Do you want to learn how to offer expert consulting services to your clients? Incorporating consulting services into your firm is an excellent way to increase revenue, but offering non-expert guidance to clients is unprofessional and can leave you vulnerable to a lawsuit. So how do you determine what consulting services you should and should not offer?
If you’re not sure where to start, you’re in luck! Gusto and Practice Ignition teamed up to present a webinar about consulting services and expertise titled “Managing 2021 Consulting Risk Within Your Engagement Letters.”
The webinar featured tips and advice on accountant consulting from the head of Gusto’s accountant community Will Lopez and the Head of Accounting of Practice Ignition and Managing Director of Lance CPA Group Josh Lance.
In addition to this article, be sure to read Part One of this series, which breaks down the five pillars of consulting for accountants.
In this post, Will Lopez and Josh Lance will give you invaluable tips for determining your expertise, training yourself and your team, expressing your services in engagement letters, and how you can begin incorporating your expertise into your services.
Introduce your clients to payroll they’ll actually love.
Only consult in your firm’s areas of expertise
It’s essential for your firm’s wellbeing to only consult in areas where you can deliver competent advice and expertise. Josh Lance’s firm, Lance CPA Group, offers human resource consulting services for restaurants and breweries. Human resources isn’t a typical service that CPAs provide, but Josh’s firm includes HR experts. You should never offer consulting services in an area outside of your field of expertise:
If we didn’t have [HR experts], … we may be giving advice that is poor, inaccurate, illegal, and could be a huge risk issue for our firm. When you start dishing this advice out, and companies come back to us and try to sue us as a result of that, that becomes really problematic. Only accept engagements when your firm has the expertise to deliver that service with competence. This is [a] very good for risk management practice that you should go through.– Josh Lance
Offering consulting services in a field in which you are not an expert can result in legal ramifications and creates unnecessary risk for your firm. You need to be an expert and have the ability to give competent advice before taking on unique consulting engagements. Josh conceded that people learn more when gaining experience, but you need to be an expert before giving consulting advice:
You’re not starting a CPA practice … [if] you were a bartender before and never knew anything about tax law. Some of that you do have to learn as you go, but we shouldn’t be trying to do consulting service just for the sake of doing it or trying to get revenue. If we don’t have that expertise, then we’re just trying to fake it and figure it out. We need to have expertise built-in.– Josh Lance
Before offering someone consulting services, make sure that you and your firm are expertly versed in the subject. Otherwise, you’re deceiving your clients and run the risk of being sued.
Determine whether your firm needs additional training
An essential part of offering consulting services is evaluating whether you and your firm need additional training in a particular field of expertise. You might have experience or knowledge in a field, but you need to gauge how much more training or additional certification is necessary before consulting clients. You also need to make sure everyone in your firm is trained in the field in which you’re going to begin consulting clients:
“If we don’t have all the knowledge that we need right there, we need to figure out where are those gaps [and] what are the things we need to do to train up. [It] could be [that] one of our people in our firm may be a great expert in R&D [Research & Experimentation] tax credits, but no one else in the firm knows that. If we’re going to start to develop that as a practice within our firm, we need to get everyone else trained up there, so we can all work to help deliver that service.– Josh Lance
Just because someone in your firm is an expert in a subject does not mean that you’re ready to offer consulting services — everyone in your firm needs uniform training so that you can offer expert advice and guidance to your clients as a whole. It’s essential to create an atmosphere of continuous learning and professional development in your firm:
We want to make sure we’re actually making a commitment to learning. … We’re doing it to gain those skills necessary to deliver this service to our clients. Regardless of what professional standards say, being competent in one’s chosen medium or subject matter just makes good business sense. If we’re going out there and we don’t have that competency, … that’s going to lead to failure really quickly.– Josh Lance
When you invest time and resources to train and professionally develop yourself and your team members, your firm will have the ability to meet your clients’ consulting and accounting needs. Simply put, focusing on training and professional development will help you mature into a more successful firm.
