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Stop Payments To Stop Putin · The Accounting Podcast

• [00:00:00] Thank you to our sponsor, A2X David Leary: For our listeners providing e-commerce accounting services, you know the pain of seeing lumpsum deposits from Amazon or Shopify hitting your client's GL. It usually means you're about to spend hours manually categorizing revenue fees and other transactions before reconciling. E-commerce accounting doesn't have to be this hard. Stay tuned to hear more from our sponsor, A2X, later in the episode. Jonathan Weiss: Hey, Blake and David, it's Jon here from New York. I'm actually outside right now, shoveling my snow. So, I wanted to give you guys a quick note to say that I'm listening to The Cloud Accounting Podcast while I'm shoveling the snow. And when I'm done, I'm going to go to Earmark and get CPE credit for it. So, just wanted to say thanks for making my snow shoveling much more bearable, and thanks for the amazing ability to get CPE for that. Hope you guys are doing well. Thanks for a great show. David Leary: Coming to you weekly from the OnPay recording studio, this is The Cloud Accounting Podcast. Blake: Hello and welcome to another episode of The Cloud Accounting Podcast, I'm Blake Oliver. David: I'm David Leary. Blake: Good morning to you, Saturday morning, February 26th, David. David: Good morning to you. Blake: It's been a tough week with this whole Ukraine-Russia thing going on. It feels weird to be online doing the usual thing when a country is invading another country. This is the weird cognitive dissonance of the internet now, where if something horrible is going on in the world, we see it firsthand. So, I have my iPad open with the news playing, and there's social media video of planes shooting bombs at people, and it's strange. David: Yeah. And it's hard to digest the real impact yet. I think it's still early. [00:01:45] The direct impact the war can potentially have on accounting David: But it does kind of impact is, I think I saw Acumatica; that's all developed in Russia, the code. Blake: Really? Oh wow. David: Russian engineers. And so, there could be an impact on an industry, and I think we're going to start to find this out. And I think there's other apps that have engineers in the Ukraine as well. So, we're going to- I think in a week or so, we'll probably start hearing some stories of it impacting our industry more directly. Blake: Yeah. David: Outside obviously, fuel costs and everything else. [00:02:13] Cutting Russia off from SWIFT Blake: The one thing that I did see that is tied directly into what we talk about all the time is this idea that one way the international community could stop Russia is by cutting off Russia’s access to banking- international banking- through the SWIFT payment system. David: Yup. They did that, right? Blake: No. So, Boris Johnson of the UK, prime minister, and I think Biden has- I'm not sure if Biden has said this too, but there have been world leaders who have said that we need to do this. We need to cut off Russia from the international banking system, because that would hurt a lot. But this is the problem is that a lot of countries aren't willing to take that hit themselves. And there's actually a very simple way to solve this war, to stop it without force, which is sanctions that actually do something. David: Well, ‘cause right now, I know that Russia has been kicked out of the Eurovision Song Contest. Blake: Yeah, that's really going to hurt them. David: That’s the kind of stuff that's being reported on the news. This is- I dunno- it’s bananas. Blake: So, this is the thing about the sanctions that- the news that you have to dig a little bit to find out is that yes, there are sanctions being put in place, but the most meaningful sanctions would be on international payments and finance and banking, because that basically, would stop trade with Russia in most countries. Because if they can't transact in U.S. dollars, that's very difficult, to do international trade. David: Yeah, I just Google searched, and I mean, there's news articles that are half-hour-old regarding SWIFT and Russia. And so, I think next week maybe I'll give a follow up. [00:03:47] What is SWIFT? A brief history Blake: So, I just wanted to talk a little bit about SWIFT, for those who aren't familiar with it. It's really interesting to look into. So, it's called the Society for Worldwide Interbank Financial Telecommunication, SWIFT. It's a Belgian cooperative society that serves as an intermediary and executor of financial transactions between banks worldwide. To simplify this, every bank that uses SWIFT has a corresponding account with every other bank that uses SWIFT. And then SWIFT is the messaging platform on which they make adjustments to those interbank accounts. So, that's how banks can send funds, to send transactions to each other, is using SWIFT. David: Yeah, it's like a global modern ACH, in a way, right? Blake: Well, but it's old. It's been- it's for wire transfers. So, this started with- this was the original wire transfer system. So, it's 11,000 financial institutions in 200 countries, and they, back in 2018, we're exchanging an average of over 32 million messages per day. So, if you can't send payment orders, you can't really do business, right? That's the idea. But you know, it's super inefficient. That's why wire transfers cost a lot of money. This is what a lot of these new fintechs have basically been operating around in many ways. But it's still super critical for big business, this is how you do it, right? Big businesses send money through SWIFT, through wires. So, it's been around since 1973; originally started with 239 banks in 15 countries. And before SWIFT, international financial transactions were communicated over telex, a public system involving manual writing and reading of messages. And it was set up out a fear of what might happen if a single private and fully American entity controlled global financial flows. So, actually, SWIFT was set up as a way to decentralize banking messaging and all that. Interesting. [00:05:41] Russian business leaders can put economic pressure on Putin to stop war David: So, it’s the theory that Russian business leaders, Russian banks, other people involved in the Russian economy will be mad that SWIFT got turned off, and they'll put pressure on Putin to pull back the reins on his exploits. Blake: Yeah, because it could potentially stop economic activity, right? It would have devastating consequences for Russia's economy. And then that would actually make a difference; that would put political pressure on Putin. So, it's an interesting idea. Of course, then, the counterpoint is, well, Russia has been very- on the cutting edge with crypto and cryptocurrency. And so, could they get around SWIFT just using cryptocurrencies? And this is the thing about crypto, is not controlled by any single entity, it allows both good actors and bad actors to circumvent the traditional payment reels. And if we did stop Russia from using SWIFT, would that just accelerate cryptocurrency as a means of getting around now this new restriction? So, I think that leads us into app news, right? So, SWIFT, it's payments technology. A lot of apps that we talk about are payments apps. I also have four listener messages, but we promised last week that we would do app news first. So, we're going to talk about that. So, David- David: Yes. basically, we have double the app news, ‘cause we have the app news we didn't get to last week, and the new app news this week. So, I mean, I have 10 or 12 browser tabs open with different app news. I know you have some share. Blake: Yeah, what's top of mind for you? [00:07:18] App news - Airbase, Payhawk, and Brex David: I'll jump into these three. So, you have Airbase, Brex and then Payhawk. I think not many people are familiar with Payhawk yet, but Payhawk just took a 100-million-dollar round from Lightspeed Venture Partners. And they really are gonna use this money to attack the U.S. market. So, in the U.S. market, Brex just announced that they're offering people to create multiple bank accounts inside their Brex mobile app. Now, you can create up to eight accounts. So, if you want to separate your payroll account, and a marketing account, and a tax account, you can move the money between these accounts. So, Brex is moving beyond just being a spend card, right? Which they- the bank before, but now, they're a more functional bank, right? And actually, kind of similar to Relay, right? If you consider [CROSSTALK]. Blake: Wait, wait, wait. So, hold on. You mentioned Payhawk raised a bunch of money though. So, it's Payhawk, and Brex. David: Oh, it's a Brex-type product, yep. So, there's news from Airbase, Brex and pay [INAUDIBLE]. Blake: And Airbase is also a Brex-type product. David: And Brex-type product, yep. Blake: So, they all started out as spend cards, corporate credit cards, essentially. David: Yes. Blake: With modern ability to delegate, and manage, and give access to everybody, and do purchase orders, and all that stuff, right? David: Yep. Blake: Spend. Spend management. David: And spend