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2021 is coming to a close, but we’ve still got a lot to talk about. Blake recounts his trip to the Digital CPA conference, and takeaways from the keynotes he may or may not have attended, including the call to end the IT department, as we know it. We’ll talk about why CAS is where it’s at, why you might be underpricing your CAS, how the wrong metrics can lead to the wrong conclusions, and how much work is too much. We’ve also got some thoughts on Ed Mendlowitz’s ”Art of Accounting: Timesheet dispute redux,” 2021 Zoom trends, and some great feedback from listener, Cathy Volk on personal responsibility, and why she doesn’t see QuickBooks Desktop use declining. In app news, we’ve got funding raises, updates from Oracle, news on FreshBooks, TaxDome, Kabbage, and two surveys from QuickBooks. Grab your gift-wrapping supplies, a tasty beverage, and join us!
Show Notes
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Show Notes
00:52 – Blake’s got a new Mac!
02:27 – David’s Bank-Feed Debacle
05:58 – The Threshold of Hell – Watching National Lampoon’s Christmas Vacation?
06:57 – Blake's Takeaways from Almost Inside Digital CPA
08:46 – It’s Time to Get Rid of the IT Department
15:33 – The AICPA's Melancon: ‘The profession that constantly reinvents itself’ | Accounting Today
19:35 – Accounting 4.0: Don’t become Blockbuster Video
22:45 – Are You Under-Pricing Your Client Accounting Services? - CPA Trendlines
29:49 – Voices Art of Accounting: Timesheet dispute redux | Accounting Today
30:35 – A Timesheet Debate & Why Work Takes So Long
33:05 – Blake’s Timesheet Use Case
35:35 – What Is a “Reasonable” Number of Work Hours? - CPA Trendlines
38:39 – New QuickBooks research reveals the impact of late payments on mid-sized businesses
44:08 – Majority of Mid-Sized Businesses Outgrow Technology or Overpay for Unused Features
46:00 – Here’s How You Zoomed Over the Past Year - Zoom Blog
51:07 – H&R Block names Xero a preferred solution provider
51:22 – Twitter comment from Zachary Owen, re: H&R Block
52:37 – Canopy raises $35M in latest funding round | Accounting Today
Canopy’s Accounting Practice Revolution Receives $35M Injection
53:51 – Intuit QuickBooks Canada and Dataswitcher join forces to automate conversion to a cloud-based accounting solution
54:22 – Oracle Gains After Sales Top Estimates on Cloud Performance
54:48 – FreshBooks, Sensibill Bolster Small Business Expense Management
54:58 – Kabbage® from American Express Launches Kabbage Funding™ to Help Simplify Funding for U.S. Small Businesses
https://www.businesswire.com/news/home/20211208005617/en/Kabbage%C2%AE-from-American-Express-Launches-Kabbage-Funding%E2%84%A2-to-Help-Simplify-Funding-for-U.S.-Small-Businetransactions
55:16 – Accounts payable automation startup Tipalti raises $270M, quadruples valuation to $8.3B
55:16 – Accounts payable automation startup Tipalti raises $270M, quadruples valuation to $8.3B
55:35 – CPA funding portal expands with loan-financing option for small biz clients | Accounting Today
57:29 – Facebook Message from Cathy Volk – Thank you!
https://business.facebook.com/CloudAccountingPodcast/inbox/
https://business.facebook.com/CloudAccountingPodcast/inbox/
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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.
[00:00:00] Thank you to our sponsor, OnPay
David Leary: Many times, when choosing a payroll service, you have to choose between a new startup with a great app, or an established company whose tech may feel behind the times. With OnPay, you get the best of both worlds - a great app from an established company that's been providing payroll services for over 30 years in all 50 states. Stay tuned to hear more from our sponsor OnPay later in the episode.
[00:00:18] Preview
Blake Oliver: I understand why people would think this. If you're thinking about realization and hourly rates, you think, “Oh, well, this is an in-demand service line. I need to increase my fees so I can make more money,” but you'd be totally making the wrong move, if you ask me. And here's why- let me explain why.
[00:00:42] Welcome to The Cloud Accounting Podcast
Blake Oliver: Today is Sunday, December 12th. This is The Cloud Accounting Podcast. I'm Blake Oliver.
David Leary: And I'm David Leary. So, your new computer arrived, is this correct?
[00:00:52] Blake's New Mac
Blake Oliver: Yes! I'm so excited. This is my first new computer in five years; personal computer. I'm on my own now, so, I gotta pay for my own gear. So, I got the new MacBook Pro M1 Pro Chip thing.
David Leary: This is the Apple chip, right?
Blake Oliver: Yes. Apple silicon. The specs are just incredible on this thing. They have re-engineered how a computer works when it comes to the chip, and the memory, and the graphics card. They all are connected now, and they share the same 32 gigabytes of memory, which means that Apple didn't have to bump up the processor speed to create these incredible improvements in performance and also efficiency. So, I'm so excited because this computer can do anything, and the fans never turn on. Like I haven't yet-
David Leary: So, this still has a fan. I guess it was the MacBook air has no fans, but this is ...?
Blake Oliver: Right.
David Leary: So, you still have a fan, but you have not turned it on yet.
Blake Oliver: I have a fan, and normally, when I'm editing audio/video, it turns on; it's really loud, which sucks because then I have to wait for it to cool down before I can record something-
David Leary: When you’re doing a GoToWebinar, or a Zoom meeting, or any of that, no fans?
Blake Oliver: I've been doing Zoom meetings, no fans, yeah. I wanna try Google Hangouts cause that's horribly inefficient and see how that goes, but yeah, it's been great it's, and it's like cool on my lap and everything. So, I highly recommend it. I know most of our listeners are PC people because, hey, it's accounting, and that's the way it is, but I went Mac a long time ago, and I haven't looked back. Love it! Yeah, that's my new toy. That's my Christmas gift to myself. How about you, David? What's new?
[00:02:27] David's Bank-Feed Debacle
David Leary: I'm debating a laptop purchase here. I'm trying to debate whether or not just to get a decent desktop that I just leave at home, or just use my old laptop as kind of a desktop PC and go with the Microsoft Surface Go Pro, like something that's a little smaller, but super portable.
Blake Oliver: I've heard great things about those laptops.
David Leary: And what's nice about those- ‘cause it's a half of a tablet, but because it's true Windows, I could still run the podcast on it, if I had to, on the road. So, I'm kind of kicking around the idea of heading down that path, but in the meantime, first, though, I have to get my bookkeeping in order, which is, right now, a complete nightmare.
Blake Oliver: Well, you know, it's like the shoemaker's shoes, right? I'm the same way in a lot of cases, yeah ...
David Leary: BBVA got purchased by PNC. It won't connect to the bank feed there, and then, the historical data just is listed as debit/credit. There's no information. There's no information. They can't get the old statements ... I was always paperless, so I never really ... QuickBooks would retrieve the bank statements, and that worked until I can't connect. And then, the other side, I have a Divvy card; Divvy doesn't have a bank feed, so I have to go and download the .qbo file and manually import the bank feed, which was a little bit of work, but it worked for three years, except for now, every time I try to import the bank feed, it says it's too big.
Blake Oliver: Oh, wow.
David Leary: And so-
Blake Oliver: Into QuickBooks?
David Leary: Into QuickBooks. So, basically, the two accounts with the vast majority of my transactions, I can't- I have no bank-feed data for.
Blake Oliver: Yeah. Do you think you're just gonna have to hire somebody on Upwork to do this manually?
David Leary: Oh, I got interns starting next week, again.
Blake Oliver: Awesome.
