David Leary Podcast Image

David Leary

Host & Producer of Cloud Accounting Podcast
Recent episodes featuring David Leary
Intuit acquires ChronoBooks & news from Xerocon London
Cloud Accounting Podcast
SponsorsOnPay: http://cloudaccountingpodcast.promo/onpayOnPay is offering an exclusive promo code only for the listeners of The Cloud Accounting Podcast to get three free months of OnPay payroll service for any of your clients that you set up by February of 2020! Visit the sponsor link, and use code "CAP3FREE" to take advantage of this offer! LinksFather-Son Podcasting Microphone — SNLhttps://www.youtube.com/watch?v=LSYsmgZEKv0 [Free CPE Webinar] Level Up Your Financial Outputs: How to Save Time, Add Value, and Delight Clients — CPA Academyhttps://jirav.cpaacademy.org/webinars/a0D2S00000enqnCUAQ Intuit’s acquisition of ChronoBooks offers enhanced productivity with QuickBooks Online Advanced — QuickBooks Bloghttps://quickbooks.intuit.com/blog/news/intuits-acquisition-of-chronobooks-offers-enhanced-productivity-with-quickbooks-online-advanced/ Xero’s half year 2020 results & announcing Net Zero @ Xero — Xero Bloghttps://www.xero.com/blog/2019/11/xero-half-year-2020-financial-and-operating-results/ Pay with TransferWise: A new way to pay and manage your bills — Xero Bloghttps://www.xero.com/blog/2019/11/xc-pay-with-transferwise/ Xero + GoCardless launch integration to help combat late payments in the Americas — Xero Bloghttps://www.xero.com/blog/2019/10/xero-gocardless-launch-americas/ Xero needs to Square up! - Sam Byrnes | Livewire https://medium.com/ecp-insights/xero-needs-to-square-up-9950b2de44fc Where Will Square Be in 10 Years? — The Motley Foolhttps://www.fool.com/investing/2019/11/14/where-will-square-be-in-10-years.aspx Google to roll out checking accounts for consumers — The Washington Post https://www.washingtonpost.com/technology/2019/11/13/google-eyes-banking-it-widens-its-reach/ Revolut Seeks $500M To Staff Global Expansion | PYMNTS.com https://www.pymnts.com/news/digital-banking/2019/revolut-seeks-500m-to-staff-global-expansion/ Payro Debuts Payroll Financing For SMB Owners | PYMNTS.com https://www.pymnts.com/news/b2b-payments/2019/payro-debuts-payroll-financing-for-smb-owners/ With QuickBooks integration, Tide adds data-driven personalization https://bankinnovation.net/allposts/biz-lines/corp-bank/with-quickbooks-integration-tide-adds-data-driven-personalization/ The Future of Banking Is … You're Broke | WIRED https://www.wired.com/story/the-future-of-banking-is-youre-broke/ Blake’s new favorite app is... You Need a Budget!https://www.youneedabudget.com/ One in three millennial business owners dissatisfied with accountants | Accountancy Daily https://www.accountancydaily.co/one-three-millennial-business-owners-dissatisfied-accountants SURVEY: Firms Divided on eSignatures | CPA Trendlineshttps://cpatrendlines.com/2018/11/09/survey-firms-divided-on-esignatures/ The Truth about QuickBooks™ Files | LinkedInhttps://www.linkedin.com/pulse/truth-quickbooks-files-angela-meharg/ Fourteen years after launching, 1Password takes a $200M Series A | TechCrunchhttps://techcrunch.com/2019/11/14/fourteen-years-after-launching-1password-takes-first-funding-a-200m-series-a/ 8 trends in the Accountant's Software Industry | LinkedInhttps://www.linkedin.com/pulse/8-trends-accountants-software-industry-matt-paff/ See David recording in the closet on our new Instagram account!https://instagram.com/cloudacctpodGet in TouchThanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus. Meet Blake in person! December 9-11: Digital CPA Conference in SeattleLimited edition shirts, stickers, and other necessitiesTeePublic Store: http://cloudacctpod.link/merchSubscribe Apple Podcasts: http://cloudacctpod.link/ApplePodcasts Spotify: http://cloudacctpod.link/Spotify Google Play: http://cloudacctpod.link/GooglePlay Stitcher: http://cloudacctpod.link/Stitcher Overcast: http://cloudacctpod.link/Overcast   TranscriptThis episode of The Cloud Accounting Podcast is sponsored by OnPay. 