The Next-Gen Accounting Firm Runs on CAS and Automation

It’s hard to believe that not too long ago, one of the biggest challenges accounting firms faced was attracting new business. Today, I rarely hear firm leaders complain about not having enough work. Instead, their complaints are about not having enough people or time to do the work they already have—and that lack of capacity is stunting their growth.

The clients are there. The work is there. The potential is there. What’s often missing is the ability to capitalize on these things. The good news is that there’s a two-ingredient recipe to solve this:

1. Embrace client accounting services (CAS).
2. Automate rote tasks with technology.

Individually, CAS and automation are potential game-changers, opening new possibilities for firms to do more diverse and more efficient work. But when firms deploy both together, true transformation can happen, and I think this move is what’ll power the next generation of accounting firms.

CAS Is the Growth Engine

CAS is the growth engine, and the bottom-line results don’t lie. In 2024, CAS practices reported a median growth rate of 17% and a significant increase in net client fees per professional. But those aren’t the only benefits:

• For clients who only thought of reaching out to their accountant once a year at tax time, CAS is a complete change of course. Now their accountant is like an outsourced finance department, providing year-round assistance with everything from accounts receivable to payroll. More significantly, that accountant is now a trusted partner offering strategic chief financial officer-level insights across a wide range of business matters.
• For the firm, the client relationship shifts from strictly a tax and compliance engagement to something far broader and more sustainable.
• For partners and associates, as well as those thinking of pursuing accounting as a career, CAS can help provide a more balanced and attractive career path that includes varied workloads, fewer deadline pressures, and opportunities to nurture deeper client relationships. These are the selling points that can bring in the young talent the profession is desperate to attract.

Automation Is the Catalyst

While CAS is the growth engine that powers these benefits for clients, firms, and employees, automation is the catalyst that multiplies and accelerates them.

Automation frees up accountants to do the higher-value work that CAS is known for by making routine compliance tasks faster, cheaper, and more accurate. Let’s face it, most accountants would rather spend their time on things like forecasting, offering advice, and providing valuable business insights than crunching numbers. And most clients would welcome that kind of help.

Meaningful improvement in the tasks that are keeping accountants from this important work can help foster:

• Predictability, which can be achieved through an increase in monthly recurring revenue.
• Client retention, which will always be cheaper than attracting new clients.
• Profitability, driven by higher effective billing rates.
• Efficiency, as demonstrated by higher jobs per staff and lower average time to complete a job.
• A better client experience, with more satisfied clients leading to a higher net promoter score and more referrals.

Losing out on these benefits is just one consequence of forgoing automation. The other big consequence is opportunity cost. Firms throughout the profession are already automating many of their routine tasks. That means those that choose not to, and focus only on compliance, may find themselves in a race to the bottom on pricing. That’s not a path to growth.

Of course, there are those who choose to believe that artificial intelligence (AI) is coming for our jobs. But my counterargument to this is simple: AI doesn’t replace people—it replaces tasks. Which means that while AI won’t take an accountant’s job, another accountant using AI probably will.

Making the Move: The Keys to Scaling CAS With Automation

Combining CAS and automation sounds great in theory, but what does it look like in practice? Building a growth-oriented firm with CAS and automation means focusing on four key areas:

• Standardized and automated workflows: Understand where automation can provide the most value in the firm—and where it can’t. A good rule of thumb: Routine and repeatable tasks are good candidates for automation, and strategic tasks are best left to human beings.
• Pricing models that reward efficiency: Automation provides a good excuse to revisit your pricing structure to enhance profitability. Consider alternatives like value-based, subscription, or fixed-fee models.
• An organizational chart that’s system-dependent, not people-dependent: Consider how the automation of certain tasks will shift responsibilities. That shift will impact roles, processes, and accountability across the firm.
• Investing in people: No matter how much technology you have, your people will always be your greatest asset. As automation increasingly handles more of the “what” of your work, make sure your team is elevating the “why” and communicating that to your clients.

Is Your Firm Next-Gen Ready?

In 2024, CAS revenue was projected to nearly double over the next three years. As this momentum runs parallel with the rapid advances in AI and other technologies, it’s clear that the one-two punch of CAS and automation is going to reshape the future of accounting—and the timing couldn’t be better.

The profession needs more capacity to do a wider variety of work for clients, and that capacity increase is contingent on talented young people choosing accounting as a career.

The good news is that CAS and automation can help on both fronts. By allowing for more strategic work and positioning accountants in higher-value roles, this combination can help leaders build a next-gen, growth-oriented firm that’s focused on moving forward, not standing still.