Latest / The Accounting Podcast / The top benefit employees want is unlimited PTO (but most CPA firms don’t offer it), how you can evolve to compete with platforms, and California spent $1B on accounting software that doesn't work
Transcript
- This episode of The Cloud Accounting Podcast is sponsored by Xero. As a listener of this podcast, you are probably keen on getting industry insights, staying ahead of leading-edge technology, and boosting your network. Well, I have some good news for you. This June, at Xerocon 2019. Xero will bring together hundreds of tech-savvy, future-minded professionals, just like yourself, from across the Americas, and the entire globe. Come join Blake, myself, and this collaborative community in action, June 18th and 19th, in San Diego. To receive a special discounted ticket to Xerocon 2019 in San Diego, head over to CloudAccountingPodcast.promo/xerocon. That is Cloud Accounting Podcast dot promo forward slash X E R O C O N. Book your Xerocon ticket today, and we'll see you in San Diego. Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver- David Leary: And I'm David Leary. Blake, I feel like it's been awhile. Blake Oliver: It has been. I didn't disclose this in the last podcast episode, but I shall disclose it now, [00:01:00] because I was late in getting the episode out. I was horribly sick over this past weekend. I don't know what I had. It was a cold; it was a flu. It had me in bed for three days straight. I crawled out of bed, recorded the podcast with you, chugged cold medicine before I did that, and then, went straight back to bed. Then, finally got the podcast episode out. Sorry, everyone, for the delay. It's nice to have fans who check in on you and get worried. David Leary: Yes, I [00:01:30] think we saw a couple tweets, like, "Where's the podcast? Where's the podcast?" Blake pushed through. We could've skipped a week, but I actually think that's the death of most podcasts. As soon as you skip a week, you skip two weeks, then the whole thing's dead. Blake Oliver: Yep. David Leary: Also, just a other thing that happened this week. Some of you have noticed, we have a new sponsor. Xero is sponsoring. Blake Oliver: Yeah! David Leary: Many thanks to the Xero team for supporting the show. We really appreciate that. Blake Oliver: For those of you who are concerned that The Cloud Accounting Podcast might lose our independent streak, I want to assure you that sponsorships do not, at [00:02:00] least in my mind ... Actually, David and I haven't talked about this, so I don't know what you think, David, but I am not compromising my editorial integrity for a sponsor. It just happens that Xero hasn't really done anything stupid in a long time. That's why we haven't really been talking about Xero, but, if they do, sponsorship is not an immunity challenge. We'll still cover anything that happens with objectivity, and fairness. That's reasonable, right, David? David Leary: If you were to ask anybody who's managed me in the past, I'm [00:02:30] going to speak my mind publicly. Sometimes, people don't like that. Even as an employer, right? Blake Oliver: Right. David Leary: I've had managers be like, "You need reel Leary in a little bit. He's outta control." I've tried to maintain integrity, with what comes outta my mouth; sounds like you have ... Blake Oliver: We're very grateful. Thank you, Xero, for being our sponsor. Just to get this all out there, I was one of the first Xero bookkeepers in the United States, so I have a long relationship with Xero. I'm a big [00:03:00] fan of the product; still use Xero for my side bookkeeping business that I maintain. I was a Xero Ambassador. I had a contract role with Xero, a few years ago, promoting Xero in in the community, in a transparent way. Everyone knew I was doing that. David, what I love about this podcast is that you come from the other side. If this is a two-party system, you're over there, coming from 19 years at Intuit, with all those relationships, and I think it's a good balance, or, at least I hope it is. [00:03:30] David Leary: We did get a review this week. Blake Oliver: Yeah, let's read the review. David Leary: We have a review this is Judie McCarthy. She actually has s product called Client Hub, and I think she also has her accounting firm. I think it's called ThinkLeader Consulting. "Five stars. Blake and David deliver the cloud accounting news in a fun, informative, and easy-to-listen way. As both an accounting professional, and an app developer, they help me keep up to date on important news, and what's new, and trending in the community. Thank you for making the commute more enjoyable." Blake Oliver: Thanks, Judie! David Leary: What [00:04:00] do you wanna jump into? Let's see, let's see, let's see ... There's some good news for Intuit that came through, if you wanna jump into that? Blake Oliver: Yeah, let's hear it. What's new with Intuit? David Leary: Okay. Intuit is