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 a little behind the times. With OnPay, you get the best of both worlds - a great app from an established company that's been providing payroll for over 30 years in all 50 states. OnPay is an easy-to-use, full-service payroll with simple, straightforward pricing, and it includes all their features - employee self-onboarding, HR tools, health insurance, worker's comp tracking, and 401(k). With an accountant's dashboard and partner program combined with best-in-class integrations with Xero, and QuickBooks, OnPay is the right fit for all your clients, whether they have just one or 500 employees. They also handle all the complicated stuff that other payroll providers don't, like agricultural payrolls, including Form 943, multi-state payrolls, and employees with H-2A visas. I'm really excited to tell you that OnPay is offering an exclusive promo code only for the listeners of The Cloud Accounting Podcast to get three free months of OnPay payroll service for any of your clients that you set up by February of 2020. Head over to CloudAccountingPodcast.promo/onpay. That is Cloud Accounting Podcast dot promo forward slash O-N-P-A-Y, and use code "CAP3FREE," when you sign up your clients. That is C-A-P, the number 3, F-R-E-E. And to be clear, you cannot get this promo anywhere else. It's only available to the listeners of the Cloud Accounting Podcast.
A rundown of QuickBooks Online news from #QBConnect
Cloud Accounting Podcast
SponsorsOnPay: http://cloudaccountingpodcast.promo/onpayOnPay is offering an exclusive promo code only for the listeners of The Cloud Accounting Podcast to get three free months of OnPay payroll service for any of your clients that you set up by February of 2020! Visit the sponsor link, and use code "CAP3FREE" to take advantage of this offer! Show Notes 00:45 – Meet Valerie!  01:44 – Meet David!  02:09 – Live fast, cloud-account hard! David’s firm, ENVOLTA, has hit Hubdoc’s Top 50 North American Cloud Accountants and The Ottawa Business Journal’s Fastest-Growing Companies list multiple times! | Ottawa Business Journal 03:00 – Breaking news! The world does not stop when we attend accounting conferences!  03:47 – News from QuickBooks Connect! | Accounting Today 07:08 – Like a spell-checker, only for accounting processes - one new QB feature, Bookkeeping Review, helps you find, and correct errors, with customization options for each client 08:52 – Bookkeeping Review gives users almost real-time accounting, and eliminates a lot of year-end close headaches, especially around tax 10:26 – What makes QuickBooks's Business Performance Overview tool outperform similar tools from competitors?  12:39 – Benchmarking tools are splendid, but how do you know the data is solid?  15:35 – Using powerful review and benchmarking tools provides a solid foundation for effective advisory 17:29 – How do we build, a bigger, better Cadillac of accounting tools?  18:34 – Will too many apps spoil the tech stack? | Financial Times 21:44 – When FASB speaks, accounting apps, like LeaseQuery run with it! | Business Wire  23:14 – Bankifi is throwing down the Banking-as-a-Service gauntlet | Forbes 27:11 – Is another tax software company getting ready to bite the dust?  28:37 – The MyPayrollHR dominoes keep falling – Cachet ceases accepting ACH deposits for payroll | Cachet Financial Services 29:57 – Cachet’s decision leaves companies, like Vermont-based PayData, holding the bag | VTDigger  32:15 – CYA with insurance – the best way to protect yourself and your firm when you’re stuck in the tangled web of apps and services 33:02 – David DiNardo's parting wisdom: accounting and bookkeeping firms should go social! Not only is it good for marketing, but it's an excellent way to network and stay on top of what's going on!  Connect with David and Valerie David DiNardo:  LinkedIn: https://www.linkedin.com/in/david-dinardo-mba-42344599/ Website: https://envolta.ca/ Valerie Heckman:  LinkedIn: https://www.linkedin.com/in/valerieheckman/ Twitter: https://twitter.com/vheckman Get in TouchThanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus. Meet Blake and David in person! December 9-11: Digital CPA Conference in SeattleLimited edition shirts, stickers, and other necessities.TeePublic Store: http://cloudacctpod.link/merchSubscribe Apple Podcasts: http://cloudacctpod.link/ApplePodcasts Spotify: http://cloudacctpod.link/Spotify Google Play: http://cloudacctpod.link/GooglePlay Stitcher: http://cloudacctpod.link/Stitcher Overcast: http://cloudacctpod.link/Overcast   TranscriptValerie Heckman: If we keep the books clean, and we do those reviews, and we've put things in place to automate, the tax return should be a breeze, as well. Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver. David Leary: I'm David Leary. David DiNardo: I'm David DiNardo. Valerie Heckman: And I'm Valerie Heckman. Blake Oliver: Awesome. Thank you guys so much for joining us today! David Leary: Valerie, and David ... For this interview, I'm gonna use Leary, I guess. I will not be David for this interview. Is this correct, Blake? Blake Oliver: Yes, Leary ... [crosstalk] Leary it is, and maybe going forward. [00:00:30] David Leary: Going forward, possibly, okay ... So, we are at day three of QuickBooks Connect. It's after the big party the night before; we're up bright and early. We ran a contest this week, and we have our guest hosts. One guest host was not a contest, who is Valerie. Valerie, you're with Intuit. Do you wanna just give a little quick background on who you are? Valerie Heckman: Absolutely. I am with Intuit QuickBooks, and I am a senior product consultant for QuickBooks Online. David Leary: What does that mean? Valerie Heckman: That means that I help accountants get more comfortable using QuickBooks Online and showing them all the exciting things that it can do as they start their journey to the cloud. Blake Oliver: Perfect, and [00:01:00] you're based in Chicago? Valerie Heckman: I am based in Chicago, yes. Blake Oliver: But you go all over the place? A lotta travel?  Valerie Heckman: I do. I do. I carry a bag, and I'm on the road most of the year. Blake Oliver: Awesome.  David Leary: We have to go fast today because you have a flight to catch, right?  Valerie Heckman: I do, yes. Blake Oliver: Got it.  David Leary: David DiNardo ... We ran a contest this week. We wanted to give one of our loyal listeners a chance to be on the podcast and guest host. You wrote a big ... You weren't on Twitter; you kinda came in from the side. Twitter, there was a lotta people talking about, "I wanna host, I wanna co-host, I wanna co-host!" Thank all of you for trying to get on there. David wrote this great post [00:01:30] on LinkedIn, and Facebook, and his friends and family commented on it - he'd be a great guest host ... What caught my eye is a) you're a young millennial, started a cloud-accounting firm; and you have 35 fully remote employees, and it's one of the fastest-growing firms in Canada. What's the firm name? David DiNardo: So, I own ENVOLTA Cloud Accounting, located in Ottawa, Canada, and we specialize in, really, the cloud-accounting world. We started in 2014, and we've grown the business exponentially in the last five years to [00:02:00] the fastest-growing business in Ottawa, two years in a row. Blake Oliver: Fastest-growing business, period, or ...?  David DiNardo: Yeah. Blake Oliver: Wow. David DiNardo: Top 10 in Ottawa for two years in a row- David Leary: Very impressive.  David DiNardo: -and Ottawa is the capital of Canada, so there's a lot of major businesses there. Then, we won fastest-growing business- we came 51st in Canada for a three-year trend. We are just leveraging the technology and growing it. Blake Oliver: What's your headcount? David DiNardo: We're at 35 people. We're hiring 10 more people by January. We're just landing [00:02:30] the contracts and keep on going. Blake Oliver: Nice! David Leary: And I'm assuming you jumped straight into cloud from day one. David DiNardo: We started on some desktop, but the vision ... We started five years ago, and the cloud apps weren't there yet. So, we definitely adopted to QuickBooks Online first and now, everyone's on QuickBooks Online. We have an app stack, and all of our employees work remotely across Canada. David Leary: So, I think this is gonna be our regular [00:03:00] news episode- Blake Oliver: Yeah.  David Leary: -because we've been here; we've been doing interviews, interviews, interviews, but there's news! News happened here this week at QuickBooks Connect and news has happened outside of QuickBooks Connect. Believe it or not, there's a world happening of accounting news that still happens. Blake Oliver: Yeah, let's talk about what is new from QuickBooks, and from Intuit. We're lucky to have Valerie Heckman here to help us get the overview. So ...  Valerie Heckman: Yeah, yeah. So, it has been an exciting week at QuickBooks Connect. There have been so many different pieces of news across the board; [00:03:30] many things shared on the main stage on Accountant Day with Ariege. I'll go through some of that, and then, there was also a lot of news in the booths, right? This year, we had a lot of the new innovations being really showcased in the booths so that you could come and see a bit of a presentation around it. Blake Oliver: So, our friend of the show, Ranica Arrowsmith, wrote a great article on Accounting Today, kind of summing up three of the main key announcements that we heard from Ariege on, I think it was day one, the Accountant Day. The [00:04:00] first one that caught my eye - I saw tons of tweets about this - was the Optimization Center. We got a peek at that. It will actually score your clients and show you how effectively you've set them up, based on, I think it was like bank rules; whether you've got those in place. Valerie Heckman: Yes. Yes. So, we're actually showing you an objective measure of how efficiently each client is set up, and then also recommendations to improve. So, it has to do with how many times a transaction [00:04:30] is touched or interacted with in QuickBooks Online, which is super-exciting. David Leary: David, you obviously have a firm. How do you know, when you have all your clients, that you're handling one client with super-efficiency and all your clients are being handled efficiently? Do you have any way to measure that right now, internally, or are you really excited about a tool like this?  