cards, yeah. But it's opening up into other- expanding into other items. The other announcement Brex had, which I thought was kind of interesting we missed, it was about a month ago, but they teamed up with 1Password. So, these are, you know, those apps you use to share your passwords across your company, right, and store your passwords. They've teamed up with them, so now, you can fill- autofill out card information at checkouts, right? And so, I could, in theory- the way this reads is, are companies on one pass- one password? Sorry, one password. I can put in a virtual credit card into one password, then when you go to Amazon to buy something, it's going to pre-fill that credit card in, the virtual card. So, you don't even have to come get me. Blake: Oh, well. David: It’s a virtual card, in theory. It's kind of how it reads, but you know, until you use these features, sometimes it's hard to guess- Blake: Yeah. No, that makes a lot of sense. that would be really cool if it was just a browser extension that automatically filled in the correct virtual card number to make the purchase, because it could recognize what you wanted to do. David: And it eliminates that dance of you coming to me, or sending a request through Brex, “Hey can I buy this?” And then you are spinning up your own virtual card and typing it into the browser. It eliminates a lot of back and forth, in theory. That's what's kind of interesting. Blake: And just to make this clear for folks who haven't used this, the whole idea of this virtual card thing is really interesting, because the workflow might go like, “David, I need to buy a piece of equipment for the podcast.” And you're the purchase approver. And so, I submit an approval request or request a purchase through Slack or something like that. And these apps route that approval to you, you approve it, I'm issued a virtual card number for just the amount of that purchase. And then I would go and type that into Amazon to use as my payment method. But you're saying we can automate the typing in of that into Amazon as well. David: Yes. Blake: That's pretty neat. [00:10:18] American Express and Airbase create virtual AMEX cards David: And then American Express made announcements with Airbase. So, up to this point, I feel like all these neo banks and these virtual card companies that are all on these are MasterCard. I don't know if you've noticed that, right? You want to spin up a virtual credit card, it's a Visa or MasterCard, depending on who you're using, right? Because Visa and MasterCard, all of these APIs are doing that. Well, American Express announced with Airbase that- so, if you're using Airbase, you now can create virtual AMEX cards. Blake: And this was not possible before; it was all Visa and MasterCard. David: I don’t think so. I mean, maybe it was, but it's been very quiet. But now, I think that this is significant announcement. Blake: That's a big deal because people love their AMEX points. David: Yeah. Blake: And that's one of the reasons why folks don't want to move from traditional AMEX corporate cards to Brex, or to Airbase or whatever, right? Because they want- they love those miles. They love those points. Execs do. David: Previously, all these companies have been built on the Visa and MasterCard APIs. And obviously, if people are building on them Visa and MasterCard APIs, they're not using American Express. So, this is kind of American Express, I think, getting into this game a lot more seriously now. Blake: Nice. [00:11:24] Thank you to our Sponsor, Canopy David Leary: This episode of The Cloud Accounting podcast is sponsored by Canopy. Accounting practice management software should bring together all your firm's mission-critical functions in one place: client management, document management, workflow, time and billing, and payments, to keep your team organized. Canopy knows that not all firms are on the same practice management journey or timeline. So, Canopy lets you build your practice management platform as you need it. You start with client management as your foundation, then you choose the modules that your firm needs. And since nobody likes paying for modules they don't use, they offer modular pricing as well. Canopy integrates with QuickBooks Online, Xero, FreshBooks, CRMs, form builders, spreadsheets, calendars, email, and Zapier. They have a mobile app, centralized file management, fillable PDFs, a client portal, task management, and the list goes on and on. For either integration with the IRS, you can easily retrieve all your clients’ transcripts, notices, and child tax care credit payments without leaving Canopy. To try Canopy free for 30 days, head over to cloudaccountingpodcast. promo/canopy. That is cloudaccountingpodcast. promo/canopy. [00:12:32] Intuit's new revenue-sharing opportunity Blake: Well, let's see. What do I have on my list? Intuit news. I know you have earnings stuff to talk about. Before we get into that, maybe you could explain to me what you think about this new revenue share opportunity with QuickBooks. They've changed up how they reward ProAdvisors. So, it's called the Intuit ProAdvisor preferred revenue share program. It's in beta right now and has only been rolled out to a few hundred ProAdvisors. And I believe this is what Hector Garcia was talking about with me on the Earmark podcast I did with him recently. My other show, Earmark Accounting Podcast, Hector Garcia joined me, and we spent an hour talking about the future of QuickBooks. And he's a part of this new revenue share program. And it's changing how he approaches QuickBooks Online. Because for the first time, you can get pretty decent rewards for putting clients onto QuickBooks Online Advanced, or any QuickBooks product. So, before I get into the details, I'm wondering what you- if you have any initial thoughts on this whole change. David: I mean, I think I got more out of your interview with Hector than the article. I kind of have this article up that was on Accounting Today. But it feels like, or it smells like Intuit is finally going to remove that incentive to push Enterprise down people's throats; QuickBooks Desktop Enterprise. Blake: Well, they didn't say anything about taking away the rev share. David: In a way, but you have no reason to push QuickBooks Online if the QuickBooks Desktop Enterprise commission is so large. Blake: Right. So, they're making more, yeah. They're making more, even, or they're bringing the commission for QuickBooks Online up to- I mean, it's not the same yet, I don't think, but it's still getting- it's getting better, right? The way this works is, if you enroll in this program, ProAdvisors get 30 percent of the billed price on base fees and 15 percent of the employee fees for 12 months. Clients get their first month free as well as a 50 percent discount for the next three months. So, there's a benefit on both sides. So, how much do you actually make on this? I played around with it- it looks like, you know, you could get a few hundred dollars per QuickBooks Online account you sign up. They've made it a little more convenient because you don't have to bill it through to the client yourself like it- with a lot of these programs, and with this program in the past, or Intuit’s discounts in the past, you, as a firm, had to bill your client, and then you would get a discount. And so, your margin would be there, right? Be like, what you pay Intuit, less the discount, and then you charge your client the full price. But that's a lot of work. So, a lot of firms just never bothered to do it. With this, when you enroll in the program, Intuit will bill the client directly, and give you a deposit for the commission. David: Yeah, and this is where this gets interesting, because they have this verbiage on here about growing your revenue. So, you're going to receive 30 percent of the billed price, based on base fees, and 15 percent of the employee fees for 12 months. So, you're going to get a piece of the seat licenses? Blake: I think what they mean is by that, by payroll. David: Just payroll? Payroll fees, probably. Blake: Payroll is half of what the GL product is, I think. You know, it's more clear than many of these programs have been in the past, but it's still a little bit complex, in that regard. You know, it would be nice if it was just a flat percentage across everything. David: Well, they have a- so, on this- and we'll link this in the show notes. I'm on their website, so they have a chart that shows how this calculates out to where what you're going to get- like a simple QuickBooks Online simple start that's 25 bucks a month. It's discounted- discount per month, and it comes out- the rev share for the first three months is like $3.75. During that next nine, you're going to get that $7.50. Post QuickBooks Online Advance, you're looking at $27.54. Blake: So, here's the thing, my thinking on this. I've been in this space for a decade now. I've been a part of a lot of these programs with Xero, with Intuit, with many other different apps. And for me, personally, I've never gotten that excited about any of these rev share opportunities, because in the big scheme of things, how much of your