Express a clear scope of services in your engagement letters
A key part of offering consulting services and running a successful firm is creating clear engagement letters. You and your clients need to be in full agreement about the services that you will and will not provide. Josh stressed the importance of not leaving any room for ambiguity in your engagement letters. Otherwise, you and your client may have a misunderstanding:
I may have an assumption about what accounting services are, but my client may have a different assumption. Maybe my assumption is we’ll review their bookkeeping work. We’ll prepare financial statements. We’ll do APAR. That’s what my assumption is. My client may think it’s bookkeeping and payroll, or they may include tax in there. … If we don’t have a clear scope of services, then we’re going to be leaving things up for guessing and assumption, and that’s not good. … Very clear scope of services is key and critical.– Josh Lance
Your engagement letters need to detail the services you will provide and how long your services will take. It’s also essential that you list each service’s frequency, such as yearly, quarterly, or weekly. Josh also expressed the importance of detailing the scope of every individual type of service that your firm provides a client. For example, performing a tax return will obviously have a different scope and frequency than offering HR consulting services. Your engagement letters need to be incredibly specific, and your client needs to sign the engagement letter to confirm the services.
An easy-to-use and affordable tool for handling all of your proposal and engagement letter needs is Practice Ignition. Practice Ignition provides accountants and firms with engagement letter templates to keep clients informed about all of your accounting and consulting services.
Offering uncommon services during unprecedented times
Since the start of the COVID-19 pandemic shutdowns in March 2020, accounting firms have provided small businesses with consulting services not strictly related to accounting. Services classified as “uncommon” for accounting firms, such as HR and cash flow analysis, have become more common.
Will Lopez, observed that a great way to address your clients’ uncommon needs is the Gusto People Advisory Certification program.
When you look at common versus uncommon … COVID … has thrown a lot of what’s uncommon to be more common. … [What] a lot of us saw a huge spike in people operations. ‘Should I hire? Should I fire? Should I furlough? How do I access a PPP [and] EIDL?’… [Gusto] People Advisory [Certification] is just speaking to that payroll portion, and the benefits administration portion, where it’s like understanding payroll, advocating for benefits, and then championing HR along the way.– Will Lopez
The Gusto People Advisory Certification program teaches accountants and bookkeepers to help small businesses with various people-operation-based needs, including payroll, benefits, and HR. The program also offers four CPE credits! If you want to learn more about the program, click here.
In the last year, accountants and firms have provided small businesses with various consulting services. Josh advised that firms begin to regulate the uncommon services so that they can be included in engagement letters and be performed on a regular basis. Reflect on the uncommon services you or your firm provided clients in the last year and start incorporating those services into your engagement letters:
Maybe one of the ways to look back at this is just to see what we [have] done in the last 12 months. What are things that came up consistently with our clients? … Figure out what those … consulting-type services are, and figure out, ‘Okay, how can we start to provide these services on [a] more regular [basis] to our clients?– Josh Lance
What uncommon services have you provided in the last year? Accountants and firms can begin incorporating consulting services by training their staff and detailing the services in engagement letters to help their clients and make additional revenue.
Learn more about evaluating consulting expertise!
Finding and evaluating your expertise is essential for implementing consulting services. If you advise a client in an area in which you are not an expert, you and your firm could be sued. It’s also essential to train everyone in your firm in the area that you plan to offer consulting services so that your firm can better address your client’s needs. Additionally, you need to clearly state the scope of your various services in your engagement letters to avoid misunderstandings with your clients. Finally, evaluate the uncommon services you and your firm have offered clients in the last year so that you can begin incorporating them into your services.
Click here to watch the full webinar, and make sure to check out Part Three of this webinar if you want to learn all about creating perfect engagement letters through Practice Ignition. If you want to learn more about Practice Ignition’s automated workflow, visit their website and consider starting a free 14-day trial.
If you want to learn all about advising people and adding consulting services to your firm, visit our People Advisor Certification page on our website. You’ll learn how to consult businesses on various people-focused operations, including HR, payroll, and benefits, while also earning four CPE credits.