firms, determining profit margins requires looking into the behind-the-scene factors which are often intangible and qualitative factors. The idea is to calculate whether your business is really getting a good ROI or not.

What are the variables in calculating the profit margin?

1) Determine the actual time and cost of resources required/spent on the service

It is very easy to overestimate or underestimate the time taken to complete certain tasks within a project. It is necessary to get an accurate sense of how much time is required and the resources needed for each task. 

This can be simplified by using time tracking software. These, when integrated with your project management applications, provide valuable insights into figuring out how long your client accounting services firm takes to perform specific services. 

In addition, it is possible to calculate the productivity levels of your employees. In the long run, when you are aware of exactly how much time to allocate for specific services, estimating project costs becomes easier.

2) Taking the experience of service provider into account

Expertise and proficiency will inevitably vary across your employees. For instance, a CPA who has been with your company for a decade commands a higher rate than a junior CPA who joined a few weeks back. It is necessary, therefore, to take into account the differences in hourly rates when a project or task requires the expertise of a senior employee.

While individual contributions of employees may vary on a day-to-day basis, calculating an average hourly rate for them is important. This is particularly helpful when figuring out the overhead cost of a project by keeping the figures and time taken as close to the real deal as possible.

3) Calculate direct and indirect costs

Calculating hourly rates for your employees isn’t the only thing to deduct from your profit margin unless the goal is gross profit margin numbers. Several other direct and indirect costs also need to be factored in. 

For instance, the overhead costs for office space, such as rent, utility bills, cost of technology, and office consumables all factor into your profit margins. 

Indirect costs for employees include training, health insurance, and other benefits offered by the organization. Going over the expense categories helps figure out the ones that are applicable to the profit margins of the services offered by your accounting firm.

4) Factor in marketing and advertising

Accounting firms are a highly competitive industry. The key differentiator is customer experience. Understanding the prospective clients’ specific needs and the role social media plays in today’s digital landscape makes professional marketing and personalized communication a necessity. 

Apart from this, administrative costs such as getting project specifications, invoicing, and billing all come under overhead and need to be calculated as well. Basically, any tangible/intangible factor that integrates into the overall cost of the product or service offered by your accounting firm needs to be considered.

5) Understand the lifetime value of your customer

Acquiring a new customer can cost 5-25x times more than retaining an existing customer. Maintaining an existing customer is a whole different ball game. Increasing customer retention by 5% can increase profits from 25-95%. 

Loyal customers are four times as likely to refer; bringing you new clients with very little additional expense on your part. Factor in each client’s individual contribution to your overall revenue by evaluating their immediate and long-term costs by focusing on referral programs and client accounting services. This significantly improves the accounting firm’s service profit margins.

Client retention rate is one of the most organic ways to calculate how well your accounting firm is doing. To break it down, CPAs with high client retention rates are doing such great work that their clients realize they are much better off with them than without.

Sentient Solutions for Accounting

Looking for help in transforming your accounting firm? Sentient Solutions for Accounting is a one-stop solution when it comes to financing and accounting back-office services. We partner with accounting firms to help them enhance their productivity, efficiency, and profitability. With world-class processes, a highly qualified and experienced team, and Robotic Process Automation in accounting, we are here for you every step of the way. Please feel free to reach out to us in case of any questions.

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According to Amy Gallo, a management expert, and consultant, in her article on the Harvard Business Review, acquiring a new customer can cost 5-25 times more than retaining an existing customer. This is not to say that going out and getting new customers is not advisable, but if a majority of those clients are around for a longer life cycle, a revenue base can be built that is more profitable and predictable. She also adds that increasing customer retention by 0even 5% can increase profits by a whopping 25-95%!

Here are some ways you can improve client retention rate:

1. Personalize Communication

According to McKinsey, personalized communications yield 20% higher customer-satisfaction rates, a 10-15% boost in conversions, and a 10-20% reduction in marketing and sales costs. 

Clients today are more online and connected than ever before. The medium you use for communication and how you go about it has a noticeable impact. Flooding their inbox with generic mails just doesn’t work anymore.  

The one-size-fits-all approach has now evolved to understanding the specific needs of the client Accounting Services, taking a genuine interest, and asking insightful questions.

2. Pricing it right

Technology and “right-sourcing” have made our business operations faster and more streamlined. This allows previously time-consuming client accounting services to be done in much smaller time frames. 

With the resultant reduction in costs, there can be more flexible with pricing, including fixed vs hourly pricing (which may give clients more budgetary predictability).

3. Obtain a single unified view of the client

Coming off the end of the celebration and splurging is the tax season. Every financial year brings a whole new set of facts and figures as well as new client requirements. As a CPA firm, being able to help the client requires being equipped with the right information.

This can be obtained by asking the right questions. However, a client’s data should not be spread across different departments. This makes follow-ups and even normal interactions challenging, and sometimes even embarrassing.

To avoid this, make sure pertinent client information is available in a single, unified platform for easy access. This will allow CPA firms to understand and consolidate client data, resulting in easy access to the most current information.

4. Cross-sell and up-sell

According to Patrick Hill, a serial entrepreneur and a contributor to Forbes, the success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%. 

Increasing the customer base is the fastest way to grow a business and the most obvious way to reach short-term revenue goals. A prospective client may not like what is being offered. 

In that case, understand their needs. Understand. Personalize. Sell.

However, up-selling or cross-selling to an existing customer can sometimes prove more lucrative than what you will make on a new client.

5. Maintain an omnichannel presence

Nowadays, clients use online resources more than ever. Therefore, it is imperative that CPA firms have an online presence across different websites and devices. 

You can start by creating a Google My Business profile for your CPA firm, and using websites like Yelp to lend an authenticity that can often make or break a business with real-time reviews. Social media reviews are also incredibly helpful. Pay attention to these reviews and address them when needed.

6. Ask for referrals

However, the internet isn’t the only place for referrals. Asking clients for specific referrals is very useful. One customer experience agency found loyal customers are four times as likely to refer to new clients. 

Referrals, however, don’t work just with clients. No matter if the clients are mid-level firms or start-ups, they will need services you don’t provide. Building relationships with other businesses (e.g., lawyers, financial planners, etc.) will be a  mutual source of new clients. 

The best way to go about this is to maintain a list of referrals for anything that your clients might need that your firm doesn’t offer.

7. Be proactive

U.S. companies lose $136.8 billion per year due to avoidable consumer switching. 

Therefore, it is vital for the management to understand the different levels of service offered and how many clients are required at each level to remain profitable. Juxtapose your client needs and your service offerings to get clarity and initiate the action plan.

8. Tone down the technical jargon

Financial matters are intimidating enough without adding accounting jargon to them. Speaking simply helps connect on a personal level, improving trust. This is supplemented by responding ASAP and treating each client as your most valued.

9. Leverage new technologies

If you want to stay ahead, you need to stay updated. Keeping abreast of the latest developments in software and services that might benefit your business is imperative. 

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Moving away from concerns of pure profitability, the client retention rate is one of the best ways to measure how well your organization is providing its service. To break it down, CPAs with a high client retention rate are doing such great work that their clients realize they would be worse off without them. 

Looking for help in transforming your accounting firm? Reach out to us.

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