69 CAS SPECIAL: A Conversation With Amy Bridges - CAS Benchmark Survey

On today’s episode of CAS Minute, we dive into the 2024 CAS Benchmark Survey with Amy Bridges from CPA.com. With her extensive experience in practice development and data-driven strategies, Amy unpacks the key findings from the latest survey. Discover actionable insights for CAS practitioners looking to elevate their services, drive growth, and optimize strategy heading into 2025.

Key Takeaways:

• How the 2024 CAS Benchmark Survey was designed and key changes in methodology.
• The importance of defined strategies and plans in driving CAS growth and profitability.
• Why standardizing processes boosts revenue and margins for CAS practices.
• Insights into the growing adoption of value-based pricing models and their impact.
• The future of high-level service offerings like CFO services and business insights.

Links and Resources:

2024 CAS Benchmark Survey - https://www.cpa.com/cas-benchmark-survey
CAS 2.0 White Paper and Glossary: https://www.cpa.com/cas
CPA.com Webinars on CAS: https://www.cpa.com/resources?filter=Webinars
Contact Amy Bridges: amy.bridges@hq.cpa.com

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Transcript

Alright. Today is going to be a fun one. It is a special episode featuring Amy Bridges from CPA.com. If you don't know Amy, she's been with CPA.com for about six years. is a senior manager in their practice development department and was one of the many masterminds behind the CPA.com CAS benchmark survey for 2024.

So Amy and I are going to have a nice long conversation about Insights that came out of the survey, the survey methodology, and how CAS practitioners can start to think about their growth as they approach 2025. So I've got a copy of the CAS benchmark survey in front of me here. I will be linking to this and many other resources in the show notes so that you can take those for reference, check them out and without further ado, let me get Amy on. 

Is our data science department, it focuses heavily on the process of taking raw data, turning that into insights, which then drive action, which then results in a value. And like that, that data value chain is so critically important. And so we spend a lot of time talking about that. Um, but I think that's a story that comes out of this.

This CAS benchmark survey. 

And that's the way we wrote the report. 

Yeah, So, you've been with CPA.com for coming on six years. 

Coming up on six years, yes. 

And, and coming from a history of, um, spending a lot of time in the education sector. 

Absolutely. I mean, I worked with software companies.

I taught high school. I taught at the college level. Um, I've done an awful lot of adult training all down through the years. Um, but much of that came from a place of trying to use data. To support what we were doing, you know, understanding, understanding the data around training and the data around education to make better decisions about how to help people learn and how to help people adopt software, how to help, um, companies, you know, decide how to use their educational dollars.

Um, my master's degree focused on assessment. So, you know, this, this assessment space, the survey space is near and dear to me. Yeah. 

And you know that I'm a big believer in data and I love this. 

I'm so excited about our conversations every time 

just the power that data can have when it's, when it's harnessed well, when it's aggregated correctly, and then it outputs something that you could potentially argue the output of like how the data is actually correlated, but you can't actually argue the raw data itself.

Um, and so, um, You could write, but if it if it's done correctly, and you're just gathering raw data points, yes, you can argue the inputs that come into that. How many respondents were there to survey where the demographic data behind that you can always go 16 layers deep. And so it's so fascinating to me to when you're capable of harnessing data like this, how it can actually create value.

to the recipients of the data. And so I'm curious, you know, you spent a lot of time at CPA.com now with firms with practice development in a lot of areas of CPA.com and you've started to lead the efforts on this CAS benchmarking survey. What is that like for you? What's the process to put this together?

It's a lift. And, um, this is the fourth survey that we've done. Um, I was very fortunate to come into CPA.com, um, on the tail end of the first survey. So kudos to the people that originally, um, you know, decided that this was something that was needed in the client advisory or at the time client accounting and advisory services space.

Um, You know, we were spending a lot of time trying to make decisions based on just anecdotal data. And we realized that really starting to do a bigger survey was going to help us understand trends, understand, um, really the spectrum of what was happening. So those first surveys were put together, um, based on, Gosh, what do we think we need to know?

And when I look back at the first survey now, I think, you know, this was a, this was a fantastic effort. But the way that we asked a lot of those questions, um, was still frankly through a lens of what was happening in traditional CPA firms, um, in the way that they had historically looked at, um, tax and audit.

The second year, um, you know, we sat down and we said, gosh, based on what we learned in the first year, how do we want to change these questions? The third survey that we did, we actually brought in a survey methodologist who helped us really talk about and look at the way we wanted to structure those questions.

