Client accounting services (CAS) is becoming an important revenue category for public accounting firms of all sizes, with larger firms seeing it gain a significant slice of their revenue pie during the past two years, according to a survey from the AICPA Private Companies Practice Section (PCPS) and CPA.com, the Institute’s marketing and technology subsidiary.

The percentage of net client fees provided by CAS, which includes outsourced finance and accounting services and other back-office support for clients, more than doubled for firms in the largest revenue segment tracked by the 2016 National Management of an Accounting Practice (MAP) Survey, initial results of which were released earlier this fall and showed top-line revenue growth among firms of all sizes.

Among firms with revenue of at least $10 million that offer virtual CFO and other client accounting services, CAS accounted for 9% of net client fees, up from 3.9% in the 2014 MAP survey. The CAS category also produced double-digit percentage gains in the next two largest MAP segments—firms with annual revenue of $5 million to $10 million and those with annual revenue of $1.5 million to $5 million.

“It’s safe to say that nearly 10% of revenues in the profession are focused on client accounting,” said Mark Koziel, CPA, CGMA, the AICPA’s executive vice president–Firm Services, who discussed the survey results at the 2016 Digital CPA Conference in Las Vegas. “And depending on the size of the firm, it may be more or slightly less, but overall it’s a strong category on its own. Tax and audit continue to be the number one and number two revenue categories, but client accounting demonstrates growing significance to the profession.”

Among firms that offer CAS, the percentage that the category contributes to the top line ranged from 20% for the smallest firms (those with revenue of less than $200,000) to 8.5% for firms in the second-largest revenue segment.

Koziel credits automation and other technologies with helping to fuel the growth of client accounting services. Tasks that once were costly and time-consuming to handle have become profitable, making the category attractive for firms. In addition, the ease of access to this technology, much of which is delivered via the internet (aka the cloud), has opened up CAS as a practice offering for even the smallest firms.

“What was once just a service we’d do when asked, more firms are dedicating resources to it and finding it to be very profitable,” Koziel said in an email. “For the newest small firms, it’s ease of access to technology to open a practice based on the service.”

Methodology

The AICPA PCPS/CPA.com National MAP Survey is conducted every two years by the AICPA Private Companies Practice Section and CPA.com, the AICPA’s technology subsidiary. Representatives from 1,537 CPA firms were asked details about their latest fiscal-year financial results. Responses were gathered from May through July this year. The poll’s main sponsor is Aon.

Although it’s been discussed for several years as a potential gateway to growth, it appears firms of all sizes are finally seeing portions of their overall services dedicated to client accounting.

The above revelation, and other key firm findings, were announced at this week’s Digital CPA conference, hosted by CPA.com and the AICPA, as part of the 2016 National Management of an Accounting Practice (MAP) Survey. This survey of 1,800 firms of all sizes was produced by CPA.com and the AICPA Private Companies Practice Section (PCPS).

More specifically, the survey found growing penetration of the client accounting services/virtual CFO services category for larger firms. The slice of net client fees represented by that service area, which includes outsourced finance and accounting services and other back-office support for clients, more than doubled to 9 percent for the largest firms with annual revenue of $10 million or more that are active in this area, according to the survey. It also increased by double digits for the next two largest segments: firms with revenue of $5 million to less than $10 million and $1.5 million to less than $5 million.

On another front, CPA firms’ use of cloud services has grown since 2014. Some 56 percent of all firms surveyed said they use cloud-based software, up 17 percent from two years ago. Six of seven CPA firm revenue segments reported increases, with only the largest category ($10 million in revenue and up) reporting a slight decline (-1 percent). Use of cloud-based remote backup increased 14 percent to 57 percent for all firms, and an identical number reported that they capture source documents digitally.

Among other findings of the survey:

• 38 percent of firms provide staffers with tablets or mobile monitors to work remotely, with 91 percent of the largest firms ($10 million in revenue and up) doing so.
• 49 percent of firms are using social media for business development, while 29 percent are using it for recruitment, although the latter is far more common for larger firms.
• 43 percent of firms text clients to obtain information, although the practice is far less common in larger firms with more formal client communications.
• 30 percent of firms use Skype to communicate with colleagues and clients, compared to 10 percent in 2014.
• Only 7 percent of firms indicated that they do not operate in a paperless environment.

In commenting about the findings, Mark Koziel, CPA, CGMA, vice president of firm services and global alliances at the AICPA, gave some insights behind the numbers and stressed there was more to the stats.

“I hear instances of client accounting being more profitable, but it was difficult to get more hard stats about that. Also, in smaller firms, in many instances, they may have shown greater profitability but only because they lost a key person and overworked everyone else,” said Koziel. “The largest growth in fees we saw were for firms earning under $200,000 (up 10.5 percent year-on-year). We are not quite back to pre-2008 growth numbers, but we are strong today though.”