David DiNardo: A tool would be amazing. We're doing a lot manually, right now, but it's all part of the onboarding process. That's where it defines everything - setting the tone with the client at the beginning; setting them up properly; and then doing the ongoing work. If you don't have a process, you won't be able to do [00:05:00] any of these KPIs or anything in order to measure it. Then, you become more reactive rather than proactiveness. David Leary: Yeah, I could see how ... It's great if they're gonna open this up to ProAdvisors ... If you don't have any processes, you're gonna run this tool, and three of your clients are gonna be like 90-percent efficient, and your other ones are like 22-percent efficient. If you don't have any processes, you'll never know why those three are that efficient. Valerie Heckman: Exactly. Exactly. So, we're saying how can we help the accounting professionals really get their arms around what that looks like and how they can improve it? One of the things [00:05:30] I really thought was cool with that is that you can create those bankrolls from there and then, copy them to other clients within QuickBooks Online, without having to do an export/import to Excel. It's gonna be really easy to go through a workflow and standardize across clients if you want to. Are you excited about that? David DiNardo: Yeah, very excited. I think that's great. Blake Oliver: And it's sophisticated. It's not just let's copy all the rules from this one client to another. You can pick which rules specifically you want- Valerie Heckman: Right.  David Leary: Which means you could almost create a fake QuickBooks Online company and almost have like a template of rules that you copy over [00:06:00] to every one of your clients, because it's pointless ... Right now, there's 150,000 QuickBooks ProAdvisors, and every one of them has individually created a rule to code Starbucks to meals and entertainment [crosstalk]  Valerie Heckman: Sure.  David DiNardo: -but what's gonna be exciting is if you niche your clients out into different industries and you master one of those niches, then you can roll it across all your clients in a very streamlined way-  Valerie Heckman: I've actually seen that happen with the rules, today. I was working with a firm in Seattle that they have real estate clients, and every one of them goes to FedEx, and goes to the same gas stations, and goes here and there, and has all these [00:06:30] very similar expenses; then, even the income coming in from certain places is pretty standard. So they create a standard set of rules that they upload every time they have a new client, and we're just making that easier to do, because you don't have to go to into Excel and deal with the import, and mapping, and all those things. David Leary: Rule standards are the new chart-of-accounts standards. Blake Oliver: So, that's all about getting the data in efficiently; the most effective way to do that, as possible. Second on the list of features was what happens after that, right? Valerie Heckman: Yes.  Blake Oliver: How do we actually close the books? That was called Bookkeeping [00:07:00] Review. So, as I understand it, it's like a really cool checklist integrated into the product. Am I describing it, right. Valerie Heckman: Yeah. It's a checklist and more. The idea here is that QuickBooks is going to automatically find errors and surface mistakes for quicker resolution, of course, and then also enable you to say, "If this particular client has certain things that we need to look at closely, I can create my own kind of checklist around them and keep an eye on things." We surface [00:07:30] all sorts of things that might need attention, right?  