And then this year, I had the delight of being able to work with Bill Reeb, um, who is, um, With succession institute, he's a former chair of the CPA and has a lifetime of consulting experience through his lens as a CPA working with CPA firms around strategy and governance and change. Right? Because so much of what's happening with CAS is change.

Um, so he and I said, well, What if, what if we could start from scratch? What if we could start from with a blank sheet of paper? And those were fun conversations to be able to say, what do we think is happening in CAS? If we could create some hypotheses, what would those hypotheses be? Um, we actually had several hypotheses that were all around the fact that there is so much more opportunity.

And so we tried to put some structure around those hypotheses. And then we, we built some questions to, um, to really try to ask the question to say, do we have support for this hypothesis? Getting participation is probably the first of the heavy lifts, so we felt really excited this year that our participation did go up quite as much as we wanted it to, but what we found was that the quality of the participation, so the number of new firms participating in the survey was fairly significant, And what we discovered was that the firms that were participating this year are really coming closer to hitting the mark around the AICPA and CPA.

com definition of CAS. So we talk about CAS being really what starts at the end of bookkeeping and then all the way up a spectrum to include some business insights advisory work. And, in previous surveys, we'd seen an awful lot of firms that were doing work that looked like, um, annual tax cleanup.

They were doing work that looked like one off advisory. Um, this is really valuable work. It is, you know, when I say it's not CAS, I don't mean to say that it's not good work, but it's not standardized in the way that client advisory services really begins to bring value. And as a result, what we saw in those early surveys.

With such a mishmash of firms all kind of coming to the table, really almost asking the question, is this CAS? 

Yeah. 

So this year when we saw an uptick in our numbers, but then this big uptick in the quality of the data, you know, we started to do the analysis and said, we really have something here. What we've got this year is, is pretty good.

I wonder to what extent, so I remember 12 years ago in public accounting, I was in financial audit. And then over the summers, you either participate in a benefit plan audits, or you, you kind of slot in wherever the firm needed you. And one of the options of being slotted in was in what was effectively their, their CAS department.

But at the time it was like, it wasn't called that. It was just maybe outsourced accounting. If that, And so over the course of the last 12 years, even the last four years or five years, the survey has been been around. You probably have more folks that have created delineation between, Oh, tax advisory, or just a bookkeeping cleanup engagement to this is now CAS where historically under most firms, hourly billing models, you know, the tax manager would go in and clean stuff up and work with the team.

They just bill hourly. And it was all part of the tax engagement. Do you think that that Uh, split maybe into more CAS specific, uh, service offerings has enabled you to have higher quality data. I'm

One of the interesting things that we've learned from the CAS Benchmark Survey is that, When we look at what we were talking about at CPA.com 12 years ago, we had a big campaign around transforming your bookkeeping practice. The CAS Benchmark Survey in the first year.

And really in the second year, we realized that transforming a bookkeeping practice into CAS was probably not a best practice. So that idea of being able to use staff who were working in other areas, who could come in in the summer and do tax cleanup, or do other big kinds of project work, that was part of this concept of transforming a bookkeeping practice into CAS.

The CAS Benchmark Survey helped CPA.com and AICPA realize that, um, there's a place for bookkeeping and tax cleanup and project work. And some of that lives under CAS and some of it doesn't. And so what we have seen with practices that have really spun up in the last five, six years is that, um, We're starting to see a best practice, which is preserve your bookkeeping.

That work has value to your clients, that work has value to your firm. Preserve the way that you use your staff when you have capacity to do other projects. That work has value to clients, that work has value to the firm. Don't try to create that as part of your standardized process that lives under CAS.

And so what we see in this benchmark survey is over and over firms who have dedicated CAS staff that are not being shared across the firm are better able to standardize their processes. Their margins are higher. Their revenues are higher. Um, just all the data looks better. We also see that those are the firms who are able to really start to offer services to clients that hit multiple points along that spectrum.

They're not, um, they're not bound to sort of the transactional accounting and controllership level work. Because they have the people and they have the resources and they have the training and upscaling and the time and the process and the standardized process to be able to do more CFO level work more proactive business insights work a lot of what you talk about in the way that you've kind of built what you're doing right now.