David Leary: So, I’ll have some help. Yeah, they’re accounting majors ... Yeah, they'll help me out ... What they’re gonna do is print out paper statements, and they’re gonna have to reconcile manually because there's no ... Yeah, it's a total mess. So, I’m slowly migrating. I really want- I'm just gonna move everything to Relay, actually. I'm just migrating everything-
Blake Oliver: Well, thank you for that-
David Leary: So, that way, I'm killing PNC. I'm gonna kill the Divvy and just go one platform that has a great bank feed; do the virtual cards on Relay. Just move to one thing ‘cause-
Blake Oliver: Yep, it's worth it.
David Leary: It’s great experimenting and learning with new tools, and it's good for me, from the industry perspective, but my bookkeeping suffers by using a bunch of random tools.
Blake Oliver: It's true.
David Leary: And then, I'm even actually moving from AutoEntry to Receipt Bank, and now, even on that, I have some stuff in AutoEntry, some stuff in Receipt Bank, and I just have a big mess, so I need to clean it ... Yeah, migrating from one tool to another is not an easy game, and I'm just one business doing it. Imagine you're an accountant, or bookkeeper, and you're trying to migrate clients from solution A to solution B?
Blake Oliver: Oh, it's a huge thing. I mean, and that's why in my firm, I had a dedicated person and that's all they did. They did no client accounting. They just did migrations. And I highly recommend it because it unblocks a ton of stuff.
David Leary: I think for our app listeners that are out there, if you have an app, you're an app company, your app, and the migration from product A to product B is not the only priority for a small business owner at all, and it's hard priority for the accounting firm to manage.
Blake Oliver: If you can, offering a white glove migration service, where we'll just do it for you, is great. I think that's a huge investment, but it's a worthwhile one. The payroll companies have been doing it for a long time. You know, “Just hand me your list of clients. We'll migrate them. We'll get everything set up.” Now, whether they do it perfectly and don't cause you a bunch of headaches later is an open question, but I do think that's very valuable.
David Leary: Payroll's a little bit more black, and white. You start trying to migrate people's receivables, the way they invoice-
Blake Oliver: It’s a challenge, yeah.
David Leary: It’s a wild- you don't know what you're gonna get into.
[00:05:58] “Take a Look Around You! We're at the Threshold of Hell ...”
Blake Oliver: I was on the way home from Digital CPA Conference, and I got to see a movie, a Christmas movie that I haven't seen in a long time on the plane. Actually. I've never seen it in full, National Lampoon's Christmas Vacation. I just thought about you David, um, sitting at home, instead of stringing up, you know, 10,000 lights on your house, you're gonna be doing bookkeeping for Christmas vacation, right?
David Leary: Now, let me ask you this, you watched a movie- My understanding is on airplanes, for whatever reason, there's a psychological effect, and you get a little bit more teary during movies? You get a little sad?
Blake Oliver: Well, I mean, that movie is not exactly one that makes you tear up, though.
David Leary: That's I was wondering - did this evoke any emotions from you?
Blake Oliver: Hey, I know people love that movie, but I just was a little underwhelmed by it. I didn't find it all that funny. It's basically just Chevy Chase causing misery to his neighbors, and his family for the entire movie. He's just this guy that can’t just relax. I hope to relax during my Christmas break. I'm taking a week off. Well, it's a staycation cause why go anywhere in Arizona?
[00:06:57] Blake's Takeaways from Almost Inside Digital CPA
Blake Oliver: Oh, but I do want to talk about Digital CPA.
David Leary: How long was that conference?
Blake Oliver: I don't know because, for the first time, I went the conference, but I didn’t buy a ticket, which I highly recommend, actually.
David Leary: Wait, wait, wait ... So, you go to the conference; you didn't buy a ticket. That tells me you don’t even get a name badge?
Blake Oliver: I didn't get a name badge. No, I didn't even bother to like hook up with an app to get me into the conference for a name badge.
David Leary: So, you just loitered in the hotel lobby or something?
Blake Oliver: Yeah-
David Leary: Explain this process to me.
Blake Oliver: So, my problem with conferences for a long time has been I don't really go to the sessions because a lot of the sessions are just the same thing every year. It's the same either super high-level stuff that I already know, or it's like super-technical tax, and audit stuff that I don't need to know. So, I don't go into the sessions. Now, I do, generally, when I go to a conference, go to the keynotes, but if they're early in the morning, I never make it ‘cause like I'm out networking with people late at night.
So, this time I said, well, I'm just not gonna cause myself the stress of feeling like I didn't advantage of the ticket. I'm just not going to get the ticket, and I'll just read about the keynotes later in Accounting Today, and I did, and it worked. So, I just went to the conference. I hung out in the lobby, met everybody walking through. That's the most valuable part of a conference in a lot of ways-
David Leary: Do they have an expo hall? Were you able to go in there?
Blake Oliver: They do, but it's small, but like I didn't care to go in-
David Leary: But could you, if you wanted to, or were they checking badges?
Blake Oliver: I don't know, I didn't even try ... I know this is crazy to you, right, David, ‘cause you're all about the expo hall, but it was great. I didn't feel like I was, um, missing anything, and I got to meet a client of mine. I'm working with a firm called Growth Lab; met those guys for the first time. That was really the main reason I wanted to go to the conference. Digital CPA is the CAS-focused — client accounting services-focused — technology focused small conference that AICPA puts on with CPA.com every year.
[00:08:46] IT Departments Be Gone!?
Blake Oliver: It's a good one to go to if you're in that space, but I do have a criticism of it, which I heard from somebody or- well, they didn't exactly express this, but they brought up this issue, which is that the people who go to Digital CPA tend to be a lot of the partners, or directors; sometimes, there's managers that go from these CAS departments, but you never see the staff there. And I know that at Xerocon, QuickBooks Connect, you tend to see firms bringing more staff. The smaller firms bring their teams to learn. I always thought that was so weird about Digital CPA because so much of technology is put down in a firm, like top-down, and then it never gets adopted-
David Leary: Is this just because the courses offered wouldn’t appeal, or is it just a lack of smart marketing on the AICPA’s part of really telling firm owners, “This is the one to bring your staff to ...”?
Blake Oliver: Well, it's expensive. That's for one thing. These tickets are hundreds, if not thousands of dollars-
David Leary: That's true. To make it cost prohibitive, yep.
Blake Oliver: Yeah, and then, of course, the travel and all that ... I think a lot of accounting firms are just still in that mold where they’re not used to bringing their staff into any of this decision-making, right? It's like, “I make the decision top down; I put in the tech, and you're gonna use it.” It just doesn't work. It fails. That's why most technology fails, and implementation fails in an accounting firm.
There was a story in The Wall Street Journal a couple of weeks ago that points this out. It's not just a problem in accounting firms. It's a problem in corporate America, in general. The headline is, “It’s Time to Get Rid of the IT Department,” which I love because in my brief stint at a large firm, my biggest complaint was the IT department. I wanted to put in technology in my practice, but I wasn't a partner, so I didn't get any respect from them. It took them eight months to turn on Microsoft Teams for me, when Microsoft Teams was new, and by then, I had decided to leave ‘cause I'm like, “Are you kidding me? I can't get Microsoft Teams in?”
Yeah, I'm all in favor of this, getting rid of the IT department. I think it's one of those things that we have just sort of come to accept that every company of a certain size has an IT department, and they are in charge of technology, but why is that? Why does it have to be that way? The author of this article questions this whole thing, the whole need for it. His name's Joe Peppard. He takes us back to when the IT department was born.
It was originally the computer department. You needed a computer department to run these computers because they were super, super complicated, but we don't have super, super complicated computers that only specialists can run anymore. We can all use computers. We have NoCode technology so that you don't have to be an engineer, or a computer scientist to build apps and stuff, and he says that it's really IT that is holding a lot of companies back, especially big ones, because business these days is about technology. Think back to our interview with Aaron Harris at Sage. What did he say that was so amazing? He said- I guess I'm gonna have to paraphrase ‘cause I can't remember exactly — the application is becoming the business.
David Leary: Yes.