creating 200 to 500 jobs, and a "prosperity hub" in downtown Bluefield, West Virginia. Blake Oliver: So, prosperity hub, we're talking an office ... Where is Bluefield? David Leary: I, to be honest, do not know. It's in West Virginia. Brad Smith, the former CEO of Intuit, has a lot of ties to West Virginia. I think Intuit, in the past, has [00:04:30] opened up some sort of customer support center there - a very small one in West Virginia - but it seems like this is gonna be somewhat of a customer service center, but also some innovation team, and innovation lab for other entrepreneurship, and small businesses in the area, as well. Blake Oliver: Wow. David Leary: Beyond ... It's big economic boon for that teeny little town. Blake Oliver: It looks like it's at the very southern point, or second-most southern point of West Virginia. It's a town of 10,000. Interesting [00:05:00] to see Intuit opening up an office in a place like Bluefield, instead of the Bay Area, or Seattle, or New York, or one of these other tech hubs. I think there's been a shift away, recently, from that. I remember when Amazon was looking at other hubs; they eventually settled on New York, and then abandoned it, and have decided, now, they're just gonna spread their workforce out over the country. Maybe this is the beginning of a trend. David Leary: Yeah. It's all made possible because [00:05:30] of cloud. You can do work now ... People can really work anywhere, which really is good for everybody. Blake Oliver: It's great for the employees, because you could get a job at that Bluefield office, and I'm sure ... If I looked up home prices right now, in Bluefield, I would probably want to shoot myself, given what real estate costs, here in Los Angeles. You can have a much higher quality of life in a small town. [00:06:00] David Leary: This is beyond just taking jobs there. They're working with the public schools, and colleges. They're starting a Junior Achievement program ... In a way, you could almost say this is an experiment, right? Not many big companies are going to teeny, teeny towns like this, and really trying to help the whole thing, the whole community. Blake Oliver: That's great. Speaking of benefits for employees of locating offices in smaller towns - affordability being a benefit - let's talk about other benefits. What are employees looking for these days? Because, [00:06:30] I know for our listeners who run firms, or who run accounting teams, they're always trying to hire; trying to figure out, "What benefits can I offer to my employees that will keep them, or that will track them, and retain them?" I saw an article in Quartz at Work, QZ.com, called, "MetLife finds unlimited paid time off is top emerging benefit." This is a stat from the just-released MetLife Employee Benefits Trends Study 2019. It [00:07:00] surveyed 2,600 full-time US workers. The top benefit that employees expressed interest in is unlimited PTO, meaning your employer doesn't track how many vacation days you have. You simply are allowed to put in for as much PTO as you think you deserve. Then, it's up to your manager to determine whether or not you can take it, or not. I, myself, have unlimited PTO, here a FloQast. I am a pretty big fan of it. Of course, one downside is you don't actually accrue [00:07:30] anything, so, when you leave the company, you don't get to take weeks of pay that you have accumulated with you when you go, as a parting gift; but I guess that's also one of the benefits for the employer, right? There's no more-. David Leary: Yeah, you don't carry a balance. Blake Oliver: It's funny. I think there was another headline for the same article, which is, "Study finds top benefit employees want is to work less." Which I thought, "Oh, that's kind of intuitive," right? Makes sense. Yeah, 72 percent expressed interest [00:08:00] in unlimited paid time off. Following that, rewards for healthy behavior, phased retirement, paid sabbaticals, and onsite free, and subsidized services. Those were the top five. I also found a related stat in another survey. David, you'll recall that, in a previous episode - maybe it was two episodes ago - I brought you a survey called the 2018 Anytime, Anywhere Work Survey? David Leary: Oh, yeah. Blake Oliver: Yeah, a survey of CPA firms. They happen [00:08:30] have a stat in there about unlimited PTO, and I thought it would be interesting to compare that to the fact that most employees want PTO. How many how many firms are actually offering it? This is a chart broken down by the size of the firm. Very, very different results. In firms with one to 10 CPAs - small firms - 21 percent of those firms offer unlimited PTO; only 21 percent. Of the next size up, 11 to 20 CPAs, that is [00:09:00] just 5 percent of firms offering unlimited PTO. For firms that are 21 to 74 CPAs - those are considered large firms - just 21 percent, again. Now, here's where it really changes. In firms with 