The Accounting Podcast

Blake and David leap into the latest updates from Xerocon, including new features like traditional bank reconciliations, embedded bill pay with BILL and AI capabilities through JAX (Just Ask Xero). They look at Xero's strategy to double and how it compares to Intuit's mid-market growth focus. They also touch on the potential impact of QuickBooks' pricing strategy.


Chapters
  • (01:01) - Xerocon Highlights and New Features
  • (01:18) - Deep Dive into Xero's Bank Reconciliation
  • (06:13) - Xero's Strategic Focus: The Three by Three Initiative
  • (10:18) - Xero's Market Share and Competitive Strategy
  • (17:52) - Listener Questions and Advice for Aspiring Accountants
  • (21:37) - Xero's Upcoming Features and Integrations
  • (40:46) - Alternative Career Paths in Accounting
  • (41:16) - Xero's New AI Features and Bill Payments Experience
  • (45:53) - Exploring Xero's JAX AI and Its Functionalities
  • (54:04) - Xero's Market Strategy and Competition with QuickBooks
  • (01:01:51) - Xerocon Highlights and Nashville Adventures
  • (01:07:44) - The Mysterious Case of Mike Lynch
  • (01:14:27) - Closing Remarks and Upcoming Events
 

Show Notes
New features announced at Xerocon Nashville
https://blog.xero.com/product-updates/new-features-xerocon-nashville/

Intuit cut to Equal-Weight at Morgan Stanley, citing reliance on pricing lever
https://seekingalpha.com/news/4139926-intuit-cut-to-equal-weight-at-morgan-stanley-citing-reliance-on-pricing-lever

British entrepreneur Mike Lynch among missing after luxury yacht sinks off Sicily
https://www.reuters.com/world/europe/seven-missing-15-rescued-after-sailboat-sinks-off-sicily-2024-08-19/

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Transcripts
The full transcript for this episode is available by clicking on the Transcript tab at the top of this page

Creators & Guests

Host
Blake Oliver
Founder and CEO of Earmark CPE
Host
David Leary
President and Founder, Sombrero Apps Company

What is The Accounting Podcast?

The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Blake Oliver: [00:00:03] There are so many smart, creative individuals who didn't go through the traditional path that we are blocking from joining our profession. And these people are the cool people you want to make accounting cool. Bring in the cool people who didn't major in accounting in the first place.

David Leary: [00:00:22] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:29] Hello and welcome back to the Accounting Podcast, the number one podcast for accountants in the world. I'm Blake Oliver.

David Leary: [00:00:35] I'm David Leary and Blake. I almost missed the intro because for those of you listening, Blake is wearing a blue Xero blue. So what color is that kind of turquoise? Whatever the Xero Blue is cowboy hat. Yes, I was.

Blake Oliver: [00:00:47] At Xero Con in Nashville this past week and I picked up a blue Xero cowboy hat. So, um, my new favorite hat, it's going to go back here on the shelf. And thank you. Zero. I've got updates for you from zero. I've got all the latest product announcements. Um, stories? Yeah. I can't wait to share that with you, David.

David Leary: [00:01:10] I'm want to know, because I heard a feature that I wanted in zero may have been announced.

Blake Oliver: [00:01:16] Yes. And that is the title of our episode zero. Now, does bank reconciliations, and it sounds crazy. Um, but yes, like they do traditional bank reconciliations now that United States accountants are used to the way that we are used to doing it. And it's kind of amazing that it took this long, but there is a good reason for it and we'll get into that. The leadership at zero has rolled over and there is a renewed US focus. So thus US accountants are finally getting their traditional bank rec. And by that I mean you run a report and you see a list of transactions, and you clear them by checking them off and putting in a starting balance and ending balance. And then you can close the period and lock those transactions completely.

David Leary: [00:02:08] Yeah, you match it to a bank statement, not just the bank feeds coming through every day.

Blake Oliver: [00:02:12] Exactly. And and the important thing to note is that it actually locks the transactions in the ledger. You can still change the category if you need to recode, but the amounts you cannot delete or edit the amount to throw off the bank rec in that way. So that'll be welcome news to many accountants. And it's a really big deal, because that was the number one objection to us accountants to adopting zero for like the last 14 years, maybe longer. Um, and, you know, it seems kind of silly because zero did bank reconciliations. It's not like they didn't do it. They just didn't do it in the same way that us accountants are used to. But if you're trying to get people to change software, it has to translate, right? You have to localize the software. Yeah. And that was something that Xero just struggled with when they came to the US from New Zealand and Australia years ago, back in 2011 is when they first set foot on the shores here. 2013 was when they first had their, you know, official launch in the US. And there was just something lost in translation, right. The, the needs of the US accountants struggled to get addressed on the product side back in New Zealand. And there's a whole ocean between you, right? You think that cultures aren't that different, but they really are. So and that's.

David Leary: [00:03:43] Like a from a bookkeeping perspective, like we were using, you know, I think one of the entities we had was on zero. And then you're like reconcile the accounts. And I'm like, I can't. And I think mentally it was just really hard to like, comprehend, like, what do you mean? There's not really reconciliation here? Yeah. Like like there was a disconnect because they're like, well, you reconciled, you match to the bank. Well, but that's just the bank feed I still want to match to the bank statement. And it was really hard to process. Oh, yeah. Yeah. For me. Yeah.

Blake Oliver: [00:04:10] Yeah. It's a total mindset shift and I don't know. For those who haven't used Xero, the best way I can explain it is that Xero does a 1 to 1 match between the general ledger transaction in the register and the bank statement transaction, and QuickBooks does not. Quickbooks does a period reconciliation where you mark transactions as cleared and then you lock them. Yeah. Ah, you reconcile them that way. And so, you know, it's it accomplishes the same thing in the end. But it's a totally different workflow.

David Leary: [00:04:43] So especially if you're coming from the QuickBooks world, because when you see the matching that's happening in Xero, you're like, well, that's just the matching. That's just putting the see C on the transactions. I haven't actually reconciled.

Blake Oliver: [00:04:54] Right. And it's zero. It's the same. Both steps happen at the same time under the old method. Yeah. And so what's nice is that it's not going to affect the accountants who have already adopted zero and are familiar with it. Because you still do that. This is just an extra layer on top. So it provides additional closure on like when you close the books. It's it's great because now you know your client isn't going to go unlock a period, right? You can still lock the whole period using the dates in the financial settings in the app to prevent anyone from going back and changing it. But let's say somebody undoes that, like changes the date. If they go back and try to delete a transaction, they won't be able to because it was already reconciled in this new method. So it's like double protection. So you got to.

David Leary: [00:05:39] Make sure you reconcile. It's perfect before you hit finish or. That's right.

Blake Oliver: [00:05:43] That's right. The undoing part is, is not as easy. Um, but you know, it's a, it's a, it's a really good sign that they did this because it shows that zero is now focused on the US again. They're going to make another go at it. And they know that this is critical to their goal of doubling in size, which they explicitly stated on stage. I actually really liked the the new CEOs, um, presentation. Um, Sukhinder Singh Cassidy went up on stage and she put the investor one pager up on the screen and said, this is what we are telling investors. So it wasn't like, here's one message for the accountants. Here's one message for the investors. It's the same thing. And the core message. The most important part of her message that I came away with was the three by three win. The three by three is a key strategic strategic initiative for 2025 to 2027 fiscal year.

David Leary: [00:06:51] And what is the three by three?

Blake Oliver: [00:06:53] So the first three is the three core markets US, UK, Australia. Those are the core markets they're going to focus on. And the US is first in that list. I don't I don't know if there's a priority there, but that seems important to me. That seems to mean something to me. Um, and then the other three is the three parts of the product that they're going to focus on. And that is core accounting, also known as general ledger payroll and payments, getting paid and paying your vendors. They view that as the three most important things that you do with your accounting software. And when I heard that, that was music to my ears.

David Leary: [00:07:36] So I'm imagining like a grid. Here's the countries over here across the top. You have, you said payments, the core accounting payments and payroll.

Blake Oliver: [00:07:43] Right.

David Leary: [00:07:44] Accounting. I'm imagining boxes and some things are maybe yellow where they haven't built it yet, or they plan on releasing it. Green's like we're solid in that quadrant. Is that kind of what I'm imagining?

Blake Oliver: [00:07:54] Well, so yeah, a great example is the bank wreck. The US bank wreck. Right. That is a core accounting feature that US accountants need if you're going to try to switch them off of QuickBooks. And so they're building that because that's in the three by three.

