It’s not a solo effort though; it’s about an accounting firm and their client progressing together, hand-in-hand. Success very much depends on the firm’s readiness to deliver a certain set of services – but just as much on the client’s willingness to embrace this kind of services, meaning they first need to place a demand and then incorporate such input into their business decision-making.

Growth stages of advisory

Quite commonly, a comparison between Compliance and Advisory will conclude that compliance is focused mainly on statutory and governmental reporting, typically quarterly or annually, which requires no knowledge of the business – as opposed to business advisory that takes a deep dive into the operations to figure out the impact certain financial transactions would have by including spending per spend category, the profitability of each product or service the client offers, etc.

In between, however, there are two more growth stages, something we call the Actuals and Forecasting.

The actuals show a snapshot of the current financial status in the form of quarterly or monthly reports derived from both the income statement and balance sheet, yet with no attempt to look into the financial future. Forecasting, in turn, estimates the amount of revenue or income that is expected to be achieved in a future period.

Regardless of the technique used but resting on various criteria such as available historical data, accepted accuracy as well as the possibility to establish a correlation between these factors, forecasting will provide essential development scenarios – only, just as with compliance and the actuals, there will be no particular consideration for business needs. 

Advisory readiness matrix

Getting ready for diversifying accounting services and moving towards higher value advisory demands a certain level of key modules like systems, data, workflows and people/collaboration.

Depending on the scope of services provided, the requirements in terms of readiness components vary significantly.

Basic COMPLIANCE doesn’t necessarily need cloud technology. In terms of data, no such thing as real-time or actionable is expected. Workflows can be simplistic and don’t require automation, collaboration with the client is very limited and rather transactional.

For robust ACTUALS, technology has to be stepped up. Only a centralised architecture will work, with a unified system of records as the accounting platform and enhanced by pre-integrated add-ons. All data must be up to date, with a high priority on accuracy and precision. Yet in terms of data granularity there is no need to track spending per category, aggregated values are sufficient.

Workflows, in particular approval workflows, have to prevent erroneous or fraudulent spending and ensure correct business coding. The collaboration with the client is basically about authspending as a whole rather than specifying spending allocation.

Sound FORECASTING, just as the actuals, relies on a centralised and fully cloud-based system complemented by a set of pre-integrated apps for a best-of-breed solution. Data requirements skyrocket as only high-quality historic data can form a proper basis for future estimates.

Speaking about the final stage, i.e. complete ADVISORY readiness, the first thing to mention is a total focus on the entire system for capturing and maintaining the business as well as its financial activities. Apart from being in real time, all data need to include the full business context. So, any spend coding should be designed to reflect this.

Fully automated workflows are essential for this goal as they help optimise processing and minimise errors. Especially approval workflows, when fully automated, contribute to data quality by ensuring that the business coding is done on time and correctly.

The collaboration with clients has to reach a whole new level. In stark contrast to the discrete and transactional communications when providing compliance services, advisory needs a so-called service continuum: close, uninterrupted interactions aimed at understanding every aspect of the client’s business.

To illustrate this concept in action, here’s a selection of stories about the successful delivery of advisory services and how to build a solid foundation utilising technology, data and workflow automation.

The power is in the platform

Lara Brennan, Partner and Head of Cloud Solutions, Mazars LLP

“To support businesses as they grow you need to understand where they are now, and where they aim to be. What is it they want to achieve? For this you need to have real-time management information plus a detailed analysis to provide hindsight. A simple P&L & BS is not enough. In fact, the communication and collaboration with clients is key to obtaining the insight and foresight required to model the future.

At Mazars, we’ve been building effective digital solutions for clients that enable us to deliver proactive advisory services. I can honestly say: the power is in the platform. 

Automating data collection and capture with Dext and combining this with multi-level workflows in ApprovalMax provides clean data with layers of analysis that has been authorised before getting processed. This enables real-time reporting that drives our analytics and advisory services.”

