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Integrated Client Accounting Services


What is an Integrated Client Accounting Services platform? It sounds like an oxymoron in a marketplace where most firms have to piece together disparate systems to meet their accounting and bill pay needs. This often means using retail products and/or products that are meant for small business, but are not designed to meet the specific needs of Family Wealth firms. This leaves firms with a solution that is not scalable and does not provide the transparency and controls needed.

In order to understand what an integrated Client Accounting Services platform is, we first need to define what is ‘Client Accounting Services’. As many Family Wealth firms look to expand their offering and offer more holistic solutions to their clients they are increasingly adding financial reporting such as cash flow analysis and bill pay for their clients. And for good reason, 62% of firms recently surveyed by Datafaction, say they provide bill pay because it adds stickiness to the relationship.

Client Accounting Services includes bill pay, cash flow analysis and financial reporting. It requires that the accounting and bill pay functions be integrated. Simply put, bill pay is the input, and cash flow analysis is the output. The problem is that for many firms, the bill pay system is separate from the accounting system, and the two do not talk to each other. This requires the bookkeeper to be the main conduit by manually entering data into both systems. This situation is compounded by the fact that many firms are using a consumer-based general ledger that is not multi-entity. This requires the bookkeeper to constantly be logging into and out of the various entities that your client owns. Your typical high net worth client will have multiple entities you need to track. Multiply these by dozens of clients and you can see how this type of solution quickly prevents you from scaling your business. 

As firms move beyond offering bill pay on an ad hoc basis (or as I would say more accurately on an accidental basis) and progress to offering Client Accounting Services on a more holistic and official basis, they need a solution that scales, provides the transparency across clients and offers the controls needed to properly manage this type of offering. Providing scale and more control may sound like competing priorities, but when an approval workflow is integrated with a multi-entity general ledger and a banking platform, it is possible to create scale while also gaining control and visibility.

Key Component of an Integrated Client Accounting Services Platform

There are five key components you should look for in a technology solution. They are:

  1. Integrated Document Imaging: It doesn’t sound like that big of a deal, but lack of integration with electronic documents was the number one pain point for QuickBooks users, as identified by our recent market research survey. Having an electronic image of a bill and the ability to include that image as part of the invoice payment approval process is a critical component to scaling the approval process. It also makes audits and client inquiries much easier to manage than trying to find the document on a file server. Integrated imaging saves time – period.
  2. Cloud Based Accounting: The accounting system is at the heart of your operations.  Your accounting system needs to be multi-entity. Having to log in and out of various client files is not scalable. Another key aspect is having your accounting system be in the cloud, making it accessible anywhere you can access a browser. The recent sudden shut down demonstrated the value of such accessibility, as well as removing the added burden of purchasing and managing hardware. Finally, your accounting needs to integrate with your approval workflow and payment system, which eliminates dual entry of data. Dual data entry is  death by a thousand journal entries.
  3. Approval Workflow: Having an approval workflow that is integrated with your accounting system and payment system is critical. Your approval workflow should be able to handle different approval paths for different dollar amounts and have the ability to include the end client in the approval workflow where appropriate. The approval system should act as a gatekeeper to the release of funds. If it is separated, then funds can be released independent of the approval process - which makes it an "approval process" in name only.
  4. Integrated Treasury Management: At the end of the day your clients’ invoices need to be paid. Using a client’s bank accounts opens up firms to all sorts of risk and it can be difficult to manage and predict how much cash will be on hand. Likewise using a payment provider may leave you in the dark on when the actual invoice might get paid and the information reporting is not integrated with your accounting system. When all the payments are marked as to the payment provider, how do you track what your client spent their money on?
  5. API Driven Ecosystem: Finally client accounting is only one aspect of your service offering. You need your accounting and bill pay solution to be able to integrate into your larger technology stack. Does this system plug into your investment reporting system? Can you have your financial reporting be investment aware in a streamlined manner? Your goal is to offer holistic service to your clients and you need the ability for technology components to securely integrate with each other in order for this to happen in an efficient and scalable manner.

Want to learn more about how AgilLink from Datafaction stacks up? Please download this one pager.

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