Latest / The Accounting Podcast / The beginning of the end for QuickBooks Desktop, NetSuite soars, and Walmart deploys blockchain in the real world
Transcript
- David Leary: Apparently, somebody just took over AICPA's Twitter handle, and changed the image, changed everything. Blake Oliver: You know, they really shouldn't have made their password 'cpaexam,' all lowercase. Blake Oliver: Welcome to the Cloud Accounting Podcast, a show for accountants, and bookkeepers using cloud technology to make their jobs more strategic, and impactful. I'm Blake Oliver- David Leary: And I'm David Leary. Blake Oliver: David, we're back from New Orleans, from the Cloud Accounting salon, not getting our hair done, but talking [00:00:30] with a small group of amazing, intelligent accountants providing outsourced accounting services; some people from software. I had a great time. It was great to see you. David Leary: Yeah, we got to hang out for two or three days, face to face. We got to enjoy some great New Orleans food, had some drinks. Got to talk cloud accounting. We should've been more motivated, and pulled out the microphone, and recorded something live. There was this great ... I'm much more comfortable standing in my closet. Blake Oliver: Exactly. I [00:01:00] was having too much fun to even think about doing work, but plenty of stuff happened, while we were gone, so, let's talk about it. What's new? David Leary: This is on Insightful Accountant: Intuit discontinues the QuickBooks Pro Advisor Desktop certification. Blake Oliver: End of an era. David Leary: Yeah. As of December 31st, of 2018. They said it's because of a declining number of certifications over the last few years, and that was the basis of the decision. [00:01:30] Blake Oliver: That makes sense. David Leary: It'll still be ... If you're currently certified, you'll maintain your certification for three years, starting, it looks like, January 1st of 2019. You'll still be listed in the QuickBooks Pro - Find a Pro Advisor site, but it's really just anybody new, you can't get certified Desktop-. Blake Oliver: And you really shouldn't. David Leary: Yeah, hopefully, anybody listening to the Cloud Accounting Podcast, right? It is not ... We're not getting certified Desktop. Yeah, you're right. It's probably a lot of work, and effort to get a badge that maybe [00:02:00] doesn't matter, going forward, as much. Blake Oliver: Well, speaking of QuickBooks, the online version has a new feature, and actually a new version called QuickBooks Online Advanced. I saw this pop up on the Firm of the Future site. What is QuickBooks Online Advanced, you ask? Unfortunately, it is not enterprise in the cloud. It is basically the same as QuickBooks Online Plus, except now you can have 25 simultaneous users online. That's it for now. David Leary: Wow, so, it's [00:02:30] really just if you have to have everybody in your QuickBooks, all at the same time. Blake Oliver: Yeah. David Leary: It's interesting. How do you feel about that? I kinda have the theory of ... In the olden days, with QuickBooks Desktop software, you'd get QuickBooks Enterprise, and you have your warehouse staff in the accounting system, and the bookkeepers in the accounting system, and the lawyer in the accounting system. Everybody's all in the accounting system at the same time. In the new world, I kinda feel like you could just have only the bookkeeper, or the accountant be in the accounting system, and have all the rest of the staff in apps, right? You have [00:03:00] that separation to where the accounting system's your domain. In theory, you don't need 25 people's fingers in the books. What's your take on that? Blake Oliver: In theory, right ... There are, I think, a small percentage of companies that are taking that app ecosystem approach and integrating lots of different front-end apps with the back-end accounting system, but, I'm gonna guess that's less than 20 percent of companies. I have a feeling that the vast majority are really not doing a lotta integrations, and for them, this is important, because they do have a lot of people that need to access [00:03:30] the system at once. My hope is that that ... It would make sense that eventually, as Intuit adds enterprise features to their online product, which they have to do, in order to move up market with the product, that it will be added to this Advanced version. Pricing is $150 per month. You also get a dedicated customer success manager, priority care for technical support, and [00:04:00] you get up to 5 online training courses, annually, included. David Leary: Yeah. It seems to make sense. It probably, technically, is not any different. They could probably even do 100 users at the same time. There's probably no technical limits to this. It's interesting how it's being phrased as this 'Advanced.' It looks like it's setting the table for an enterprise. Blake Oliver: Mm-hmm. David Leary: Coincidentally, it's a similar number of users, simultaneous access ... It's starting to set that table for maybe a more advanced version of QuickBooks Online, right? Enterprise [00:04:30] level. Blake Oliver: Well, and I think they're doing this, because they're starting to face competition from cloud ERP providers, like, NetSuite, and Intacct, who overlap in that $100-$150 segment, per month. Those guys are coming down market, right? Intuit really needs to figure out a way to get those enterprise folks