Think in terms of value for the client

Alastair Barlow, Founder and Chief Dreamer, flinder

“Advisory means different things to different people and is quite an emotional subject for accountants. However, if you speak to a business, it’s very unlikely they would use the words compliance or advisory; it’s the accountants really who are obsessing about compliance vs advisory – instead of asking themselves what does my client care about? But this is actually the most important bit: when we talk to clients, we need to think in terms of value to them because value is different from one business to another.

Many accountants assume that advisory is having a conversation with their clients on the back of a set of figures when in fact, advisory can start before you get all processes and numbers right. It can even begin if the data is completely wrong. For us, sometimes, the first piece of advisory is a finance function assessment. We baseline our clients against several dimensions, such as people, processes, technology and data. This allows us to issue a report indicating areas they need to focus on and then we give them a choice: you can do it yourselves, or we can do it for you.

Normally, clients come back asking ‘can you build a cash flow model, can you install a purchase order system, can you put in ApprovalMax, can you help us get better information?’ So, we end up with a process improvement project, which is a perfect first advisory piece of work.” 

Establish confidence in numbers

Brendan Lucas, Director, Hopscotch Accounting

“I feel that the move to advisory services should begin with the basis. For us, step one is structuring the basics so that we can rely on the numbers. This is the part where we must be involved from start to finish because confidence in the client’s numbers is essential and once you have it, you can indeed understand what’s happening with your client.

That’s when you can report on the numbers with confidence and, coming from there, you can actually do something about it.

You should certainly spend more time on understanding your client, talking to them and getting the numbers right than on the following steps. Yes, it takes time to get people up and running. And it involves introducing them to new a technology that helps us get the right data, for example data entry tools and ApprovalMax for ensuring data authorisation. But then, after about two to six months, we’re usually ready to offer them more services because we have sorted out and made sense of their numbers.”‍

Take the noise out

Trent Todd, Technical Director, Tinka Consulting

“The key to providing high-value services such as forecasting and analytics is to take away the noise and focus on what really matters, and what matters is giving good advice. So, you need clean data, you need automation, and you need it pronto!

In terms of automation, the final goal is to build an automated set of reports that refresh every month and the board members can review. To achieve this we need to start with automation. As a first step on the way to getting such reports, we put ApprovalMax and AutoEntry in place because they establish consistency in coding. ApprovalMax is our “start small” as we can save our clients hours and hours every month just by implementing it. And then we can begin with building other recommendations for them.”

It’s not a destination, it’s a journey

James Fry, Director of IntelliG+Ence, Garbutt & Elliott

“The starting point has to be good quality management information; without that it’s not possible to provide good advisory of any kind. So before moving into the advisory phase, we need to ensure that we have solid data we can trust – that’s the foundation.

The big thing for us is moving away from manual processing – there’s no value in it for the client and it’s not particularly interesting for us either. That’s why we use Dext Prepare and ApprovalMax, along with a data analytics technology like Dext Precision to ensure that all data is accurate. Automating the processing allows us to refocus our time on what really makes a difference: talking to our client.

Once we have good quality compliance data, there are lots of ways we can help our clients: visual management information, KPI benchmarking, budget preparation, forecasting and cash flow monitoring services. We see the move to advisory as a gradual process for every client, but the approach and pace differs depending on the individual experience and sophistication. Some clients never had any management information before, so we have to explain what it is and how it will benefit them. For us it’s key to understand where the client currently is on his journey. If you present a complex cash forecasting model when the client doesn’t understand why cash flow is so important in the first place, it’s just no use.”

In conclusion 

In the end, it’s not just about the client’s needs – the actual scope of advisory as well as your ability to provide it depend on two things. Firstly, how well are you equipped: do you have capable technology to ensure high-quality data and process automation? Are you prepared to have deep conversations with your client to analyse their requirements and guide them through the process? And secondly: is your client ready for this kind of service? In that respect, both the business maturity and people’s commitment come into play. There will be clients who need to be educated, and clients who come to you with all the right questions before you even think of them.

Apart from having to develop a close relationship with the client, you do need powerful technology to help get the data right and free up valuable time by eliminating routine work.