75 or more CPAs - considered major firms by the definition in this study - 53 percent of them, over half, offer unlimited PTO. Isn't that strange? Small, and medium firms are anywhere from 5 [00:09:30] to 21 percent offering unlimited PTO. Then, you get to the major firms, and over half are offering it. Can you explain that, David? Do you have any idea why that might be? David Leary: On the low end, the solo to 10, I'm thinking they're smaller firms; they're trying to be innovative; they're trying to do different things; they need to differentiate. They want to hire people; they're offering that right. I buy that number. The major firms? It just seems super-high, this data - 53 percent? Blake Oliver: Yeah, 53 percent- [00:10:00] David Leary: Or, this graph is just goofy. Blake Oliver: The only reasoning, or the only thing I can come up with is that the larger the firm, the more likely they are to have the staffing resources to enable people to take unlimited PTO, to have that policy in place. Now, remember, unlimited PTO doesn't mean that people are actually taking more time off. In fact, studies show that when people have unlimited PTO, they actually tend to take less time. David Leary: Like, you just can't leave this week ... "Hey, I'll be back on the 16th of April, and 17th of April." Blake Oliver: Maybe [00:10:30] the smaller firms are not offering unlimited PTO, because they're worried that they will run into staffing issues. David Leary: All right. What I need everybody to do is tweet. If you have ... If you're an accountant, or bookkeeper, and you have unlimited paid time off, tweet that you have unlimited paid time off, and then, just say how big your firm is; approximately how big, because- Blake Oliver: Maybe you should do a Twitter survey, David. I know they have that feature now. David Leary: I just don't know if I have enough major firm people following me directly, but we could try it, and see what happens. Maybe we'll get a little action. I can build this ... All right, I'm gonna take [00:11:00] an action note here: David to build the survey. Blake Oliver: Let's see, what is next. You had a story about taxi companies, David, and that intrigued me, because I used the analogy of Uber, and how Uber is disrupting taxi companies, in our discussion of QuickBooks Live, previously. David Leary: Yeah, because I think if you go back to even when we broke the QuickBooks Live story, and I made the artwork for it, I put the word 'Q'Uber'Books ... I put the word Uber in there, because it feels [00:11:30] very obvious that that's coming. I think I even heard on a ... Joe Woodard's podcast, this week, that he mentioned something about Intuit could be the Uber, and you, the bookkeepers, or ProAdvisors, are the taxis. This analogy's been thrown out a lot lately. I came across an article this week; it's from something called SmartCitiesDive.com. The existing taxi companies have had to do some things to stay competitive. Not all of them have died. The markets evolve. I think there's things our listeners could learn from this article. Blake Oliver: Basically, [00:12:00] we can learn from what the taxi companies have done to evolve, in response to Uber. We could take those lessons, and apply those to our firms, in order to evolve against a competitor like QuickBooks Live. David Leary: Yeah, and it's not just QuickBooks Live. I think that with AI, and bots, and new business models, right? Blake Oliver: Right. David Leary: Everything ... There's just a lot of evolution, and disruption, and you can do things to combat that. You don't have to just take it, as a firm. Blake Oliver: Got it. Okay, well, let's dive in. What should I do, as a firm? What can I learn, as a firm owner, from taxi [00:12:30] companies? David Leary: One thing they did is they stopped calling them taxis. They took the word 'taxi' off the taxi. Blake Oliver: What do they call them? David Leary: They painted them black, but they call them Yellow Cab. That's one picture in here. Blake Oliver: Okay, so, Yellow Cab ... They just call them Yellow Cabs; they don't call them taxis anymore. David Leary: Yep. Blake Oliver: Got it. David Leary: They started pulling off the word 'taxi.' That's one thing that could be- you could do. Another thing is they got apps. They weren't being competitive on a technology basis. They [00:13:00] all got apps. Some of these taxi companies even partnered, even worked together to get apps, so you can get one app, and you can actually hail all the taxis in the town. Blake Oliver: Here's an idea. If you are a firm ... Let's say QuickBooks Live ends up happening, and now, business owners can get a QuickBooks bookkeeper, or a ProAdvisor inside of QuickBooks. I could see a firm creating their own Google Chrome plugin that allows you to get help on demand from your firm, and would then integrate [00:13:30] with QuickBooks, because it's part of Chrome, and it can see what you're