happy with QuickBooks Online. Hopefully, this is the beginning of that. Speaking of NetSuite, NetSuite did [00:05:00] really, really well in Oracle's third-quarter results. I've got an article here talking about how NetSuite had a spectacular quarter. Revenues were up 26 percent, and bookings were up 40 percent; 39 percent in the quarter. Annualized revenue for NetSuite is now 800 million. It says, "A significant contributor to Oracle revenues,” which, actually, if you dig into those Oracle numbers, it's [00:05:30] a good thing they bought NetSuite, because they're on-premises, and hardware business is declining. David Leary: Yeah, I think deeper in the article it actually says that. It's like, "NetSuite is becoming the most significant buy that Oracle has ever made." Blake Oliver: Mm-hmm. It's great for Oracle, because, as those customers outgrow their application, then they become Oracle customers. David Leary: Blowing some dust off, back to the [inaudible] days, when did they acquire NetSuite? Do you remember when Oracle bought NetSuite? Blake Oliver: I think it was a couple of years ago, now. David Leary: Yeah, it's interesting, because Oracle has [00:06:00] so many different possible revenue streams, so, obviously, many are drying up, but, reading between the lines, cloud accounting is what's growing Oracle now. Blake Oliver: Mm-hmm. Yep. Hey, I do have some more NetSuite news. They also are announcing [crosstalk] some new features. Pretty cool. The latest .... Oracle, and NetSuite are really good at this, making boring things sound sexy. They've announced what they're calling Banking as a Service, or BaaS. This [00:06:30] is going to be basically an API for banks to integrate with the NetSuite ERP. Initially, it will be around payments and account reconciliations. They don't give specific examples, but the way I imagine this working is that I will be able to make payments from within NetSuite, and those payments will be processed by my bank. Paying a bill, for example, and then from account reconciliation, [00:07:00] from that standpoint, when a payment is received in the bank account, the bank will push the reconciled transaction into NetSuite, into the general ledger. It won't have to do that on its ... I won't have to do that. David Leary: Yeah, it's interesting how they're presenting this. I think Xero recently talked about how they have a bank API, and the banks can integrate with Xero. I think, traditionally, you talk about APIs, right? You have QuickBooks Online APIs right, or, even go with the Xero API. Really, off [00:07:30] the shelf, a third-party developer, whatever app it is, it's cleared-a-law-firm software. They don't need to talk to Intuit. They can just go and integrate with QuickBooks. I think, with this, they're presenting it that way, but I think it's really a back and forth. The banks are creating their APIs, but, in order for the banks, and the accounting system to communicate better, together, the accounting-software apps also have some sort of APIs for the banks, and they're kind of meeting in the middle, right, if that makes any sense. I don't see any [00:08:00] oddball bank going and using these APIs. There's probably a biz-dev deal done. There's some agreements, and these APIs are just really helping to make the customer experience better, ultimately. Blake Oliver: Yeah, and I'm sure plenty of banks won't take advantage of this. Actually, cited in the article is a prediction from Forrester Research. It says that, "More than 50 percent of banks will fail to exploit open banking, starting [00:08:30] down the slow, painful path to becoming an unintentional utility." That's the way banks are for me, already, when it comes to my clients. I set them up on Bill.com. I set them up on various payment services, various extraction services, so I don't have to go in, and get check images, or whatnot. The bank is just a utility. It's not important, other than you have to have it. David Leary: Yeah, cuz once [00:09:00] you have your client set up with the Bill.com, and you said you're fetching bank statements, or the check images. Once they're set up, you could swap the bank out, and swap in a new bank, and it truly doesn't matter. Blake Oliver: Right. The value to the bank, and the reason they should want to participate in this program, is that if they do it, then they have less worry about being disintermediated by FinTechs. They are basically becoming FinTechs, themselves, [00:09:30] with Oracle's help. David Leary: Ultimately, I've always, and I felt like this a decade ago. I remember when I first started using Mint, and for those of you listening, Mint is personal finance software that's in the cloud. You connect all your bank accounts, just like you do your bank feeds in QuickBooks, and Xero. I remember, like a decade ago, banks wouldn't connect; sometimes, it wouldn't work with this credit card, or work with this one; it would disconnect. It's the typical problems we're still having now, a decade later. I always felt like [00:10:00] a good way to solve that was just to have somebody put out ... Like one of the software apps put out a blog post. It's like, "Here's the 10 banks that have the least problems. Here's the 10 banks that have the most problems," and update it every month. Because, if the banks ... If they really care about their customers, and not losing customers, they're going to make sure they have good