”Centers of influence”(COIs) are a select group of people who can help to increase your access to and credibility with your target market by providing their referrals, testimonials, and word-of-mouth endorsement. Professionals such as realtors, insurance agents, and of course bankers had figured out that having a steady stream of referrals from COIs is one of the best ways to successfully build their book of business. But which centers of influence should you seek out in order to increase your referrals?
While there are a number of professions that lend themselves to providing bankers with good referrals (attorneys, for example), accountants/CPAs are among the most valuable COIs for business bankers. So how will you go about courting more CPAs—your match made in COI heaven? In order to work with them, you need to understand what they care about—what keeps them up at night—and then help them solve these pain points.
What has CPAs counting sheep
A recent study conducted by the American Institute of CPAs (AICPA) is a great place to start with your research into the mind of the average CPA. This trade association, which represents over 418,000 members around the world, conducted its biannual CPA Firm Top Issues survey last year to uncover some of their members’ top pain points. While responses varied slightly depending on the size of the firm, there were some common themes among the results:
- Good staff members remain difficult to find and retain in most firms.
- While bringing in new clients can be a challenge, accounting services remain in high demand.
- Succession planning is an issue for many firms as staff members’ interest in becoming partner wanes.
- To head off recurring problems, firms are reimagining their business model, including how they can move from a transactional service provider to a trusted adviser relationship with clients.
- Firms are concerned about how they will keep up with evolving technology, especially privacy and cybersecurity concerns.
Although there were some new trends uncovered by this most recent survey, many of the top concerns were unchanged from the 2013 and 2015 surveys. The key to becoming a partner with CPA firms is understanding these issues addressed by the AICPA, and then figuring out if you can help them mitigate these concerns. Can you refer them to new tax associates? Do you refer them new clients who are looking for a more “trusted advisor” status from their CPA? Can you brainstorm succession planning with them?
Analyzing CPA firms on Vertical IQ
By doing a quick review of the Vertical IQ Industry Profile on CPAs firms, we can learn more details about some of the very pain points, which were confirmed by the AICPA survey:
Competition for talent: Demand for hiring accountants and auditors is expected to grow 16 percent between 2010 and 2020. Hiring will be driven by growth in the number of businesses, changing regulations, greater financial scrutiny of companies, and a surge in retiring CPAs. Firms are looking for graduates with advanced degrees at a time when schools are struggling with tight budgets and constraints on their capacity to teach large classes. The result may be a limited pool of talent with advanced degrees, which could push wages up for new accountants. Annual turnover rates at CPA firms average 8-14 percent, with higher rates at larger firms.
Growth in demand: Again, demand for accountants is expected to grow 16 percent between 2010 and 2020. CPA practices have seen modest growth in net client fees in recent years. Fee increases averaged 5-10 percent in 2016. More CPA firms are experiencing revenue growth and making strategic investments for the future. Overall employment by CPA practices in the U.S. rose 2.5 percent in December compared to a year ago, according to the Bureau of Labor Statistics. Employment rose 3.3 percent in 2016 and 4.1 percent in 2015.
Lack of succession planning: Most CPA practices are highly dependent on the sales skills and client relationships of a few key partners, yet less than half of firms have a succession plan in place if these partners are disabled or die. Only about 44 percent of CPA practices have a practice continuation agreement in place to cover the death or disability of a partner. About 84 of firms expect succession planning to be a significant issue in the next 10 years.
New business models: In the face of increased computer automation and a weak economy, CPA practices are seeking to become “trusted business advisors,” providing additional consulting and planning services to clients. By moving away from low-value transaction services and after-the-fact reporting, to proactive consulting and financial planning services, CPA practices can deepen client relationships and increase firm profitability.Keeping up with technology and automation: The widespread use of accounting and tax preparation software packages has eliminated much of the tedious “number-crunching” tasks that CPAs used to perform. While automation of routine accounting reporting is a potential threat to the billable hours charged by CPA practices, it frees CPAs to focus on higher-value analysis and has created new opportunities for consulting on the implementation and use of computer systems. CPA practices are also implementing information technology, such as knowledge systems and mobile computing, to improve the productivity of their employees.
Calculating ways to boost CPAs
A bit of cordial quid pro quo goes a long way when it comes to remaining top of mind with your professional centers of influence. And the good news is that there are several things that bankers can offer to accountants to address some of their common concerns.
- Since demand is highly seasonal for accountants, a line of credit can help manage cash shortfalls during slow times (January and the summer months).
- A line of credit or term loan can allow firms to invest in new technology, thus increasing staff productivity and client confidentiality.
- A merchant services account can reduce collection issues for firms’ high volume of tax returns (tax services can be over 50 percent of revenue for small firms).
By using the Industry Profile on CPAs, you can learn a lot about this potentially valuable COI and referral source. And by showing accountants your diligent research and consultative approach to solving pain points, you will be sure to boost those CPAs’ confidence in recommending you to one of their own clients.