Feel free to look at more MAP Survey results here, and heed Koziel’s parting words: “The best advice I can give firms today is do not manage to be average.”

Firms of All Sizes Also Make Strides in Cloud Usage and Other Technology Metrics Since 2014

LAS VEGAS (Dec. 6, 2016) – Client accounting services has become an important line of business for CPA firms in all size segments, even as overall client fees are growing, according to a survey sponsored by the AICPA Private Companies Practice Section and CPA.com.

One trend is growing penetration of the client accounting services/virtual CFO services category for larger firms. The slice of net client fees represented by that service area, which includes outsourced finance and accounting services and other back-office support for clients, more than doubled to nine percent for the largest firms with annual revenue of $10 million or more who are active in this area, according to the 2016 National Management of an Accounting Practice (MAP) Survey, topline results of which were released earlier this fall. It also increased by double digits for the next two largest segments: firms with revenue of $5 million to less than $10 million and revenue of $1.5 million to less than $5 million.

“It’s safe to say that nearly 10 percent of revenues in the profession are focused on client accounting,” said Mark Koziel, CPA, CGMA, the AICPA’s executive vice president of firm services, who discussed the survey results at the 2016 Digital CPA Conference. “And depending on the size of the firm, it may be more or slightly less, but overall it’s a strong category on its own. Tax and audit continue to be the number one and number two revenue categories, but client accounting demonstrates growing significance to the profession.”

Client Accounting Services/Virtual CFO Services as Percentage of CPA Firm Revenue

Note: Percentages represent median values for segments from firms that indicate revenue from this service area.

On another front, CPA firms use of cloud services has grown since 2014. Some 56 percent of all firms surveyed said they use cloud-based software, up 17 percent from two years ago. Six of seven CPA firm revenue segments reported increases, with only the largest category ($10 million in revenue and up) reporting a slight decline (minus one percent). Use of cloud-based remote backup increased 14 percent to 57 percent for all firms, and an identical number reported that they capture source documents digitally.

“We’re seeing broad pickup in cloud services and other emerging technologies,” said Erik Asgeirsson, president and CEO of CPA.com. “The next wave that leads to greater productivity and capabilities for advanced firms is fuller integration of these technologies and the elimination of bottlenecks in work processes.”

Among other findings of the survey:

• Some 38 percent of firms provide staffers with tablets or mobile monitors to work remotely, with 91 percent of the largest firms ($10 million in revenue and up) doing so
• Some 49 percent of firms are using social media for business development, while 29 percent are using it for recruitment, although the latter is far more common for larger firms
• Some 43 percent of firms text clients to obtain information, although the practice is far less common in larger firms with more formal client communications.
• Some 30 percent of firms use Skype to communicate with colleagues and clients, compared to 10 percent in 2014
• Only seven percent of firms indicate that they do not operate in a paperless environment

Methodology: The AICPA PCPS/CPA.com National Management of an Accounting Practice Survey is conducted every two years by the AICPA’s Private Companies Practice Section and CPA.com, the AICPA’s technology subsidiary. Representatives from 1,537 CPA firms were asked details about their latest fiscal year financial results. Responses were gathered from May through July this year. The poll’s main sponsor is Aon.

About the AICPA

The American Institute of CPAs (AICPA) is the world’s largest member association representing the accounting profession, with more than 418,000 members in 143 countries, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.

The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, and offers specialty credentials for CPAs who concentrate on personal financial planning; forensic accounting; business valuation; and information management and technology assurance. Through a joint venture with the Chartered Institute of Management Accountants (CIMA), it has established the Chartered Global Management Accountant (CGMA) designation which sets a new standard for global recognition of management accounting.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and Ewing, NJ.

Media representatives are invited to visit the AICPA Press Center at www.aicpa.org/press.

About CPA.com

CPA.com offers a growing list of products and services for practice management, client advisory services and professional development. The company has established itself as a thought leader on cloud technology and has been a driving force around the reemergence of virtual CFO/controller services by firms.

The RIVIO Clearinghouse, a joint venture between CPA.com and Confirmation.com, is an online financial document clearinghouse that enables private businesses to exchange key financial information with lenders and investors.

CPA.com is a subsidiary of the American Institute of CPAs, the world’s largest member body representing the accounting profession. For more information, visit CPA.com.

Leading Expense Management Platform a Key Component of Client Accounting Services

LAS VEGAS (Dec. 5, 2016) – CPA.com is adding Expensify, an innovative leader in expense management software, to its roster of automated solutions for CPA firms.

Technology is changing the way companies – and the CPA firms that serve them – conduct business. CPA.com has helped CPAs with this transformation through business strategy, education, change management and a lineup of curated solutions for firms, but many pain points remain, including outdated methods of approving client receipts and travel expenses.

