6 min read

Want to Up Your Advisory Game? Start with Cash Flow

Featured Image

Before we dive in, I want to speak to the fact that the title and topic of this post may appear to be highly biased, coming from the co-founder of Helm a short term cash flow forecasting tool. And it’s true, I am biased. I do believe that cash flow is the place to begin if you’re looking to raise your advisory game. But my bias does not come from Helm. For nearly six years, we’ve provided advisory services to small business clients in our accounting firm, Twenty Eighty. We’ve always offered these services along with bookkeeping, payroll and basic tax prep and filing. Included in the advisory services was cash flow forecasting. And this is where my bias comes from.


Define Advisory (or don’t)

Now that we have that out of the way, let’s define advisory services. In an article that I wrote last year titled “What the Heck is an Advisor?” I spoke to how undefined advisory services are in the accounting industry. And there is no one interpretation of advisory that we as an industry have ascribed to. And this lack of clarity actually creates an opportunity for advisory to be what you want it to be. It allows us to tailor our services to fit our own bookkeeping or accounting practice, our areas of expertise, our style and our clients, etc. And this results in advisory services being extremely broad and in some cases unique. Yet no matter what your interpretation of advisory is, offering cash flow forecasting can still be a solid play.


The Facts and the Goals

I want to revisit a few pieces of data that you’ve very likely heard before.

  • Over 50% of small businesses fail in the first 5 years*
  • Over 80% of small businesses fail in 10 years*
  • Over 80% of all failures are due to cash flow issues*

Here’s an additional piece of data that’s not thrown around as commonly.

  • Survival rates of businesses that manage their cash flow is 90%**

Wow, 90%? That’s a significant difference. Although after more thought, it makes logical sense based on what we know from the other three statistics and the likelihood of a business failing. But still when presented this way I think it creates an interesting perspective.

As bookkeepers and accountants, we’re all aspiring to do one key thing. Okay maybe two key things. Help businesses succeed while earning a good living. We ventured down this career path with a desire to achieve these two goals. And I suspect you too humbly hold some professional satisfaction each time you’re able to sit back and think “I helped my client do that”. So if we want to help businesses succeed and we know that businesses that manage their cash are 90% likely to succeed, well, this may already be starting to get more clear.


How Cash Flow Raises your Game

Clients value cash flow

Running a business is stressful. Our clients are constantly juggling the hundreds of tasks that land on their ‘to do list’. The stress of whether or not they have enough money to cover payroll next week or rent on the first of the month, to pay a vendor bill, or to send money to themselves is typically the biggest stressor of all. The State of Small Business Cash Flow published by Intuit Inc. reports that 69% of small business owners have been kept up at night by concerns of cash flow. This is weighing on their minds very heavily. Which means that when most business owners are presented with the opportunity to have you as their professional, forecast their cash flow and assist with them with their cash management, they are highly inclined to take you up on the offer. When you provide a small business owner with the optics on their future cash position, you’re giving them peace of mind. You’re instantly reducing their stress. Not only that, these insights also provide you and your client with an opportunity to take action based on the forecasted cash highs and lows. You’re helping them succeed.

Clients will pay for cash flow

As a result of the high value that clients place on cash flow forecasting and cash management, they’re naturally willing to pay a premium for this service. The reduction of stress along with the foresight into their financial future that they didn’t previously have far outweigh the monetary cost of your services each month. In fact, the peace of mind and opportunity to make proactive decisions rather than being reactive is something that it’s difficult to put a price on due to the value it holds. And if we think about the second goal of an accounting or bookkeeping professional, to earn a decent living, well, providing cash flow services contributes to this. The value of a cash flow forecast isn’t in the time it takes to create the forecast, the value is in what you and the client do with the information. The discussions you have, insights you gain and actions you take. Cash flow fits the value pricing model extremely well which means once you find the right tool to create a cash flow forecast efficiently it becomes a high value add on for both existing and new clients.


Raise Your Game Even Further Yet

Raise your game even further? That’s right. The truth is cash flow forecasting can actually open the doors to more advisory services. It creates the opportunity to increase your suite of services offered to clients.

In order to offer advisory services, whatever those services look like for you and your clients, there’s two things that you need. First, you need a deep understanding of the business. A foundational level of knowledge that gives you enough information to offer sound advice to the client. And second, you will need the client’s trust. Without their trust, your advice will fall on deaf ears, and they won’t likely pay you for advice they aren’t willing to listen to. And from my experience I know that cash flow forecasting organically creates both of these things, knowledge and trust. It’s a by-product of the cash flow forecasting and cash management process.

You see, in order to create an accurate cash flow forecast, you need to know the cash inflows and cash outflows of the business. You may very well need to ask questions that you didn’t otherwise need to ask. You’ll require details that you didn’t otherwise require. And as a result, you get to know the client’s business on a more intimate level. The depth of understanding naturally increases, giving you the opportunity to create dialogue that you wouldn’t have previously needed to have with the client.

From my experience, it’s not long after creating the very first cash flow forecast for a client that they start to gain a new level of trust. They acknowledge the time you’ve taken to get to know their business so thoroughly and they also appreciate that you’re now providing new insights into their future. You’re partnering with them to take actions and make decisions that they may not have previously had the optics to make. And small business owners very often take comfort in knowing that they’re not in this alone. They trust you.

With this new level of knowledge and heightened trust, now you can raise your game further. You can now offer some broader advisory services beyond cash flow, custom to the needs of the client. Do they require some new financing that you can help them apply for? Do they need to renegotiate terms with a vendor? Or look at some additional KPI’s that are relevant for their industry? This list can be nearly endless, my point being that the knowledge and trust that you’ve gained from cash flow forecasting set you up nicely for offering even more highly valuable and highly profitable advisory services.


Touch Down

If you’re not yet convinced that offering cash flow forecasting is the play you should make, here’s one more thing to consider. Despite all of the above information pointing to offering cash flow to clients, less than one third of accounting and bookkeeping professionals are actually doing it. And although we’re seeing this number increase, it’s still the minority of professionals who are assisting small businesses with what they need the most, cash flow. Which means, providing this as a service can give you a significant competitive advantage.

I’m going to be completely honest with you, when we started offering cash flow services to our clients, we didn’t think through any of this. We didn’t fully realize the positive impact it was going to have, not only for our clients but also for our accounting firm. Our cash flow forecasting services began with one or two clients who were experiencing tough economic times of our local economy. We simply had enough information about these clients that we knew that our only chance for survival was for them to have the forward-looking projections so that they could plan their future and tightly manage their cash. And this was the start of our cash flow advisory journey. The start of my bias. Which is why cash flow cash flow advisory is now a pillar to the service offering to the clients of our firm.

Cash flow advisory contributes to the success of the client, is a valuable and profitable service offering, creates opportunities to broaden your services and differentiates you from your competitor down the street or a click away online. What some might call this a ‘win-win’.


*Canada, US and UK failure rates, cash flow mismanagement.

**relative success