David Leary: [00:08:07] Got it.

Blake Oliver: [00:08:09] And there's a lot more that was announced actually quite a lot of new product that's coming very soon. Like Q3, Q4. So this is not stuff that's just coming in like someday in the future. I like that they didn't go too far out because it always ends up being disappointing when they miss the target, right? Every time that happens, anytime, anytime something is announced more than like a quarter or two away, it then it generally isn't.

David Leary: [00:08:34] It doesn't hit the finish line. Yeah.

Blake Oliver: [00:08:36] Um, but the reason I really liked the three by three and I think it's brilliant and I think they are on totally the right track is because when I had my accounting firm doing client accounting services, that is exactly how I viewed my own firm. We did three core things. We did accounting, we did payroll, and we did bill pay for our clients. And of course we helped them get paid as well. So that's the payments part. Those were the three core services that every client needed. And we built packages designed to serve that. And we did fix fees. And you know, I always say I had great success having never worked in public accounting, building that accounting firm from scratch. So so zero is building what accountants need to deliver client accounting services effectively.

David Leary: [00:09:27] Yeah, it's not some crazy dashboards. It's not all this other stuff. It's. Yes. It's here's the three things you charge your client for. Let's just do those really well. Yeah.

Blake Oliver: [00:09:36] Exactly. And this is a great change from when they were out there. I'm trying to think of the last, you know, wild thing they built to try and bring in new people, right? The impressive thing is like, I think the cash flow or performance dashboard. Right. It's like those are great to have. Dashboards are nice, but that's not the thing that the clients need that every client has to have, that every accountant has to have to serve those clients. Yeah. Right. So I want to go through those three areas and just tell you what's new, like what they've released recently and what is coming because it is it's exciting and it might get it should get QuickBooks users to switch. And this is really critical for Xero. I don't know if our listeners are aware of the market share dominance it's worth talking about. Quickbooks has over 80% of the small business accounting market in the United States, and by my estimate, Xero doesn't have more than 3 to 5%. And that's after a decade of trying.

David Leary: [00:10:38] And I think from a numbers perspective, I think QuickBooks online is now pushing in the US or North American market, maybe 4,000,004.2 for Qbo. Xero has maybe 400,000 now. I might be a little liberal on that number, but to put that in perspective, there was a while in like 2013, 2014, 2015 where Qbo was putting on 300,000 Qbo subs a quarter. So just kind of like from a sheer size and volume thing. You're right. Like, but is this is this a play then, Blake, to get people to switch well, or is this a play of like, hey, when you have a new client, maybe you put them on Xero?

Blake Oliver: [00:11:14] I think it's both. Um, and I think they could do it because when there is a dominant player like QuickBooks, they tend to slow down. They can't satisfy everyone. And so competitors can peel away at the edges. At the margin, Xero should be able to double its market share in the United States if they execute this plan I really think they've got that potential now. There's a lot of room between making the plan and delivering on it, but some of the stuff that's coming out this year should give us confidence that they can do it. So I'll go through that. But first, I want to welcome our live stream viewers. Thanks for joining us on this Monday morning as we record Gator NYC says, for me, all they need is one reason we are not QuickBooks. That used to be a good enough reason, but it's not enough of a reason to get a big market share. It got them the 3 to 5% that I estimate. Thanks, Tyler for joining us. Thanks. Hooked hooked says digging the hat. Tyler also likes the hat. Thank you. Uh, they had a bedazzling station where you could bedazzle your hat. I didn't I didn't take the time to do that, but that would have been fun.

Blake Oliver: [00:12:33] There was some really good ones. Like, I was impressed with the creativity of the accountants at Xerocon. Um, and that's one thing. Also, before I dig into the product I want to talk about, and we should probably take an ad break, but I just want to say, like there were a thousand, about a thousand attendees there. That's according to the Xero media team. Um, and I don't know if I said this already, but congrats to the Xero events team for putting on just a fantastic event. You know, Xero has always had this beautiful accounting software mentality, and it translates into everything they do and they put on a fantastic event. Beautiful. It was at the Music City Center, which is just an incredible event venue in Nashville. What a great place. If you're thinking about doing a conference, even a relatively small one, like a thousand people feels great in a place like that. So everything's very walkable, easy to stay at hotels and walk to the venue and then walk to the bars and and Broadway and all that. It's a great spot. Little sweaty, kind of sweaty in August. I'm not going to lie. Uh, but, uh. But it was nice.

David Leary: [00:13:39] Nashville is great.

Blake Oliver: [00:13:40] So before I get into the rest of this, David, how about we thank our first sponsor?

David Leary: [00:13:45] Yeah. Our first sponsor is Linde Flow. As an accountant, you've likely noticed your clients don't always choose the best options when it comes to financing or taking out a loan. Imagine being able to offer your clients a curated list of loan options that you've personally vetted, ensuring they receive great rates and terms that truly benefit their business and increase your firm's revenue. With Linde flow, this becomes a reality. Linde flow empowers accounting firms to offer an unparalleled suite of credit and loan products. You'll create your own marketplace of specialized lenders, providing clients access to a diverse range of financial solutions from SBA loans and bank feeds. I'm sorry, bank feeds are on the brain from SBA, SBA loans and bank term loans to equipment financing commercial real estate loans. Lend flow delivers a comprehensive array of options tailored to your client's needs. Linfield lets you present this entire loan marketplace on your own website with your own branding. This gives your clients a professional, fully digitized and streamlined process that sets your firm apart. With impressive approval rates of up to 95% and loan amounts ranging from $2,000 to over $5 million, you can confidently meet the diverse needs of your business clients to help your clients secure the capital they need to thrive, while simultaneously boosting your firm's revenue streams. Head over to The Accounting Podcast promo flow that is The Accounting Podcast dot promo forward slash l e n d f l o w.

Blake Oliver: [00:15:10] That's awesome. I always wanted to be able to do that for my clients, but I never could because I didn't know bankers. I didn't have those relationships. Right. So being able to create this dashboard and present those options.

David Leary: [00:15:24] And we're doing a live demo with with flow tomorrow and I have a story I'm saving for that. Not on the show. I'll tell you a story because I feel a personal connection to small business loans.

Blake Oliver: [00:15:35] Ivy. Ivy says, happy to have finally caught you live. Awesome. Thanks for joining us, Ivy. And boring accountant says zero is a premium slash risk. If a client is changing accounting firms and the client is on zero, there is a barrier for changing accounting firms as few know zero or will charge more money for using zero. Uh, that is always true when you are using the not market dominant solution. And that's why Xero has struggled, because it's the safe thing to choose QuickBooks. It's the same thing. Uh, what was it back in the 60s and 70s buying IBM? Yeah. You you you'll never get fired for hiring IBM was like. It was almost like a motto that IBM used to sell IBM. Yeah, right. Um, so it's low risk. So that's why Xero has to really upped their game with the product and focus on the core tasks so that they can be multiple times better than QuickBooks. And I think they could do it because it's really hard when your QuickBooks to do everything well. And I actually think that QuickBooks has the wrong strategy right now. We'll get into that. I want to talk about Xero first, though.

David Leary: [00:16:49] I don't think necessarily that you have to I don't think it has to be better. Like it just has to be. So just like I cannot use a mac and then use windows, my wife can do both. She can jump back and forth, right? Right. It just has to be good enough to where an accountant or bookkeeper or something your cash practice can. Hey this clients on Xero boom boom boom boom boom. Oh I jump over here, I can use that. And you could just go back and forth. It doesn't have to be better because I think for me and this bill went off three, 4 or 5 years ago, maybe a lot of it. I used to talk to a lot of accounting firms like, oh, we're a QuickBooks shop, and they get a zero client and convert them to QuickBooks and then Xero shops. Well, I'm a Xero shop and they would take a QuickBooks client and convert them to zero. And that's a lot of work. If you think about Xero with some apps, when you're all done, you're in the exact same spot. You basically have a GL with some apps on it. It just it's crazy. So you're better off just supporting both in your firm and you need that. They have to be equivalent products or equivalent experiences equivalent.