Expensify is the fastest growing company in the expense management category, and has won acclaim for the ease and functionality of its user experience. It integrates with all major accounting software applications, including Intacct, another member of CPA.com’s partner program for firm solutions.

“Expensify clients report that using Expensify can reduce time spent on receipt submissions, approvals and reimbursements by 83 percent, which is exactly the kind of pre-accounting automation that can drive real efficiency for firms and their clients,” said Erik Asgeirsson, president and CEO of CPA.com, who announced the new strategic alliance at the 2016 Digital CPA Conference. “As client accounting services mature, the importance of digitizing all inputs and outputs and getting maximum insight from data will continue to grow.”

Expensify allows CPA firms to manage client expenses and reconcile corporate credit cards in a single console using real-time, continuously updated information. Clients also benefit from Expensify’s easy-to-use mobile app with industry-leading features:

• Expensify's SmartScan OCR technology scans receipts, automatically extracts transaction data and assigns each expense to a reporting category
• Data automatically syncs with all major accounting programs
• Corporate card reconciliation automatically imports the credit card feed and merges each transaction with the corresponding receipt while flagging duplicate expenses
• Next-day direct deposit makes it easy to reimburse employees
• Unique company policies automatically analyze which expenses actually need a manager’s review, and automatically approve the rest

“CPA.com has been a key driver in the reemergence of client accounting services for firms, and we’re thrilled to partner with CPA.com to bring expense management and receipt tracking technology to a wider audience of CPAs,” said David Barrett, founder and CEO of Expensify. “We already partner with many of the nation’s largest accounting firms, many of whom are drawn to the value of being able to analyze and manage a client’s expenses in real-time. With this partnership, we are committed to CPA firms as they expand their role of the trusted advisor to include expense management for their clients.”

About CPA.com

CPA.com offers a growing list of products and services for practice management, client advisory services and professional development. The company has established itself as a thought leader on cloud technology and has been a driving force around the reemergence of virtual CFO/controller services by firms.

The RIVIO Clearinghouse, a joint venture between CPA.com and Confirmation.com, is an online financial document clearinghouse that enables private businesses to exchange key financial information with lenders and investors.

CPA.com is a majority-owned subsidiary of the American Institute of CPAs, the world’s largest member body representing the accounting profession. For more information, visit CPA.com.

About Expensify

Founded in 2008, Expensify has quickly become the innovation leader in automated receipt and expense management with an easy-to-use mobile and web app. With entirely automated expense reporting processes and features such as patented SmartScan technology, company card management, and integrations with all major accounting software, Expensify has quickly grown to serve over 100,000 companies globally. Headquartered in San Francisco, Expensify recently opened offices in London and Melbourne to continue better serving customers in all time zones.

CPA.com is adding Expensify, an innovative leader in expense management software, to its roster of automated solutions for CPA firms.

Technology is changing the way companies – and the CPA firms that serve them – conduct business. CPA.com has helped CPAs with this transformation through business strategy, education, change management and a lineup of curated solutions for firms, but many pain points remain, including outdated methods of approving client receipts and travel expenses.

Expensify is the fastest growing company in the expense management category, and has won acclaim for the ease and functionality of its user experience. It integrates with all major accounting software applications, including Intacct, another member of CPA.com’s partner program for firm solutions.

“Expensify clients report that using Expensify can reduce time spent on receipt submissions, approvals and reimbursements by 83 percent, which is exactly the kind of pre-accounting automation that can drive real efficiency for firms and their clients,” said Erik Asgeirsson, president and CEO of CPA.com, who announced the new strategic alliance at the 2016 Digital CPA Conference. “As client accounting services mature, the importance of digitizing all inputs and outputs and getting maximum insight from data will continue to grow.”

Expensify allows CPA firms to manage client expenses and reconcile corporate credit cards in a single console using real-time, continuously updated information. Clients also benefit from Expensify’s easy-to-use mobile app with industry-leading features:

• Expensify's SmartScan OCR technology scans receipts, automatically extracts transaction data and assigns each expense to a reporting category
• Data automatically syncs with all major accounting programs
• Corporate card reconciliation automatically imports the credit card feed and merges each transaction with the corresponding receipt while flagging duplicate expenses
• Next-day direct deposit makes it easy to reimburse employees
• Unique company policies automatically analyze which expenses actually need a manager’s review, and automatically approve the rest

“CPA.com has been a key driver in the reemergence of client accounting services for firms, and we’re thrilled to partner with CPA.com to bring expense management and receipt tracking technology to a wider audience of CPAs,” said David Barrett, founder and CEO of Expensify. “We already partner with many of the nation’s largest accounting firms, many of whom are drawn to the value of being able to analyze and manage a client’s expenses in real-time. With this partnership, we are committed to CPA firms as they expand their role of the trusted advisor to include expense management for their clients.”