If there's, I don't know, things that don't have vendor names, transactions without pays, and things like that, we may give you that bump of, "Hey, take a look at this more closely." Then, what I think is really awesome is we've already started doing this, so there is the Bookkeeping Overview in QuickBooks Online today, but we've gotten so much feedback from our professionals that we are building out even more kinda smart-scanning things that can surface more items that need attention. David DiNardo: So, I love this. We're [00:08:00] actually presenting- my chief operating officer, Victoria, is presenting in QBO Connect on quality control. We do year-ends every month, so our data ... We send out reports by the 15th of the following month. If your books are cleaned ... We have an internal checklist. The fact that that's going external to everyone, that's very important. When we talk about real-time accounting, this is the real-time accounting. Make sure the books are clean before you go to the next month and not carry over any slack [00:08:30] from month to month. Blake Oliver: When you say you're doing a year-end close, you mean like a hard close every month? David DiNardo: Yes.  Blake Oliver: Not this soft close of, 'well, it's reconciled, but is it?' David DiNardo: We have that checklist, that quality checklist that we go through - the balance sheet, the whole nine yards - and we actually lock the books after the month, so that the user doesn't go in there and mess things up or anything. Blake Oliver: This is what separates the firms that are doing good workflow from the ones who aren't, because you're saving yourself so much time [00:09:00] and eliminating the possibility of errors later down the road [crosstalk]  David Leary: -that's technical debt- it's debt you're carrying forward and eventually, you're gonna have to pay that debt, and it might be a lot of time at the end of the year. Blake Oliver: Yeah ... That's a software term, right? Technical debt is messy code that you end up paying for later when you fix it. David DiNardo: And guess what happens? You do the year-end ... You're fixing all the problems throughout the year. The year-end takes no time, and it's clean, and you're just ready to automate the tax now. [00:09:30] Valerie Heckman: Right.  Blake Oliver: Do you guys do tax, too? David DiNardo: Yeah, absolutely. Valerie Heckman: Right, exactly. Yeah, so why should we have to file extensions every year for clients? If we keep the books clean, and we do those reviews, and we've put the things in place to automate, the tax returns should be a breeze, as well. Blake Oliver: You could theoretically start on that like the first weekend in January. David DiNardo: Absolutely, once the banks are reconciled at the last month, you could do the tax return and start doing tax planning, and now, that advisory piece comes into place. Valerie Heckman: Exactly because you have the time now. David DiNardo: Yeah, exactly. Valerie Heckman: You have the time now. I was talking to somebody at the conference that said it used [00:10:00] to take six hours or more per client to get things ready for the tax return. Of course, if we have that across all of our clients, we have to file extensions to gain that time. Now, they're like, "It's an hour, because we've been keeping the books up to speed, and we're not looking back at what happened; we're working in as real time as possible. Blake Oliver: So, the third big feature announcement on the main stage was the Business Performance Overview.  Valerie Heckman: Yeah.  Blake Oliver: It's interesting. This is one that I'm actually the most [00:10:30] skeptical of, personally, because I come from the Xero world. That's where I started in the cloud. Xero tried to do a Business Performance Overview tab. I'm not sure if you guys are aware of that, but nobody uses it. At least nobody I know actually uses it. Let's talk about what it is, and then, I know, David, you can give us your perspective. Valerie Heckman: Yeah. So, it is a tool that's going to show us key metrics and trends in industry comparisons. We have our ecosystem data from over 4 million [00:11:00] small businesses, and we really want to help accounts have a better understanding of their clients, in relationship to each other, and help drive an impact for that, and give you tools that you can use to look and see how the business is doing, as you prepare for those advisory conversations. David Leary: It's funny, because, Blake, I remember six months ago, you were like, "Why doesn't Intuit just do this? Why don't they just have benchmarks built in the product? It's so obvious! They have the data ..." and now, they've done it.  Blake Oliver: Right.  David Leary: Just for you, Blake, they've added this feature.  Blake Oliver: So, that's the thing is you get these charts of KPIs trending over time - that's really cool - from the [00:11:30] QuickBooks data of your client. Then, you also get a ... We're gonna get benchmarks. You'll be able to see, okay, what is an appropriate gross margin for a business with 10 to 50 employees also in the restaurant space?  