Blake Oliver: The tech is now the business because that's what people are interacting with. And so, it doesn't make sense to have a separate IT department because they aren't- you can't measure an IT department that's like a service provider to the business based on that.
David Leary: Well, the thing is the whole machine is built this way, right? You have your head of the IT department, or VP of IT, or whatever you want to call this position. Sometimes, it's the CTO, but sometimes the CTO just throws something out ... If they’re a tech company, it tends not to be the same guy. Then, you’ve got like your VP of finance, right? The whole enterprise sales model is built to sell those people stuff.
This was going back to Expensify’s model of going to the employees; the consumerization of business software has happened ... I’ve always had an issue with this because- I literally have not had a corporate-issued laptop probably six to eight years. I just always use my own, and my own tools. The reason why- it's like, I grew up working construction. Could you imagine if your plumber came to your house, and he wasn't allowed to use his own tools?
Blake Oliver: Yeah. Right
David Leary: It’s kind of that same thing. We’re all in this information/creation/technology stack, and really we are- artists is not the right word, but we're craftspeople at some level. So, you're gonna bring the tools you're comfortable with to your job to do the best work you can do. And if some random IT guy says, “Well, we have a contract with this company, so you have to use ...” I dunno, some other random- name one random crappy app, and you're forced to use it. You can't create things. Then, eventually, you're right, employees are going to leave.
Blake Oliver: Yeah.
David Leary: That’s kinda the same thing. If employees don't get to pick the tools they're gonna use at the accounting firm or help influence that decision, they'll eventually leave.
[00:13:43] Thank you to our sponsor Client Hub
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[00:15:08] Toeing the PR Line ...
Blake Oliver: There was a lot more than that at the Digital CPA Conference. Uh, I didn't attend the keynotes, but I did read the Accounting Today article. So, I'll tell you what the, what the big keynote was all about. Barry Melancon, the President of the Association of International Certified Professional Accountants, also known as the AICPA, gave a wide-ranging keynote.
His main point was that- I'll just read the quote. “It's very important that our profession evolve, we can choose not to embrace technological changes and service expectation changes, or we can choose to rethink and to be the actual profession that constantly reinvents itself. Now, I know that there are people that you probably go to cocktail parties with who might say the stereotypical CPA is not innovative, and they're risk averse, and they're even really old; you know, the symbolism of the green eyeshade, but each and every one of you actually defeat those stereotypes.”
So, first of all, great pandering to the audience, but also, it made me think about some of these recent stories we've had on the show and also on my Earmark podcast about how a lot of accounting firms, or a lot of CPA firms are just choosing not to be CPA firms anymore. I thought, that's a funny way for them to reinvent themselves. The accounting profession, which has been led by the certified public accountants for so long, a lot of the high-growth firms are choosing not to be CPA firms. That's what I was thinking about when I heard that reinvention thing.
And I wonder, what is gonna be the solution to this, right? Are we just gonna say it's okay that all of these high-growth firms like EisnerAmper deciding to split off the audit practice into its own thing, and the growth firm is gonna be non-audit, and not a CPA firm; then, we’ve got Acuity in Atlanta, one of the first true cloud firms, cloud accounting firms that's not a CPA firm hitting the eight-figure mark in revenue ... They're not CPA firms. I know there are some high-growth CPA firms out there, but like most of them — I would say more than half that I know of, or not; maybe even 80% — this is a problem, and I don't feel like anyone's really paying attention to that in leadership.
David Leary: We were sitting there at Sage Intacct’s conference, and we only went into that one session, and I forgot her name ... The gist of it is, is she was giving that keynote, and the keynote was really kind of her full cycle of her company; like the 30-day window into their company, and the tools, and technologies, and how they get all the way to the end of the closing the books. Through that whole process, you're just sitting there, and you're like, this is accounting. No accounting firms do this ... Like, this is actual accounting.
Blake Oliver: Right.
David Leary: It’s kind of that same- accounting is not being done. Tax, and audit’s being done, but that's tax. It's not accounting.
Blake Oliver: There was one thing in the keynote that Barry Melancon did say that I really agreed with. He said about tax, “The next generation of entrepreneurs will not view a tax return as a product that they get from you. They will, in fact, view the tax return as a byproduct of the entire relationship that they have with you, and that subtle difference in thinking, when you think about client experience is a major way of thinking about how to refresh, and rethink about tax practices.” I have to say that I agree with 100%. It’s gonna be about-
David Leary: Getting firms to think about the relationship.
Blake Oliver: Yes, it’s about the long-term relationship with the client; valuing that; pricing that; not pricing one tax return. That has no value to, or very little value to a client. What matters is their relationship with you. I thought that was great, and I enjoyed, you know, just being able to go enjoy the conference, and get the summary in the, uh, article.
[00:18:53] Accounting 4.0?
David Leary: At this conference, this was the Digital CPA conference-
Blake Oliver: Yes.
David Leary: Was the word “Accounting 4.0” mentioned?
Blake Oliver: I saw an article about that. I don't know if anyone said that. What is-
David Leary: Was the word “Accounting 3.0” mentioned?
Blake Oliver: No, I didn't even know we had gotten to Accounting-
David Leary: Was the word “Accounting 2.0” mentioned?
Blake Oliver: I didn't know we had gotten to Accounting 2.0; I thought we were still working on that.
David Leary: Blake, we are at about 300 episodes of this podcast. Have we ever said Accounting 2.0, Accounting 3.0?
Blake Oliver: No. Also, it’s kinda funny because that whole way of numbering products is a little bit old fashioned, isn't it? Didn't we do- we stopped doing Windows 3.0, and- a long ago?
David Leary: Yeah, I don't know where this term came from, but Accounting Today had an article. The article was titled, “Accounting 4.0: Don’t become Blockbuster Video.”
Blake Oliver: Oh, I love this story. Yeah.
David Leary: By Kevin Dehner, and Jeff Haskett. I got caught off by the Accounting 4.0. There's a line in here, and he says, “As people have begun to talk about 'Accounting 4.0,' the change in our industry is now.” I've never heard anybody ever say Accounting 4.0, or 3.0, or 2.0, so it's like ... But then, you get into this article, and it's very, very cliché, right? “Accounting 4.0 forces us to rethink these beliefs, as clients shift their perception of value. Remember the ace in the hole? Making this shift can feel like steering the Titanic. Rome was not built in the day ...” This is basically the article.
Blake Oliver: This is like the same kind of thing, like why I decided not to go to the conference because it's people saying the same stuff over, and over again; this high-level, like: “We need to reinvent ourselves.” And my question was always like, how? How do we reinvent ourselves when GAAP hasn't changed in a meaningful way in 50 years? We still don't know how to value intangible assets, and that's why goodwill continues to balloon on our balance sheets. We're not looking at the stuff that really needs to be looked at. We're not taking a hard look at the profession.
David Leary: Let me read you the last paragraph of this article. Again, it's basically reinforcing what you're saying, whereas it doesn't actually have a lot of “how.” It’s kind of weird, but, um- I’ll just read it word for word: “Accounting 4.0 offers a more comprehensive, and holistic approach to accounting. It connects physical with digital and allows for better collaboration and access between CPAs and their clients. Accounting 4.0 empowers firms to better control and understand clients, leverage data to boost productivity, improve processes, and drive growth. Let's embrace it as the opportunity that it is.”
Blake Oliver: Great. Awesome. How? How? What do we do? Actually, there was one thing in this story that I liked one, one suggestion, which is if you want to do this change, create physical, and organizational separation from your core business to create a low-risk sandbox for experimentation. I think that is essential. If you want to build a new service line, let's say you want to add finance as a service, or let's say you want to add client accounting services, give it its own team. Don't borrow resources. Give it a dedicated leader; empower them; give them a P&L. Half measures don’t work. That is actually fair, but of course, all the other stuff, right? There's a lot of details here. A lot of details to be worked out.