Yeah, and I feel like, and I'm biased because I'm running an independent CAS practice, but I feel like over the last three to five years, the rise of standalone CAS practices has grown incredibly quickly. And I suspect a lot of the respondents are likely running CAS only shops and not just CAS practices within a larger firm.

Is that what you saw as well? Yeah. 

So I don't know that I would say that the rise is quite as big is, is what you and I perhaps perceive it as. I don't think the data necessarily bears that out. We are seeing more standalone CAS. We are seeing more firms that are actually spinning this off just from a, from an independence kind of point of view to write like that's that is another consideration around this.

Um, yeah. But I do think that we are seeing a lot of success. Um, one of the questions that I get asked fairly regularly is around whether or not you have to be a really large firm to have a successful CAS practice. because we are aware, I mean, in the profession, everybody knows about some of these top 20 firms who have really fantastic successful CAS practices.

I'm here to tell you, That the best practices and the top performers in this survey actually live below that. There is something to be said for being able to be agile, being able to be focused, um, and being able to make those decisions that are reactive to the trends in the market to allow you to put yourself in a proactive space with your clients.

And I think that smaller. Not smaller, but not small firms, but, you know, smaller firms that are not necessarily top 100, um, have a unique ability to do that when they have a plan, they have a strategy and everybody is on board. 

Yeah, and I feel like it's one of those things to where, you know, I've had a number of conversation with CAS leaders of large firms and have been fortunate to just sit alongside of many of these firms.

folks and listen to their pain points, listen to how they're building. And oftentimes they, they do lament that it is somewhat difficult to push change through, um, just because of the, the more Bureau, uh, bureaucratic decision making that comes with larger firms. Uh, however, you see other CAS practices in, in.

Top 10, top 20 firms who are given a lot of autonomy and decision making and strategy for their CAS department. And they are running, they're moving quick. And so I think it's maybe less dependent upon the size of firm and more dependent upon what, what ownership, uh, of decision making are you allowing the leaders within your CAS department to take, which small firms innately have just by nature of being small.

Absolutely. Um, you know, We laid out the way that we presented the information from this benchmark survey this year, um, around the concept of 7 big insights, because we really wanted the benchmark survey report, um, to be actionable. We wanted this to be something that was not a read that you turn around and put it on the shelf, but rather, you know, you, you can actually.

Take something and do it. So these seven insights each have action steps, and then there's a whole page of actions that you can take at the end. But one of the big insights that, you know, on first read is like, well, that seems kind of obvious. Why did they actually write that? It is a best, or, you know, our big insight was that, that having a defined strategy and plan are key to a successful practice.

But when we looked at the data. Over and over and over again, when we sliced it by, you know, we had a number of attitudinal questions that we added this year, around whether or not you had a formal written plan at the firm level, whether or not you have a business plan at the CAS level, um, are your firm leaders, uh, On on board.

Are they aligned? Are the partners who are referring and own clients aligned to your strategy for, um, ideal client profile or your niches and over and over when we sliced that data, we saw that those firms that, you know, are hand raising and saying, yes, we are doing these things. Their average client revenues were significantly higher.

They, um, You know, they had strong net client fees per professional and strong margin their typical monthly fee. Actually, the median of the group that said that they have a formal written business plan was a thousand dollars higher than the all respondent group. I mean, just over and over. We saw that these groups had stronger growth.

And again, on first read, it seems obvious. Oh, have a strategy. Have a plan. You'll do better. Um, but it really is part of being able to, take the time to work on the CAS practice and not just working in the CAS practice to kind of cite that old adage. 

It, it is interesting looking through these insights and I've got a physical copy of my benchmark survey right in front of me here. So I will be referencing this, um, but, but you're right. You know, there are a lot of correlations in the data, uh, to things like having a defined strategy and that resulting in a high revenue, higher margin, more revenue fees per client.

Um, You know, I'd love to walk through some of these insights and get your thoughts on them because, like you said, some of them may seem very obvious. And, you know, I like to to take a look at what can we what can we take out of this? What action should it be driving? And I know you've got a lot of actions at the bottom, but let's have a conversation about it.

Um, so on on insight number 1. CAS growth continues to be a significant, continues to be significant, outpaces the professions overall growth. Uh, you know, you see a trend from 2018 through 2024, uh, top performer, median net client fees have gone from about 1. 5 million to, uh, just under 3 million per year.