That's the idea, as I understand it, which I think we've talked about ... Maybe it was you, and I, David; maybe it was with a guest, but like, this question in my mind as to can I trust that data? How do I know those books are clean? If I'm gonna use benchmarking data, I wanna know [00:12:00] where it came from ... I don't know. I think it's really cool. There's a lot of potential, but I think also- David Leary: But, in theory, if you think about layering this, right? The efficiency of the data entry, and you have the  closing the book checklist- Blake Oliver: Yeah.  David Leary: There's gonna be a score where Intuit eventually will be able to, for the benchmarks, the only companies that'll be included in that are people that are at some X score. Like, "We have confidence that the data's good because ..."  Blake Oliver: As long as that is happening [crosstalk] As long as there is some sort of confidence ratio that is being used to rank the data, right?  David Leary: Yeah, because the other eight plumber [00:12:30] businesses I'm being compared to, in my zip code, they're only putting invoices in; they don't put any of their expenses in QuickBooks or something- Blake Oliver: And what if they don't have David DiNardo's firm closing the books every month? Valerie Heckman: Right, right.  David DiNardo: I think the main thing is the third-party apps. You have the Spotlights, the Fathoms, the Jiravs out there doing this in some context ... That I would rather, and talk about skeptical, I would rather leverage an app to be integrated specific for what I'm looking for than [00:13:00] that generalized data that I don't know if I can ... What's the data count? What's the metric around it? There's all these questions behind it.This episode of The Cloud Accounting Podcast is sponsored by OnPay. 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 a little behind the times. With OnPay, you get the best of both worlds - a great app from an established company that's been providing payroll for over 30 years in all 50 states. OnPay is an easy-to-use, full-service payroll with simple, straightforward pricing, and it includes all their features - employee self-onboarding, HR tools, health insurance, worker's comp tracking, and 401(k). With an accountant's dashboard and partner program combined with best-in-class integrations with Xero, and QuickBooks, OnPay is the right fit for all your clients, whether they have just one or 500 employees. They also handle all the complicated stuff that other payroll providers don't, like agricultural payrolls, including Form 943, multi-state payrolls, and employees with H-2A visas. I'm really excited to tell you that OnPay is offering an exclusive promo code only for the listeners of The Cloud Accounting Podcast to get three free months of OnPay payroll service for any of your clients that you set up by February of 2020. Head over to CloudAccountingPodcast.promo/onpay. That is Cloud Accounting Podcast dot promo forward slash O-N-P-A-Y, and use code "CAP3FREE," when you sign up your clients. That is C-A-P, the number 3, F-R-E-E. And to be clear, you cannot get this promo anywhere else. It's only available to the listeners of the Cloud Accounting Podcast.Blake Oliver: Well, this is ... I guess this fits a trend that Leary, and I ... I'm gonna say Leary, so we don't get confused [crosstalk] Leary, and I have talked about, which is the GL providers - the QuickBooks apps of the world - are becoming very broad. David DiNardo: Right. Blake Oliver: Building features like that, where ... As soon as QuickBooks came out with receipt-scanning, my question was - what's [00:15:00] gonna happen to all these OCR apps?  David DiNardo: Right.  Valerie Heckman: Sure.  Blake Oliver: But then there's always a use case where they're not gonna cover it, because the receipt-scanning will be simple in like a QuickBooks and will fit the needs of those people who don't need a specialized tool; maybe this will be the same way, right?  David DiNardo: That's exactly ... It depends on your clients. But I want that content behind it to deliver that advisory services. I don't wanna generalize anymore. I think, when you're starting out, it's great for that business owner, but once you start growing a business and you start wanting to deliver [00:15:30] that key advisory stuff, then you need that specific content. Valerie Heckman: My hope is that us having it - and this is my opinion, right? - my hope is that us having that really gives people a taste of what it could look like to use a tool that's even more powerful; that, "Okay, this is what's included in my QuickBooks Online, but if I look at one of these other apps, it's gonna put that on steroids and give me capabilities beyond what's here. But at least what's here will help me get- [00:16:00] Blake Oliver: Get started.  