Nearly every accountant I’ve ever met refers to him- or herself as a trusted business advisor. However, when asked what makes them a trusted business advisor, most of their answers fit the description of a trusted accounting technician who acts more like a scorekeeper than a coach. The path from trusted accounting technician to trusted business advisor is a value-adding journey.
For accounting technicians to become trusted business advisors, they must move up the value chain from being a scorekeeper delivering hindsight to providing technology-enabled, realtime oversight so they can deliver value-added coaching insight and the mission-critical foresight clients rely on. Let’s look at each valueadding step:
Hindsight: is the act of reporting on past outcomes. As the saying goes, hindsight is 20/20. It’s difficult to compete with other firms on commodity services.
Oversight: is the business of reviewing your client’s financial information with an eye toward addressing issues before they become problems. Operating in the cloud will soon be ubiquitous and an assumed competency. However, firms that utilize cloud and mobile technology not just as an information transfer utility but as a means of getting closer to their clients and keeping an eye on day-to-day outcomes will move into the realm of trusted business advisor.
Insight: is the art of helping clients fully comprehend the implications of what appears on their financial statements. We refer to this as Financial Fluency in support of growing our clients’ business acumen. Tell clients what’s happening in their business, and you’re a good accountant. Teach them to understand and strategically respond to what’s happening, and you become an essential partner in their success.
Foresight: is the science of breaking down company goals and strategies into key performance indicators. The operative word here is “indicator.” Trusted business advisors focus on improving the quality of information for decision makers by identifying the 20% of the activities that drive 80% of the outcomes. Populating a client’s business dashboard with strategically aligned indicators creates an environment of measured predictability.
Firms need to adopt specific advisory protocols that support each of these value-adding levels. For example:
• A hindsight action step would include organizing the chart of accounts so a client can access more relevant performance feedback by department, service, or product line.
• An oversight action step might include setting alerts or triggers for when key margins go outside the desired perimeters.
• An insight action step might include regular Financial Fluency training sessions for clients and their key managers.
• A foresight action step would include the development of 5–7 key performance indicators that provide strategically relevant feedback about mission-critical activities.
Advisory services are not the same as reporting on what has already happened. They should be proactive and include deeper insights and relevant perspectives that support an organization’s overall objectives. To make sure every client benefits from, and every team member can provide, advisory services, firms must have standardized advisory service protocols to avoid falling into the unleveraged trap of random acts of consulting.