David Leary: Oh, I missed this one. “Protect it from your firm’s politics like the baby bird that it is.” There's just all these clichés, obviously; plus, they talk about Blockbuster ... It just goes on, and on. I just am still wondering- I've yet to see ... I shoulda searched on Twitter for Accounting 4.0.
Blake Oliver: Well, what was Accounting 3.0? What was accounting 2.0?
David Leary: I don't know ...
Blake Oliver: We’re gonna find out.
David Leary: I have no idea.
[00:22:27] CAS is Where it's At!
Blake Oliver: Here’s an example of how firms continue to use old methods for a new service line. CPA.com put out a survey recently, this year, that they've been talking about a lot showing that CAS revenues are surging 20%. It's really high growth, right? This is where the opportunity is-
David Leary: This has been a theme this year, right?
Blake Oliver: Yeah.
David Leary: Over, and over, we've seen articles, and surveys like this.
Blake Oliver: Right, and it's about the relationship, You're not just doing a tax return for a client anymore. Now, you're doing their bookkeeping. You're doing their accounting. You're providing some advisory services, as well, on an ongoing monthly fixed fee most of the time, right? A lot of firms are realizing this is where the action's at, but the problem is, as I experienced, we're still using old methods to try and manage it and try to evaluate it.
One of those methods is realization in the billable hour. There's actually a terrible, terrible conclusion in the survey, which is otherwise really great. I'm gonna pull this up and share this with you because I think it's a fascinating window into how the way you think about data really changes the conclusion you draw from it.
David Leary: The problem with this survey ... One, it was a great survey, except for this one-
Blake Oliver: Conclusion, yeah.
David Leary: -gaping hole conclusion, but then you ... They never really said what the conclusion is.
Blake Oliver: Here's the section that caused me a little consternation - Room to Raise Fees: “There are signs in the CAS survey financial data that suggest CAS practice leaders may be underpricing their services,” and they analyzed all of these CAS practices, these client accounting services, accounting and bookkeeping practices, based on realized rate per hour.
As you might expect, as you should expect if you've ever been in the bookkeeping world, the realized rate per hour for all levels in CAS comes in low when compared to other CPA firm benchmark studies across all services. That rate, for all respondents, is $89 per hour. Top performers had a realized rate of $142 per hour. Now, all other services, average of $165 per hour.
So, most firms are getting, you know, around half of what they would get for other services, and they also say the sales close rate is high; 75% for all respondents. So, the conclusion is that this is a high, in-demand service, and therefore, we should raise our prices, and service fewer clients that are the best ‘right fit’ clients.
[00:25:05] Are You Under-pricing Your CAS?
Blake Oliver: Now, that's a mistake. If you ask me, that's the wrong conclusion to draw, and CPA Trendlines repeated this conclusion in an article called “Are You Under-Pricing Your Client Accounting Services?” I understand why people would think this. If you're thinking about realization and hourly rates, you think, “Oh, well, this is an in-demand service line. I need to increase my fees so I can make more money,” but you'd be totally making the wrong move, if you ask me. And here's why- let me explain why.
Bookkeeping, accounting, putting the books together, write-up work, whatever you want to call it, you don't price it based on hourly rates. You price it based on the value the client perceives. The reason, I believe, that we're earning maybe half of what we would earn for other services is simply because clients do not value accounting, and bookkeeping the way they value tax planning, or audit. And the reason is tax planning, and audit takes a lot of experience, or a license, and so you can charge more for it.
With the audit in particular, we create artificial scarcity by giving a monopoly to CPAs to do it, and with tax planning, man, you've gotta be really experienced to do that right. It's very complicated. Bookkeeping — there's a lot of people offering bookkeeping, right? There's a lot of supply. There may be a lot of demand, but there's also a lot of supply, so you're just never gonna be able to charge what you charge for tax, and audit for bookkeeping.
David Leary: Well, I think you can't manage it as its own separate thing. You have to look at your entire firm.
Blake Oliver: There you go. Now, that-
David Leary: Because, in theory, if you control the bookkeeping, that’s gonna make you more efficient on your other firm offerings.
Blake Oliver: And that's exactly where I was going with this is that you don't wanna trim your clients for CAS; you don’t wanna do less work. You wanna offer CAS to everyone, every client. Lower your prices; increase your capacity for CAS, and it will lead to way-more profitable work in tax, and other consulting services.
David Leary: It's like having the eggs, and the milk on sale, but way in the back of the store.
Blake Oliver: Exactly, and that's what this-
David Leary: Costco is not making business-unit decisions based on those eggs that are in the hardest place to get in Costco.
Blake Oliver: This is what so many firms do is they silo their services, and they try to optimize them individually at the practice level, and they don't see it as this client is a client of the firm, and by having this bookkeeping client, we have this opportunity to sell them many more services when they need them.
And this is the problem I ran into at a big firm. Our rate had to be so high that we excluded most of our clients from being able to use CAS. So, don't raise your rates on CAS. What you should do, if you wanna make more money, is add additional advisory type services to layer on top of your entry-level CAS prices and keep that as low as possible. Don't try to make a ton of money on CAS. You know, you use CAS as a way to get clients. I just can't believe that this is- I mean, I do believe that this is the wrong conclusion you draw from the wrong metrics, and old thinking, hourly based thinking.
So, I just wanted to share that with our listeners because, you know, I think this is really bad advice; very, very bad advice. I'd be curious to know what you all think — am I right? Am I wrong? I know it can be challenging to offer CAS to everyone, but I think we should do it. It's better for the clients; it's better for your firm in the long run.
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[00:29:49] The Timesheet Debate Continues ...
David Leary: So, speaking of old thinking, Edward Menlowitz wrote another article on Accounting Today. He directly talks about you in this article, and again, it’s about the timesheet dispute.
Blake Oliver: Having Ed on my new podcast, the Earmark Accounting Podcast was I think the best marketing ever cause he is so prolific, and he has actually been wonderful about sharing this episode. and I really enjoyed it.
David Leary: Just a compliment to you — it was an excellent episode. And there's a couple of funny things in- he actually calls out in here, at the end- he talks about, “I know that opponents of timesheets say these are all spurious reasons, and that is what Blake Oliver kept prodding me to admit, but he didn't succeed.”
Blake Oliver: So, yeah, for those who didn't listen, head over to my new podcast, the Earmark Accounting Podcast, and listen to the debate, the timesheet debate with Edward Mendlowitz.
David Leary: That's not even the best part. That's just a teeny piece. I learned so much from him ... It’s easy for us to like, “Oh, those guys that use timesheets, they're just old dinosaurs, and they're not worth listening to,” but he brought so much value in that- you talked to him for a solid hour, hour and 10 minutes, maybe, right?
Blake Oliver: What was great about that is I don't think Ed and I actually disagree all that much on the timesheets because the way he uses them is appropriate. He uses them primarily as a way to get an idea of what people are working on and help them allocate their time and reallocate work to different team members so that they are most useful, or most effective-
David Leary: He said it helps you identify what added services were performed past the original scope, who worked on it, who should have been possibly assigned to it instead; were certain staff rotated in on the project, rotated off? You don't get to track any of that if you're not using timesheets. He actually states in here that firms that just bill solely on time are gonna be penalized every time they introduce new technology, and so, it's just not a smart way to think about this, right? You use the timesheets for lots of your practice.
Another thing is he always puts these great one-line zingers in. He said, “A common argument against timesheets is that staff does not like to do them.” And he's like, “of course, no one likes filling out timesheets.” He says, “I don't like stopping at stop signs. I don't like paying for toll roads when I drive to New York City, but it's part of what we need to do.” He always sticks these nice zingers in.
Blake Oliver: Yes. Nobody likes filling out timesheets. Well, I think part of the problem is that we require people to fill out timesheets to such a level of detail, that it really is a painful thing. Having to do it to the quarter hour, that's a lot of going to your timesheet multiple times per hour. And then you have to make these judgment calls about, do I put an email that I wrote into there as a quarter hour? I mean, some firms do that a tenth of an hour. That's crazy. Can you imagine having to track your time to six minutes?