Um, you also see double digit revenue growth, uh, continuing from 2018 through 2024. One interesting thing that I, I was looking at there is that top performers revenue growth in 2024 was 15%, yet all respondents was 17%. So 

that's a trend we've seen. over the four surveys is that growth in the space is high.

when we think about those top performers, one of the things that we have hypothesized and talked to, you know, dozens of firms about and, and so we don't have necessarily, you know, as hard of data around this, but I feel pretty confident saying that the top performers are growing just a little bit more slowly for a couple of reasons.

One is. That they're really intentional about the way they want to grow. So once you have defined an ideal client profile, once you've selected a niche, you really start thinking about right fit clients. Um, as a result, maybe you don't take as many new clients as someone that's just sort of. Growing with wild abandon.

Um, maybe your growth is not even from new clients. Maybe your growth is around, um, adding services for clients for top performers. I think tend to be a little bit more intentional. They have a slightly longer view of where this is going to go. When we think about what's happening in the all respondent space, we believe that there is still a lot of price adjustment happening.

so even if you didn't take on a lot of new clients, if you adjusted your pricing, um, because. You know, overall, we still think that most CAS practices are probably underpricing awful lot of their services.

So as we continue to get to a right price sort of level, this is also part of the growth that we're seeing. Um, there doesn't seem to be as much price sensitivity in this space as maybe some of the other spaces that CPA firms are working in. it is still a new area. You know, clients come to you and I think you can speak to this better than I can, but clients are going to come to you, um, with a lot of needs and, and they may actually have trouble defining the needs that they have.

They just know that they need help. 

How do you manage the outliers and the data set? When I look at double digit revenue growth, continuing for CAS practices, I look at it through the lens of, of our standalone CAS practice who is small. And so, um, relatively speaking, our growth percentage, um, would actually be very similar.

Much, much higher than any of these figures because we're coming from a lower base. Um, and so I'm like, all right, well, we grew eight times the median. We're doing great. But at the same time, it's like, Oh, that relative growth to a larger firm would be like 1%. And so how do you manage, um, taking those outliers and then putting it into a, an understandable and actionable format here?

So, I mean, let's just talk about survey data and how we present statistics. Right. When the data comes in, um, we anonymize everything so that we can really just look at the numbers and not be swayed by, Oh, but we know this firm. and we take a look to see, you know, did they answer all the questions or did they answer the questions that we need?

we look to see if anything appears to be a mistake, you know, so sometimes you get, you get a survey response that is off by a factor of 10. Somebody forgot a zero. so fortunately. we do have a small team, you know, that is, that has access to this and, and we're able to, when we find something that doesn't seem right, we're able to reach back out and, and make data corrections.

So, part of the reason that the quality of the overall data set is high is because we really watch the data as it comes in to ensure that anything that is just an error gets corrected. then. You know, when we finally close everything down, we go through the data and we really look for anything that just appears to be, that's not to say that we throw out small firms, because they're not wrong.

They're just small. We're not throwing out folks who had a crazy wild growth year. that's not sustainable. But it's real. And so we look at all of that data, you know, collectively, what we report in this survey, then our medians, it's tempting to talk about averages. And I mean, technically, the word average doesn't actually mean mean, but, um, You know, so we don't report those means because what could happen very well would be a distortion of, of that.

When we start to look at those medians then, It's one of the reasons that I always remind everybody that this is, this is benchmark data. This is a survey that was self selected, you know, folks had to, had to opt in, um, had to take the time to submit, you know, to, to do their, to, to pull that data together, to be able to submit more than 70 questions.

So I'm going to pause right here and thank anyone who is listening to this podast, who participated in particularly this year's survey or previous survey. Thank you so much for being part of this. Obviously. We are able to draw insights, learn so much, and hopefully give back into the profession because of this.

And thank you especially to you, Roman, because you've completed this year's survey. I would also make my, um, plea for future year's surveys. It's a little bit of a lift, but I do think that there is, you know, when I talk to folks who've completed the survey, You know, they talk about going through the process of gathering.

The data can be really useful internally when you think about your own metrics. But your question was, you know, how do we prevent? How do we deal with outliers? How do we prevent distortion? And the answer quite simply is because we look at medians. Your, um, practice revenue may be very different than the median practice revenue. And it's one of the reasons that we're so excited that for folks who take the survey, they can actually log back into the survey platform. They can slice and dice that data to get a subset that is actually something that they can compare themselves to.