Blake Oliver: [00:17:48] Okay. Well that's where zero is headed. Uh, Scott in the live stream says bit of an off topic question. That's okay. I'm starting my journey to finish my bachelor's degree in accounting. I was wondering if you had any advice for someone who doesn't want to go into public accounting? Thank you in advance. Well, you don't have to go into public accounting in order to get experience. Um, I, I met plenty of folks at, uh, at Xerocon who who didn't take that route. And actually, that's one of my favorite things about going to events like Xerocon and QuickBooks connect is because you get the rebels, you know, you get the unconventional accountants, you get the people who didn't have all the advantages like I did, and those I find tend to be some of the most interesting people, like someone who got kicked out of their house at 18 and had to work to put themselves through college in order to become an accountant. That person has an interesting life experience, and I love talking to those people and meeting those people. And they don't just do what everyone else did because their path was not the same. And every time I go to an event like this, it just reminds me how incredibly stupid it is that we have a CPA pipeline problem because we don't have to. There are so many smart, creative individuals who didn't go through the traditional path that we are blocking from joining our profession. And these people are the cool people. You want to make accounting. Cool. Bring in the cool people who didn't major in accounting in the first place.

David Leary: [00:19:28] They're already here, but you're pretty embarrassed to let them join your party.

Blake Oliver: [00:19:32] Yeah, and the barrier actually makes accounting worse. It makes the profession worse, not better. It makes it boring. So my argument is get rid of the boring stuff. Keep keep the high bar. Make sure these people are talented and have the knowledge to know what they're doing. But take out the boring, expensive stuff that just keeps accounting the same as it always was. And and that is why the AICPA cannot solve this problem, because they are totally focused on the traditional pipeline and widening that pipeline. But there's a whole group of people that are outside of that pipeline that would love to come in and join us. And I can't tell you how many E's I meet who say I would have become a CPA, but I just I couldn't afford it. I couldn't afford the time, you know, I couldn't afford the money, the tuition.

David Leary: [00:20:23] Or that that even that, uh, looking down their nose, like sometimes you'll get that vibe that CPA's. Well, that's just a bookkeeper. Yeah, that that that mindset and that vibe that should not be there.

Blake Oliver: [00:20:33] No, no. Yeah. We're killing the profession with this attitude. And, um, you know, every time I will, I will I will argue with anyone about this. Um, and maybe the problem is that, you know, the folks who are in favor of the traditional path, they just they hang out with the same boring people, doing the same boring things with the same boring country clubs. And they have they need to go to one of these events, you know. Um, and you would it's a, it's an eye opener. Hooked says that's me went into construction accounting currently working for one of the largest engineering firms in the US. So there you go. Right. Uh, Scott Hook did it. You know, these people, there are plenty of people who don't go into public accounting that do great. And so you don't have to, you know, sell your soul if you don't want to. Um, not that there's anything bad with going that path, but I'm saying, like, if you don't want to do it, you don't have to do it and you shouldn't suffer. Yeah.

David Leary: [00:21:27] Let's steer you back to the. We teased it. You're going to go through all the new things that are coming in zero.

Blake Oliver: [00:21:32] Thank you for keeping me on track.

David Leary: [00:21:33] Hammer out this list because I know it's pretty big.

Blake Oliver: [00:21:36] Okay, so core accounting is the first job to be done. So as as I almost hate to say it, but like the first thing that was announced was more bank feeds in zero because the United States is insane and we have 4500 banks, and we have this crazy way of getting bank data into accounting software with, you know, these intermediaries like Yodlee that fail and duplicate transactions and don't work and break all the time. And so zero was announced that they have expanded their direct bank feeds from 20 to 700 across the US and Canada.

David Leary: [00:22:15] That's great.

Blake Oliver: [00:22:16] Still a long way to go, but they are also paring those direct bank feeds with the aggregator bank feeds to try and capture the whole market. It just seems crazy to me that there's so many banks that don't do this stuff. Um, so that, you know, every time I see that, I laugh. It's just that's that's not really Xero's fault. That's just the United States. That's that's our crazy banking system.

David Leary: [00:22:38] And again, that's a different cultural shift that Xero had to mentally grasp because I think in Australia there's six banks. Yeah. And then, well, for one thing, they all have their own bill pay product. The banks work together on a bill pay product. So in the US you never have to build bill pay. Oh in the US. Oh and there's six banks. They all have bank feeds. Nobody writes paper checks. It's just the whole integration when it comes to the states is completely different. You're like, oh there's 20,000 banks. Yep.

Blake Oliver: [00:23:04] So they figured it out. They got to focus on that. Right? You can't get people to switch to your accounting software if the bank import sucks. They also have a PDF bank statement import that they have been working on recently. That's available now where you can upload a PDF statement and it just creates the transactions in Xero. So you don't have to go through a third party to do that anymore, like OCR software. Um, but I don't know if it works for all the banks. It like they've they've basically figured out the templates these banks have so that it's more accurate. Right. The import uh, we mentioned the period bank reconciliation. There's also coming soon improved bank feed monitoring. So there's going to be a dashboard where you can see the status of all of your clients bank feeds and fix them so that you're not surprised a month later when you go in and you realize bank transactions haven't been being pulled in.

David Leary: [00:23:54] I love this, and when I was at Intuit, I really like wanted Intuit to do something like this, and I actually thought about doing it myself. Like, this is great to show the status of bank feeds, um, or bank feed failures to you, right? As the accountant for your own clients. But I'd much rather see them publish it publicly like Intuit and Xero should publish publicly. The banks that have the best connections and most reliable, and the banks that suck. And then what'll happen is people will start moving clients to the banks that are reliable, and then the banks will have to improve their behavior on these bank feeds. But I think obviously if zero they just made relationships with 700 banks, they probably don't want to get in a situation where they're calling out banks that suck. But I get it. But it would be better for everybody. It would raise the whole boat for everybody if they would, you know, publicly call out these banks that constantly disconnect.

Blake Oliver: [00:24:46] Sort of like if the Pcob follows through on its threat to publicly name the audit firms, yes, have bad audits or the clients of audit firms that have failed audits, then that might actually change some behavior. But back on topic. Coming soon in zero localized charts of accounts for the US. So more localization these will be tailored to our entity types LLCs S Corps, corpse. C corpse. So when you set up a client from scratch, or when a client sets themselves up, they actually have a chart of accounts that matches the tax structure of these entities and that.

David Leary: [00:25:22] Haven't had this. They have not had that. No.

Blake Oliver: [00:25:25] It was always like a generic chart of accounts. And and so one of the first things I ever did was I developed my own custom CSV file, a master chart of accounts that had everything you needed for any entity type. And then my team would go in, you know, copy it and then delete what they didn't need and import it.

David Leary: [00:25:43] Gs right. That's yeah. These are I had that for years.

Blake Oliver: [00:25:47] I did that for years. And it wasn't you know, it took some time to figure it out. But that's the problem is like most accountants don't have the time to figure that stuff out. So this is great. Uh, there's also coming soon a custom trial balance with custom date ranges. So this was always an issue where like in QuickBooks, you can build a trial balance that has custom date range. In Xero you could not. And this was another deal breaker because if you do tax in the US, you want to be able to create a trial balance with a custom date range so that you can pull that into your tax software for whatever the tax year is or for whatever reason. Right? Um, and that was a big blocker in the past. So they are listening. Um, 1099. They're improving the whole 1099 process. They've got a streamlined workflow where you can collect W-9s directly from the client via the contact page. So it's basically send an email to the contact from Xero, and they can click a link and then enter their w-9 information without having to send you a form like a PDF that you then enter into the app. Um, third party payments starting in Q3, the third party payments that need to be excluded from 1099, like your payments through merchant processors, will automatically be excluded. Finally, you don't have to go find them and exclude them. That's good. Xero already announced this. They they reminded us about it. The expanded state based sales tax reporting. So now you can calculate sales tax with the Avalara integration directly in Xero. They have an integration in Caseware, in an integration with Caseware working papers in Canada to import trial balances and general ledger data that will make it easier for Canadian accountants to do year end closes.

David Leary: [00:27:31] So that's interesting because I always thought Xero didn't Xero have like kind of a connect to the banks or import statements and just pump out trial balances so you could export it out to accounting software like a write up version. I thought Xero had something like that.

Blake Oliver: [00:27:46] Xero has that in Australia.

David Leary: [00:27:48] Okay.

Blake Oliver: [00:27:49] And they have tax software in Australia. Xero is an end to end product and product in Australia and that's why it is so dominant there. Because imagine if you had that like you know QuickBooks kind of has that with. Yeah it's with Intuit series and Pro series. But it's like not perfect. And so a lot of accountants don't want to use that software, right. Zero products in Australia are like top notch. But that's because Australia has a very simple tax system compared to ours.