connection to the accounting systems. It's really the only way you're gonna keep your customers, in the long run, is how well you connect to other things. Blake Oliver: Yeah, and it's not [00:10:30] just about keeping customers. They could do so many cool things to add more services, if they connected to accounting software. Some examples from this article are getting data that allows them to very quickly, and easily provide loans, or working capital to businesses. Which, if you look at what's happening in the FinTech space, there's tons of companies doing that, now. All the credit card processors, like Stripe, and Square, and PayPal are offering [00:11:00] working-capital loans, because they have the data to support it, without having to make the business owner do a complicated application for a loan. Those companies can see what credit card transactions you have, and can figure out from there, whether or not you're safe to loan money to. The banks could do the same thing, if they just plugged into the accounting. David Leary: Then, you might take the point of view that maybe the banks could get cut out of the whole picture. If you really look at a lotta these ... Apple [00:11:30] has so much cash in the bank, right, but even companies like Intuit ... They did QuickBooks Capital, and I think some portion of that money ... Yes, there's banks involved, and there's traditional lending sources involved in that process, but I think Intuit, themselves, is acting like a bank. I'm pretty sure Square has a bunch of cash, and these other- some of the other people you just mentioned. They can almost give out these loans, and cut the ... The banks could be completely cut out of this game, if they don't play nice, and utilize these other things. We'll have to keep watching this. This could be a whole podcast, itself, on banking APIs. Anybody wants to start that, it's free. BankingAPIs.com. I'm sure you can get it on Twitter. Go [00:12:00] for it. Blake Oliver: You're just trying to create more podcasts that have fewer listeners than we do, David. I can-. David Leary: Yeah, yes, yes. Blake Oliver: -up our ranking that way. What else? What else do we got this week? David Leary: Gene Marks wrote an article that the U.S. Census Bureau says there's 32 million small businesses out there, and he's taking this point of view that they're just wrong. His point of view is you can't count people that have a side hustle, or, they're just filling out some additional [00:12:30] income on a schedule C. Right now, they're counting those people as business owners, and they're counting a lot of independent contractors as a business owner, like a barber or something like that. Even then, he's like, "Okay, fine, count those guys," because, in a way, that is a business. Life coaches, dieticians, etc., real estate agents ... There's so many more that are hobbyists, or they just have shells. Maybe somebody owns 10 [00:13:00] properties, and for whatever reason ... Yeah, maybe arguably, that's one business, but he's filing 10 returns for all 10 properties that he might own for tax reasons, or what have you, and so, that's bumping up the numbers. By the time you get through the article, at the end, he's taking a pretty strong stance that there's just around 7.8 million. Blake Oliver: Yeah, that makes sense. David Leary: That feels a little low to me, but I also think, yeah, 23 million seems ridiculous. I've seen numbers, like there's 220 million small [00:13:30] businesses, globally, and that seems a little ridiculous to me, as well. 7.8 maybe, possibly, could be small, but ... I think you recently talked about numbers, and what defines small business, and midsize business, recently. Blake Oliver: Yeah. What's his criteria for a business? David Leary: Good question. This is a very opinion piece, and I think ... Somewhere, [inaudible] sentence, yet ... True business owners sign paychecks. They have vacation policies. They struggle to find people. They do performance reviews. He thinks it should be counted [00:14:00] like that, like what [crosstalk] Blake Oliver: Yeah, and we call those employer businesses, businesses that have employees. Yeah, that makes sense. Of course, if that's his definition ... It's not very clear, but if that is how he's defining the 7.8 million businesses, honestly, a good chunk of them are just corporations that employ one person, or one person, and that person's spouse that they are using simply for tax purposes, so that may even be, actually, a high [00:14:30] number. David Leary: Like I said, it's definitely an opinion piece. It's worth people reading, and checking out, because he does take that funnel, and starts chipping away at it, to get down to that 7 million. Blake Oliver: The thing that really blew my mind, when I started looking into the number of businesses in this country, is that over half of our economy is created by under 3,000 businesses. Think about that. Those are the big businesses, like Walmart, like Amazon, that generate [00:15:00] half of economic activity in this country. Then, you get down to say something like 200,000 businesses that are mid-sized, and then, everything below that, there might be millions of businesses. It's really hard to count what is a business, or what isn't, at the small-business level, but below $10 million a year in revenue. It's a pretty small segment of the entire economy. I think it's less than 20 percent- David