Clarity: How Accountants Can Market and Deliver More Value-Add Advisory Services

By Posted in - Members Blog on December 29th, 2015 6 Comments

The Value Pyramid for Accountants & Advisors - Clarity

Lately we’ve been discussing The Value Pyramid for Accountants & Advisors.

We’ve talked about the pyramid’s bottom two layers (Real-Time Data and Compliance),
and how most firms struggle to evolve beyond these commodities. We’ve also talked about the top two layers (Strategy and Innovation), and how
difficult they are to scale and delegate.

So where’s the opportunity for firms to provide more value-add advisory services to their business clients? More importantly, can it be done effectively,
profitably, and in a scalable way?

The Value Pyramid
has seven distinct layers. And those three middle layers are a sweet spot for accounting firms. It’s where progressive, modern firms (which are often young
and tech-savvy) can provide value beyond Real-Time Data (bookkeeping) and Compliance without needing experienced gurus to deliver these services.

As for the question about it being effective, profitable and scalable, the answer is a resounding Yes.


To the typical small- or medium-sized business owner, a set of financial statements doesn’t mean much. Sure, their accountant will produce these documents
for compliance purposes, and may even try to explain the ins and outs of their latest Profit & Loss (P&L) Statement or Balance Sheet. But chances are
all this ‘accountantspeak’ will just make the business owner’s eyes glaze over.

Even if they are savvy enough to interpret a P&L Statement and Balance Sheet, the information is retrospective. And while it’s good for them to know
their ‘score’ and how their business performed last year or last quarter, they’re more interested in ‘What’s next?’ They want to know where they should
focus and what they should do differently to improve their results. And it’s hard to get that kind of information from a standard set of financial
statements—especially when you’re not an accountant.

Management accounting, forecasting and financial charting software has been around as long as the personal computer. Even trusty Microsoft Excel has been
used by many accountants and advisors in an attempt to produce simplified graphical charts and reports as a way of presenting financial data, ratios and
Key Performance Indicators (KPIs) to their clients. (I’ve heard many accountants proudly tell me about their complex Pivot Tables over the years!)

Unfortunately for accountants, when using these tools it took a lot of work (often too much) to prepare the information before a client meeting. After all,
there’s no point creating well-presented, easy-to-understand graphical charts and reports if the underlying data isn’t accurate and up to date. Garbage in,
garbage out.

In the past this meant the senior advisor burned two, three or more hours before they even saw the client. Then, after a one- or two-hour meeting
with their client to step them through the financial and business insights, they had to recover two or three times as many hours of work “on the clock”
than their client believed it was worth. “You charged me for six hours? But we only had a two-hour meeting!”

You can imagine the short-term result. Write-offs. A lower hourly yield than the work deserved. And a lot of effort without commensurate reward.

But over time, the accountant would lose their motivation, no longer thinking of themselves as a true business advisor. And so they’d retreat to the easy
‘bread and butter’ work of compliance.

Thankfully, technology has created an exciting new era for accountants and business advisors. Cloud accounting, and the way it uses transaction bank data
feeds, has allowed massive efficiencies in bookkeeping and lower-end accounting processes.

Which means very little preparatory work—in terms of preparing reports and visually representing the data—is needed before a business advisory meeting with
a client.

It can even be done by their support staff. Powerful financial reporting and forecasting tools such as Fathom, Spotlight Reporting, CrunchBoards, Float, Cash Flow Story, ProfitSee and Vistr make it easy to prepare management reports and dashboards for a business advisory meeting (as long as the
business’ bookkeeping is up to date).

This frees the accountant and business advisor to peruse the reports and dashboards, think through the key issues, and then meet with the client.
And all without having to spend half a day preparing for it.

These tools also give business owners far greater clarity on their business’ past and projected performance than a standard P&L Statement and Balance
Sheet. Green is good. Red is bad. Green arrows pointing up are good. Red arrows pointing down are bad. And so on.

At last! Clarity. Data that’s easy to provide and easy to interpret.

And clients value this clarity. So much so that you can (and should) charge extra for this added value.

But guess what? It’s still just data. And for many clients, these “pretty charts and dashboards” still don’t mean a lot. They want interpretation and

We’ll talk about this Commentary—the next layer up in The Value Pyramid—in our next post. But for now, think through how well your firm is
providing (and charging for) clarity to your clients. Are you doing it for all your business clients? Are they happily paying for it? (If
not, you need to learn how to more effectively communicate the value of the service.)

And if you’re not providing this clarity layer of value yet, you’d better hurry. Remember, it’s just a step on your way up The Value Pyramid with your clients—not the end game.

I think this clarity layer will also be commoditised. Once business owner clients become more exposed to the apps and tools available,
they’ll learn how easy it is for you to provide these impressive reports and dashboards. And when that happens, they’ll quickly become the status quo.

By not offering these reports and dashboards to your clients, you risk them finding another accountant or business advisor who does and thinking, “Wow. Why
doesn’t my accountant help me this way”.

And your client will soon become your ex-client.

What’s been your experience with these new financial reporting, forecasting and dashboard tools? Are you selling the added value, or meekly giving it away?
Do your clients appreciate the added clarity? Share your comments below, and let’s get a conversation going.

(6) awesome folk have had something to say...

  • Sholto Macpherson -

    January 5, 2016 at 2:51 pm

    Excellent article, MC. That’s a great breakdown of advisory services, helps you understand what those services should look like and how they should be delivered. Especially the part about scalability.
    Looking forward to the next instalment.

    • Michael Carter -

      January 5, 2016 at 11:49 pm

      Thanks for your comment Sholto. Two more instalments in this series, addressing the Commentary and Accountability layers of The Value Pyramid. The great thing for advisors is that the first 5 layers of The Value Pyramid don’t require experienced gurus to deliver them. It’s all about the right processes, tools and advisors (in terms of personality types). Stay tuned… 🙂

  • Kerry King -

    January 8, 2016 at 8:58 am

    Good content MC, Keep up the good work.

  • Snow zhu -

    March 22, 2016 at 4:55 pm

    MC.I enjoyed the great benefit of your article, My personal think now most of the bookkeeping agency personnel with real-time data level, they are most antipathy towards repetitive work .I think the cloud accounting software can bring a new vitality and make work more efficiently, It can provide some analysis report more convenient and beautiful But it cannot fundamentally promote the thinking mode of the solidified financial personnel changes, I wonder how can make financial personnel according to the experience accumulated gradually achieve different levels of thinking? Rather than merely data.

    • MC Carter -

      March 30, 2016 at 5:40 pm

      Thanks for your comment Snow. Yes, the value comes from the level of thinking of the advisor and the conversations they have with their client, based on the data. Data alone can just be delivered via an app or robo-advisor technology. I agree that cloud accounting software offer the opportunity for a new vitality and more rewarding work for accountants (and bookkeepers) if they step up—and climb up—the value pyramid. Otherwise they’ll be threatened—not empowered—by the new technology.