David Leary: [00:28:19] Got it. So okay. So I knew there had some functionality like that, that I was confused when I saw the case where announcement. Now it makes sense. Okay. That was just a down under thing.

Blake Oliver: [00:28:28] So I mentioned the bank feed status. Seeing all your the status of all your bank feeds across all your clients in one page. Also on that page will be like key metrics like the overall cash balance, their accounts receivable, accounts payable, their current ratio, their revenue expenses. Just core information like that, which I suppose, you know, I've never found anything like that to be terribly helpful because I look at that after I reconcile the books, not before, but it's probably it's good to see the cash balance, like if you have your bookkeepers in your firm reconciling the books on a weekly basis. You could, like on a Friday or something. Go look at the cash balance for all your clients and just check for any cash flow problems that way. Um, all right. Moving on to payments and cash flow. So this is, well, 2 or 3 I guess it's one of the three areas, right? Is payments that zero is focusing on. And the big announcement here was embedded bill pay with Bill.com. So in Q3 I mean we're talking very soon. In the next few months, you will be able to pay vendors directly within Xero using ACH transfer. So you've got your list of bills and you say, pay this vendor and you don't have to go to a third party app to do it. It happens via Bill.com payment processor built in.

David Leary: [00:29:59] So similar to the QuickBooks Bill pay Right. That's built in.

Blake Oliver: [00:30:04] So so this is funny to me because this is something that, like accountants have dreamed of having for years and years. Remember, it used to be in QuickBooks desktop for some banks. Yeah, you could pay directly. And that was like a super cool feature. And somehow it just like went away. And then QuickBooks built it for online. And now Xero is building it. So like this is great.

David Leary: [00:30:28] Well the natural place to pay bills is in the GL. Let's just. Right, right.

Blake Oliver: [00:30:32] You track your.

David Leary: [00:30:33] Bills. Everybody's done it. Right, right. We've been to Oracle NetSuite. They built bill pay. We've seen Sage build it right. They they they acquired auto entry to do the scanning. But then they built their own bill pay. And then you have QuickBooks obviously was part of Bill.com then their partner Emilio. Now they built their own and now Xero is building it in. It's the natural place to pay bills is in the accounting system. Yeah.

Blake Oliver: [00:30:54] Um. They're also partnering deeper. They're expanding the integration with stripe to allow clients to pay you easier from invoices that you send so your clients can get paid faster. Uh, direct bank transfers are available in the US and early next year. Tap to pay will be available so you can create an invoice on your phone. And you can just touch phones with somebody who has Apple Pay, for instance, and you can get paid right there. I don't have.

David Leary: [00:31:29] To get a dongle or anything. No dongle.

Blake Oliver: [00:31:31] It's just like works with the phones chip inside. Got it. It works on Android. They demoed it live on an Android device and it worked, which is pretty cool. Um, so coming to Apple soon? Apple just makes everybody work a little harder to get approved on their platform. Uh, and they also are adding SMS invoicing, meaning you can send an invoice to a phone number to get paid, which is more and more important these days.

David Leary: [00:31:55] Yeah. Intuit just I noticed that showed up in their the CPU interface recently, too.

Blake Oliver: [00:32:00] Yeah. So many people. Right? Like, like, I mean, let's say you're a field service operation, right? You don't want to email an invoice to your client, your customer. You want to just text it to them. So it's right there on their phone. They tap and they can do Apple Pay. They can do whatever, right.

David Leary: [00:32:14] Because a lot of times you get like, you know, a landscaper or somebody who does work at your house, they text you, I'm done. And they send a photo of whatever they did. And then the most logical thing would be a text with the link to the invoice, the most logical.

Blake Oliver: [00:32:28] Okay. The third area is payroll. And funny enough, Xero did not announce anything about payroll. They just said we have all these great payroll apps in our payroll ecosystem, but they already do have a partnership with gusto, right? So it seems to me natural that if Xero is embedding bill pay with Bill.com, it would be very it would be the it would be perfect to embed payroll with gusto. There was no announcement of that here. That's my.

David Leary: [00:32:59] Guess. History, right? Like didn't at first. They tried to build their own payroll for the longest time, right? If I remember correctly, with zero, then they did forget it. This is impossible. And then they started working with gusto. Now, at the show floor, were there other payroll providers? There was Onpay. There was ADP there? Yes. Interesting.

Blake Oliver: [00:33:20] Um, and so that is also my concern is that when Xero starts embedding, you know, picking winners with apps like Will that will that reduce the availability of options in the Xero marketplace? That's my concern. We can talk about that.

David Leary: [00:33:36] I what I think what's interesting to me is like on the R side you have that button. So if I send out an invoice there's a button that says pay now and I can change that button and Xero to any site I want. I can make that pay now button, send to my million page. I can make it send to my Bill.com page I can make it send to a stripe page. You have control over that button, which is really cool. But it's funny how on the AP and payroll sides it's not kind of the same. Like, it would be great if you could just go to a preference and say, I want to pay my bills through built in Bill.com bill, or I want to pay my bills through Melio or whatever option I want to choose for, etc. and the same with payroll. Like, I want to use this one for payroll so they could have a deep integration with multiple products. Yes, that's what I want it differently from the AR side, which is the beauty of that button, right?

Blake Oliver: [00:34:26] I would love if the embedded option worked for multiple apps. It's like the next version, the next step of the App Store. Yeah, the deeper integrations like Xero should make that open. I should be able to connect Melio in Xero. I should be able to integrate Melio and Xero the same way. Bill.com or Bill now is going to be in Xero or any or relay. Yeah. And with with payroll on pay and Gusto and ADP and all of these payroll apps, right? That is what made Xero successful in the US. That's how it got its current market share, was the marketplace, because it allowed accountants to create custom solutions for clients that were better than the all in one option of QuickBooks at the time. So Xero should stick with that. Do not go to trying to pick winners and losers. That's that's my. I really hope that the way they're building this, they have options. Like think about how Apple is building their AI into Siri. Apple is not exclusively going with open AI. They're starting with them. But the way they are architecting this is designed so that they can choose multiple providers. It's super risky to pick one. Like, what if that company stops developing the product and it sucks?

David Leary: [00:35:45] Or if that company launches their own GL?

Blake Oliver: [00:35:47] Yeah, right. Like you've speculated Bill might do someday. Right? And then suddenly your competitors. That's no good. And in these big companies like you can't you can't trust the word of one person who's going to be gone in three years. They won't do that.

David Leary: [00:36:04] Yeah. It's. Who's the CEO at the time, right. And what's their initiatives? And the other thing I like about that, multiple integrations. And it starts to be a little bit more like Sage Intacct and NetSuite, where you'll see a lot of those apps and like they run in the UI of the GL, right? They're actually in the UI of the GL. You're not opening up a second browser tab, etc. and you're right, it kind of it's almost a more mature view of the world, like, hey, we're gonna we're secure with ourself that we'll let all the payment players in if they meet some UI standards or whatever it might be.

Blake Oliver: [00:36:35] And Xero is perfectly designed to allow for that on the dashboard, because the dashboard is composed of widgets. Each bank account is a widget, the accounts payable is a widget, the account list is a widget. And what if you allowed any app to add their own box on the dashboard? Their own widget? Like from a design standpoint, it would be so easy, relatively speaking.

David Leary: [00:37:01] It's funny because it sounds like product development talks at Intuit and the developer team, you know, 12 years ago, like, why are these things not exist yet? I don't know. I know why.

Blake Oliver: [00:37:10] I know why, here's my here's why I think they don't do this. It's because short term thinking says, well, if we build the all in one, we can get a piece of all of these payments going through Bill.com. Yeah, we can get a piece of all of the payroll subscriptions, and that increases our average revenue per customer. And then we become a much more valuable company. Fast. But it's not good in the long term because it reduces customer choice. But these companies get so big and they are driven by shareholder value and making quarterly expectations that they do the short term thing instead of the long term thing. And the long term thing is to give customers more choices and to give them options and not to lock them in to one option. And whenever you have less choice, you end up getting mediocrity, just like the traditional CPA pathway. Had to had to put that in there. Sorry. Uh, okay. Continuing on, they also announced the full release of zero inventory plus zero is going after the e-commerce vertical. And this is, uh, the big the big announcement is that they now integrate with Amazon in addition to Shopify. So if you run an e-commerce store, you can connect zero, manage your inventory in zero, and sync it with both Shopify and Amazon, which is basically enough for anyone to get started selling.