So, you know, when you log back in Roman, you can actually say, I only want to look at practices whose revenue where the CAS practice revenue was pretty similar to mine. 

Yeah, 

that's 

that's super helpful. I actually didn't know that I could log back in and then slice it by firms. My size, uh, I'm going to do that because I'm curious and I want to know, you know, where are we relative to other folks in the space? Uh, and within where, where should we be aiming? Uh, one thing that I actually often tell clients who ask about benchmark data for their industry or certain metrics that they have is that I want to go through an exercise of planning and developing strategy for them.

First, before looking at any benchmark data and then look at benchmark data, because if I'm, if I'm just predicating my goals and strategy based off of benchmark data, then I'm, I'm really just going to that median, like you said, and not trying to become that, that really high performer. And so oftentimes I actually say, let's look at that after we go through the planning exercise.

It's one of the reasons that we report top performers in this survey. And to clarify, top performers in this survey were defined as, those whose net client fees per professional, in other words, revenue divided by FTE, was the top 25%, the top quartile. Not everybody gets, not everybody who has a successful CAS practice.

meets the threshold of top quartile. A couple of things can happen. Um, when you are in a big growth stage, you've done a lot of strategizing, you've done a lot of planning. Um, it is a best practice and CAS to try to add your headcount, add your staff before you add clients. You want to get people up to speed.

You want people to have the industry knowledge. You want them to be familiar with the technology. So as soon as they take, On client work, they hit the ground running and offer that amazing experience for your clients. When you're in that growth phase, it kind of tanks your net client fee per professional number, because your revenue divided by your FTE, that divisor, that bottom number, as it goes up before the revenue comes up, you know, we see, you know, high cash margin, or we see, you know, firms who had an amazing amount of growth, whose net client fees per professional Can look really bad.

And it's another reason to remember that these are kind of snapshot point in time. So when you look at your own firm, you know, we, we talked so much about what are the best metrics to be looking at and CAS? Well, part of the way you want to look at your metrics and CAS is that you don't want to look at 1 snapshot.

You really do want to look at those trend lines. You know, what's happening over time. 

Uh, anecdote hits so deeply to me right now, uh, because I look at our revenue per employee relative to what I see my peers in the space doing. And I'm like, Oh man, we are so behind the curve. However, to your point, like we're in a growth phase and we need to bring people and we need to onboard them in a different way.

It feels like we have been in a constant state of onboarding of new clients and new team members since day one. And it feels like we're still behind on that. And I don't know when that catches up. Maybe it's a period of when you're intentionally strategizing not to grow as quickly to your point of how the top performers may be doing in order to reach more of those, you know, top performing metrics or benchmarks for revenue per employer, things like that.

But that's relatable. 

You know, I said earlier that I've spent a lot of my career looking at data and thinking about how data informs decision making and planning and you know, how do you, how do you teach? How do you grow? How do you, and one of the things that that I have observed for years and. You know, what you're saying correlates to this is that growth is very stair step, right?

You have an you have 1 thing goes up and then it plateaus. Another thing goes up and then it plateaus. And I think that when we look at the way, you know, adding. Adding headcount, adding technology, adding clients, all of these things. And then, you know, maybe you, maybe you pause all of those things while you look at the strategy and you adjust your fees or you, you know, do some upskilling in order to offer more services.

and I, and I don't know. I don't know when you would ever get to, uh, a more linear kind of growth. Maybe it is, you know, when the regression puts you at a place that everything is so big that the stairsteps become so small.

Yeah, you know, I don't, I don't know. I think you probably see less of the stairstep approach and more of the productized solutions that exist in market. And I don't know if we would define those as CAS practices or not. They're really like more software than, than. Services in a lot of ways. We won't go that direction.

Yeah, I was gonna say, you know, it's, it's one of the things that we do talk a lot about at CPA.com, though, is, is how do you productize these CAS services? And one of the things I think that we can still see in the data from this benchmark survey is that firms that are thinking about how do I use technology?

And how do I scale? And how do I get to a place where the services that I'm offering are really high quality, repeatable, high value types of services? They may not look like the same kind of product ties, um, situation that we would have in a, you know, in a software or a SAS kind of situation, but it certainly is more product ties than, um, Um, perhaps a true consulting where every engagement starts from zero.

And I think there's becoming a lot of delineation in the industry around that right now. Um, and, and it kind of goes well, uh, into the insight number two of firm firms, increasing revenue by expanding their higher level service offerings. So more business insights, more CFO, more of that strategic layer.

