Business Diagnostic Engagements

Source: Practical Accountant

Practical Accountant interviewed practitioners, software vendors, consultants, and others for this lead article on diagnostics CPA firms provided to their clients, often as part of their regular quarterly reports. Here are a few types of engagements:

• Benchmarking.
• Forecasting.
• Software applications that create graphic analyses, ratios, and narratives from financial statements.
• Ratio analysis to develop scores to predict future success.
• Cash flow improvement—usually the cash flow problem is symptomatic of some other problem.
• Acting as external CFO.
• Improving productivity and efficiency.
• Review of software to assure proper classification for benchmarking purposes.
• Development of strategic plans, often by facilitating retreats. Developing dashboards and other measurement processes to monitor the plan.
• Pricing analyses.
• Customer acquisition cost analyses.

Graphic presentations are extremely important, as they are easier to understand than numbers.

Many firms believe it is obligatory to provide these services, believing that if they don’t, someone else will.

Firms market these services:

• On their Web sites.
• Through referral sources such as bankers and lawyers. Bankers are very interested in these services as they help with credit analysis.
• Through direct mail to clients, followed up with meetings. The letters should be customized by including information directly relating to the client.
• Some firms get agreements for monthly fixed fees.

For the complete article, click here and select “Business Diagnostic Check-Up” in the August 2008 issue.

From Practical Accountant, August 2008, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004, 800-221-1809.

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