firm's revenue comes from this? If you're getting maybe a few hundred dollars per client, per year, and it's only for the first year, my monthly accounting fees dwarf that, you know? I mean, my monthly fee is more than that. David: There are some firms that this is their bread and butter This is the game they play- a lot of the VARs, right? This is the game they play. This is the game they're in, but it's a combination of a lot of things, not just this, because it's merchant services. You build out the suite of products, you get people on it, and then you get that residual revenue for a long time. Blake: And you provide premium support that Intuit can't; you do all the setups. You're basically a VAR. David: Yeah. It’s a fair- in the grand scheme, let's just say whatever, 100,000 QuickBooks ProAdvisors, the people that this is the primary source of their revenue is probably a handful. If it's 100, I'd be surprised, that are really, “Hey, this is how we make our money.” But in general- and I've always felt this with every app developer I've always talked to- accountants don't want spiffs. They want easy-to-understand pricing, and they just want to make sure your product solves the customer problem. ‘Cause really- and I've had this- when an accountant asked me, I'll use it, but I want $20 per user. The second somebody else comes and spiffs some- your competing app spiffs that person $21, they’re just going to move the clients. The people that chase these numbers, you kind of don't want as customers, in a way. Blake: Yeah, exactly. David: ‘Cause they're just going to jump to the next guy. Blake: Right. David: I dunno. You see this a lot in merchant service. I think merchant service is the worst; a nickel difference and people are moving clients over. Blake: Yeah. If somebody is coming over to you for a discount on three months of their QuickBooks Online subscription, that's not a good enough reason to take them on as a client. But like you said, I think there's a lot of QuickBooks ProAdvisors, or at least there's some really high-volume ones where this is helping people get on QuickBooks, setting them up, charging a fee for that, doing support; that's a big thing. And for them, this is going to make a big difference. But for- if you're building a cloud accounting practice, if you're building a CAS practice, or an outsource bookkeeping practice, or whatever you like to call it, don't make your decisions based on this. Making your decision based on how much rev share you're getting on QuickBooks Online is like making your decision of whether or not to engage in a business transaction based on the tax consequences of it. In the end, you should be making the decision mostly based on the business model, the business metrics, not based on a tax savings. Because it's just not going to be that much in the end, if you're making a good business decision; it's not going to make you or break you. David: And I think the bigger here issues for accountants and bookkeepers is the whole, who bills the client? And I think the ideal situation you'd want, either I'm going to do all the billing of the client, and roll it into my fees, and then I'll pay Intuit for all of my subscriptions, or it's best that all the accountants- all the clients just pay Intuit directly. But I don't know any accountant that is set up where 100 percent of their clients is one or the other. Because Intuit and other apps have these different programs. So, these clients came in under this program, these clients came in this way, these clients I added and I'm handling the billing for. From a management perspective, it's messy. You’d almost want- the best service would be, solve that problem. Blake: Yeah. David: I think accountants would rather have that clean over a commission, in my theory. Blake: Which is why I just never really bothered with them because it was just too difficult to manage these programs. The time it takes to build a client and then get the commission, and then, you know, all that. It's just, it's not anywhere near what you can make if you deliver a really high-quality outsourced accounting practice like service. [00:20:28] QuickBooks Online updates Blake: So, let's move on from that and talk about QuickBooks Online updates. And then I want to talk about numbers, Intuit’s earnings. So, what's new in QuickBooks Online? We're talking about January, because we've been a little bit behind on the app news. So, in January, QuickBooks announced three new features of note. The PandaDoc connector is one of the latest additions to premium apps. So, QuickBooks Online Advanced- it's only for advanced- now has a direct connection to PandaDoc, which is a very popular proposal payments software, that I used personally years ago, in my firm. I loved how customizable it was. The proposals are beautiful. So, it allows you to automatically create PandaDoc documents, customized vendor, customer-facing forms, all from within QuickBooks Online Advanced, there's templates. I don't know exactly how this workflow goes, but it seems like you can automate, you know, creating of that from QuickBooks Online, so you don't have to go into PandaDoc and do it, and then they sync. That's really neat. David: And that's in QuickBooks Online Advanced, and really, that's being targeted at small business owners because in theory, Practice Ignition’s on the- Blake: Accountant’s side. David: Accountant’s side, yeah. Blake: Yeah. Although I do know a lot of firms that use PandaDoc because of the customization, instead of Practice Ignition. Sort of like, you gotta take a look at both, I would recommend. They're very different tools, but yeah. And it's only QuickBooks Online Advanced. Again, more features coming to Advanced; that's where they're pushing people. You can now securely transfer your financial data to QuickBooks Online from Sage 50 with assistants using Dataswitcher, QuickBooks new migration partner. So, they're going after the Sage 50 market, I imagine, to get them onto QuickBooks Online Advanced. Most migrations complete in less than 72 hours. I love these kinds of services because if you're an accountant and you have a good relationship with one of these services, it gives you a way to migrate clients, migrate prospects without having to do it yourself, which is a huge time suck. And usually, they're offshoring the labor part. So, it can be a really cheap service, a really affordable service. And they'll bring over everything for up to two years in the past, which is great, too. David: And in general, you can- there's other firms that kind of specialize this. So, you could go to another firm, they'll convert your client, give you back the file, and you don't have to do any work. Blake: Yeah. And that's the way to go. You want the ongoing, right? You don't want to have to be stuck doing all these conversions. I mean, that’s how- David: And you want somebody who does it a lot, so they know all the tricks, and the headaches, and the stumbling blocks. And I'd prefer- I mean, if I had to pick and choose, I'm going to go with an accounting firm that works with the companies that do it, than me try to work with companies that do it directly. Blake: Finally, audit log data retention has been increased to seven years. I think generally, seven years is the max that you have to go back for stuff. So, it's good that the audit log and QuickBooks Online now, it goes back seven years. David: That's great, because now, you have seven years of transactions entered by apps, and it doesn't say which app put the transaction in. Blake: Oh, great. Well, hopefully, they fix that, too, right? David: Still, when are the- fix that. I know if someone's listening from Intuit, just put in the Audit trail, the app that put the data in, not the person who connected the app. If you connect- that's the way it works- if you connect an app, let's say you connect Dext. Dext puts the transactions into QuickBooks. It shows that you, Blake, put the transaction in QuickBooks. So, you never can really, “Well, what if you connect 10 apps?” I don't know which apps. I mean, you can kind of work backwards and guess, but it makes it very hard. Very, very hard. Blake: Yeah, not a good implementation of that. [00:24:01] Intuit's latest earnings Blake: David, what about Intuit earnings? How's Intuit doing these days? They were crushing it during the pandemic. Are they still crushing it? David: I think so. I think in general, they have the earnings, but the juice is in the conference calls, right? Blake: And I'm so glad that you take the time to actually look at these transcripts and read them. David: So, at a high level, you know how they talk about the big five bets, right? Blake: Yeah, yeah. David: So, they instantly come out talking about their expert platform- TurboTax Live, QuickBooks Live- this is now the fourth year of TurboTax Live. This is now the second year of QuickBooks Live. They've doubled their customer base, and they're finally seeing improved retention rates with QuickBooks Live. Blake: Doubled the customer base with QuickBooks Live? David: Yeah, from a year ago. Blake: But they didn't say what their base was. David: No, that