looking at in QuickBooks. That would be super-cool. David Leary: Yeah, or you could just FaceTime with your clients instantly. There's lots of things that can be done - even extreme things that we're not even thinking about. They created a button, and they could put it at certain locations. Imagine, at a bar, there's a button, a physical button at the bar, you go, and you press, and then the taxi comes. Blake Oliver: Yeah, makes a lot of sense. David Leary: In some ways, they just had to step up their game, and [00:14:00] compete. They kinda didn't have to compete for maybe 60 years, 80 years, and now they have to compete. Because of that, it's actually good for them. They've had evolve, as well. Blake Oliver: It's definitely good for consumers, just like QuickBooks Live is gonna be great for business owners. That's cool. I actually see some positive change. Maybe this will force traditional accounting firms to finally modernize, or at least traditional bookkeeping services, et cetera. David Leary: Hopefully, people [00:14:30] start doing experiments beyond ... It feels like a lotta people are throwing the word 'advising' out there, like advising is gonna solve everybody's problems, so hopefully ... Yes, that could it; it could not, but there's a lot more choices you have. You just have to be creative, and figure it out. Blake Oliver: I like these ideas better, like making it a better customer experience. Just continuing this analogy with ride-sharing, and taxis, people still just wanna get from point A to Point B. The only thing that Uber has [00:15:00] done to change things is make it easier, more convenient, more pleasant. They haven't actually fundamentally changed the service that is being delivered. That's why I don't agree with people who are saying that bookkeepers, and accountants need to become advisors, because that's fundamentally different than what we do now. It is not what we are trained to do; it is not our skill, and it's not really even what business owners want. Yes, if you ask them, "Hey, do you want somebody to advise you on your business, and tell you what to do, and [00:15:30] give you insights?" Of course, they'll say yes. Everybody wants it, but the question is are they gonna pay for it. The vast majority of businesses are not willing to pay anything close to what it takes to deliver good advisory services. There's this huge gap here, and I like focusing on being more competitive, from a customer-experience standpoint. David Leary: You're right, the fundamental job did not change, but, my experience as a customer ... All that weirdness of you get there; all the sudden, he doesn't magically take credit cards, and you gotta somehow pay [00:16:00] him cash ... All that weirdness of a taxi experience kind of got eliminated by Uber and Lyft- Blake Oliver: Yeah, all the bad stuff, right? Most of the bad stuff-. David Leary: But I'm still sitting in the back seat of a car, getting to where I wanna go. Blake Oliver: Yeah, exactly. Businesses still want their bookkeeping to get done. They still want their taxes to get done. Just services like QuickBooks Live are gonna make it much less painful, because I just click a button, and make an appointment inside of QuickBooks, and I can do the screen-sharing right there; I've got the video on ... It's gonna be ... I can already [00:16:30] picture it. It's gonna be great. It's gonna be so much better than working with your traditional bookkeeper, who doesn't even know how to do video meetings. David Leary: That's the keyword here - traditional. You have to stop being traditional, and be innovative, and come up with new ways of running your business. There, we've put that article to bed. Blake Oliver: We're talking about Intuit. I've got another story about Intuit, David. David Leary: Okay. Blake Oliver: This is about TurboTax. It's tax season. Let's see, it's April 5th, as we record. We've got another [00:17:00] 10 days of tax season, so, this is very relevant. "CryptoTrader.Tax Integrates With Intuit TurboTax For Easier Crypto Tax Filing." I spotted this on RTTNews.com. Cryptocurrency accounting for tax purposes is a huge pain in the butt, because the IRS treats cryptocurrency as an asset, not as a currency. That means that whenever you buy, or sell any cryptocurrency, you have to calculate gains, and losses on every single transaction, [00:17:30] which can be a nightmare. There are a few solutions out there. This is one of them - CryptoTrader.tax - which you plug into your blockchain Bitcoin wallet, and it will view all of your transactions, and then calculate those gains, and losses for you, and now, integrate with TurboTax to automatically populate the IRS Form 8949. That's pretty cool. David Leary: Yeah, especially if you're a do-it-yourselfer, absolutely. Blake Oliver: Yeah, exactly, and I'm sure there are [00:18:00] plenty of do-it-yourselfers that are sweating over this. CryptoTrader.tax joins