Leary: Go podcasting. Blake Oliver: But I think it's smaller than that. Oh, yeah, they're all podcasting, [crosstalk] and making [00:15:30] lots of money podcasting. David Leary: Yeah, down at the very bottom, there. Before I jump in, and let you go again, I do have another opinion piece-. Blake Oliver: Let's hear it. David Leary: There's an association called SaaStr. It's Software as a Service; it's an association of, basically, the app developers, if you wanna think about it that way. It's a blog site, et cetera. There's a recent blog post that came out, and he's kind of just taking this take that every SaaS contract should have an automatic out clause. He talks about [00:16:00] some of the pains of buying software, and I think I can read a couple of these, because I feel like our audience would definitely identity with these, when they go to try apps, and they try accounting software. I'll quickly read these. Things like: vendors selling you software that you never use or deploy; salespeople pushing you to sign multi-year contracts that you don't really want to do; less-tech-savvy buyers being told software does things it doesn't do; being qualified out by a business-development representative. In that case, "Oh, you're too big [00:16:30] for this plan. You'd need to buy the QuickBooks Advanced," something like that. Not being able to talk to a salesperson, or always having to go through a business-development representative, first. Not be able to do a free trial, or even try out the product, at all; salespeople discouraging you from doing a free trial, even when it's available, or salespeople discouraging a pilot. They hate that whole situation, and then, the whole thing ... A lot of SaaS companies, they have VC [00:17:00] money; they have pressure to gain users. Their goal is to get as many people on a one-year contract, as possible. That's kind of his point of view, that it's a game, but he really goes on to say, ultimately, it doesn't really matter, in that everybody in our space that's building SaaS software should be just giving the customers what they want. Because, if the customer signs up for a year contract, and they cancel, four months in, they're not a real customer, anyways. Let people who wanna sign up monthly, sign up monthly. Let people who wanna do it quarterly, sign up quarterly. Let people that wanna sign [00:17:30] up for a year, sign up for a year, but don't constantly push everybody to the year, because it's really ... A) You, as a business owner of a SaaS app, you’re probably misstating your numbers, internally, but give the customers what they want is really the argument. Hopefully, we have cloud-app developers, and cloud-accounting software packages that really pay attention to this, and take it to heart, going forward. Blake Oliver: I'll make a counter to this argument, which is that if you are selling to mid-market companies, if you make [00:18:00] software for mid-sized companies, like we do, here at FloQast, you really need to be having your customers sign annual contracts. That's what we do. We do not sell monthly. We do not put you on a monthly credit card charge. You have to pay upfront. The reason that we do that is because it is so expensive for us to go out, and find you, and convince you to buy the software, that we have to do it, in order not to lose a ton of money on sales. David Leary: It's the enterprise sales model. [00:18:30] Blake Oliver: Yeah. I think, for consumer software, it's great. If people are finding you, and signing up on their own, and you have, pretty much, an inbound strategy, that's great. If your strategy is primarily outbound, which ours is majority outbound, at this point, meaning we have people calling controllers, and CFOs, and saying, "Hey, would you like to close faster, and more accurately?" Then, getting 99 out of 100 hanging up. That's a bit expensive to have people [00:19:00] doing that all day long; that's why we do it annually. It's great, because it helps fund our product development. If we didn't do that, we wouldn't be able to improve the product as much as we have, over the years, and it would stunt our growth. I think it depends on what sort of business you are. Same thing for accounting firms, for service providers. I think that all accounting firms who provide recurring services should be charging [00:19:30] at least a portion of their fee upfront, if not all of it. If you do tax, why are you billing in arrears? You should be charging at least 50 percent of the tax return, upfront. Get paid for half before you deliver the return, or maybe you can get all of it, or maybe you can charge throughout the year, so you're getting paid monthly for that tax return that is gonna be filed in April. If you provide bookkeeping services, get paid on the first of the month by all [00:20:00] of your customers, so that you have the cash to pay your staff. David Leary: That makes sense. I see that you have a couple more articles. You talk about robots, machines ... There's a couple [crosstalk] Blake Oliver: Oh, yeah, I got a lot, and we've already hit the 20-minute mark, here, I think - unless I can edit this down a little bit, so I'll be brief. I'm just gonna pick my favorite story to finish this out, on my end, at least. Then, I think you have one more. Here is my top story. It's blockchain, woohoo! If [00:20:30] you're not sick of it yet, this is actually a good blockchain