David Leary: [00:38:43] Yeah. So that's exactly where QuickBooks is essentially. So they both acquired inventory companies and so it got Tradegecko. They had zero buy. They bought um, I'm blanking on the name.

Blake Oliver: [00:38:55] I forgot the name too.

David Leary: [00:38:57] They're out of San Clemente. I know everything about them. I can't remember the name. They come back to you.

Blake Oliver: [00:39:02] Just shout it out in the middle.

David Leary: [00:39:03] It was. Locate location, locate inventory. And they basically both are at the same spot where they integrate with Shopify and Amazon at the inventory level for e-commerce. But if you have 12 e-commerce stores, you're going to have to have third party app. You just can't do it.

Blake Oliver: [00:39:18] David, I think we should read our second sponsor message and then I will continue.

David Leary: [00:39:22] Yeah. You want to read that? I'll post in the link here.

Blake Oliver: [00:39:25] Yeah. Who are who are we thinking today?

David Leary: [00:39:27] This is the Small Business Research Institute.

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David Leary: [00:40:44] And that goes for the person that was in the chat. Here's a path you could take if you want to be a CPA. Just focus on providing you know you don't want to go down the traditional path. Here's an alternative path right here.

Blake Oliver: [00:40:56] Mad man Dan, welcome back to the show. What makes Xero as the go to platform for me is its beauty in its simplicity. You can work with a set of books as simple or as complex as you want, without all the clutter that Cuba would, Cuba would bring with it. Definitely. I hear that a lot. All right. Continuing on, Xero also had AI announcements. Jax. But I realized I didn't play the demo video that I wanted to play. Of the Bill.com payments experience. I think it would be interesting for our live stream viewers to see it. So I'm going to put up my screen and we'll watch a quick, like two minute demo of the new bill payments experience.

Speaker3: [00:41:43] Our bill payment solution will offer a simple and secure way to manage, approve and pay bills using ACH, transfer credit card or debit card or by requesting bill to send the vendor a check all without leaving Xero. Let's take a look. I'm going to open up my organization. Let's imagine they've already got their bills entered in Xero. They've been reviewed, approved and are now ready to be paid. I'm in the Awaiting Payments tab and can see all outstanding bills. I'm going to select the four bills that need to be paid and click Make Payment because I've already onboarded to bill within Xero. I now have three options to pay these bills. I can pay by check where I manually create and print a check Batch payment, where I can download a CSV file and upload it to my bank account. Or I can select pay by bill, which will be the new option I have available. Here I can see a summary line for each of my vendors and the bills I've selected to pay. It shows each of the vendors details, how many bills I'm paying them, and the subtotal, as well as how each vendor wants to receive their funds. I can also see the total payment amount which will be debited from my Bank of America bank account. I have the option to change my payment method for these four bills from ACH transfer to pay by my American Express card. I'm going to continue and pay with my bank account. I also have the option to schedule these bills to be paid at a future date. If I had multiple approvers involved in the payment process, I could request someone else to pay and they will be notified to review the batch. But I'm going to go ahead and click pay. And there you go. I just paid four bills to three different vendors in a couple of minutes without leaving zero. On this payment confirmation page, I can see Bill has informed my vendors that the payment has been made and I will receive notifications in zero regarding the status of my payment. It's so seamless and easy.

Blake Oliver: [00:44:14] So that payment by credit card is really interesting. You do pay a fee. Bill charges a 2.9% transaction fee when you use a credit card to pay bills or invoices through their pay by card feature. But I think a lot of folks might be willing to do that for cash flow purposes.

David Leary: [00:44:31] Well, yeah, that's.

Blake Oliver: [00:44:32] To collect the points.

David Leary: [00:44:34] Yeah. The points. There's a lot of that. Amelio's a lot of these apps. That's their business model, is the pay with a credit card to get that.

Blake Oliver: [00:44:41] So that's important though because like it creates a lot of problems for us doing client accounting services because there are so many clients who want to pay with their Amex. Yeah. And you can't you can't run the bill pay process for them for them via Amex. And this will let you do that. Yeah.

David Leary: [00:44:56] You get to have that that middleman uh, way to do it. Just a couple of things on zeros, bill pay. So if I remember correctly, the default functionality of zero is to have bills entered and then bills approved. Like that's a default built in functionality of zero. Right. Yeah.

Blake Oliver: [00:45:11] You enter well you can enter bills. And then there's an approval process a very simple one.

David Leary: [00:45:16] It can go in by default like it's no you don't have to buy a second tier. Exactly. Yeah. Exactly. Because because that's, that was one of the things I think, you know, the reasons people even ever had to use Bill.com because QuickBooks approval had that and it was for the bill approval before you'd even try to pay it. Right, Right. And so that's something that's just built in out of the box. You're getting built approval.

Blake Oliver: [00:45:36] So QuickBooks now has its own payments feature.

David Leary: [00:45:39] There is build approval like in like an expensive tier. You know, one of those you have to pay extra for market features. Yes yes yes. Well so this no.

Blake Oliver: [00:45:47] This goes to like the competition. Like what will what will happen. I want to talk about that. Before we do that, I want to tell you about Xero's new AI features. And probably the best way to do that is to play the demo video, which I'm going to skip around through because we don't need to play the whole thing. And some of it we've talked about before on this show. Um, so maybe I will just like, not play the audio and I'll just sort of narrate for our listeners. So the Xero AI is called Jax, which stands for Just Ask Xero, which I think is probably one of the best, uh, better names for an AI. And there are three ways that you can integrate with you can integrate. There's three ways that you can personally integrate with Jax or access it. One is in the Xero interface. You press the Jax button in the upper right and you can chat with the Jax chatbot. You enter a message such as how much money am I owed? And Jax goes and figures that out. Not complicated right? This is nothing mind blowing. It just tells you you have an outstanding amount of whatever is in your accounts receivable. And then you can ask for more details, such as show the largest unpaid invoices, and then it'll give you a list of those invoices with links to those invoices.

Blake Oliver: [00:47:05] And then you can ask, are any of these overdue? Or what was it for. And it will tell you the details such as the contact name and the line items and the amounts and the status. And then you could, for instance, say, let's add a late payment fee for that invoice and it will do it. Stuff like that. Right. You don't have to go into the R section to do stuff. Now, will this be game changing for accountants? I don't know. We'll probably just still go to the ah in order to do stuff right. We like to see things in tables, but I could see this being helpful for end users perhaps. Right. Who don't know where to find things. Um, and I just want to say, I really, really hope that just as Xero becomes like a really good search functionality, because I have always struggled with search in both QuickBooks online and in Xero. Like to find a particular transaction, it never seems to be easy. I want to find a transaction for $429. Just show me all of the recent transactions for $429, and I end up getting like transactions from three years ago.

David Leary: [00:48:08] Right? I mean, we went through this the other day. I was trying to see if, uh, a sponsor owed us $750, and I wasn't sure if they paid us or not. And I sent you a message. I basically used you as my chatbot, and you're like, oh, yeah, I saw that come through in the bank feed, but it's not marked paid over here. And yeah, so it would be great if I could have just asked did ADP pay this yet? Yes, it might be right.

Blake Oliver: [00:48:28] So that's what I'm most excited about with these chatbots is if you give it access to all of the information in the whole accounting system, it can answer those kind of questions. That's what I hope they focus on, not just like doing little tasks. It needs to be an information gathering. A search function would be the a real true global search would be amazing.

David Leary: [00:48:46] And the best one would also look at your bank feed and make oh no, it's not in Xero yet, but we did see it come through in the bank. Yes, right. Like look at all tell me that.

Blake Oliver: [00:48:55] Like, oh yeah, it happened in the bank. It has not been recorded in the GL. Something simple like that which the current search functions just suck at. Okay. So that's one way to get it. The other way is in WhatsApp. You will be able to chat with zero in the messaging tool WhatsApp. And it probably won't be you. It'll be your clients doing this. And you can say message the zero bot and say update Rachel Frost quote. Add three extra power sockets for $50 each and jacks will go into zero. Find the quote and update it and change the amount and add the line items. That is pretty darn cool. And then you can tell it to send the invoice. You can tell it to um, oh, you can update a quote. You can do all that kind of stuff.

