What is advisory in accounting?

Accounting advisory (definition)

Accountants that go beyond financial reporting to support the strategic decision-making of their business clients are providing advisory services.

In an advisory role, accountants use their financial acumen, analytics and industry knowledge to support small business decision making.

Traditional financial accounting and reporting

The simplest models of small business accounting involved cleaning up business books and preparing year-end financial reports like the income statement, balance sheet, cash flow statement and statement of owner's equity.

The need for accounting advisory services

Traditional end-of-year financial reporting brings business performance into focus, often prompting discussions on how to do better. An increasing number of accountants use this conversation as an opportunity to provide clients with strategic insights and add-on services. These are advisory services.

What are financial accounting advisory services

• Tax planning helps the business plan upcoming spending in the most tax-efficient way possible.
• Quarterly or monthly management reporting helps the business owner keep on top of financial metrics by reporting on them more regularly. The accountant can spotlight key trends to help the owner troubleshoot problems or lean into opportunities.
• Refinancing and debt management helps businesses reorganize their lending in a way that lowers interest payments.
• Cash flow advice uses tools such as cash flow projections to predict when a business will and won’t have cash so they can manage their spending. Accountants can also offer solutions to improve cash flow.
• Budgeting and forecasting helps businesses plan their spending and capital investments, while providing more accurate estimates of revenue, costs and profit.
• Driving key performance indicators (KPIs) involves agreeing on key goals for the business – which can be financial or not – and then working out how to measure progress towards them.
• Accounts receivable and/or accounts payable support may be provided to businesses that don’t have effective processes for billing customers, collecting debts, or paying bills.
• Technology and process advisory can make businesses far more efficient by recommending software and automation solutions for time-intensive or error-prone tasks like invoicing, paying bills, bookkeeping, inventory management, and more.
• Business planning can be a great service to help owners grow or optimize their business.
• Continuity planning prepares businesses for disruptive events such as natural disasters, fires, supply chain failures, equipment breakdowns, public health crises, new competitors and emerging technologies, to name a few.
• Succession planning and exit planning can smooth the transition to new ownership and help maximize the sale price of a business.
• Virtual CFO gives small businesses the services of a financial controller, remotely. The virtual CFO uses online accounting software to remotely monitor financial activity and provide key reports, advice, or even sign-off on key financial decisions.

How to find accounting advisory services

The list of potential accounting advisory services is often too long to be fully met by a single provider. You can search for accountants and their specialities in the Xero advisor directory.

See related terms

Financial statements

Accounting period

More terms