Coinbase, which is probably the exchange that people are most familiar with, in also having TurboTax integration; Coinbase has one. I thought that was pretty cool use of the cloud accounting ecosystem to streamline tax filing. I think you've got at least one more story here, something about security? David Leary: Last week we talked about that great article from Cathy Iconis on her QBO Chat blog, about creating [00:18:30] a virtual bookkeeping company. It kind of had detailed steps of everything you need to do - check, check, check, check, check. I think one of those steps talked about security. Well, here's an article that is from ... I'm gonna blow his name. Ryan Lazanis. He wrote an article called, "Cloud Accounting Security for Your Firm." That's on his blog called The Future Firm-. Blake Oliver: Great blog; FutureFirm.co. David Leary: When I think about this article, it's kinda similar to the way Cathy's was, where she just covered every little thing, so you don't forget to do anything. He [00:19:00] does the same thing in his article, but it's only about security for your cloud accounting firm. He touches from storage, to hacking, to data privacy, and even covers data-privacy rules, in the EU, versus The States, and why that's important for you. Especially if you're using Cathy's article from last week to create your virtual bookkeeping company, you wanna add this one to your stack of articles to work through. Blake Oliver: Those in the know, know that this week is SuiteWorld, or was SuiteWorld, in [00:19:30] Las Vegas. That is the NetSuite annual user gathering; NetSuite being Oracle's mid-market ERP in the cloud. There wasn't a lot of new stuff going on at SuiteWorld this week. I wasn't there; I didn't go this year, because we did our own little product launch here at FloQast, and I was distracted with that, but I did catch Steve Brooks' write-up of new feature announcements on Enterprise Times. He [00:20:00] does a really nice job of summarizing all of these press releases, and actually doing a little bit of analysis, too, as to what really matters. The new feature I wanted to highlight from SuiteWorld that I thought was interesting is a service called NetSuite Brainyard; brain, and yard - those two words just stuck together. It is a dedicated business-research, and benchmarking service that Oracle is launching for NetSuite customers. Over time - I guess it doesn't do it now - it's going to leverage [00:20:30] the anonymized data that NetSuite has collected over the last 20 years from its customers, and then provide insights to customers, based on analysis carried out by NetSuite. I thought that was really cool, because benchmarking is one of the hardest things to do properly for small, and mid-sized businesses, because it's hard to find good data. Who is better to do it than the cloud ERPs? It reminded me that, I think, at one point, QuickBooks Online had some [00:21:00] sort of benchmarking available inside it. I swear I remember seeing this at one point, and then it disappeared. I feel like it was one of those things that could've been super-useful that just disappeared and went away. I've always been wondering, when is Intuit gonna do that, or Xero? When is Xero going to allow us to benchmark our businesses against other similar businesses? I feel like this should be possible. David Leary: I remember that briefly in QuickBooks Online. When you were setting up QuickBooks Online, you would tell it what [00:21:30] kind of business you are, and it would compare, and it would recommend, like, "Based on your business type, and your area, and your zip code, here's the chart of accounts you should use." It would use some of that data, but present some of this other comparison stuff, like, "Hey, the average plumber in your area is charging this much an hour." You're right, I think something like that existed. Now, I'm using QuickBooks, and I haven't seen it, so, I don't know if it's completely gone, but logically speaking, yes ... There's no reason QuickBooks, or Xero can't do this with real data, which really puts a lot of these ... There's tons [00:22:00] of other companies that are doing it with abstracted data, or sample data, and they've been doing it for years, or via surveys. Blake Oliver: Right. David Leary: There's no reason Intuit, or Xero could do this with the real data, but, at the same time, that's some of their bread and butter, and do they want it out there? Blake Oliver: One of the problems in the past has been that everybody has a different chart of accounts. My advertising and promotion account might be very different than what you've got set up, so you can't compare apples to apples, but I feel like this is one of those instances, where AI could be [00:22:30] super-super-useful. You could actually compare the charts of accounts of thousands of thousands of businesses, and then come up with some sort of master chart of accounts and use AI