number is still- yeah, they have not actually released QuickBooks Live numbers, right? But it also makes sense, ‘cause I think we've talked about this before. It's very obvious that's what customers want. So, I think they probably have way more people signing up for QuickBooks Live than they're prepared for as a product offering just yet. And so, that's why they probably have people turn. Blake: 200 percent growth is crazy for accounting services; that's nuts. David: The other one is Credit Karma Money. So, we talked about that; that's the bank account for the consumers from Credit Karma. They have fully integrated that in. So now, 36 million TurboTax customers are getting able to deposit up to 88 billion in their tax refunds into this checking account if they want. So, Intuit, one successful tax season, they could really be big in this peer-to-peer consumer cash bank game. Blake: How many billions did you just say? David: 88 billion in tax refunds. Blake: Okay, I'm trying to put this in context. So, 88 billion is more than Tether, you know, the one-to-one crypto to U.S. dollars. So, instantly- I mean, that would be if they got everything, right? They'll get a good chunk of it though. So, Intuit is going to become a big bank. I mean, they already are, because they have this service, right? But they're going to grow their banking product so quickly, because people are going to be depositing refunds to get it fast, and they'll try it, and then they'll use it, and they'll probably stick around. Some of them will. David: It's all going to be how they roll that out in TurboTax, and in doing the wizard, and the onboarding, and is it confusing? Blake: It’s brilliant. David: But if they can guarantee you'll get it faster than transferring it to your normal bank, like, “Hey we'll give it to you- Blake: Instantly. David: -next morning or something, people are going to sign for in a heartbeat. Blake: Well then, why wouldn't they front the cash? Because they know they're going to get it from the IRS; it’s just a risk management thing. Yeah, it's great. I mean, it's just so brilliant to connect these two things; to connect your tax refund to depositing it in your new fintech bank account What an easy way to just build a customer base. David: And then, you know, they get into their fifth big bet, which is QuickBooks Online Advanced. Note here, they talk about, they want to offer more deeply integrated partners. Because that's what's gonna help them acquire new customers, and have higher retention It's just like you've talked about, the PandaDoc thing, right? Blake: Yep. David: They want to head down that path. Blake: They want to be the whole back-office business suite. It's not just accounting, it's also CRM with MailChimp. It's proposals with PandaDoc, all that. David: But now, they're thinking- because as they're learning with QuickBooks Online Advanced- that they can- QuickBooks Online Advanced is really designed for 10 - 100 employees; it’s kind of their sweet spot. They're trying to disrupt that mid-market. But now, they think they can go higher. They want to stay focused on the 1 – 100, but the way they're building the platform, they're saying it's giving them the ability to scale, they can actually serve bigger mid-market customers at a disruptive price. Blake: I love the mid-market, you know? I've worked for two companies that serve mid-market. It's so underserved. There's so much money there. You could charge hundreds of dollars per month for QuickBooks Online Advanced if it had all the features they need. I mean, up to $1,000 a month. David: I don't want to distract from this, but when you interviewed Hector Garcia, he defined how he defines mid-market, and I thought it was excellent. So, everybody, there’s a link in the show notes. Go to listen to that Earmark Podcast with Hector Garcia, ‘cause he just- I love how he defines it. Blake: Well, because he defines it based on the customer's need; the need of the business, and not based on revenue or headcount. David: Or employees, and all these other- Blake: Yeah. It's based on, what do they need out of their accounting system? And everyone should read that, who serves small businesses that are in that mid-market segment. David: Yep. And so, as they've continued to add these features to Quickbooks Online Advanced, 70 percent are upgraders, right? So, they're moving people from smaller skews of QuickBooks Online, but 30 percent are new to franchise. So, new customers are coming right in. 30 percent are just coming in and using QuickBooks Online Advanced. Blake: So, meaning that they've never used QuickBooks before, they're just going straight to QuickBooks Online Advanced. David: Yep. Blake: Amazing. David: Which is the most expensive skew. Take it a little bit about QuickBooks Commerce, they're actually talking about [INAUDIBLE] between the TradeGecko acquisition and the OneSaas acquisition. Remember they turned off connectors for OneSaas? Blake: Mm-hmm. David: Right. So, what they're saying is, they had to scale back until they ensured they have the right customer experience. Right? [00:29:12] Blake's OneSaas nightmare Blake: Well, because OneSaas- I'm sorry but I've used OneSaas in the past, myself, and it was the most frustrating experience out of- I still have nightmares about OneSaas. It's just not a- it was not a good product. So, when they acquired them, I thought, “Uh, oh.” So, this is happening, right? They're realizing, “This is harder than we thought.” David: Yeah. And so, they're trying to just stay focused and keeping people's books clean, because I think ultimately, now that- and this is the thing. The fact that the CEO of Intuit is saying things like, “We need to keep their books clean,” tells me they're understanding the pain of accounting and bookkeeping because of QuickBooks Live. Remember I said this could be good for all of us, by Intuit getting into the bookkeeping game. Blake: Because they're gonna be bookkeepers. So, they're going to feel our pain. David: So, they want to start a quality inventory offering, and e-commerce offering. They can't have that messing up the QuickBooks data because that means they can't automate bookkeeping work. Blake: That's a great point. David: They're not really saying it, but the fact that he acknowledged the books have to stay clean, tells me they understand that they can't have the book to be messy. Blake: So, the thing about OneSaas that's interesting, David- just a side note here- the way that OneSaas approached trying to merge data or trying to push data from one system to another is different than the way Zapier works. So, Zapier is a push-pull system where it automates workflow, but it doesn't actually maintain a dataset of its own. David: Yes. Blake: OneSaas said, “We are going to create a central database of everything; a unified- grand unified theory of databases for all of your data. And then we're going to pull the data in from all these different apps, and then store it there. That's going to be the master data set, and then we'll push it out where it needs to go.” I think that, in theory, is great, but in reality, very, very difficult to do without messing up the data. And then you have these issues where you have to keep data sets in sync, and that's where it all got screwed up for me, was trying to use OneSaas with bill.com and Xero, because this was when bill.com didn't have a connection to Xero themselves. And so, OneSaas was sitting in the middle staying in sync with my Xero data, trying to stay in sync with bill.com. But if anything went awry, it would mess up that central data, and then I didn't know where to fix it. I didn't know where the problem was. And then if I didn't fix the problem in all three datasets, it would sync back into the central database and then mess up my data again. [00:31:43] Where should your main data be kept? David: And the argument could be made that your accounting system, Xero, Sage Intacct, QuickBooks, that's the center of the universe. That needs to be the source of truth. That's where all the data should be. Blake: That's where it should be, yeah. Yeah, yeah. And that's why Intuit and Xero need to figure out how to expand their database capabilities beyond financial data. Because financial data is only one piece of the puzzle. You've got human data, you've got operational data; all this stuff is actually way more important than the accounting data, in many cases. ‘Cause accounting data is a lagging indicator, it's not a leading indicator. So, that's the big problem, as I see it. If people can figure out how to solve that in the GL, and have your GL be the master database for all your business needs, somebody is going to do that. And there are some new GLs popping up there, doing that. That's going to be a big deal. And then that becomes just a database that everyone plugs into via APIs to automate flow of information. Actually, I'm going to pitch another interview I just did on Earmark. I just talked with Ben Taylor from SoftLedger, and Ben has built a GL that is API-driven. As I understand it, all of the accounting data in the database there is accessible via API. And so, you can