Increasing Competitiveness of Accounting Firms Through Capital Advisory
Offering advisory services is one way for accountancy firms to become more competitive. These services can help attract new clients, increase revenue and improve client relationships. Accounting firms seek money infusions to make efficiency-minded investments, like robotic process automation and data analytics. They are also looking to grow their advisory and consulting businesses.
What is capital advisory?
Capital advisory services help insurance clients increase their return on capital by matching their risk with the most appropriate funding source. It builds upon a detailed understanding of an insurer’s capital requirements and the various stakeholders’ expectations to optimize capital structures that align with their risk tolerances. SMEs want clear, authoritative advice that helps them make the right decisions for their business – whether funding growth, managing cash flow or unlocking earning potential with equipment finance. They might have been overwhelmed by choice, but with a single point of contact, they can be guided through options that meet their needs. Traditionally, accounting firms have been limited to providing compliance services. But the changing environment means they need to offer more than this. Several mid-size and large accounting firms are turning to capital advisory to make them more competitive and meet the growing service demand.
How can capital advisory make accountancy firms more competitive?
The demand for advisory/consultancy services is accelerating in the accountancy sector, driven by the need for firms to help businesses become more proactive and strategic. The increasing complexity of regulations and competition is also fueling it. Accountancy practices that embrace capital advisory can offer their clients valuable services, including helping them find new funding sources and finance. It can be particularly attractive to SMEs struggling to fund growth, manage cash flow or acquire equipment that will unlock earning potential.
For accounting firms, capital advisory can significantly boost revenue and competitiveness. It enables them to serve their customers better and compete more successfully with bigger competitors. In addition, it can attract the attention of private equity investors who are increasingly targeting accounting firms as a low-risk investment opportunity. These investors appreciate the recurring nature of accounting fees and that many services can be outsourced to reduce costs.
What are the benefits of capital advisory for accountancy firms?
Big accountancy firms provide a range of audit, tax and consulting services to global corporations. They help companies manage risk, reduce costs, increase efficiency and maximize profits. They also assist with M&A, prepare tax returns and provide legal advice. While the COVID pandemic has forced firms to focus on business continuity planning, it’s also allowed them to expand into new service areas and diversify their offering. Increasingly, SMEs want their accountants to provide more strategic and proactive support.
It can include advising on government support programs and cash flow forecasts, leveraging visual dashboard reports to drive discussion and take action, and providing data analytics. It can also include recommending business models and process changes, such as using technology and implementing best practices. It can help to ensure clients are getting the most value from their accountancy firm and are meeting all regulatory requirements.
What are the challenges of capital advisory for accountancy firms?
The industry faces many profitability challenges, such as declining demand for traditional accounting services, rising compensation costs and the need to implement efficiency-minded technology. Getting and keeping talent is the hardest issue. Fortunately, many accounting firms are tackling these challenges head-on and finding ways to differentiate themselves from their competitors. It includes offering new services, such as business strategy and risk management consulting, and adding technology-related offerings, like cloud consulting and data analytics. Another way to stay competitive is by visiting up-to-date with changing deadlines, accounting standards and other regulations. In addition, ensuring that the firm’s technology platforms are operating is crucial. The ability to track key metrics like aging receivables and payables and generate daily cash reports is essential. These tools help to streamline the firm’s accounting operations and improve client experience. They also enable the monitoring and managing cash flow, which is vital for surviving volatile economic conditions.