David Leary: The one thing from the podcast that I remember is he kind of apologized, saying that you had a poor experience. You didn't have a great experience at a great firm, when it came to the way you were managed as an employee, and it's probably why you quit. My guess is you probably had the typical experience.
Blake Oliver: Right. I think I did, and I think that's where Ed, and I disagree is like, he seems to have this very rosy view of the accounting profession. Maybe he ran his practice differently, but I think most people don't have a positive-
David Leary: Which is probably why he is who he is. He probably did run it differently.
[00:33:05] Blake's Timesheet Use Case
Blake Oliver: He says he doesn't use the timesheets to make evaluations of staff. He uses a bunch of other things, and he doesn't primarily bill by the hour. He’s really just using timesheets the way that it's probably best used, which is an information system to get an idea of where people's time is.
I've gotta say, David, I am a little bit embarrassed to admit this, but I am ... As I grow Earmark, I've got some employees now; I am having them do a timesheet because I need to get an idea of, as we build out our processes, how much time it's taking per episode, but I wanna say this — I am going to use them very judiciously. I'm gonna just use it to get an idea of how much time this takes so that I can figure out our capacity on episodes to start.
I'm not gonna use it to evaluate the staff. I'm not going to use to incentivize them, and I'm not going to ask them to track their time to a ridiculous decimal point. I'm gonna do it very generally, like probably even to the hour. I just wanna know, roughly, did this episode take us four, or five hours to do? Therefore, I know we can probably accomplish X number of episodes per week; that sort of thing.
David Leary: Well, and plus, on top of that, you can use it to raise real issues that could have happened because it's not so much that the person may be editing a podcast- they did this one podcast that took six hours to edit the podcast. It's not an indication of that person's work. It could be an indication that, “Oh, the guest had a crappy microphone that kept making this weird clicking noise every time they had to talk, and I had to go take all those out,” but you wouldn’t know, if you don’t track how much time that- the difference between why did that one take an hour? “Oh, I sent them a microphone that was perfect, and it worked.”
Blake Oliver: So, it's important that you use them the right way, and I think most firms that are using them to bonus staff, incentivize staff, like you said, it runs counter to our goal, which is we want them to use technology to become more efficient, but if they do that, both the staff and the firm loses hours, which causes them to then bill less, and so they get penalized.
They get penalized because they're not hitting their hours, and then the firm gets penalized ‘cause if it's billing hourly, which is crazy at this point, then they lose billable hours, so they actually hurt themselves by implementing technology, which is why most technology fails because it tries top down. The staff aren't bought into it because they don't want change because change just hurts them.
[00:35:21] What is a Reasonable Number of Work Hours?
Blake Oliver: And there's one more article that Ed wrote — because he's so prolific — I wanna point out. It actually makes the case- it actually makes the case against realization and shows just how crazy cost accounting can be. He wrote an article on CPA Trendlines called, “What Is a “Reasonable” Number of Work Hours?” answering the question: “How many hours a year do you recommend staff working?”
His answer is it depends, and he gives a spreadsheet showing different ways to calculate the number of chargeable hours in a year. So, if you're gonna be a traditional firm, you have tell staff, “Here's how many hours I expect you to charge or bill during a year,” and then, you typically would incentivize them to hit those targets. This is the old hourly billing model.
Well, the crazy thing about it is, as with much cost accounting, you can change the methodology, and it dramatically changes the result. He gives four different ways to calculate the number of chargeable hours all the way from 1,200 to 1,400 to 1,600 to 1,864 per year, which is a change of 55% more. So, think about it this way — if you have four different firms that all have the same number of clients and do approximately the same amount work with the same number of staff, depending on how many hours you say there are in a year to bill, you're going to have as much of a difference as 55% in terms of how much time things take. That's a lot. That's a big difference, right?
David Leary: And a good manager will figure out the units of measure that's gonna maximize their bonus, and other people might lose their job.
Blake Oliver: Yeah, it just shows how imaginary it all is. So, basically, think about it this way, too — if you're a staff that goes from a firm that has 1,200 hours to a firm that has 1,864, are you actually going to do 55% more work? No, you're gonna inflate your hours by 55%. You're either gonna actually take 55% longer because we all know that work expands to fill the time allocated to it, or you're going to lie on your timesheet, or, you know, not lie, but just sort of fudge, right? That's how it works. This is why this method is insane.
David Leary: Well, this goes back to like simple cell phones. I do not have an Apple phone. It’s called a OnePlus; kind of an off-brand. I bought the OnePlus for $300. If I wanted the equivalent iPhone, it's gonna cost me $1,000, but I doubt ... Apple spends more time figuring out how to maximize what they're gonna charge for it than they do- they probably manufacture it for the same cost as the phone I got.
Blake Oliver: All these phones cost like a hundred bucks to make. It's all like the same- the same price for them to make it.
David Leary: I think that’s where we’re focused, I think, in the accounting industry, with timesheets. So much effort’s about that side of it that if you just spend more effort on the other side of what value you're bringing, what services you're providing, is there ...? There's probably so much margin to earn on the other side that maybe even tracking at all is pointless. It's really just a cost to do this, right? It's where you're investing your energy.
Blake Oliver: I would say track it- when you're starting a new service line, track it to get an idea of how much time something takes, maybe, and maybe do it roughly on an ongoing basis, but let people track to like the hour. Who cares? On average- if you’ve got a bunch of staff, it'll average out, or half hour ... It's not-
[00:38:39] QuickBooks Surveys Reveal Where Firms are Wasting Time, and Money
David Leary: I’ve got two surveys from QuickBooks, since you just had a survey that kind of led us down this path. One of these surveys I actually like, and the other one I think is kind of bullshit. So, we can go down these two paths. One of them, it says basically the impact of payments on mid-sized businesses- essentially, it's a survey ...
At the bottom of the article, obviously, it pushes into it merchant card services, blah, blah, blah, but there's really some good data in here that you, as a firm ... We just talked about like offering new services. There's some serious pain here that you, as a firm, could solve. So, essentially, QuickBooks surveyed 2,000 mid-sized businesses to understand about their past two invoices, and how it affects their business. 65% of the people surveyed, businesses surveyed, said they spent 14 hours a week on average on payments-
Blake Oliver: Collecting payments?
David Leary: -between administrative tasks ... You record the payment, collect the payment, call them if they're late, all that kind of stuff. 14 hours. It's basically two business days a week, or two business days a month.
Blake Oliver: I believe it. Yeah.
David Leary: No, no. A week, sorry, two business days a week chasing their payments.
Blake Oliver: Was there any idea of like the average size of these businesses or anything?
David Leary: These are businesses with 25 to 200 employees. So, slightly bigger businesses.
Blake Oliver: And good targets for accounting services ‘cause they're big enough where they have these needs-
David Leary: Where they can afford to pay, right?
Blake Oliver: -and they can afford to pay, and they're small enough where, for them, an extra headcount makes a big difference. So, if they can outsource that ...
David Leary: 81% of the businesses said they don't have a fully integrated payment system.
Blake Oliver: 81- wow. That's ... Meaning that the payments don't reconcile to the invoices automatically ...
David Leary: Yeah, and 50% said that they have multiple digital payment platforms, and some of it's automated, and some of it’s not automated, but the whole end-to-end is not automated. And so, this is where you, as a firm, come in and ask your clients about this because you have the skillset, in theory, to solve this for them, and it's a solvable problem.
Blake Oliver: There's tons of A/R solutions now that will handle all the different types of receivables you have — in person, online — and sync that into the accounting system. This is really the opposite of A/P, or the flip side of the coin. We’ve done a lot of this, as firms, optimizing accounts payable. A/R — if you're not doing that, that's the next easy win, right?