conceivably into that and automate the flow of everything. And I don't know about the operational or anything like that; that would be a next level kind of thing, the operational data, but that's what we need. So, if Intuit wants to win long-term, that's what they need to build into QuickBooks, is like, “I want to have my CRM data in the QuickBooks database, or I want to have payroll stuff that needs to be in QuickBooks, not in some separate database, too.” David: Yeah. And then the other note is that they really reiterate focusing on retention. For QuickBooks Live, the retention is lower than QuickBooks Online. But what they've discovered through different customers, a customer that chooses QuickBooks Online isn't looking for that same level of products and features and services than somebody who chooses QuickBooks Live. So, they're just being very intentional about making sure they're solving. I think before, they attacked this was the same customer, and I think they've realized that it's two different people. The person that picks QuickBooks Online is much different than the person that chooses QuickBooks Live. And you have to build the right product offering for QuickBooks Live for those customers. So, they're starting to figure out that they’re two different cohorts, and they're going from there. [00:34:05] Thank you to our sponsor, A2X David Leary: This episode of The Cloud Accounting Podcast is sponsored by A2X. Since 2014, A2X has helped thousands of online merchants and their advisors save inordinate amounts of time reconciling the revenue for their online stores. A2X post tidy summaries of sales, returns and fees from Shopify and Amazon directly into QuickBooks or Xero, that exactly match the deposits that appear in the bank account, allowing you to accurately reconcile in just one click, giving you the confidence of knowing that your client's e-commerce financials are accurate. A2X has won the support of Amazon and Intuit and has hundreds of five-star reviews by accountants and bookkeepers in both the QuickBooks and Xero app stores. Cloud Accounting Podcast listener and e-commerce expert, Scott Scharf, said A2X is the gold standard e-commerce accounting. A2X has a partner program for accountants and bookkeepers that includes one-on-one onboarding, training for you and your team, and exclusive marketing opportunities. To learn more about using A2X and get 50 percent off your subscription for three months by using code CAP50, head over to cloudaccountingpodcast. promo/A2X. That is cloudaccountingpodcast. promo/A2X. A2X, e-commerce accounting without the fuss. [00:35:17] Xero app integration Blake: We talked about Intuit. Let's talk about Xero. Xero released a new feature- a new product, I should say- called App Launcher. It integrates the Xero app store’s apps directly into the My Xero dashboard via a dropdown tab with the navigation bar. So, are these just bookmarks? David: So, think about it this way. If our listeners are either Google people, right, and so you're in Google docs, and you can hit the little thing in the corner, and now you can see Google Sheets and google Slides, and you can jump between the different apps. Or if you're using- if your Outlook- Office 365 and you're in the browser, you can get the little thing in the corner, and you can jump over to PowerPoint, or Excel, or Word. You can jump into [CROSSTALK]. Blake: Oh, okay. David: So, basically, built that- so, all the apps you subscribe to, or add on to Xero, right? So, I've connected to your inventory, and I've [INAUDIBLE] floats, and I've added data [INAUDIBLE] or whatever I'd added, right? I can just hit the button in the corner of my Xero, and I have a shortcut to all those apps. Blake: Got it. David: It's funny because it's full- the developers have to integrate in or it won't show up here, but it's almost like full circle, because Intuit, when they first rolled out the QuickBooks app store- and it was not even called that then, it was called the Intuit Partner Platform, IPP- there was a widget that was in the corner of QuickBooks Online. And you could choose that, and jump over to an app. So, I could- from there, I could click and jump over to Dext. And then in Dext, the developers would have the same widget in the corner, and they could click on that, and then you could jump over to bill.com. And then from there, you could jump back over to QuickBooks; and it was like a menu that connected these together. So, it's kind of funny how full circle these kind of come around. Now, from what I could tell- and you're the Xero expert here- prior to this though, the apps I'm using with Xero I could never find or click on them and launch them from inside of Xero anywhere, right? Blake: Say that again? David: Prior to this menu, with Xero, there was no place for me to see the apps I've connected, and just launch them, right? Blake: I think you could find- yeah, you couldn't just launch them. You could see what you connected, but it wasn't very visible So, this is cool. It makes me think of, in G Suite- what do they call it now? Google Workspace? Which I use- I have that menu button with nine dots, click that, go to Google Calendar, go to Google Docs, go to, you know, all that. It's, they copied that, which is good, ‘cause it works really well. David: The vision of this, I always thought was great, that Intuit just- it never really executed on fully, is that becomes like notifications. Blake: Well, and that's what Xero has tried to do with their Xero HQ. But that, I don't know, I haven't seen that grow. People- it's not getting the adoption that it needs. The idea was, all these apps would send notification to a single feed, and then your team would be able to see all the updates. David: The problem is with products like this, is all these developers are building their own product. Blake: Right. David: And they have to weigh all the features they have to have to their product. So, “Oh, contribute or interact with the Xero notification system,” is just such a low priority for them. Blake: Right. They got way more important things to do. David: Because there's not a lot of bang for the buck. And nobody's asking for this, either. I mean, I've never talked to an accountant or bookkeeper that's like, “Man, it'd be great if when I have a bill to pay, you know, it would just show up in a little menu here.” Right? It’s just- Blake: In Xero. David: -nobody's asking for it. Blake: That was a great point. They're also rebranding the Xero feature requests to Zero product ideas starting in April. They're going to change the voting system for Xero features. I always liked the voting system. And so, you can go into this- if you're Xero user, you can go into this board, and you can look at the features and vote on them. David: I've always- user voice, early adopter of that Intuit rolled out. Oh, I love that concept of people voting up what you should work on. Blake: Yeah, but the problem with Xero is that they would just ignore it. So, all of these little features that would make a big difference to the U.S. market got all these votes, and then the Xero product people in New Zealand would just ignore it. They weren't using it. So, you shouldn't have a board like this if you're not going to actually listen to your customers and build this stuff. And it's criminal to have these feature requests out there for five years or more, too; like little ones that you could easily have a crack team go at it and do it, and they just ignore it. So, I hope- David: I mean, I think it's a balance, right? What I like about it is communicating to customers, “Here's the things we want to start building. Here's the things that are in demand.” And then if the customer asks for something that's really low, you can just say, “Look, nobody really wants it.” Right? Blake: Right. David: You can show them that nobody really wants that thing. And the other side of this is, I looked at when apps actually have their Trello board- I mean, it could be any board, right? And they show the features moving through the pipe, that they're working on, or plan to work on, or the roadmap. Because let's be honest, none of these apps are doing anything unique. There's no secrets. Blake: Yeah. David: And everybody knows what bugs they are; people just want the visibility. “Hey, I know your app doesn't do this. When are you going to add this?” And everybody’s guilty of it. I mean, I've been going on with Airtable. You can make these beautiful card views in Airtable, but you can't hide the labels of each field. So, it's kind of ugly. I don't need it to have a field that says first name, and then last name, then have Blake Oliver. Just have Blake Oliver, right? Blake: Right. David: And it's been there for, you know, it's going five years. It's the same kind of stuff; everybody votes for it and never happens. So, you're right. You have to back this up. It can't just be, “Give me your ideas.” Blake: So, Xero is hitting the reset button. They're actually archiving all the old feature requests, and they're starting fresh with Xero product ideas. So, this is a chance for them to actually listen. David: Wow. Blake: Yeah. Yeah. David: So, just, good thing all of you took time to vote for these features. Blake: Well, they did say that they have brought over hundreds of the most voted, commented, and viewed ideas. So, they're bringing over the top ones, but it was out of control. There were just too many, and too many they hadn't dealt with. And it was becoming embarrassing because every time somebody would comment on this idea that had been out there for 10 years, it would go to hundreds of people who would then reply and say, “Yeah, it's amazing. They haven't built this yet. It's so wonderful that Xero has ignored us for all this time.” And you know, it's just not a good look. David: I don't know why- there's all these product managers in all these companies. This is your fundamental job, is to go in and curate this, work with this every day. Blake: Well, so, this is the thing. It's like, you know, I feel for Xero because opening it up to this is a bad idea if you're not actually going to use your customers to, you know, make the product better. And I don't think Intuit has anything like this because they know better. David: Oh, they do. They have a feedback button where people can just give feedback on QBO. Blake: Yeah, but there’s no public support where you- David: But then there's also a voting part. There's a page to do votes, but it’s the same type of thing. Unless somebody is curating it on a daily basis, like when I was reviewing my paycheck, it gets rough. And if you want to taste it, set this up for Earmark. I'm sure you're getting suggestions from Earmark. Let people start voting what you should have on Earmark. Blake: Yeah, I know. And so, that's the thing. It’s like, if I want to do something like this, but I'm not going to do it, unless I'm actually going to say, “We are going to dedicate a specific amount of development resources to building our user.” If you're not going to prioritize the stuff that gets voted on, that's just insulting, right? That's worse than if you- to ask them and not do it is worse than to not ask. Do you know what I mean? David: Yeah. I mean, the IRS could have the same thing. Blake: ‘Cause you’re just wasting- David: Let people vote, markets our conversations. Blake: So, that's just my take on that. Do we have any more app news? I've got listener- four listener mails, and I want to make sure we get to them. [00:42:50] BaCo Tech becoming Once Accounting David: Just really quickly, a former sponsor, BaCo Tech, they've rebranded. They're now called Once. Blake: Once Accounting. David: Behind the theory of touch, it once, like a warehouse, the best warehouses aren’t a bunch of guys driving forklifts around, moving product. The best warehouse is they put something where it needs to go, and they touch it once. And that's the theory that, you know, for this product, and solving for accounting firms, and tax numbers, and data. You don't want to touch the numbers every month, or now and then retouch them again in tax season. You just touch things once. So, they've rebranded as Once, which I thought was good. And then on top of that, they've been now accepted to the CPA.com’s accelerator; the CPA.com just announced. They announced 10 new apps: five apps, and then five ESG apps. Apparently, they're starting to get into- or green apps or whatever you want to call that these days. [00:43:39] Ian Crosby goes to Shopify Blake: I got one more small bit of news. Remember how Bench’s CFO, accounting software from Bench- well, actually, I would call them accounting from Bench- their CEO left. Ian Crosby, who was there for 11 years, founded the company. He has landed at Shopify. He is going to be running their Shopify Balance product, the product director for Shopify Balance. And Shopify Balance is a product that offers physical or virtual cards that merchants can use to deposit and withdraw money from ATMs or pay for merchandise online. So, congratulations to Ian Crosby. I was wondering what was going to happen. David: Yeah. It's basically their bank. Shopify’s bank. Right? And Shopify is on that same march, the same with Square, where “Hey, just keep your money in Shopify. You get paid, don't move it to another bank. Just keep it here.” And they offer bill pay, and they offer all the other stuff. And they’re- so, he's rolling there, but what's really interesting about this, is this the next march? Where obviously, he has experience with accounting, he has experience with Bench. Are we going to see Shopify make a move into accounting? It just feels like it's the next move for Shopify. Blake: Could, could, could. David: Bell went off for me, Jason Richelson Bookkeep kinda prompted me in this via- indirectly via an email, but it's already hard enough to sync e-commerce data to the accounting system. It's hard to get it to match your bank statement. I mean, even our sponsors, I think, in this episode. You know, we have A2X sponsoring, we have Synder; that's kind of their deal. But now, what happens if you don't- there's no deposit to your bank account because you're just leaving all the money in Shopify or inside of Square? Because they're not real bank accounts; you're not going to get a bank feed in the same way. Is this setting up to be an accounting nightmare that the only way it's going to be nice is if you get your accounting through Shopify or Square? Blake: That’s a good question. David: If you’re omni channel, if you're using multiple platforms, this is a nightmare. This is a potential- setting up to be a potential nightmare if you can't get this data out of these bank accounts. I mean, I'd probably be recommending to clients not to use the bank features of these products. [00:45:44] Thank you to our sponsor, Synder David Leary: This episode of The Cloud Accounting Podcast is sponsored by Synder. With direct connections to Amazon, Shopify, eBay, Stripe, Square, and 20 of the most popular online and e-commerce platforms, Synder automatically categorizes and accurately post transactions into the accounting system, allowing you to easily prepare your client's data and organize their consolidated P&L, regardless of the number of platforms they may be selling on. Synder allows you to use the general ledger of your choice: QuickBooks, Xero, even Synder’s own GL, which is designed specifically for e-commerce businesses, and contains everything you need out of the box to make tax season a breeze. Synder can sync all the necessary details like inventory items, tax, shipping, discounts, classes, and locations, and even correctly handles the processor fees. With tools like a duplicate detector and rollback functions, you can rest assured your clients’ books will never get messed up because you can undo and restore any synced to data with literally, one click. If you need support from Synder, they offer free help using your favorite means of communication, be it chat, email, or phone. To try out Synder for free, head over to cloudaccountingpodcast. promo/synder. That is cloudaccountingpodcast. promo/synder. [00:46:55] Listener voicemails Blake: Let's get to listener voicemail. We have feedback on our discussion of compilations. Last episode, we were talking about Mazars and Trump, and the compilation reports they do, and how compilations are a weird thing, in my opinion. David: And I think one of my questions was, is this common? Does everybody do this for small business owners? They just show up with numbers and you put together a report? Blake: Yeah. I mean- and as I understand it- a compilation is basically, I get numbers from my client. Often, they've already prepared the financials. I put them into my template for my firm, put my logo on it, and then put a bunch of fine print on it that says I never looked at any of this. So, my opinion, my question is- at least in the last episode, my question was, why do we do this? Why do we do this as CPAs? It just confuses people. And that was part of the whole confusion around what Mazars was doing with Trump. We got all this news, all these news reports saying that Mazars is retracting their audited financial statements for Trump. Well, they were never audited. This is part of the confusion. So, anyway, here's some feedback from a CPA that actually does compilations. [00:48:01] Chris's voicemail Chris CPA: Hey, Blake. I am a listener to the Cloud Accounting Podcast, and a CPA in public practice. I literally had this same conversation with one of the tax managers today. We were engaged to compile a set of financials for a client who already had nice-looking financial statements. My question was, why are we taking their already professional-looking financial statements, rearranging them into a standard form, and handing them back? In my opinion, it is a crappy service that does not provide value, and if anything, has the potential to degrade the value of our brand. Keep up the good work. Chris. Blake: Thank you, Chris, for that validation of my thinking. As somebody who has not done compilations myself, I am just so flabbergasted by them. I just don't understand them. And I guess, I'm not the only one. David: So, to tie back to little follow-up on Mazars dumping Trump. Trump has made some comments about this on