Valerie Heckman: -that conversation started." Blake Oliver: It could actually grow the market for those kind of apps, in that people get a taste of it and then, they want more. Valerie Heckman: Right.  Blake Oliver: The Bookkeeping Review is almost the same way. We've got the Jetpack workflows, the Arrow workflows [crosstalk]  David DiNardo: Carbon; throw in Carbon-  Blake Oliver: Yeah, Carbon, for sure. People will start doing the checklist thing for the first time and then, they'll say, "Okay, what else do I need, maybe, when I'm ready to get something more robust ...?"  David Leary: It's just good enough, right? You get the phone apps on iPhone and Android ... You can take a photo, but [00:16:30] then there's all these other apps- Blake Oliver: A million of them-  David Leary: -that would let you use filters and all these other things, and then, eventually, they put that stuff in the phone. You never knew you needed those things, and now, "Oh, I can do filters?" Then, it makes you go seek other apps to do crazier filters, and meme creators [crosstalk]  Valerie Heckman: Well if we think about the audience [crosstalk]  David DiNardo: I think that's a drawback, too. If you're starting an accounting firm right now, and you walk into all these apps, you are overwhelmed. Blake Oliver: That's right, yeah.  David DiNardo: I could see a high anxiety around that, just walking in and not knowing the direction. Then, on top of it, QuickBooks and [00:17:00] Xero, or whoever, are building similar apps, or similar functions than a Hubdoc. Clients are actually coming to me, and be like, "I just seen this upload-in receipt for QBO, but you've trained me on Hubdoc. What's the difference?" So, now I'm having those- David Leary: It's interesting that clients are noticing this now-  David DiNardo: They are. David Leary: It's not just us talking inside baseball, here on the podcast. Clients are noticing, "Oh, there's an app, and there's this other app, and they have overlapping functionality ..." and they're out there questioning their accountants and bookkeepers about it. Valerie Heckman: Right, but the [00:17:30] general audience - the folks that aren't lucky enough to have someone like you - they don't even know that OCR stuff exists. Then they see it, and they say, "Oh, wow! Gosh, I wish that this had the ability for me to do this with expense reporting, and have my employees use this, and have more ..." You're like, "Yeah, that exists, too," but it's an additional thing that not everybody needs that capability. So, it's like how do we take the core of accounting and then, take the core of the cool automation tools and build that into QuickBooks [00:18:00] Online and still leverage the ecosystem for the Cadillac version of some of these things?  Blake Oliver: I love that. Great analogy. There was other news that happened in the last week or two, while we have been in the enclosed world of QuickBooks Connect, which I feel like normally I listen to the news every day; I watch the news. I have no idea what happened over the last 48 hours. The world could have ended outside of this building, and I would not know. Let's see if we can talk about some of the news in the accounting world, David. Do you have any stories [00:18:30] that are ...?  David Leary: I have a story that's tangent to something David said about being overwhelmed. It's an article on Financial Times; the title of the article is "Lawyers' next challenge: too much technology." So, it's that there's just too many app choices. How do they know which ones? Because lawyers move slow, and if they're gonna build a tech stack and redo their firm, they want to do it for the next 10 years. There's so many startups; there's so much choice. How do they pick the tech stacks to go forward? I just thought it was an interesting article because I feel like it's the same pain accountants and bookkeepers have been having. I [00:19:00] think we're getting more comfortable with it in our space. Blake Oliver: It's not just accountants, right? Everybody has app overload. David Leary: I guess that's true, yes, yes. Podcasters ...  