And. It's interesting to me dissecting what, what I would call more of that software led or productized approach. It's not that it's just hyper templatized. I think that the more productized approach is far less relational driven. It's far less strategic in that you have predominantly a software that is forefront that is providing a visualization or some sort of automation on data that's coming out of a company.

The software is then kind of dependent upon utilizing insights or AI layered over the top of that to provide some sort of like analysis, right? Here's your trends. Here's month over month. Here's a variance report. Like technology is really, really good at that. Or I look at firms that are excelling in the higher level service offering space.

I think of folks like, like Jody Grundon and what, what he's done with Summit and now Anders of really creating repeatability. In a strategic function, that's predicated upon a great relationship. What are your thoughts on that? 

You know, um, I, I have seen some CAS leaders in the past few years who have been acknowledged or, or given awards within a particular client industry.

Um, and I think, gosh, that's, you know, like CAS goals. can you be the person or can you be the firm who, who is so embedded in an industry and has such great relationships with those clients that what you are doing layered on top of what that software can do with you. where you have that best of both worlds, where you are able to use the software to do something that is a relatively standardized approach.

but. Also creates that level of relationship. Um, and sure, you know, at summit by Anders, you know, those guys, you know, they have their, they have, they have their niches, you know, when I talk to different people on those teams there, um, they have great relationships as well, because, The, the AI and the technology that they, that they use can, can do some of that early lifting so that their time is spent on the relationships as well.

So that's one of the big things that we learned in this particular, um, survey with really three questions around service levels that, that were really interesting. I told you there were a couple of, of big, you know, sort of surprising things. The first one. Was this idea that, high numbers, high percentages of the survey respondents said that they can.

Offer CFO level services and business insight services. 

69 percent 

Yeah. I was gonna say greater than 60 percent on both of those. The second question then was really kind of a confidence question. You know, do you feel that the Val, that you are offering good value in those areas and those numbers dropped.

Yeah. And that was a little bit surprising to us. And so, you know, we spent some time kind of digging around. That, but it was the third number that are the third question that really kind of brought it all together, which is what percentage of your revenue is coming from those higher level services and it's, it's a really low numbers like less than 8%, you know, probably honestly closer to 3 or 4 percent what we began to understand is that so often that level of insights advisory, um, is happening in a reactive kind of way. can we do that? Have we ever done that? Yes. We had this one client, one time that we, that we were able to do this with. Are we offering it proactively? Not very often. Are we standardizing it?

Probably not. again, this comes back to planning and strategy, you know, you and I have talked about this before, like you built this into your plan from the get go. But if we have a firm that's been doing this for a long time, and they've really spent their time focusing on building up the muscles and the processes around the transactional accounting and the controllership level, they may be doing some of what we think of as almost like CFO light.

fairly regularly. But the planning and the strategy to get over the hump into the bigger, the business insights CAS, um, it requires, it requires a lift. It requires some upskilling. It requires a plan to get there. It may require some different software even. and so, you know, we see that these firms are saying, can I do it?

Sure. Am I doing it? Maybe not so much. It's a great opportunity, though, that as you know, when we look at where the next sort of phases of growth for the profession are going to come from, we think that moving up that spectrum of services, um, to be able to offer that to clients, you know, you told me recently that, um, you've had a bunch of new clients, um, in the past, you know, You know, a few months.

Um, and it seems to me that they're wanting some of this, right? If they don't just want, um, outsourced accounting. 

That's right. That's right. And we're, we're seeing a hunger for that just across the board. A lot of more anecdotal data for us, but conversations that we're having with companies that say, yeah, I've got a bookkeeper, but you know, I'm just not getting a lot out of that.

And I feel like I need to glean more insight. My accounting function out of my finance function, and these are, you know, three, five, 10, 15, 20 million businesses that have committed to outsourcing their accounting and finance department, maybe with one or two internal hires supporting a key function, but they're starting to realize that we need more out of this function in order to run a sustainable and profitable business.

And so we're having those conversations every day. And one of the. Maybe more rhetorical questions that I asked myself after hearing you talk about this is okay. If only Eight or sub eight, maybe 3 percent of revenue is actually being generated by CFO services. Yet 69 percent say that they have the capability of offering them or do offer them.