Sunday. So, this is probably after we recorded. Blake: What did he say, David? David: And he said, he insisted Sunday, that the firm, Mazars, USA, was ‘broken by radical leftist racist prosecutors. Blake: Radical leftist racist prosecutors. Do you think he's getting confused between Mazars as an accounting firm, and the New York Attorney General, who is a prosecutor? David: Yes. Well, the interesting thing to- Manhattan District Attorney, Alvin Bragg, and State Attorney General, Letitia James, they're both black. So, it's even crazier where he's- where this is coming from, I don't know. It's a little crazy to me. But the fact that he used ‘broken’ tells me that- Blake: To describe Mazars? David: To describe Mazars, tells me they got pressure, and they cracked; they broke. And now, they're crying wolf on- Blake: Well, that's one of our theories. David: They’re not crying wolf, but they're going to turn state’s witness. Blake: They're going to turn state's witness, right? David: Yeah. Blake: That's one of our theories, is that they are under pressure from the attorney general. David: And he goes on to talk about how, you know, they've been threatened and intimidated by Letitia James’ office. Blake: Yeah. Well, I mean, that's how you get people complicit in criminal activity to, you know, to finger the people who are up higher, right? This is the whole strategy. This is how you take down the mafia. You get some lower-level people. You get the accountants. And honestly, the- David: This is Law and Order 101, man. You can watch any Law and Order episode. This is the whole episode, every single time. Blake: I would love to play the Law and Order sound, but I think we might get sued. So, let's hear from another listener. This is about time sheets, continuing our time sheet discussion. [00:50:28] Email from Eric, CEO of YPTC Eric Fraint: Hello, Blake and David. I’m Eric Fraint, President and Founder of Your Part-Time Controller, LLC. We specialize in providing accounting, controllership, and CFO services to nonprofit organizations. We do no audits, and no tax work. We have close to 400 staff members working with about 1,000 organizations around the country. I started YPTC almost 30 years ago, working alone from my house. I enjoy your podcast. You and David have succeeded in doing something that I would have said couldn’t be done you created an entertaining and informative show about the accounting profession. I listen to your podcast while on the treadmill, or outside on a walk. I often get the urge to comment on one topic or another, but I’m never in front of my computer while listening to you. Well, I was up early this morning, in front of the computer, so here goes. Regarding time sheets, and in the spirit of debate (I have no vested interest in convincing you of my point of view), I agree with many of the problems you’ve discussed. I have my own time sheet war stories going back to my public accounting days when I first graduated from college. But there are some significant benefits to using time sheets. I’ll mention one here: they make it easier for organizations to hire us. How? The problem with fixed or ‘value pricing’ is that value is subjective. What is the value to an organization of having a smoothly running accounting department? Or the value of getting timely month-end financial reports? Or the consulting advice we provide as we go about our work? Or the data visualization services we can provide giving organizations real-time, or almost real-time information on their mobile devices? Or any of the many other things we do for our clients? We think the value of what we provide is very high, but an organization may not agree, especially if they don’t really know us yet as they contemplate hiring us. Billing by the hour is something organizations can more easily understand and are more comfortable with. Some may think of it as a convenient proxy for value, by which I mean that the more difficult something is, the longer it must take. While I, you, and your listeners know that this is often not the case with the work our profession performs. It does make it easier for organizations to feel more comfortable with hiring us. There are other reasons why we feel that using time sheets for the type of work we do, is superior. I would be happy to share with you if you are interested. Keep up the good work. Sincerely, Eric. Blake: Can I just say, before we talk about this, that I'm so honored that we have the founder of YPTC listening to our show? 400 staff, 1,000 organizations, 1,000 clients across the country. I mean, this is a big firm, but you don't see them on the traditional accounting firm top lists, because guess what? They're not a CPA firm. And so, they're in some ways, invisible to the traditional accounting community. But they're clearly doing amazing stuff. I just think it's so wrong that you have these organizations that are growing so fast, non-CPA firms, and the CPA world excludes them from all these rankings. So, you know, traditional accountants or accountants who are in practices, they don't know about them. And I mean, maybe that's on purpose, right? You don't want people knowing that there are alternatives to the traditional type of practice. David: Especially people in the industry already. Blake: Right, exactly. You don't want your staff- David: What good does it do some list of top CPA firms if they start letting people that are doing very similar work, and just as big, it’s going to make other people, “Maybe I don't need to be a CPA firm either.” Blake: Yeah. So, I want to talk about the time sheets. So, this is a really thoughtful message. Thank you, Eric. And I have heard this not just from you, but also from Kenji Kuramoto of Acuity. His reason, just like yours, for using time sheets is not that they're a great measure of productivity, or they're a great way to manage staff- I think we all realize they're not good in that regard, or there are better ways to do it- it’s that it allows you to get your foot in the door with a client very quickly. And it's hard to argue with that. The idea that if we get our foot in the door, we can demonstrate our value, and then we can get them on a fixed fee or a value price package. But we just need to start working with them, they have an emergency, they need us right now, let's just get an agreement out there, start working on an hourly basis. And that's easy for them to understand. And I think especially for the type of clients that YPTC works with, which are not-for-profits, they're more sophisticated. These are people who are used to hourly billing arrangements- very familiar with that- can make a lot of sense. But I would also say, maybe if we tried a little harder, we could figure out a way to communicate the value, so that they would take a fixed fee or a value price package upfront. And I got lots of ideas on how to do that, but we don't have time to get into that now. I suppose one would be just to look at it from their point of view. If I am a CFO at a not-for-profit, or I'm a board member at a not-for-profit, looking to find somebody to help me, I might be thinking in context of, what would it cost me to hire this person full-time, versus to outsource this work? And so, what you're competing against is really, the total fully burden cost of an employee, versus an hourly rate kind of thing, right? That's how people perceive value. If I'm a business owner, I either have to hire this in-house, or I have to outsource. That's what I'm comparing against. David: I get this younger kid who's doing landscape work for me. And he used to just charge me 25 bucks an hour. And then he moved to fixed pricing for a project. And I kind of feel like I'm overpaying now. It's psychological. I have not- but it's very difficult now. Now, how do I back in, how many hours is he here? But at 25 bucks an hour, I'm like, “Okay, that's worth it to me.” It was an instant decision. So, just reinforcing the phone caller's point, yeah, I can- instantly my brain processes this, it’d be like, “Okay, that's valuable to me.” Blake: But the problem with it, as you discuss from his point of view, is that now you are already working with him on an hourly rate, which is not value priced, it's very hard for him to capture any more of the value. So, you limit your firm's potential profitability by starting off with an hourly rate. David: And now, I don't care how slow he goes. Blake: Right. So, that's better? David: If he takes a break, a half hour break, and works for a half hour, and does it again and again, and again, okay, whatever. Blake: Because he's paying- you're paying for an outcome, not for the inputs. And you don’t have to manage that, right? You can just say, “Get the work done, I’m paying you this rate.” Okay, so, last one, we got a Loom video from Ford Baker. You were just talking about BaCo Tech, which is now Once Accounting. This is Ford, creator of that app. [00:57:04] Ford Baker Loom Ford Baker: Hey, Cloud Accounting. I listened to your podcast this morning, and really, really enjoyed it. As far as the time and billing thing goes, probably five, six years ago, I started going to [INAUDIBLE] billing