Client Advisory Services (CAS) is one of the fastest-growing practice areas for accounting firms. CAS teams go beyond traditional bookkeeping services to help business clients manage their finances, plan for the future, and achieve their long-term goals. This in-depth partnership adds significant value for businesses and creates a longer, recurring revenue stream for the firm. However, in order for that revenue to be profitable, the relationship needs to be priced appropriately for the higher-level work being done. How can firms ensure they price accurately? Enter: The client assessment.

One of the critical aspects of a successful CAS practice is conducting a thorough client assessment. Client assessments are a crucial tool that advisors use to better understand their clients' current financial situations, future needs, short and long-term goals, and risk tolerance. By conducting client assessments, advisors can provide more effective and personalized recommendations and demonstrate the value the partnership will bring to your business on an ongoing basis.

In this article, we will explore the importance of client assessments in client advisory services and how they help teams better understand their clients' needs and preferences.

What is a Client Assessment?

A client assessment is a process that client advisory services teams use to obtain information and data from a prospective client to inform pricing, identify value-added services, and determine if they are a right fit for the firm. The information gathered and used for client assessments varies widely in the industry, but typically, high-level financials or tax returns are the minimum amounts of data needed.

Client assessments may involve the use of various assessment tools and software that help a CAS team analyze the client's financial data and identify opportunities where their expertise might be able to help. At the end of the assessment, information is presented to the client as a project proposal that includes the price and other key terms for the engagement.

We’ve found the best-in-class CAS teams perform Client Assessments using this 4-step process:

1. Initial Scope Conversation: This is your first interaction with a prospective client, which could be over a Zoom call, an in-person conversation, or communication via email/online forms. This time is spent getting to know the client, asking basic questions about their business, and familiarizing yourself with what they are looking for in an accounting partner.
2. Info / Data Request: This involves information gathering by requesting both qualitative and quantitative information about a prospective client’s current operations, asking more questions about their pain points, and where they think they need help.
3. Complete Analysis: This depends on what you receive in step No. 2, but this part of the client assessment process typically includes an analysis of what was received to compare to your internal price scale, identify any insights you can provide up-front, and overall determine if they are a good fit to take on.
4. Proposal Walkthrough: This final step in the client assessment process involves taking the prospective client through a proposal that outlines how you can help, the value that you bring, and how much your services will cost.

Why are Client Assessments Important in CAS?

Client assessments are essential in CAS for several reasons. First, they help teams better understand their clients' needs and expectations. By gathering information about the client's financial situation, the team can provide more effective and personalized recommendations for things that need to be addressed, trends that deserve attention, and areas of opportunity for the client. This initial assessment essentially provides a roadmap for the overall engagement.

Additionally, a thoroughly performed client assessment is essential to enabling the successful execution of CAS services, as it prevents the team from incorrectly scoping the client. While clients on the surface may think they are in one financial place, when the CAS team gets to work, they may find a completely different picture. The amount of work needed may be significantly higher than originally discussed. This puts the firm in the position of either a) having to do costly work for free or b) going back to the client with a much higher price tag than previously agreed upon, putting a damper on the relationship. A proper assessment at the onset helps prevent this situation.

Finally, client assessments help build trust with clients. Having a solid proposal and project plan priced accurately helps to prevent the awkward situation of having to ask the client to pay more. By taking the time to understand their financial situation, client advisory services teams demonstrate that they care about the client's financial success and are invested in helping them achieve their financial objectives moving forward. This builds trust and strengthens the accountant-client relationship.

How to Conduct a Client Assessment in CAS

Conducting a client assessment involves several steps that vary greatly from team to team.

In general, however, here are the basic steps that CAS teams typically follow when conducting client assessments:

• Gather Financial Information About the Client: Begin by gathering basic financial information about the client. You may want to look at income statements, balance sheets, cash flow reports, tax returns, or other pieces of financial data, depending on the needs of the client. The easier you can make this process for the potential client, the better. Tools like Crunchafi Data Extraction make it possible to gather this information securely in a single click.

• Review the Financial Information: Senior leaders should review data to assess the financial health of the business, their finance function, and internal processes. Are the books clean and in order, or is there work to do before you can even begin your services? Does the story the client tells match what’s in the books, or do the numbers tell a different one?

• Prepare and Share the Pricing Proposal: Based on what you uncover in the financial data, prepare a proposal for the client. Sharing data visualizations may be helpful for clients to relate to and understand what you’re telling them. Remember: Not all clients will have financial backgrounds and therefore may need some extra explanation, not just on what services you recommend for them, but also why they are needed. Demonstrating expertise and value will justify the price presented and make it much easier for a client to enthusiastically say yes.