David Leary: [00:49:48] There's something to this. Um, and the whole I think Jason Statts has talked about this a little bit like because of AI, UIs are going to go away like fancy UIs and Millio before they actually coded Millio and built Millio, and they were just kind of figuring out if there was a market there. They basically had a person on one side of WhatsApp and they told the clients to use WhatsApp, and the clients would take a photo of the bill with WhatsApp, ask them to pay it. The person on the back end would do the payment and say, hey, your bill's been paid. But it was basically a text interface through WhatsApp as a function of feature way before I was around, but that's how they figured out before they built a UI. Right. Is there a workflow? What's the workflow? So it's interesting, the full pendulum, like now the UI is going away.

Blake Oliver: [00:50:32] Well, I just hope they don't take away the, uh, the, you know, the, the spreadsheet view that we need. Have have a chat bot for the, for the normies and then have the spreadsheet view for the power users.

David Leary: [00:50:44] The table view.

Blake Oliver: [00:50:45] The table view. Right. That's all we need. We just want the table view of all the invoices, all the bills. You know that. All the payroll. Remember when gusto finally added the table view for payroll? How great that.

David Leary: [00:50:58] Was every time when the app asked me, well, what's a good interface for accountants? Excel. Like make your app look and taste like Excel as much as possible.

Blake Oliver: [00:51:07] Let us let us sort the columns, you know, like some basic stuff like that. Let us let us filter. All right. We got to get we got to move on. Um, so the other way and this was the one I wasn't aware of that was really exciting. Is now you will be able to email Jax. So there's an email address for Jax, and you can do stuff like forward an email thread from a client and ask it to make a quote for the client based on the discussion in the email thread. That to me is super cool.

David Leary: [00:51:39] Okay, I want to make like real life use cases. So I have this discussion with a sponsor. The email, there's ten emails back and forth and they finally agree. We're going to sponsor these six episodes of the podcast. Then I get busy and five days later I finally go to QuickBooks, go find the email, and I create an invoice and I copy that into my invoice. I could just forward my email and it'll create the invoice for me.

Blake Oliver: [00:52:01] You forward the whole the last email, which has all the history in it, and it will create the invoice. And that's what you're seeing right now on the screen is the invoice has been created. I like this a lot. I like this a lot. And there needs to be more AI integrations like this because so much of it happens in email, so much of this discussion, I actually do this right now where like if I'm getting booked to speak at an event, I will take the email thread after all the negotiation is done and I'll pop it into my ChatGPT team plan and say. Create an invoice based on this discussion and it can do it. And then I'll copy and paste that into zero. So this is just skipping that step. And that's a it's a really accurate use case. You know pull out all the key terms all that stuff. It's it's fantastic. Um so that's it for zero. I think one more thing. Okay. They now have a recommended client switch in the Xero app store. So if you have apps that you have personally vetted and you like a lot, you can recommend them. And then clients will see those apps as prioritized. Yeah. So they don't go they don't go find an app that you don't like.

David Leary: [00:53:18] And you think.

Blake Oliver: [00:53:19] You don't like. Yeah.

David Leary: [00:53:21] I saw Live Flow did announce that they now have a Xero integration. So one of our great sponsors, Live Flow. Um, you can now sync from Xero and Google Sheets and Microsoft Excel. It's just not no longer a QuickBooks only solution. So I texted Anita Kramer, one of the founders, and I was like, if you could basically for like us, Blake, we have an entity on Xero and an entity on Qbo. We can now use Live Flow and connect to both entities and do a consolidated report with a zero file and a QuickBooks file and the same thing. So that's kind of a that's kind of a big deal. Like to pull together data from two different gl's into one consolidated spot.

Blake Oliver: [00:53:56] That is and congrats to Live Flow on getting that done. I'm looking forward to trying it now that they have the Xero integration. So let's talk about how this fits in with QuickBooks and Intuit. Xero wants to double globally, and to do that, they are going to need to grow significantly in the United States. And that likely means stealing a little bit of market share from QuickBooks. Or maybe not their existing customers, but grabbing a little of that future market share. So do we think they can do it? Will they finally get to the, say, 10% mark in the US? Which to me would mean they've got more than just a toe hold. And based on what I'm hearing out of into it, and what we've seen about the Intuit Connect conference, which is coming up, I think Xero may have an opportunity here because Intuit also needs to grow, but with 80% market share, it's hard and they need to find new customers. They need to grow into bigger markets. And we've seen QuickBooks move up market with advanced. They now have a product that costs what. What is advanced?

David Leary: [00:55:07] Hundreds a month. Hundreds a month. Right, right. Yeah.

Blake Oliver: [00:55:09] And the entire focus I mean of Intuit Connect. Maybe not the entire focus, but it seems like the theme of Intuit Connect is mid-market bigger companies, which Intuit defines as companies up to $10 million a year in revenue, which is, you know, pretty substantial needs, right? These are companies that start to think about switching to NetSuite or to intact. And when I talked to the CFO of the Savannah Bananas, he had just done that like a year ago. And they're a company doing many millions of dollars a year in revenue. So Intuit wants to grab that piece of the market. And if Intuit is focused on that, Xero has an opportunity to come in at the lower price, more reasonable, right? More better starting price.

David Leary: [00:56:03] Is a big deal like the price of QuickBooks. It's expensive. We're spending 9100 and $109 a month for QuickBooks.

Blake Oliver: [00:56:12] I'm spending $109 per month on QuickBooks. We're spending like, I think we're on the $30 a month plan for zero zero.

David Leary: [00:56:18] Yeah, it.

Blake Oliver: [00:56:19] Really not more. I'm pretty sure we are with with the app entity. Yeah.

David Leary: [00:56:24] And I understand some of that's market share and the positions Intuit's in. And the opposite happens in Australia. Xero keeps raising prices on their product in Australia. But from an entry level perspective, if you take on a client it might make sense a smaller, newer client to put them on Xero at a price point that works for them.

Blake Oliver: [00:56:40] And Xero has products that a lot of accountants aren't even aware of, like, uh, Xero Cash Book, where it's like $12 a month. Don't quote me on that, because I haven't looked at the recent pricing, but last time I checked it was like $12 a month and you get the bank feeds and you can do right up work and you can do it on like a weekly, monthly basis. And it's for clients who don't need integrated bill pay, or are they just need you to write up their books. And that is great for tax practices where the client's doing everything. Say in some other software they've got harvest or FreshBooks and they just do everything in there. They get paid, they do their work, they have some field operation system. They don't need it integrated with the accounting system. And you're just doing the write up work to get their taxes done. And QuickBooks is very expensive. Quickbooks online is very expensive for that kind of work. Yeah. Um, and we've seen the the market actually respond to the price increases. I just saw this today on Seekingalpha into its stock fell by 1.5% after Morgan Stanley downgraded it to an equal weight rating due to concerns over potential market share loss from increased pricing. So it's not just us. The analysts are looking at this too, and seeing a risk here. So that aggressive pricing strategy might cause market share losses for TurboTax. This is according to Keith Weiss, an analyst at Morgan Stanley. Um, it might be causing market share loss for TurboTax and could pose risks for QuickBooks, especially given the volatility from recent acquisitions like Credit Karma and MailChimp. Okay, so that doesn't mean that Intuit will necessarily lose. I think there's a ton of opportunity in that lower mid market area, that gap, because switching to a NetSuite or an ERP system is extremely costly, and all you have to do is solve the core challenges of those kind of companies, and they will gladly stick with QuickBooks.

David Leary: [00:58:38] And I think if Intuit for every one they gain up market, if they shed ten on the bottom market to zero, I don't think they'll care.

Blake Oliver: [00:58:45] It might even be more.

David Leary: [00:58:46] Because the.

Blake Oliver: [00:58:47] Upper the lower mid market companies, they are established, right. Savannah bananas aren't going anywhere. Yeah. They're not going to churn out. They're not going out of business. Once a company gets to that point, they're with you as long as you can serve them. Yeah, right. Just like accounting firms love those kind of customers too. So I would actually love that world If we had two really good products that serve this spectrum of customers, and the core features were all there that every accounting firm needs. I mean, that to me indicates maturity of this client accounting services concept. It would be so much better for firms not to have to piece together all these apps, have to deal with all this technology. You can if you want to and you need to, but for like 80% of your customers, you won't have to.

