In Pursuit of Profit
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Are you paying for compliance accounting or advisory accounting? Do you know?
Compliance accounting is straightforward – it deals with day-to-day accounting, reporting, and tax preparation. But what about advisory accounting?
The Intuit Tax Council defines accounting advisory services as, “Taking client challenges and applying strategies to create opportunities in service to their growth.” Accounting advisory interweaves technology, relationships, communication, and strategy to provide companies the fuel needed for profitable growth.
Advisory services are predicated on processing and interpreting large data sets, which is best done with the assistance of a robust technology stack. The ability to use technology in the form of accounting software, apps, and dashboards create the accuracy and efficiency needed for robust advisory services. These types of services are typically best executed in the cloud, because, as our team explains, “Cloud-based accounting systems allows for a more consultancy-type relationship because more people can get access to real-time data to facilitate better decision-making across the organization.” Advisory services can either be used to implement these forms of technology or optimize them to the benefit of the organization.
The first value-add component of advisory services is relationship building – creating an established relationship between the business and an accountant that goes beyond simple bookkeeping, number crunching, and compliance to drive well-informed financial guidance. Accountants who act as advisors will understand the company beyond its financials, encompassing the company’s values, mission, customers, and business model. As Amy Vetter explains, “Advisory services are about using your intimate knowledge of a business in order to offer guidance that provides them a framework for greater success.”
As you might imagine, this relational component is forged through communication. Whether your accountant is in-house or outsourced, advisory services require regular access to them. Ongoing communication is a key component to advising. You should always feel like you can bring questions and concerns to your accountant and your accountant should proactively make suggestions and bring ideas to leadership. This communication is crucial for conveying a long-term financial strategy.
In fact, this is one of the main reasons that companies that previously outsourced their bookkeeping and accounting services decide to hire an in-house accountant instead. Bringing in a senior accountant, accounting manager, senior accounting manager, or controller with significant industry experience can provide the level of real-time and dedicated communication that an organization desires as its needs become more advisory in nature.
Actionable insights for strategic planning are the meat of advisory services. Unlike compliance accounting, which includes some low-value tasks, advisory accounting prioritizes high-value activities like strategy setting. Jim Buffington explains how companies approach advisory services when he says,
A tax return or financial statement usually looks the same no matter who prepared it… Conversely, the advice, expertise, planning and strategy that went into the process before the report was created are very differentiated. Advisory services grow from our unique experiences and expertise, and are the secret sauce that creates value for our clients.
Simply put, advisory services turn challenges into opportunities for growth.
While these types of services are typically unavailable through outsourced accounting services, hiring an experienced accounting professional can provide an avenue for getting the kind of customized advice that your organization needs. As our experts summarize in an article on finding an accountant that is an advisor, “Successful companies need someone that will not only manage cash flow and provide accurate forecasting and reporting, but also offer sound advice. Having an accountant that can do the job is essential but having an accountant that can act as an advisor can really give you a competitive advantage.”
When you are ready to hire an accountant, please reach out to us. Our experienced team can find a professional to provide the advisory services you are looking for in a hire.