David Leary: These businesses on average are owed $300,000 in late payments currently.
Blake Oliver: So, you can increase working capital; basically put $300,000- well, maybe not all of it, but a significant chunk back into your client's pocket.
David Leary: Let’s step back because this next stat’s really important, but this whole conversation, “Oh, how do you bill for this? Do we bill a percentage of how much money we helped them collect?” ... Here’s the stat, which gives you a lot of freedom in billing on this, and how you're gonna value bill it.
The overhead is stressful. 78% of mid-sized businesses surveyed said they were more stressed about late customer payments this year, compared to previous years. Overdue invoices are a source of unnecessary stress, and a business owner's energy could be better spent on more essential tasks that grow the business. You have to present this, when you sell this, as a way to-
Blake Oliver: Reduce stress-
David Leary: You’re pricing the relationship, right? “I'm going to reduce your stress. I’m going to make it so you can run your business better.” It's not, “Well, if I help you collect these, I’m gonna charge you this many fees.”
Blake Oliver: Well, and also think of it, too ... If you wanna think of it in terms of time, you said that the average time spent is 14 hours a week. Let's be generous; round that up half a head count. If I can save you half a head count, what is that worth to you not to have to manage that person, pay that person benefits, all that? Let’s say an A/R specialist is gonna cost a business — I don't know. It depends on the area of the country — let's say $60,000 a year. I could charge you $30,000 a year to-
David Leary: Then, if you take time to build the right technology stack in there to automate it, your cost just went down on that.
Blake Oliver: Exactly. So, then, I hope you're not billing them by the hour ...
David Leary: So, it's a great survey from that perspective of just opening your eyes up to what's going on in the market right now. The rest of the article you don’t even need to read. It all starts plugging Intuit’s services, obviously.
Blake Oliver: I love that. It's a great opportunity that doesn't require a ton of experienced staff, which is the problem we have right now. A lot of advisory-
David Leary: And you don't have be a CPA firm to do this; you could be any bookkeeper and offer it.
Blake Oliver: Yeah. A BPO — business-process-outsourcing company, whatever you wanna call it.
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[00:44:07] From the Sort of Sublime to the Mostly Ridiculous - The Second Quickbooks Survey
David Leary: There was a second survey from Intuit. Now, this one was not really- it was done a little bit more generically. The title said, “Majority of Mid-Sized Businesses Outgrow Technology or Overpay for Unused Features.” So, when I saw this headline, immediately, my brain said, “Oh, like QuickBooks Desktop Enterprise.”
So, this survey, QuickBooks surveyed a thousand business owners with 10 to 100 employees to understand how mid-sized businesses are leveraging technology to grow. The gist of the article is most are using a product that they’ve outgrown. A lot of them are just using a product they’ve outgrown. Then, the other ones on the other extreme either have a product they've purchased, like an ERP product, that they're not using all the features, and they feel like they're overpaying it.
Essentially, this is trying to make a case for QuickBooks Online Advanced in this. The reason I've kind of think this is a B.S. kind of article is because I do feel like, chances are, a lot of these small business owners they surveyed, probably, when they say they're overpaying for something, they're probably talking about QuickBooks Desktop Enterprise.
Blake Oliver: And it's a QuickBooks survey ...
David Leary: I don’t know how many times I've come across somebody- you go to dinner, and somebody has a business, and they tell you about their business, and they say, “I'm using QuickBooks Desktop Enterprise.” I'm like, “Why? You do 12 invoices a year. This makes no sense.” They're a consulting business ... It just got shoved down people’s throats.
Blake Oliver: Right. We all know why. It's because Intuit has incentivized ProAdvisors to sell Enterprise by giving them big fat commissions for it. And so, you've got all these ProAdvisors going around selling Enterprise to businesses that don't need it.
David Leary: Intuit QuickBooks had a great survey over here, on one hand. ON this hand, I’m like, I don’t know about this survey. I mean, they're basically trying to say don't use ERP-level packages, and use QuickBooks Online Advanced.
Blake Oliver: I think we could’ve played the app music before that segment, but let's do it now.
[00:45:50] All We Wanna Do is a Zoom, Zoom, Zoom ...
Blake Oliver: All right. I have survey data, and this is from our friends at Zoom; not the microphone company, the video conferencing company, Zoom. They did what I think every software company should do. They looked at their user data on an anonymous basis. They aggregated their user data and put out an annual report as to how people are using Zoom. There are some really interesting stats in here.
Did you know that the top day of the week for meetings was Wednesday, followed by Tuesday, and Thursday? That's actually not that surprising. Good reason to, when you make your hybrid work schedule, make Monday, and Friday the days that are optional. The average meeting length was 54 minutes. I feel like that's actually really long for average because that means that a lot of meetings are longer than an hour.
David Leary: Well, if you figure, a lot of times, people schedule a meeting for an hour, and then it overruns by 10. Rarely do you get an hour meeting, and you're outta there at 45 minutes.
Blake Oliver: I try-
David Leary: Rarely does that happen.
Blake Oliver: I try as much as possible to schedule 30-minute meetings. I've even been doing 15, which I love because- I mean, the problem with 15 is you’ve gotta really cut the small talk to get things done, but you can- if you're really efficient, you can have like four 15-minute meetings in an hour and save yourself a ton of time, a whole hour, instead of doing 30. Average meeting size, also really high — 10 participants. That's way too many people to have in a Zoom, in a meeting, anyway. If you're just giving information to people, why not just do a video? 10 people, they can't participate-
David Leary: Is the number of attendees artificially inflated, just because, “Oh, it's a Zoom. I'll dial in.” You click on it. It's on mute. You're on another screen. You're doing stuff; you’re not even really participating-
Blake Oliver: Well, that's also-
David Leary: -versus walking into a physical room and sitting down in there is a little bit different.
Blake Oliver: I don't know. I just feel like that's a waste of time. If that's what people are doing, like logging into a meeting and just going on mute and just doing other work, why are they even in the meeting?
David Leary: Because remember? These people that have two jobs at the same time ... They log into one meeting on this computer, and then, over here, they do their other work.
Blake Oliver: How are you showing up to your meetings? 68% dressed casually for meetings; almost half say it's never okay to eat during meetings, which means that half say it is okay to eat. I have eaten during meetings, but I try to avoid it. It's kinda-
David Leary: I just turn my camera off.
Blake Oliver: Well, you can't-
David Leary: It depends if I have to participate. If it's a one-way kind of meeting and all hands, I don’t care. I'll carry the phone to the bathroom. I don't care.
Blake Oliver: David, here's a question for you: do you shower before you get on your Zooms?
David Leary: No. I usually have a morning- especially if I have an early Zoom, like at 6:30–7:30, I either choose to shower or eat breakfast. It's hard to get both fit in.
Blake Oliver: Yeah, I'm also one who likes to just start working, and then I'll like work out and shower later. That's what I love about remote work is I could never do that when I went to the office. I had to do everything early. 26% of Zoom users never, or almost never shower before hopping on calls. We're in that category. Some of the most popular phrases on Zoom — 71% have said, “You're on mute.” 57% have said, “Can everyone see my screen?”
David Leary: I say that all the time.
Blake Oliver: 21% have said, “Next slide, please.” They did a good job of fitting in a new feature, which I didn't know about, that they put in this survey. They have a new enhanced slide-control update. So, now you can give people access to change slides on your screen without giving them remote control. So, now you don't have to do the “Next slide, please” thing, which is great. That'll be really good for webinars. What else in here? 75%, three-quarters of users say they wave at the end of their meetings. I always wave at the end of meetings.
David Leary: Yeah. I tend to. Even if my camera's not on, it's just ... Actually, I do it on phone calls. It's stupid. It doesn’t make any sense. I’m half nuts.
Blake Oliver: 73%, almost the same amount have attended happy hour drinks, or game night. I have done happy hours on Zoom ...