• Sign the Engagement Letter: Based on what gets discussed and agreed upon during the pricing proposal, prepare an engagement letter that encapsulates the responsibilities and obligations of both the CAS team and the client, including the price of the services to which the client is agreeing. It never hurts to include a clause that says pricing is based on the information we received to date and is subject to change as additional needs are uncovered. This way, if you do find skeletons in the closet that need to be addressed, you’re not pigeonholed into the original price, and the client knows that additional costs may occur.

• Review and Update the Assessment Regularly: The engagement will most likely involve some form of monthly reporting and/or check-in meetings. These touchpoints are not only crucial for delivering the promised results to the client, but they can also be useful to a) track the status of any goals or objectives identified in the assessment and b) identify opportunities for upselling (or even cross-selling to other teams at the firm).

Best Practices for Conducting Client Assessments in Client Advisory Services

The various steps for an assessment may change from firm to firm. Regardless of the process, here are some tips to ensure your assessments are setting up both the individual engagement and CAS practice for success:

• Establish Clear Objectives: This tip is twofold. First, establish clear objectives with your team for the client assessment before beginning the process. This will help ensure that the assessment covers all relevant areas and provides the necessary information to make informed recommendations. Second, establish clear objectives with the prospective client. Understanding their ultimate goals ensures that you keep your work and recommendations focused on helping them achieve those objectives.
• Use Standardized Tools: The reason CAS is such a growing, vibrant practice area for firms is because CAS has the ability to scale sustainably. At all stages of an engagement, standardized processes and tools will make growth accessible. Tools like Crunchafi Data Extraction not only provide a consistent output so that you can easily train your team on what to look at and where, but it also makes looking at detailed financials easy for you and the client. Utilizing tools that give you full financial information rather than relying on partial reports will ensure that your price is right, your client is happy, and your firm can grow.
• Ask Open-Ended Questions: Encourage the client to provide detailed and informative responses with open-ended questions rather than yes or no responses. Not all clients are going to be financially savvy, so they may think you mean X when really you mean Y. With open-ended questions, you get to hear what they are actually trying to accomplish and can provide custom solutions to help them get there. Open-ended questions can also help you understand the client's thought process and decision-making style, which can be helpful in navigating the relationship over time.
• Consider Non-Financial Factors: While they may be seeking help with the financial side of their business, not all clients have strictly financial goals. They may be looking for ways to provide a better work-life balance to themselves and their team. They may be struggling with succession planning if it’s a family-owned business. It can be easy to get lost in the numbers and forget to discuss the human side of their business. By knowing both the numbers and the story, you’ll be in a much stronger position to provide options and insights as an ongoing advisor.

By following these best practices, CAS advisors can conduct effective and thorough client assessments that start the client relationship off in a strong position where everyone benefits.

Save Your Practice Hours with Crunchafi Data Extraction 

Crunchafi Data Extraction is the secret weapon behind successful CAS client assessments. Potential clients can connect with your firm in a single click, giving you a standardized output in Excel that paints a complete financial picture right off the bat. You can use their real-time data, from cash flow analysis to KPIs to financial statements, all there to ensure an accurate price for the engagement and to prove your value by sharing actionable insights before any ink is signed.

Crunchafi is designed to help with each step of the CAS accounting process. Here are just some of the ways our software can help your firm perform CAS:

1. Initial Financial Information Gathering: Crunchafi creates a read-only connection with a company’s accounting system or ERP, and it does this in just a few clicks. You can then download an Excel file with all the detailed information you need without ever having to have access to the company’s books. The whole process takes about five minutes combined for you and the potential client, and it’s easy enough for even the most tech-challenged client to do.
2. Completion of Financial Analysis: In the Crunchafi Excel workbook, you can find tabs that include clean lists of the chart of accounts, customers, and vendors. You can find a quick count of the number of transactions each month, as well as AR/AP agings, broken down by customer and vendor.
3. Review and Breakdown of Analysis: The Crunchafi output also includes industry-leading cash flow analysis that breaks down the monthly direct-method cash flow. Financial ratios, like profitability, liquidity, and more, can also be found, ready to go in a single click. These consistent outputs make it fast and easy to review the books accurately so that you can produce the best possible proposal.
4. Client Proposal Walkthrough: Crunchafi includes the client’s actual data that you can show, complete with professional, shareable charts and graphs. You can even customize your output to match your firm’s branding so that each presentation has a consistent look and feel, without adding extra time to your workflow.

Entrusted by the majority of the Top 25 firms, including the CAS team at Cherry Bekaert, Crunchafi Data Extraction integrates with the most used accounting systems and ERPs, from QuickBooks Online to NetSuite. With SOC 2 and GDPR compliance, customer data is kept safe and secure from beginning to end.

Contact our team today to find out how your firm can save hours in the data extraction and formatting process of your CAS client assessments.