That's telling me that internal to those CAS practices, they don't have clear definition around what they actually do for their clients. And they just kind of step into these roles yet. There's no way for them to actually track what type of service it is on the. Background and actually on this podast, I talk a lot about the importance of having a service library, uh, effectively a list of skews of all of the services that you offer and then capturing the data on that.

So you can understand where is our growth coming from? Where are margins coming from? What are we actually doing for this client? Even if it is in a value based pricing model, where most firms would be like, yep, we'll just lump it all up into this. This fixed fee, and then it's just one fixed fee accounting line, capturing a bunch of different data points that they're not actually doing anything with.

I love working with, um, folks in the accounting profession. Um, you know, so much about what you're doing. And you often forget that, you know, so much more than your clients do. Um, and I think that, you know, when I looked at those data points about, we can do this, we feel confident about doing this. We're generating revenue from these higher level services.

Um, one of the things that I know. Over and over and over again is that as folks in this CAS space, um, you can offer real value to your clients um, that you have the tools, you have the knowledge, you, you know, you know how to ask the right questions and get to answers that really provide great value.

to clients. 

And, and I do believe for us, at least at full send that service library Is an internal facing document for our own data warehousing and data aggregation.

This is not something that we're publishing, uh, in mass quantities to our, our website, uh, or talking about with clients, you know, we still want to take a value led approach to pricing and scoping and, and really, truly discovering in a customized way, what the client truly needs to be successful and then fit our SKU map to match that in a scope.

Um, I don't know to what degree, like we can get into the pricing and The pricing and niching and how those things work together. But, you know, you see a lot of firms going with medallion based pricing, you know, the bronze, the silver, the gold, and here's what's included in these things. And I personally don't love that approach, but I think a lot of firms could actually benefit from having standardization of, of what they do and how they do it.

Are you seeing more firms take, take that fixed fee approach that, um, value based. We're still seeing a degree of time materials. Um, Thoughts around pricing. 

Sure. So again, one of the things that we, you know, when we did the data analysis, I actually thought this is wrong. Like I have to go back and check my work.

I actually sent it to somebody else and said, seriously, this is not right. the, the pricing numbers. So insight number seven in our report this year, um, is just that the pricing in CAS has shifted away from pure time and materials billing. We saw in the in the inaugural survey in 2018 that more than half of our respondents there had a primary billing method of that was based on time and materials that dropped to about 25 percent in 2020, 27 percent 2022 this year dropped to 10%.

What that tells us, you know, we, the majority of them have moved to kind of a fixed fee approach. A lot of them are still doing after the fact billing. So, you know, the, the client knows what the, what the fee is going to be in a month. and then if there's a scope change, um, you know, they have change orders, um, and they bill at the end of the month.

Um, we'd like to see more go to, you know, kind of a pseudo subscription model where they're actually paying in advance. and then you do some adjustments along the way, because we know that that fixed fee right now for many, many, many of this 90 percent of firms that are that are not using a primary method of time and materials, we know that they have kind of an hourly calculator cost calculator under the covers.

That's driving that fixed fee. But it's changing the conversation with clients. I think that's the biggest thing and it's changing the internal conversation as well, because even though they are still, tracking hours, they may not be tying those hours quite as closely. To the way that the billing is working as they have in the past.

It's a, it's a way that they can start to shift things. and so. This particular insight was really exciting for us to be able to say, you know, we've positioned this as a best practice for a long time that an hourly billing with write ups and write downs is confusing to clients. It's hard for clients to budget around. it's hard for you to make improvements because as you know, if you have a.

Big improvement around technology that drops the hours that you're doing on something. It's really hard to reflect that in the way that you price with your clients. So moving away from time and billing has been an important part of this. 

I love that the data is pointing this direction. Uh, it's something that I was heavily convicted. And when I was starting my firm, I think this is the right approach. And there's two reflections that I have on that one. I think when we look from a macro economic scale and just look at our personal lives, almost everything that, that we.

Purchase and consume in our normal lives are on subscription and it's becoming more and more that way. I'm slightly seeing a trend of moving away from subscription into usage based, which is kind of interesting just with the rise of AI models and how, um, the tokens and credits work there and usage based pricing.

So I'd be curious to see if there's going to be a secondary trend and maybe cause 3. 0 of what that looks like. Um, that's another discussion 10 years from now. Um, But then the other thing, I had a conversation with a prospect yesterday who has been working with the same firm for a number of years. And he said, they're good.