David Leary: I want to see the trend of that over time.
Blake Oliver: Surprisingly, a third have attended a fitness, or cooking class on Zoom. I've never done one of those.
David Leary: I've done two cooking classes on Zoom.
Blake Oliver: Where are you Zooming from? This surprised me. Have you ever Zoomed from your bed, David?
David Leary: No.
Blake Oliver: 42% of people say they have been on a Zoom in bed. I wonder if that’s just ‘cause-
David Leary: I’ve had Zooms where the person is in bed.
Blake Oliver: This is a little odd for me. 21% meet while walking and jogging. I've done that. I like to go on walks and do Zooms where I can just talk, and I don't need to be at my computer. 11% have used Zoom on public transport. Then, here’s the funny part — have you ever done the thing where you realize that the room you're in just is like a mess, and so you've cleaned up, but only in the area where people can see it?
David Leary: No, I have not done that, but that's pretty funny.
Blake Oliver: 43% have cleaned only the part of the room visible on camera. 43% of parents had their kids show up during a meeting. I’ll one-up that. I’ve had a kid show up on a webinar. That was fun. Yeah, 36%-
David Leary: I’m very conscious of not so much cleaning up, but of brand, right? I’ll use the virtual backgrounds. I had shirts printed with the Melio logo higher up on the chest-
Blake Oliver: Ah ... That’s clever.
David Leary: -so it’d show up on the Zoom ... I’m very conscious of how these things come across, but the average meetings, I don't care. I'll do it at the kitchen table.
[00:51:07] H&R Block's Missing Wave
David Leary: I have a follow-up from last week really, really quickly. So, we talked about how H&R Block has named Xero a preferred solution provider, and the different H&R Block locations were gonna use Xero to do assisted bookkeeping with clients. We totally missed it — Zachary Owen on Twitter, (@ZachJOwen) brought up- we just completely missed it. He said, “Also weird that H&R Block’s Block Advisors is using Xero to provide bookkeeping services after acquiring Wave Financial a few years ago. What happened there?” I forgot that they acquired Wave. They already own Wave. Why would they roll out this service with Xero?
Blake Oliver: I mean, obviously, they decided that Wave wasn't working for them, right? That's all I can think of.
David Leary: If any of you have heard any rumors, or know anything about Wave ...? It completely vanished.
Blake Oliver: The problem with Wave was it was really more of a micro-business kind of thing, and there were a lot of limitations for bigger businesses, the kind that you really want for CAS. So, I think they probably just realized that after they tried putting it into these practices, and that’s a good reason-
David Leary: Well, my theory is this — Wave was always free because it had Google ads, and stuff in it. It attracted a certain business-owner type, and this is why no accounting firms would build their firm on Wave because those people didn't want to pay anything. I wonder if H&R Block discovered this.
Blake Oliver: I think you're right. Hey, we got some listener feedback, or do we have any more app news before we get to the feedback? I actually do have a story.
David Leary: There's a couple of raises that I think were interesting to touch on.
[00:52:37] Canopy's Raising More Money?
Blake Oliver: Canopy has raised $35 million in a new funding round, and I was surprised because they just did this ... Back in June, they raised $11 million; now, they’ve raised another $35 million.
David Leary: Both of these raises are after the big debacle they had, where they overbuilt that building, they laid off hundreds and hundreds of people.
Blake Oliver: I don't know what they're doing with this exactly. There's a quote from the Canopy CEO. Let's take a look and see. “The new funding will be used to further accelerate Canopy's mission to become the default operating system for accounting firms.” To accomplish this, they're gonna build out (I'm just gonna paraphrase now) client management, document management, workflow, time, and billing. That's all the same stuff. Oh, particularly with larger firms. So, they're working on getting larger firms. That makes sense, right? You get more bang for your buck as a software company when you go to the big firms.
This is the CEO again. “Our vision for Canopy is that it becomes the system of record by which accounting firms manage their work and clients. So, naturally we view Canopy as a platform, or a centralized hub to which all of your devices and other software solutions can connect. We plan to further develop our API and integrations to facilitate this.” Whatever that means is what they're building.
David Leary: So, I have about six really quick ones. Boom, boom, boom, boom, boom. If you're ready, hang on.
Blake Oliver: I've got two. Let's do it.
[00:53:51] QB Canada Partners with Dataswitcher
David Leary: Intuit QuickBooks Canada has partnered with a company called Dataswitcher to automate converting accounting systems to QuickBooks Online. The real interesting thing about this article is Dataswitcher says that they complete 90% of all successful migrations in under 13 minutes with all the conversions being done within 48 hours. I just thought it was an amazing stat, and this’ll help you move from Sage 50, Acomba, Xero; whatever you're doing to migrate, but 13 minutes is-
Blake Oliver: It's automated, right?
[00:54:19] Oracle Releases Numbers
David Leary: It’s automated, yeah. So, it’s pretty interesting on that front. Oracle released their numbers, and the big takeaway in that is NetSuite grew 29%.
Blake Oliver: Great growth. Yep, 30%-
David Leary: If you think about this, we've talked about the QuickBooks growth, recently, and Xero growth in the U.S.; they were growing 22% to 25%.
Blake Oliver: I think Xero, and QuickBooks, in very good years, grow around 30-something %, and then, they slow down; they grow around 20%. This is really solid growth.
[00:54:48] FreshBooks Teams Up with Sensibill to Offer OCR
David Leary: FreshBooks partnered with a company called Sensibill, and essentially, FreshBooks is gonna offer OCR within the FreshBooks platform.
Blake Oliver: Oh, you stole one of mine. That was one I had.
[00:54:56] It's All About the Kabbage
David Leary: Oh, you had that? I'm sorry. Stole that one ... Kabbage relaunched. Kabbage from American Express launched a product called Kabbage Funding, which is identical to the actual Kabbage when they started their company. It's just a loan product that’s working capital. It's a very confusing press release because I'm like, that's what Kabbage has been doing for a decade. I thought that was kind of strange. Then, Tipalti, which is an accounts payable automation startup in the enterprise space, they raised $270 million and an $8.3 billion evaluation. That’s another big-
Blake Oliver: $8.3 billion! Dang! Amazing.
David Leary: That’s it for my app news.
[00:55:35] The CPA.com and Biz2Credit Partnership Expands
Blake Oliver: I got one more-
David Leary: You have one more to close it out.
Blake Oliver: -CPA.com partnered with Biz2Credit for that PPP loan-portal thing, and there were sort of mixed reviews on that. They are expanding that, now that PPP is over, to include regular loan financing. So, I think this is a great service that accountants, bookkeepers, whatever, any of us financial professionals can provide to our clients.
I mean, this is nothing new, right? CPAs have been doing this forever, like working with banks to help their clients get funding, and financing, and all that stuff. You build those relationships. Well, now you can do it through a portal, too, to speed things up. So, you're gonna be able to go to Biz2Credit and apply for loans on behalf of your clients.
There's a discount on the cost of financing for CPA clients equivalent to approximately 1% to 2% on the annual percentage rate, depending on the loan amount. Funding amounts range from $25,000 to $1 million. There are also non-variable interest rates for loans secured through Biz2Credit, as well as an online application and closing process and an option for firms to earn commissions on funded financing applications. So, you know-
David Leary: Full circle on this, going back to pricing your CAS practice, or the CAS services you're providing; the bookkeeping services, right? A lot of these loan players, the way they work, and the reason that they're scaling so quickly — this goes to Kabbage, as well — the application, essentially, most of it is connect to your QuickBooks, or your Xero, and they go read the data. If you're not in control of your client's QuickBooks data, or Xero data, and their accounting data, making sure it's in tip-top shape, applying for that loan is a very difficult process. It probably won't get approved.
Blake Oliver: Exactly! So, full circle, right? I said, we need to be offering bookkeeping, CAS to as many of our clients as possible. This is exactly one reason why.