David Leary: [00:59:31] Yeah, I think it's unrealistic to think I'm going to support seven different GLS, but there's no reason. If you're a QuickBooks shop, you can't support Xero and vice versa. Yeah, it just doesn't. Especially if you're a Xero shop, you're probably saying no to potential customers constantly. Just write add QuickBooks to your inventory, your tech stack. Just support QuickBooks. Why would you say no to a customer? Yeah, it's yeah, just keep both. But I just don't see the migration happening because, I mean, think about us. I hate the fact how expensive QuickBooks is. Honestly, I think about all the apps we pay for. It's the most expensive and produces zero revenue. It drives me nuts. But to save 1200 bucks a year, it's going to take us five grand of work to migrate off. It just doesn't make sense, right?

Blake Oliver: [01:00:12] The ROI is not there to the switch.

David Leary: [01:00:15] Yeah, yeah, they got us. They got us, man. And that's, I think, the worst part that got me.

Blake Oliver: [01:00:21] Well, uh, David, I think we should read our third sponsor message today. I'll take this one. How about that? Because I haven't read this one yet. Thank you to keeper for sponsoring this episode of The Accounting Podcast. By combining client communications, file review, reporting, and task management, keeper has everything you need to run your bookkeeping or cast practice. Keeper is an all in one app that allows you, your team, and your clients to easily collaborate to make your monthly close as efficient as possible, starting with a beautiful custom branded client portal optimized for bookkeeping work. Your client can answer questions you have about uncategorized transactions, allowing you to categorize and automatically post them to QuickBooks online correctly, all without ever leaving keeper. Keepers month end file review feature will surface transactions that may not be post posted correctly, and with keepers customized reports, you'll be able to increase the value that your firm provides clients by giving them reports they'll actually read. Keepers built in task management ensures nothing falls through the cracks, and it includes time tracking, so you can see where you and your team spend their time. Keeper has a very affordable and clear pricing model that starts at only $8 a month. To learn more about why thousands of bookkeepers and accountants trust keeper to manage their month end close and to get 20% off your first three months, head over to The Accounting Podcast Dot promo slash keeper. That is The Accounting Podcast dot promo forward slash keeper. And now David.

David Leary: [01:01:51] Is that all? Zero. If we covered the whole zero cost is there anything else? Well did you have good food in Nashville I always love. I love eating in Nashville.

Blake Oliver: [01:01:59] The hot chicken. I had chicken and waffles. I had some hot chicken. Uh, it was really good. Nashville is just such a fun place. It's, you know, I think of it as, like the Vegas across the Mississippi to me. You know, you get the bachelorette parties. The crazy thing now is they have these double decker busses that drive around the city with bars on top, like, people are just standing on a bus, just drinking, being towed by a tractor while drinking. And there's a bar and there's driving around the city. And I think to myself, like, what happens if one of those has to stop suddenly? Does everybody just fall onto each other? I mean, it's nuts that that is a thing. And I'm really tempted to go on one one day. I didn't get to, but I made, like you told me, David, make age appropriate decisions. I did not go on the party bus in Nashville, Smartsheet, although some of my some of my friends did, but it was just it was too hot. Don't go to. No, I mean, if you can, if you can handle the humidity, go to Nashville in August. But like being from Phoenix. Oh, man, I can handle the heat, but I cannot handle the humidity. Yeah. Um, but but so that's the end of of zero com. But that wasn't the end of my Nashville adventure. David. Okay. Because Zero con happened to coincide with my birthday, and some of my super cool accountant friends invited me to go to an EDM festival that was happening in Nashville right after Zero Con called Deep Tropics, and I have never been to an EDM music festival. Electronic dance music. For those who don't know, it's like.

David Leary: [01:03:37] With glow sticks and stuff, right?

Blake Oliver: [01:03:39] Like, I mean to say glow sticks and stuff. I tried to describe this, uh, it's like going to Cirque du Soleil, but you are in it. You are a part of the show, and there are world class, incredible DJs spinning the most amazing music live, and you get to wander around its outdoor. This was outdoors and it was in like the park that overlooked the Tennessee State Capitol building. A beautiful, beautiful view area. Outdoors stages, multiple DJs spinning. Um, people dressed up in in costumes like performers, vendors, food trucks. And it went all day and all night, you know, like 12 hours of EDM for two days. Uh, and, you know, I would never if you had asked me, like, Blake, would you ever go to an EDM festival when I was like, you know, in my 20s, I would have said, like, no chance. But when I got the opportunity, I said, you know what? I'm going to try this. I might be horribly uncomfortable. You know, I might this might be awful, but I'm going to try it. And I had the best time. It's amazing. And it's really popular. Like, I had no idea. Edm is like. I mean, I guess it reached its peak in like the 20 tens, but it's still incredible.

David Leary: [01:05:02] And trying something new.

Blake Oliver: [01:05:04] Yeah.

David Leary: [01:05:05] Now, do you do what most accountants do at events like this? You start like, calculating, like the cost, the revenue, the cost to run the event. Oh, at the food truck. It's amazing. You start doing all the math, right? Yeah. When you're there.

Blake Oliver: [01:05:15] I mean, doing the accounting for an event like that would be so fascinating. They're cashless now, which probably, like, reduces a lot of the risk at a place like that. Right. Of of theft and all that. So, you know, it's funny, I like I feel like I'm old because I brought cash with me just in case. And I couldn't use it because that's like, I remember when you'd go to, like, concerts and like, you had to pay for everything with cash. That was the only option, right? Yeah, but.

David Leary: [01:05:40] Red rocks last week, and it was all cashless as well.

Blake Oliver: [01:05:44] The there was one act that I was really excited to see, which was the headline for the whole festival of Deep Topics. It was Sophie Tucker and I made it through. I was able to hang for two days and Sophie Tucker comes on stage and halfway through the set, thunderstorm like it just rolls in. All of a sudden there's this cool breeze. Everyone's like, oh, this is so nice. And then the music stops and we were told to evacuate because there is lightning three miles away. And I'm like, all right, I better not die at an EDM festival. That is not the way to go out. And everybody, we all had to, like, rush out of there and get out. And we did, and it was fine. But the show was. I'm just glad I got to see half of that act.

David Leary: [01:06:26] That's great.

Blake Oliver: [01:06:27] But, you know, I have a tie in to this. David. Um, I mean, there are, believe it or not, there are accountants who go to EDM. And if if AICPA and the state societies, this.

David Leary: [01:06:40] Is your you're doing your part of the pledge, right. Talking about how cool accountants are. Exactly. I follow where you're going here.

Blake Oliver: [01:06:46] I was you know, this wasn't just for fun. I was doing research. Right. I was trying to say like, how do we how do we make accounting cool. And if a bunch of accountants ask me to go to an EDM festival, I'm going to go and check it out. And, you know, if the AICPA wants to make accounting cool, I think they should sponsor the next deep tropics, you know, maybe put on their own EDM festival. Right. Let accountants let loose a little bit. That's my pitch. And so if you are listening and you're at a state society and the AICPA and you want to make accounting cool, uh, you know, let's do that. Let's let's get a DJ. There is an accountant who is a DJ. Um, I forget who it is. Uh, and he's really famous. Used to be an accountant. I'm going to figure that out and I'll share it on the next show. All right. Uh, and that is. That's all I've got for this week.

David Leary: [01:07:37] I know we kind of put it in the description. I'll hit it quickly because I don't think this is going to be newsworthy next week. So I'll just kind of hit this. So a tech billionaire who's been accused of accounting fraud is missing after his superyacht has sunk.

Blake Oliver: [01:07:50] He's missing and his superyacht sunk.

David Leary: [01:07:53] Yeah, and what caught my attention on this on Twitter was this, like, half, um, suggestion that maybe he faked his death. Possibly. And I was like, what is going on? So I start digging in more. So this is a British tech entrepreneur, Mike Lynch. Some people have referred to him as the UK's Bill Gates or Steve Jobs. Um, now, more than likely, there was terrible weather conditions, maybe a tornado off the Sicily coast and 15 people have been rescued. Six are missing, including him. He's still missing, right? Um, he founded an enterprise software firm. Autonomy to autonomy, I guess either way, to say that autonomy. Hp bought it for 11 billion. But what was really interesting, and this is the boat sinking, is just another twist on, like, this long, two decades long crazy story. So just to to fast forward a little bit to what happened in the last couple of months. So in May of 2023, he was extradited to the UK from the UK to the US had a $100 million bond. Wright faced trial after a three month long trial in June of 2024. So just two months ago he was found and acquitted on all 15 charges. Found not guilty. Right. These were the those charges. And then today, obviously his boat sinks. But to kind of rewind this a little bit and where it ties back to us, it's um, essentially an accounting story. So he started the company in the mid 90s. What was his name again? Uh, Mike Lynch. Mike Lynch.