to map all of each individual company's accounts into that master one, and then you could do benchmarking; provide it anonymized. It just seems like a huge opportunity ... As a business owner, if I had the option to have benchmarking data for my business that [00:23:00] would cause me to choose one or the other, for sure, if that was included, and the other one didn't have it. I know that Geni Whitehouse, she built her firm ... They built a whole practice in the wine industry by offering a proprietary scorecard to their clients. They could do that because they happened to have dozens of wineries in Napa. Then, they created a method of benchmarking them against each other. This is something a people have been doing for a while, ad [00:23:30] hoc, but why don't these software companies do it? It would be a huge differentiator for both the accountants, and the businesses. David Leary: Especially if they could do it ... Maybe they could do that, but only offer access to it to the accountants, and bookkeepers, so the accountants, or bookkeepers could offer that as a value-add service. There's plenty of upside to this, but then again, where'd it all go. Why'd they ...? I feel like I've even seen Xero press releases, or Xero presentations, at one time, talking about this is coming, this type of analytics. [00:24:00] Blake Oliver: Yeah, they've talked about it, and in the context of the fact that I think it's the majority of businesses in New Zealand are on Xero, now; something like that, because that's where Xero started, so, they have access to all of this information about the small-business economy there. There must be some limitations, technical limitations, that have prevented them from actually leveraging it. I think it'd be super-cool, but that doesn't mean that Xero should stop development on the little tiny feature enhancements that I've requested in their community forums ... Those need to be [00:24:30] prioritized-. David Leary: From a decade ago, you have a list? It's interesting, too, because, fairly or unfairly, we kinda lump Oracle, NetSuite, even Intacct, a little bit ... It's like, "Hey, these are the big, slow guys already," and they beat Intuit, and Xero to the punch on something. Blake Oliver: Cool. Well, hey, I got one more here. David Leary: Okay. Blake Oliver: This is about the great state of California, where I Live. We were talking ... Were you and I talking on a recent episode [00:25:00] about the high-speed rail fiasco here? I don't know. I feel like- David Leary: I don't know if I recorded it or not, but I think we discussed the high-speed rail fiasco [cross talk] Blake Oliver: In California, we love to waste taxpayer money on projects that go nowhere, apparently. I spotted an article in the Fresno Bee, which is part of the Sacramento Bee, called- the title is, "California FI$Cal Problems Could Hurt State's Credit." Fiscal is spelled F I $ C a l. That is the [00:25:30] name of the computer program, also known as accounting system, or ERP system, that California started building in 2005. David, I know, I guess I spoiled this, because you already have seen the total. I was gonna have you guess how much money California has spent on this program since 2005. Would you ever have guessed that it was $900 million dollars? David Leary: Basically, a billion- Blake Oliver: Yeah, a billion dollars. David Leary: It's a billion dollars for a software package [cross talk]. [00:26:00] Blake Oliver: For an accounting software package. David Leary: They coulda got QuickBooks Online Advanced for 160 bucks a month. It is very, very insane. I saw something else related ... In the billions, right? All these companies that are going public in California ... I saw California is depending on these companies ... Lyft just went public. California, itself, is expecting this huge income tax - because of capital gains - an income-tax budget surplus, because of this. It's all very [00:26:30] extreme - extreme spending, extreme gambling, as far as hoping there's IPOs to get money, and income. Blake Oliver: Well, I haven't even gotten to the good part, David. David Leary: Okay. Blake Oliver: We started- we Californians started building our own customized accounting software for the state in 2005. We're looking at what? 14 years ago? It has still not rolled out. It was supposed to roll out this year. State Comptroller Betty Yee wrote a letter to the legislature saying [00:27:00] that, "Problems with the accounting software mean that we have to stop rolling it out. If we do, it could impact the annual-report accuracy, which would then impact California's creditworthiness. It's like the program is so bad, apparently ... There are so many problems with it that we can't even guarantee the accuracy of the annual report, if we use it for that. If you dig into this, you'll find that it's even worse than the program simply having taken 14 years to build, and not really working. Most [00:27:30] of the agencies ... I'm not sure if it's most, or all of the agencies that are currently using FI$Cal are doing double-work, meaning that they are using their old system to record transactions, and produce financials, and whatnot, and they are also doing it in FI$Cal. Some of these departments have hired extra people just to be able to do that double-work, including the Office of the Comptroller. It's kinda mind-blowing that we couldn't build software that works for this price. David Leary: If they started this in 2005, it's probably a desktop [00:28:00] system they've been building this whole time. It's not cloud. At this point, should they just scratch it, and start over? Blake Oliver: Get Oracle to do it? It couldn't possibly be worse. I know that SAP, and Oracle implementations aren't exactly the most fun, but I think they generally happen in less than 14 years. David Leary: It's a municipality, ultimately; it's a big one. California's gigantic, the size of a country ... It's bigger than most countries, from a GDP perspective, et cetera. I can't imagine the use cases are much different than the accounting [00:28:30] system I would need for a teeny little town. Blake Oliver: It appears that, like many things, like probably with high-speed rail thing, the problem is lack of proper oversight over the spending. I bet you there's been just tons of wasted money in development- David Leary: If it makes you feel any better, I think I remember reading an article about a payroll situation in Canada, and they've spent millions building a payroll system- Blake Oliver: I remember this. David Leary: -and it's never worked, and it's been a 10-year project, as well. Blake Oliver: Yeah, here it is. Toronto Star, March 10th. Apparently, [00:29:00] this is still a problem. This article, I'm just reading it to you live- I haven't seen this yet. The headline is "Still stuck on the Phoenix pay ‘roller coaster,’ these Canadians just want to get off." It's in the Toronto Star. Apparently, this pay system the government has built is just not working, and it never will. People have been getting paid incorrect amounts, or not at all, or not getting the right tax deductions, for a long time. [00:29:30] It's already cost them a billion dollars. David Leary: I think it's like ADP's building this system for them. In the meantime, ADP's taken hundreds and hundreds of millions from them. The whole thing seems insane. Blake Oliver: 70,000 people reported having Phoenix-related pay issues in 2018, and more than 53,000 public-sector employees said concerns about Phoenix prevented them from pursuing other job opportunities for fear of destabilizing their pay. David Leary: I suspect if you didn't pay 70,000 people anything ... Less [00:30:00] than that would complain. That's pretty bad, if 70,000 people have noticed something wrong, and complained. That's pretty motivational. I think we're wrapping up for the week, right? Is that about it? Blake Oliver: Yeah, that's kind of a depressing note to end on- David Leary: Well, I think there was something I wanted to ask you about, because I know that you were sick all week, and then- Blake Oliver: Oh, yeah. David Leary: FloQast released something, and I saw it. It was something to reconcile bank statements, and I think there was a video, but I never pressed play. Can you just give me ... What's the 30-second lowdown of what it is you guys actually released? Blake Oliver: Yeah, this [00:30:30] is part of the reason that I was late delivering the last episode. I was sick, and then, on Tuesday, we had the launch of our first new product line in the history of FloQast, ever since we launched our original product in 2015. For those of you who are not familiar with what FloQast does, it's where I work. We are closed-management software. It's software for accounting teams, all related to the tasks, and reconciliations that happen as part of the month-end-close process, which is [00:31:00] a big deal in midsize organizations. We're talking teams of dozens of accountants trying to keep track of everything that they need to do to wrap up the books, put a nice bow on it, and deliver financial statements. The new product that we released is called FloQast Matching, and it's our first foray into automation of close activities. Basically, the short version of the story is if you have a high-volume reconciliation; let's say you've got a bank statement with thousands [00:31:30] of lines, maybe even potentially hundreds of thousands of lines, if you're a big business. To reconcile that, David, can you imagine reconciling a bank account with hundreds of thousands of lines in QuickBooks Online, or Xero? David Leary: I think it would actually be less painful in QuickBooks Online, or Xero, but if a company like that, like we talked about before, is using an ERP system that doesn't have bank feeds- Blake Oliver: They don't have bank feeds, and the bank-rec