David Leary: You can't offer this as a service if their books are a mess.
Blake Oliver: Exactly. Perfect. Well, I think that's-
David Leary: ‘Cause the way they do their loans is based on the data in the accounting system.
[00:57:24] We Got a Message! Thank you, Cathy!
Blake Oliver: I think that's a great way to close out this segment. We do have one listener mail that came in. This was on our Facebook page. Cathy says, “Catching up with the November 26 podcast. Thank you for referencing new accountant skills as perhaps being a matter of personal responsibility. I harped on my staff with that for years and was simply labeled as demanding. It was a firm-wide sentiment echoed by my partner. So I scaled down and eliminated staff hoping to build back better with the staff who actually cared. I take some responsibility; we were a tax mill and completely burning our people out.”
And this goes to something I think you've said, David, in regard to Intuit’s strategy for becoming a cloud company ... It's really hard to do it with people who don't wanna do it. And so, sometimes, you’ve just got to churn out the people who are not interested in changing.
David Leary: I’ve talked to companies that have moved from desktop to SaaS. I think LivePlan is one of those. They were a historic desktop company, but in order to get to cloud and create their LivePlan product, 100% cloud, they basically had to replace engineers, and product managers. It's just a different skillset, and mindset.
Blake Oliver: Cathy has one more bit of feedback. She said, regarding that QuickBooks Online Advanced Desktop app, she says, “I understand they killed the old QBO Desktop app, but I just worked on several clients in the new app, and not one of them is QBO Advanced. She's using a ProAdvisor accountant login; not sure if that would make a difference. So, apparently, that new Desktop app works with other QuickBooks file types, or subscriptions
David Leary: Okay, good.
Blake Oliver: Yeah, because I was concerned. That was an only an Advanced feature ‘cause they've been putting so much stuff into Advanced.
David Leary: It was written in that weird way. That's correct. It caused confusion the way that was written.
Blake Oliver: And that's all I got this week.
David Leary: That’s a wrap.
[00:59:11] Send Us a Christmas Card! There's Still Time!
Blake Oliver: David, if our listeners want to get in touch with you online, where can they do that?
David Leary: I'm on all the socials, just at @DavidLeary.
Blake Oliver: I am @BlakeTOliver. If you want to send us a voicemail, record a voice memo on your phone or on your computer, email it to me at blake@blakeoliver.com. We will listen to it. We will likely play it on the air. And, of course, we always love just getting messages from our listeners. Feel free. Contact us, let us know what you're thinking about these stories, or anything that's on your mind; stuff you think we should be talking about. It's my favorite part of doing the show is getting to talk to our listeners.
[00:59:43] Share Your Spotify Wrap-Up Stats with Us!
David Leary: If you use Spotify to listen to us, go to your year wrap-up and let us know, um, what your stats were for listening to The Cloud Accounting Podcast. I think somebody online listened to 61 episodes last year, for 3,000 minutes. I was wondering if anybody can beat that.
Blake Oliver: Oh, I know! It was fantastic! Kristen Keats posted hers. I don't remember-
David Leary: Yeah, she was a solid 48 or so minutes-
Blake Oliver: 48 episodes, right?
David Leary: 48 episodes, and it was about 2,000 minutes, I think.
Blake Oliver: So, thank you, everyone who has supported us, listened to us. You listening to this show is what makes our advertisers want to advertise, which makes this whole show possible from a financial standpoint. Oh, and I'm excited to say that Earmark, my app to offer CPE for listening to this podcast, is theoretically launching this month in December.
[01:00:28] Earmark, the Ultimate CPE App, is Launching Soon!
Blake Oliver: Head over to earmarkcpe.com, sign up for my mailing list. I will email you as soon as the app is out. You'll be able to get CPE credit for listening to this podcast. You listen to it here. You go to Earmark, and you do a quick quiz. It's like a five-question quiz, and then you can download your CPE certificate.
David Leary: So, I have an app on my phone, or do I go to the website, or both?
Blake Oliver: Yeah, it’s an app on your phone. You listen in whatever podcast player you have.
David Leary: So, I'm in iTunes; let's say I listen in iTunes-
Blake Oliver: Well, Apple Podcasts. Don't date yourself, David; don’t date yourself. Listen in Apple Podcasts, or listen on Spotify, Pocket Casts, or whatever you use.
David Leary: Well, I could listen in iTunes, in theory. It’d still work, right?
Blake Oliver: You could, you could. Yes, it still exists. Hard to believe.
David Leary: Oh, yeah ...
Blake Oliver: You listen there, and then you open up the Earmark app. You find the episode, and you enroll for free, take the quiz, and email yourself a CPE certificate. We are NASBA approved to offer CPE for this stuff. Believe it or not, our show qualifies for educational credit, at least until somebody decides to report us, and they audit us, but, you know, we'll get it going for a while, hopefully ...
David Leary: This is amazing ‘cause people have been asking for this for almost two years. The fact that this is here, and you’ve finally built this is kind of amazing.
Blake Oliver: I'm really excited ‘cause it's taken literally a year. I started in January. I had no idea how difficult it is to build software. I mean, I'm so excited! That’s it for this week-
David Leary: This goes to those listeners, right? People listen to our podcast 50 hours a year, and they get no credit for it-
Blake Oliver: Right, they can get-
David Leary: -but now, they will.
Blake Oliver: Now, they can get a ton of CPE. Thanks, everyone, for listening. I guess we'll have one more episode before- two more episodes before the year's over, so we'll need to do our typical-
David Leary: I think it might be three because it falls right on the 31st, so we need to figure out if we need to record on the 30th, or what have you.
Blake Oliver: Well, we could have a New Year episode.
David Leary: We have adjust things. The holidays fall kind of on our recording day, so we’re gonna have to ... Unless you wanna record Christmas morning.
Blake Oliver: Maybe ... Maybe we'll have a present-opening ceremony. All right, David, have a great week. Talk to you next.
David Leary: All right, bye.
Time for the classifieds.
[01:02:32] Fast track a scalable 7-figure firm with Future Firm Accelerate
David: If you're looking to quickly grow a scalable, systematic seven-figure accounting firm without having to work 50-plus hours per week, check out Ryan Lazanis' online coaching membership, Future Firm Accelerate, designed around Ryan's experience taking his cloud firm from scratch to sale, so that you don't have to reinvent the wheel.
You'll get online learning, and topics that help you automate, and systemize all aspects of your firm. You'll get coaching when you need help with implementation, and you'll also join a collaborative community of hundreds of other forward-thinking firm owners. For more details, head over to www.futurefirmaccelerate.com.
[01:03:09] Oh My Fraud: A True Crime Podcast for Accountants
Blake: Hey, podcast listeners, it's Blake, and I wanted to let you know about a new show I'm working on with CPA/comedian, Greg Kyte, and blogger/former CPA, Caleb Newquist. It's called, Oh My Fraud, and it's a podcast all about financial crimes. That's right, a true crime podcast for accountants by accountants.
Caleb, and Greg are going to come together every couple of weeks to unpack their favorite frauds, and explore the circumstances, psychology, and interpersonal dynamics involved. They also fully indulge in victim blaming the defrauded widows, orphans, infirm, and feebleminded because who can resist?
If you fancy yourself a trusted advisor or prefer your true crime with spreadsheets instead of corpses, listen to this show to learn what to watch out for, and to keep your clients, your firm, and even yourself safe. To subscribe, go to, ohmyfraud.com, or search “oh my fraud” on Apple Podcasts, Spotify, or wherever you get your podcasts.
[01:04:09] How to advertise in these classifieds
David: Want to get the word out about your newsletter, webinar, party, Facebook group, podcast, e-book, job posting, or that fancy Excel macro you just created? Why not let the listeners of The Cloud Accounting Podcast know by running a classified ad? Hit the show notes for the link to get more info.