They're good. However, this is maybe a 15, 20 million company. He said, they've been able to get the work done. However, they haven't. Take in the extra step to instill process, to instill systems, to instill efficiency in our financial department. And for the same, uh, uh, section of work for the last several years, we've been billed roughly the same hours every single month for that.

And it'll vary based on other things that are happening in the business, but he's like, I would think that over the course of the last three years, I would see that, you know, some tranche of work would actually decrease if our business isn't just skyrocketing. And so he's saying, I believe that they're disincentivized to improve our finance function because of their own revenue model.

And this is a fight that he's been having with them over the last several months, which is why he came to us and said, I think that this approach makes more sense for us. And I like the way that you think about things. Let's talk about, like, how does your firm serve us differently than somebody who's taking this different approach?

And like, from an ethos perspective, how does that impact us as a client? So we're having these conversations on a day to day basis. And I love seeing that more and more firms are going that direction. 

Yeah, we actually have another insight that came out of the survey this year. Where we, we saw that firms who are reporting that they have defined client niches that they really focus on have, better efficiency, better profitability, you know, we saw that for firms who are focused in specific niches.

Their median CAS revenue was significantly higher. We saw that the ref, you know, they reported that the referrals that they get tend to be better client referrals and we saw that their growth was higher. Um, you know, so when you start talking about being disincentivized to look for ways to improve process, you know, if we are already focused on strong standardization within a niche, I think.

You know, what we can turn around and do is really instead of being concerned about, improving processes for a particular client, we can actually focus on the client and say, hey, what do you want out of this relationship? How fast do you want to grow? How? You know, what is what's keeping you awake at night?

That just trying to get you, you know, the bare minimum. We didn't have that conversation about this other thing that was keeping you awake at night. We have all of this under control. Let's talk about the rest of it. 

I love that. And there is so much in this document right here that is widely available for everybody to take a look at.

Um, I'm. Personally, very thankful that you and your team have taken the onus upon yourselves to put this forward in the market, because I haven't seen anybody else doing this. And so, um, to be on the forefront of capturing data, to help firms be successful, to help them grow, to help them be more profitable, to help usher in kind of this next generation of what firm growth looks like, I think is a massive service to our industry.

So thank you for that. 

Yeah. CPA.com is CAS Professional Services. Um, area is really committed to, um, helping this segment of the accounting space continue to grow and to find its footing and, um, to help more clients. I mean, that's kind of at the end of the day, you know, we hope that you as practitioners are driven by wanting to help your clients and, and wanting to do it in a way that gives you, Success, but also maybe some balance, right?

You know, we see, um, some of the things that the profession is fighting with, with burnout. And, and, you know, CAS has the potential, um, to kind of be the antidote for some of that. So whatever we can do at CPA.com and at AICP to support this, becomes kind of an important piece of, of what we're about.

Yeah, I love it. Well, I will, I will link to the CAS benchmark survey in the show notes. Um, I will link to other CPA.com resources as well. Amy, if folks want to get ahold of you and want to hear more about what you're doing at CPA.com, where can they find you? 

So, um, I am Amy Bridges and I am amy.bridges@hq.cpa.com. You can email me directly. Um, if you have questions about this, about the benchmark survey, there is, In the survey report, there is an email that they can reach out with questions about the survey as well. Our website, bCPA.com/CAS, we try to make that really easy as well, has a lot of the other things that we're doing, including, you know, our CAS 2.

0 white paper where we define some of this, our benchmark, page. Also has a really nice glossary that we've put together, and I kind of want to push that out as I think it's a good resource, to have conversations. You know, so much of what we do at CPA.Com is also trying to empower firms to have those kinds of conversations within their firms.

We know that, CAS needs to be supported by really good change management. and so, you know, we have a, um, firm self, a CAS firm, self assessment, um, you know, the, the CAS definitional white paper, um, this glossary of terms, like some of these things that we're doing really are there to try to support conversations that practitioners can have within their CAS team within their firm.

Um, and then, you know, we have some other opportunities to, to work with those firms if, if that's what they desire. 

want to make one more plug if I can. So there is a webinar that we will be doing with a deeper dive into some of the numbers. We're also going to bring some practitioners on on January 30th and that will be available as a replay after that date as well.

So that will be on our website too. 

Perfect. I will get that webinar linked in the show notes as well for a quick link to anybody that wants to check that out. But Amy, thanks so much for spending the time here today on CAS Minute. 

Always a pleasure.