modules are really slow. To actually match up ... Let's say you're doing it in [00:32:00] Xero. To actually match up, and clear every line, you'd be clicking Okay forever. You'd be like click, click ... It would take you days and days, and which is what it does. Most accountants don't have access, though, even to ERP systems that, in these businesses, have good bank-rec modules, so they're doing it in Excel. What they're doing is they're taking a spreadsheet of transactions from their general ledger, from their bank account in their GL, in NetSuite, or something. Then, they're taking the [00:32:30] export from their bank - the bank statement - and they are manually sorting, and checking off transactions, doing the bank-rec that way, in Excel. It kinda blew my mind, when I found out this is how most accountants in mid-sized/large organizations do their bank-recs. What we built a FloQast is software for that. You take your two Excel sheets; instead of doing a bunch of pivot tables, and stuff to clear transactions, you upload those into FloQast, into Matching, and then we use AI. We are actually using ... It's a real application [00:33:00] of AI that automatically goes through and applies an algorithm to figure out which transactions should be matched; which ones cleared the bank, in the case of a bank statement. Then we pull out all of those transactions, pull those into a separate tab in our application, where you can go review them, and make sure that that's okay, and pull them out if we did it wrong. Let's say we've cleared 90 percent of the transactions. Whatever is left, you can then go match in our app, and not have to use Excel to do it. It's basically like [00:33:30] a super-powerful bank-rec tool, but it's not limited to bank accounts. You could do it with inter-company accounts; you could do it with a merchant account. Anything that you have to reconcile that's got high volume, you can do it in Matching. Super-nerdy; super-niche. There's been a lot of interest so far, and we're really excited to show that off. David Leary: Yeah, I think from the screenshot, it reminded me of code-diff tools, where developers, they have millions of lines of code, and they need to figure out what's the difference between the code from this developer, and the code from this developer ... It looks like a diff tool [00:34:00] is what it looks like. Blake Oliver: I never even thought of that as a comparison, but yeah, it's basically let's find out what is different between these two data sets, because that's essentially what a reconciliation is, when you think about it. When you're reconciling accounts, you just wanna find out what is different in this account, versus this data set, and why. Then the reconciliation is just explaining the difference, which, in the case of a bank account, is we have uncleared transactions here; deposits in transit, and that's why we [00:34:30] have this difference. That's what you're doing when you reconcile. David Leary: Cool. See, there's always a problem to be solved. Nice job. Blake Oliver: If you happened to get excited by all of that, go to FloQast.com/matching - F L O Q A S T dot com slash matching - and you can read all about it. With that, David, if people wanna get in touch with us, where's the best place for them to do that online? David Leary: The easiest place is on Twitter. You can get a hold of me directly: @DavidLeary. [00:35:00] Blake Oliver: I am @BlakeTOliver. David Leary: We're on LinkedIn. We're on Twitter. The Cloud Accounting Podcast is also on Facebook. If you just search for Cloud Accounting Podcast on any of your socials, you should be able to find us there. We started this week- really started tweeting out of those accounts and utilizing them a little bit more. Blake Oliver: By the way, if you were interested in getting the show notes for each episode delivered to you via email automatically, whenever we release an episode, go to my website, and subscribe to my email list. It's BlakeOliver.com. [00:35:30] Click the blue Subscribe banner at the top, put in your email address, and you will get the show notes emailed the next day, after we released an episode. That way, you can just go a scan through your email, and click on any of the articles that we talked about and read more. David Leary: There's an article we were gonna talk about, and it didn't ... We ran out of time today, so, I think we should tease it, and you only put it in your email feed. Blake Oliver: Oh, okay. David Leary: It's awesome. It's an amazing video. It has to do with Excel. It's awesome ... If you really wanna see this video, Blake will include it [00:36:00] in his email. Blake Oliver: This video is "What Happens When an Accountant Streams Excel on Twitch." That may not mean anything to you, or it might fascinate you. Find out in the show notes. David Leary: On that note, I'm out. Blake Oliver: Have a good one, David. Talk to you next Friday.