As the COVID-19 pandemic changed the business environment, clients turned to their CPAs for help keeping their businesses afloat. CPAs who offer client advisory services (CAS) were well positioned to help struggling clients stabilize and reposition their businesses. The term CAS can encompass everything from outsourced accounting to outsourced CFO and controller services to business advisory services. CPAs who offer CAS have real-time knowledge of their clients' finances, giving them the opportunity to offer greater strategic perspective on clients' businesses. Here's how CPAs working with clients in affected sectors used CAS to enable their clients to reimagine what's possible.
Keeping restaurants cooking
About 75% of Nick Swedberg's clients are restaurants and small craft breweries in Minnesota. These types of businesses were "some of the hardest hit" during the pandemic shutdowns, he said.
To help his clients stay in business, Swedberg, a partner at Boyum Barenscheer in Bloomington, Minn., offered them advice on a wide variety of solutions, such as implementing to-go sales and deliveries. As they planned to launch deliveries to replace in-person dining, they needed to address questions about the profitability and feasibility of the move, including analyses of employee compensation, car insurance, and handling tips, which are highly regulated in his state. He was able to do that with Excel, "setting up some advanced formulas so there are just a few key metrics" he needed to adjust to test possible outcomes for different scenarios, he said.
Swedberg also helped clients approach local government leaders about obtaining temporary exemptions from regulations. For instance, some of his restaurant owner clients obtained permission from their towns to expand outdoors when indoor dining was banned. One town let a restaurant take over a municipal parking lot, while another shut down its main street to allow for outdoor dining. When a brewery owner client asked the local board of health if beer delivery could be legalized, the board worked with the business to make it possible.
Swedberg assisted with this process by quantifying how the special permissions that clients were seeking could save their restaurants and their employees' jobs, helping them to make a compelling case to local government.
As clients got more creative, Swedberg helped them work through their ideas. For example, an owner of a Mexican restaurant turned half of his space into a market where customers could buy salsa, meats, and other ingredients that they could use to make meals at home. As Swedberg projected, the costs of the pivot have been minimal, restaurant business got a boost, and the market has done well. "It's been fun to see it come to fruition," he said. On the other hand, another client decided not to follow up on plans to turn his space into a home for four types of restaurants when the projected costs were excessive.
"My job is to get them to organize their thoughts, and then make a true financial projection" to see whether their plans were viable, Swedberg said. "Remember in math when you had to turn a word problem into an equation? That's what I do."
Maintaining the health of service-related practices
Sandy Shecter, CPA, CGMA, is firmwide director of Rehmann Solutions, a division of 900-person Rehmann, which has offices in three states. Shecter, who is located in Detroit, has physician, dentist, and surgical center clients that range in size from one provider to more than 350. Their ability to open and their patient volume were affected when many states ordered shutdowns last spring.
Shecter stepped in to help clients apply for the Paycheck Protection Program and other loans or grants. Her firm also worked with clients to provide data and projections for making decisions on management issues, such as employee furloughs; envisioning new ways to work with patients, such as telemedicine; and addressing critical technology issues, such as cybersecurity or the full outsourcing of a client's IT department.
Her firm also assists with a variety of outsourced services, including HR advice on cutting employee costs, technology expertise that would make telemedicine possible, and outsourced bookkeeping and accounting. "Providing these services on an outsourcing basis enables clients to adjust their usage up or down as needed," she said.
By late September 2020, most of Shecter's clients were back to nearly pre-pandemic patient levels, but she predicts lasting change. Her strategic planning with clients has covered options such as greater use of patient portals to communicate and switching back-office staff to off-site locations.
She advises CPAs to think beyond compliance and focus on giving clients more in terms of business advice. "The pandemic has underscored the value that clients place on real-time information they can use to manage their businesses," she said. "That's truly critical." Her clients, for instance, often seek her help with cash flow management, accounts receivable aging analysis, and the recalculation and monitoring of budgets.
Finding the key to real estate sustainability
As rental income declined during the pandemic, Brandon Hall, CPA, serving as his clients' outsourced CFO, did real estate portfolio analyses for real estate investor clients to determine how they might improve performance on rental income. He also developed tax minimization and cost-segregation strategies to help them enhance cash flow.
Hall, the CEO of 24-employee firm The Real Estate CPA in Raleigh, N.C., builds customized dashboards for clients using Google Sheets, spreadsheets that allow for easy access and collaboration for both him and his clients. It's possible to feed the client's QuickBooks Online accounting data live into that dashboard. "The dashboard will track what's important to the client," Hall said, which typically includes information on occupancy levels, budget-to-costs, rehab costs, cash income earned on a cash property investment, return on equity, and internal rate of return.
Hall was initially worried about the economic uncertainty the pandemic caused since he had not experienced a similar disruption in his career. His business coach offered advice that he uses with his own clients and recommends for other practitioners: Create a financial plan for the coming 12 months that is split into one- to two-month tranches, and set expected financial performance metrics for each tranche. Decide what actions you will take if you miss your metrics by 10%, 20%, and so on — cutting back on staff or expenses, for instance. If you attain your metrics, no changes will be necessary.
Just having a plan that envisions what to do in good outcomes and bad can reduce clients' stress and improve their response to setbacks, Hall said. "You can't control the economy, but you can control how you react to it," he said.
Helping construction companies build stronger businesses
In northern Colorado, the pandemic had minimal economic impact on construction clients due to the vibrance of the local economy, said Ralph Shinn, CPA/PFS, partner at nine-employee ClearPath Advisors in Fort Collins. Surprisingly, the real challenge for these clients was in hiring sufficient laborers or contractors, since some elected to stop working and receive unemployment benefits during the pandemic. When that forced clients to delay some projects, the firm helped them use that time as an opportunity to reevaluate their hiring practices.
The firm also helped clients account and bill for, or make bids incorporating, additional expenses related to the pandemic, such as the costs of personal protective equipment required at job sites, and the added mileage and vehicle charges employees incurred when carpooling became unfeasible. "Many [clients] didn't consider these costs," Shinn said.
Shinn's practice also has professional-services clients ranging from physical therapists to companies that provide hospital administrative services. Many of these clients were unfamiliar with remote work, and so Shinn's firm, which has used remote work for more than 20 years, provided them with free training on the remote-work environment and access to the cloud-based packages it uses. "We wanted to show them that working in a cloud-based and paperless environment can make businesses more efficient, effective, and profitable," Shinn said. The firm also offered advice on the tax advantages of setting up home offices and training for remote staff members.
CPAs can step in when clients struggle
In uncertain times, many clients seek not only tax and accounting help but business advice. While businesses grappled with the economic upheaval brought about by the pandemic, CPAs stepped in to help by identifying clients' needs based on their existing knowledge of their businesses. Offering CAS services can reinforce CPAs' roles as trusted business advisers who can provide practical and effective solutions for business challenges and valuable advice on the best ways to seize opportunities.
About the author
Anita Dennis is a freelance writer based in New Jersey.
To comment on this article or to suggest an idea for another article, contact Courtney Vien, a JofA senior editor, at Courtney.Vien@aicpa-cima.com.
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- COVID-19: Tax, a compilation of resources from the AICPA Tax Section
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