and I came up with a process that actually does the engagement letters and the bill at the same time. We still enter time, so I can see which jobs are profitable, but I use it to gauge what I'm going to do next year, not what I'm going to bill this year. The concept of not billing flat fee really came home to me, because I realized that if I had a bill, and it came on my desk, and we billed them $2,000 last year and had $4,000 worth of time, I'd mark it up a little bit for inflation, but I'd eat that other time. And this same thing was true the other way. We all talk about write-ups. And we just went away from saying, “We bill it on a standard hourly rate,” and said, “This is how much we bill.” And it was just a lot more transparency with it. An industry that prides itself on education and knowledge with 4.0 students, strives for the benchmark of an 85 percent realization rate? We're trying for a B. You know, with our new technology, what we do, I’m pretty close to a 200 percent realization rate, just because the process is more efficient. Blake: So, Ford still tracks time, but he's moved to fixed fee pricing, and he's saying that he's getting a much higher realization rate. And there's one point that he makes that I really agree with, which is that we say, as an industry, that we pride ourselves on quality, and our work, and that we have the best people. But when you use time sheets, you're kind of- you're aiming for a B, not an A, right? Because you're measuring inputs, and not outputs. And if we want to get As, if we want to be the best we can be, we got to focus on the outputs, in my opinion. Time sheets inspire a sort of mediocrity because everybody is the same. If you're a high performer, you look the same in many ways as a low performer, because you're all billing kind of the same amount of hours. And the only way to be a high performer is to just bill an insane amount of hours, which is not healthy, and then, you know, hurts your performance. So, we got to figure out a way to incentivize people to actually work less and do more, to create more positive outcomes for clients. And I've heard from a lot of firm owners this past week, since we started this discussion in the last two weeks, that they went to their staff and they said, “Hey, would you guys want to drop time sheets?” And the staff said they liked the time sheets- at least the managers they're talking to, like the time sheets. And you think, “Well that's crazy.” Well, I think there's two reasons for that. One is that these firms are being smart about the time sheets, or smarter in that they're not using them to punish people. They're not using crazy budgets and making people work insane hours. So, in that case, time sheets are much better. But we can still go further, and we can encourage our staff- who have been conditioned to use time sheets- to not think about their inputs, and to think more about their outputs. But in order to do that, we got to give them something else to track. We got to give them some other way to measure their own performance, because we're accountants and we love measuring things. We want to measure how we're doing. So, we have to give them an alternative; something better than their time sheet to measure how well they're doing, and to know that they're on track. And so, that's what we got to figure out, as firm owners and practice leaders. And David, I think that's all the time we have for this week. [01:00:24] David's follow-ups from previous weeks stories David: I have two quick follow- or three small, teeny follow-ups that are just- Blake: All right. I’ll let you do that, and then we're going to- we’ll do the ad show. David: -I think will wrap this up. So, possibly, we talked about how the PCAOB, and the SEC don't really do much. Or just, they're not tough. Blake: The penalties are not tough enough to make a difference. David: And this week, two articles came out that prove this. So, the PCAOB, they censured PricewaterhouseCoopers, PwC, in Canada, $750,000 penalty. This penalty is because 1,200 employees shared answers to the mandatory training courses in auditing, accounting, and professional independence. Blake: So, they were cheating on tests. David: Cheating on tests in arguably, our industry, which is supposed to have integrity. Blake: The greatest integrity, and- David: $750,000. Blake: $750,000, and 1200 people were cheating. Yeah. I mean, that's like one partner's compensation. David: And then Baxter International, which is a medical company, medical product manufacturer. Blake: Oh, yeah, I saw this. They had a restatement, right? For fraud. David: They basically, were not stating the way they transfer money around internationally; accounting gains from foreign exchanges. The point is, from 1995 to 2019, how many years is that? Almost 25 years. And they only got- had to pay a fine of $18 million. And as part of this, they, as a company, are now we've from being investigated, blah blah blah. Blake: So, they settled, and they didn't admit wrongdoing or anything like that. David: And it's not even fraud, but they self-reported this once they discovered it. But the- Blake: Oh, they just got it wrong. The penalty is meaningless. David: And then the- apparently, I can pay for something using crypto now, something that I use, Sling TV. So, I use Sling TV. I can go in every month and manually pay- they now are offering a service called BitPay. So, I could pay with my crypto wallet for my monthly television subscription on Sling, but I have to manually do it every month. Now, I could pay six months up in the future, but it's not a subscription if it's going to fall back to my credit card on file. I can't just set it and forget it. I have to manually go in there and pay it every single month with my crypto account. But I can pay for something with crypto; there you go. Blake: Well, not very easily though, right? We got a long way to go with crypto to be something other than a speculative asset. David, that's all the time we have. If our listeners want to send me a message, send me a voicemail, send me an email, Blake@BlakeOliver.com. Connect with me on LinkedIn as well. David, how about you? David: I'm just on all the socials, @DavidLeary. Blake: I'll see you around here next week. And listeners, if you want to get CPE credit for listening to Cloud Accounting Podcast episodes, download my new app, Earmarkcpe.com We put every episode up about a week later as a CPE course, Continuing Professional Education course. You can get NASBA-approved CPE. You listen to this podcast already, you're a CPA, you're a CMA, why not get education credit for doing it, make your license renewal easier? It’s free. Earmarkcpe.com. David, I’ll see you here next week. [01:03:23] Classifieds David: Time for the classifieds. [01:03:27] Royalwise David Leary: As humans, we're programmed from birth to learn watching others. Video has the power to engage, entertain, and educate, without ever feeling like work. When you want to become a QuickBooks Online expert in the shortest amount of time, the Royalwise on-demand, web-based learning solutions are the obvious answer. With 40 easy-to-understand QuickBooks classes designed to bolster your confidence and increase your accuracy, Alicia Katz Pollock’s training will take you from beginner to advanced user. pick just the topics you need or save money by subscribing to their entire QuickBooks Online library and coaching program for one low monthly price. Listeners to The Cloud Accounting Podcast can enjoy their first month of silver membership for only $1 using promo code ‘podcast’. So, head over to learn.royalwise.com. That's Royal like a king, and wise like an owl. Register for a quick burst class, become a member for just a dollar and make learning a hoot. That's learn.royalwise.com. [01:04:24] Oh My Fraud: A True Crime Podcast for Accountants Blake: Hey, podcast listeners, it's Blake, and I wanted to let you know about a new show I'm working on with CPA/comedian, Greg Kyte, and blogger/former CPA, Caleb Newquist. It's called Oh My Fraud, and it's a podcast all about financial crimes. That's right, a true crime podcast for accountants, by accountants. Caleb and Greg are going to come together every couple of weeks to unpack their favorite frauds, and explore the circumstances, psychology, and interpersonal dynamics involved. They also fully indulge in victim blaming the defrauded widows, orphans, infirm, and feebleminded- because who can resist? If you fancy yourself a trusted advisor or prefer your true crime with spreadsheets instead of corpses, listen to this show to learn what to watch out for, and to keep your clients, your firm, and even yourself, safe. To subscribe, go to ohmyfraud.com, or search ‘Oh My Fraud’ on Apple Podcasts, Spotify, or wherever you get your podcasts. [01:05:24] How to advertise in these classifieds David: Want to get the word out about your newsletter, webinar, party, Facebook group, podcast, e-book, job posting, or that fancy Excel macro you just created? Why not let the listeners of The Cloud Accounting Podcast know by running a classified ad? Hit the show notes for the link to get more info.