article. It is a real blockchain article, meaning this is blockchain used in the real world. I think, actually, we may be hitting, like, blockchain is no longer hype. That's how big this is. The story is in The Wall Street Journal. It is about Walmart. Walmart is requiring its lettuce, and spinach suppliers to join a blockchain created by IBM that Walmart is going to use now to track its inventory, [00:21:00] its supply chain. They have to be on board by January 31st, and then, all of the farmers, logistics firm, and business partners of these suppliers must join the blockchain by September 30th of 2019. It's a big deal, and the reason Walmart is doing this is to improve ... A few reasons: to improve public safety. You may recall that, every year, there is at least one major food recall, [00:21:30] related to green produce. E coli [crosstalk] and lettuce. People get sick, people die. Dozens of people have died, every year, as a result of this, and it costs a lot of money, because, even though the outbreak is typically limited to a certain part of the country, when this happens, people stop buying lettuce everywhere in the country. Millions of bags, and heads of lettuce have to be thrown out, and everybody loses-. David Leary: Because you can't track it, ultimately. You don't know ... We know, based on time of the year, you [00:22:00] kind of know, regionally, where the lettuce might be from, but that's about it. Blake Oliver: Exactly. People just wanna play it safe. They're like, "I don't wanna risk it," so, they stop buying. What this blockchain is gonna do is allow Walmart, and the government to trace, within minutes, the source of any foodborne illness, so that we know exactly where it came from, and we can [00:22:30] destroy any of the lettuce in the stores that came from that area and assure the public that everything is okay. It's a big deal. I think that it'll probably be used in any area that impacts food safety, or any area, where you have concerns about kids toys ... I could imagine all the parts having to be on a blockchain, at some point; that sorta thing-. David Leary: I think I've seen something like this for fish, so that way, they know if it's been sustainably captured fish, versus not sustainably [crosstalk] the change. I don't even know how I met the guy, but somebody [00:23:00] who's in that space. There's all this fraud. People get fish. They say it was sustainably caught. It gets on the market illegally. The blockchain can definitely solve for some of that stuff. No, this is really interesting, and the interesting thing about this - it's Walmart. If Walmart tells companies like Rubbermaid, "You have to shave a nickel, and half your distribution people have to jump ..." This is really, really interesting that Walmart's the one pushing this. Blake Oliver: I think, ultimately, we'll [00:23:30] see all major supply chains move over to blockchains to public ledgers, or semi-public ledgers, just because it improves efficiency that much. Pretty cool. David Leary: That makes sense. Why don't you do another one of yours. The only other thing I had was this teeny, teeny, teeny- Blake Oliver: We're almost outta time, so, if you wanna ... Do you wanna do the AICPA Twitter account, and we'll end with that? David Leary: Yeah, we can do that. Apparently, last week, the AICPA's Twitter account got [00:24:00] totally hacked by Bitcoin scammers. I just read that [crosstalk] Blake Oliver: Oh, it ties into blockchain. We were just talking about blockchain. David Leary: Perfect, yeah, so it goes right over. Its ongoing concern, and there's lots of screenshots, and you can see it. Apparently, somebody just took over the AICPA's Twitter handle, and changed the image, changed everything. Blake Oliver: Well, they really shouldn't have made their password 'cpaexam,' all lowercase. David Leary: You know that for a fact? Blake Oliver: Or 'password123.' Really, [00:24:30] guys, gotta step up the security. David Leary: Well they could get [inaudible] two-factor, Twitter does. It even supports YubiKeys, so you could have that truly locked down. Blake Oliver: You really do not want your Twitter account to get hacked, because it's hard to get it back. It took the AICPA, I think, several days. Meanwhile, bitcoin scammers are putting out fake links to send them bitcoin, sucking in probably some unsuspecting [00:25:00] CPAs. Bad news. David Leary: Well, with that, we can close this down, but people, be careful. Change your passwords; update your passwords. Stay on top of your stuff. David Leary: We will chat next week. I have a birthday tomorrow, and then I'm going on a little cruise. Blake Oliver: Hey, it's your birthday? David Leary: Yeah, I'm getting nice and old. Blake Oliver: Happy Birthday, David. David Leary: Then, I'm going on a little cruise, and then next ... Hopefully, there should be internet, or, I'll try to watch for the news; stay on top of things, and next week, we'll come back and do this again. Blake Oliver: Sounds good. Enjoy your trip, and I'll talk to you [00:25:30] next week. David Leary: Awesome. Actually, Blake, you know what we forgot to do? Blake Oliver: What? David Leary: How would we get a hold of each other. Blake Oliver: Oh, screw that, this week. David Leary: Perfect. Blake Oliver: Nobody ever does, anyway. David Leary: I should just stick this in [inaudible] does the payroll. That's funny. All right, I'm gonna stop recording.