Blake Oliver: [01:09:21] Of autonomy.

David Leary: [01:09:22] Of autonomy. And then kind of in that enterprise space. Right. Enterprise and ERP space was buying a bunch of companies was growing. Um, some of the companies, I think maybe some of our listeners may have heard of before they purchased, um, enterprise content manager, management vendor interwoven, uh, a company called CA technologies. You might have heard of them, Iron Mountain Digital, so they're acquiring those companies. Well, in September 2010, the SAP CEO took over HP. Within a year, they made the decision to purchase autonomy. They agreed to purchase it a month later. The HP fires that CEO and they bring in Meg Whitman. Right. Well, May of 2012. So not a couple months later, people started questioning the numbers inside. Right. These numbers don't make sense on the financial situation. So Whitman hires price PricewaterhouseCoopers to investigate. Meanwhile, she has to lay off 27,000 HP employees because they're in financial issues, including Lynch. So laid him off for failure to meet agreed performance goals, including financial metrics. So essentially, HP's take an $8.8 billion impairment charge, um, and linking about 5 billion of it to accounting and proprietaries.

Blake Oliver: [01:10:41] Wait, so they bought the company for 11 billion and they had to write off 8.8 of it. Yeah. Oh, wow.

David Leary: [01:10:46] And it looks like what they were doing is they were selling hardware, but recording the transactions as software sales. But then not only that, they think they were selling the hardware to Vars and counting it as actual end user sales, because I guess in technically a var could return the hardware, right? Right. It's not really a sale yet. And so they overstated their income by about $700 million. Um, in the UK, he, uh, they dropped, uh, charges against him. Hp eventually in a UK court, wins a civil suit for 5 million. It gets reduced later on to four. 4 billion. Sorry. From 5 billion to 4 billion. So he's still today owes HP $4 billion. But then even in um HP they got sued by their shareholders. Hp agreed to pay $100 million to shareholders who bought stock during that time. And it carries on and on and on. So then we start getting into, um, November of 2018, a federal grand jury here in the states indicts him of conspiracy to commit wire fraud. So 2018, it took almost a decade for him to come to the States after, you know, he was indicted and then just skip. Skip, skip, skip to go faster. In September of 2020, the UK's Financial Reporting Council finds Deloitte 15 billion pounds for failings in its auditing of autonomys accounts between January 2009 and June 2011. At issue were the sales of the hardware and sales of software licenses. So when it comes down to it, this merger and acquisition, which was just a total mess, is because of bad auditing. It was right.

Blake Oliver: [01:12:17] So HP trusted the audit and got screwed on the deal.

David Leary: [01:12:24] Yeah. The shareholders like yeah, yeah. And then and then this guy, obviously his life was all affected. He wound up getting found not guilty. Right. Right. But then luck would have it, you know? And then his boat sinks. He's dead. Yeah.

Blake Oliver: [01:12:36] So that's crazy. So, I mean, there's speculation that he faked his own death. Which, like, if you had billions and billions of dollars, you could probably do that.

David Leary: [01:12:46] Well, how do you make a tornado strike your boat? I think there's a like that was the initial thing. Then as more details started coming out, I'm like, yeah, maybe not. Oh, God.

Blake Oliver: [01:12:55] What a what a wild story. I mean, so so this is this is the problem with audit man. If shareholders can't trust the numbers, like for a big deal like this, why would anyone pay more money for audits? This is why salaries are low. This is the endemic problem with audit is like it doesn't protect us like it should. Was it PwC in the UK?

David Leary: [01:13:22] It was um, it was Deloitte who did the audit. Yeah.

Blake Oliver: [01:13:25] Deloitte. Oh what a great brand. You know everyone's like oh you got to go work for the big four. They do such great work. Well they clearly effed it up here. You know I don't understand.

David Leary: [01:13:35] He should have sued Deloitte.

Blake Oliver: [01:13:37] Well didn't they? You said they got money, right?

David Leary: [01:13:40] They sued. They sued. Um, this guy, Mike Lynch, and they won a civil case against him. So.

Blake Oliver: [01:13:45] So Deloitte didn't pay any money they.

David Leary: [01:13:48] Paid to, uh, the UK's Financial Reporting Council. So they just got a fine. They got a fine.

Blake Oliver: [01:13:52] And what was the fine?

David Leary: [01:13:53] 15 million pounds. It's like nothing.

Blake Oliver: [01:13:55] Nothing to them. Yeah, yeah, this is the problem. Like crazy. Um, well, thank you for sharing that. That's that's an amazing story. Maybe someday we'll see the Mike Lynch story on Netflix or something.

David Leary: [01:14:09] It's long. Right? It's it's just. And I don't know, we never saw the story before until today, but I was like, of course it's an accounting story.

Blake Oliver: [01:14:17] I remember hearing about it a long time ago, but now. Yeah, I didn't know all those details. Well, David, that's all the time we have for today. Thanks for letting me share my Xerocon adventure with you. And thank you for all of our listeners who joined us live. If you're listening on the podcast and you want to join us live, you can subscribe to the The Accounting Podcast on YouTube. Hit the notification bell so that you get notified when we go live, and you can catch us live and you can chat with us. You can heckle us. You can let us know what you think. Let us know, uh, what stories you want us to talk about. And you can also send us listener mail. We are at The Accounting Podcast at earmarked me and join our community. Go to earmarked community. Join us. You can chat with us. You can chat with your fellow listeners and earmark users. And don't forget, you can earn free CPE for listening to this episode and all of our previous episodes on the earmark app. Go to earmark Dot app in your web browser, or download earmark from the App Store or the Android Store, and start earning CPE for listening to amazing podcasts like this one. And many, many, many more that are far better than ours. Oh, and David, we have to celebrate the fact that we crossed 20,000 subscribers on YouTube. So thank you to everyone. Uh. It's amazing. I think it took like a year to get there, and, you know, now let's let's go to 50. You know, that's. I'm excited about that. Youtube is the place to be for podcasting. Um, and I'm enjoying it a lot. So did I miss anything, David? I guess we got to share.

David Leary: [01:15:53] Oh, I think if you're not a zero person and you want a bunch of updates on the latest Sage Intacct updates that just came out, we have a new podcast. It's called, um, The Unofficial Sage Intacct podcast. And you can just I'll put the link right now into the chat here. That's a.

Blake Oliver: [01:16:08] Great show. Is it un Sage dot show?

David Leary: [01:16:12] It's un Sage dot show is the URL because it's it's very hard to spell. Yes. It's just like you mistype it a lot. So it's just un Sage show. I put it in the show notes here and we can get that up here on the screen. And they cover, uh, well, for starters, if you want to learn Sage at all, the episode two really just is like breaks down the whole entire Sage ecosystem, which is amazing. So you understand what products are for who and what is it. You know, they don't have ProAdvisor, but they have these sips and they have these different names for their partners. You understand that? But the newest episode, episode three, breaks down a whole it's an hour of features. So if you're if you liked what Blake and I just did with zero, they just did the same thing with Sage Intacct. Uh, so they basically Sage releases a quarterly release. So four times a year they have this huge, gigantic release, and that's what they're covering in their awesome.

Blake Oliver: [01:17:02] And speaking of mid-market apps, we will be at the NetSuite suite World. I think it's also just called Oracle Cloud World. Now add in Vegas and that is going to be on Tuesday the 10th. David and I will both be there somewhere in the expo hall. So if you're a listener and you want to meet us, we don't actually know a ton of people in the NetSuite world because we're Xero and QuickBooks. More small business and we go there and we do interviews. But this year we don't want to do any interviews. We are just going to wander around the expo hall and meet people and get to know the vendors and the attendees. So, uh, send us an email The Accounting Podcast at earmarked me or join the community and let us know you're going to be there. And let's let's meet up. That is Tuesday the 10th. And I should probably mention the other events that we are going to this year. Uh, we are going to be at Intuit Connect, of course. And that is October 28th through 30th at the Aria Resort and Casino. I'm very much looking forward to that. And that's all we are going to announce at the moment. We got a few other things we are working on, uh, but it's not nailed down yet. All right, David, great to see you. Great episode and thanks everyone. And we'll see you around here next week.