AICPA: Client Accounting Services Emerging as Significant Revenue Source

Client accounting services has become an important line of business for CPA firms of all sizes, even as overall client fees are growing, according to a survey sponsored by the AICPA Private Companies Practice Section and CPA.com.

One trend is growing penetration of the client accounting services/virtual CFO services category for larger firms. The slice of net client fees represented by that service area, which includes outsourced finance and accounting services and other back-office support for clients, more than doubled to 9% for the largest firms with annual revenue of $10 million or more who are active in this area, according to the 2016 National Management of an Accounting Practice (MAP) Survey. It also increased by double digits for the next two largest segments: firms with revenue of $5 million to less than $10 million and revenue of $1.5 million to less than $5 million.

“It’s safe to say that nearly 10% of revenues in the profession are focused on client accounting,” said Mark Koziel, the AICPA’s executive vice president of firm services, who discussed the survey results at the 2016 Digital CPA Conference. “And depending on the size of the firm, it may be more or slightly less, but overall it’s a strong category on its own. Tax and audit continue to be the No. 1 and No. 2 revenue categories, but client accounting demonstrates growing significance to the profession.”

On another front, CPA firms use of cloud services has grown since 2014. Some 56% of all firms surveyed said they use cloud-based software, up 17% from two years ago. Six of seven CPA firm revenue segments reported increases, with only the largest category ($10 million in revenue and up) reporting a slight decline (-1 %). Use of cloud-based remote backup increased 14% to 57% for all firms, and an identical number reported that they capture source documents digitally.

“We’re seeing broad pickup in cloud services and other emerging technologies,” said Erik Asgeirsson, president and CEO of CPA.com. “The next wave that leads to greater productivity and capabilities for advanced firms is fuller integration of these technologies and the elimination of bottlenecks in work processes.”

Among other findings of the survey:

  • Some 38% of firms provide staffers with tablets or mobile monitors to work remotely, with 91% of the largest firms ($10 million in revenue and up) doing so
  • Some 49% of firms are using social media for business development, while 29% are using it for recruitment, although the latter is far more common for larger firms