Blake Oliver: I read an article about how a typical business, across all of its departments ... We're talking midsize/large business will have 200 or more applications being used for different things. Can you imagine being that like chief technology officer trying to corral all of these apps, and maintain data security, and all that stuff? It's crazy. David DiNardo: I think this is a big problem [00:19:30] that you can turn into an opportunity, right? If I was giving any advice to a business owner, build that app stack and just stick with it. Start with one or two. Don't try to do four or five at the same time. From a lawyer's perspective, Clio raised $250 million a couple months ago. Now, when we deal with lawyers, it's, "Hey, we know Clio. We know it integrates great with QuickBooks Online. If you're not on Clio, we can't take you as a client because we're not trying [00:20:00] to learn another app ..." [crosstalk]  David Leary: -there's 1,250 legal technology companies, right now, building software apps for lawyers-  Blake Oliver: Did you say 1,250? David Leary: 1,250, and that's just that industry. Now, go construction; now go restaurant industry ... It's insane. It's really crazy, industry to industry. Valerie Heckman: Then, what's interesting, too, is like what's missing, right? Cause I feel like so many of my conversations over the last few days, it's that, "Oh, I've gotta find the app for this ... Who's doing that amazingly perfect?" So, it's how do we piece through all of this [00:20:30] and figure out a strategy for ... I'm curious to know from you, how do you go about evaluating multiple legal apps and landing on Clio? What does your process in your firm look like?  David DiNardo: I'll give you a shout-out. Go to QBO Connect, and then just learn. Valerie Heckman: Yeah!  David DiNardo: Before you start implementing anything, do an analysis of three or four apps - what works well for your company and your clients? Get your company trained on it. We have five managers. Anytime I'm doing an app analysis, [00:21:00] I'm bringing them involved, and I'm doing a demo with them and getting the perspective of every single one of our employees before we make a decision, because they're gonna be using the tool- Valerie Heckman: You've gotta get the stakeholders' buy-in [crosstalk] or the app's not gonna get adopted, right? It'll just be, "Oh, we've got one or two clients that are using it," but not at scale. David DiNardo: Another thing we do is every month, we do a tech session. We would either bring in an app partner, or we would do a demo of a specific app so that [00:21:30] the whole company sees it before we implement it. Valerie Heckman: That is so awesome. That's awesome. You do it like lunch-and-learn style?  David DiNardo: Yes. Valerie Heckman: Awesome. Blake Oliver: So, I've got some more app news.  David Leary: Yeah?  Blake Oliver: LeaseQuery ... Were they here at QuickBooks Connect? I'm not sure. We've talked about LeaseQuery in the past. David Leary: Yes. Blake Oliver: They're an app designed basically around an ASC 842 on lease accounting. It's funny, now that FASB issues an accounting pronouncement and an app is created, or like a dozen [crosstalk] Turbocharging [00:22:00] the ecosystem. Well, LeaseQuery announced $40 million in Series-A funding, so more money pouring into the niche-app space. It was Goldman Sachs' Merchant Banking Division that invested $40 million in them. So, congratulations ...  David Leary: So, I have a question on this ... Think about this, because we've seen this, right? There's a change in the accounting standard, and people have to do this; now, an app to solve that problem pops up. What if there's a new political administration and the accounting standards possibly change. I mean, are these apps dead [00:22:30] in the water if there's ever a change? Blake Oliver: I mean, yeah, if somebody ... But here's the thing, the SEC, FASB, they don't go backwards on this stuff, generally [crosstalk] It just gets more and more convoluted every year. So, I think they're probably okay. David Leary: Okay, got it, got it.  Blake Oliver: Think about it. It's like a sunk-cost fallacy, right? Everybody's invested so much money in adopting the new guidance. If they turned it off, then everybody would be pissed off, right?  David Leary: I have an article about Bankifi. They're a European fintech company, and they really help banks, and they just do modern tech services - invoicing, [00:23:00] payments, nudges - I don't even know what a nudge is. It might be reminders to pay? - cash management, and accounting to businesses. They're a software-tech play. What's interesting, in the article ... I'm gonna scroll down here and read you the quote here.  It's really a stake in the ground, and it's this convergence of ... We've talked about this - tech firms are becoming banks; banks are trying to become accounting-software companies. I'll read it carefully here: "In the foreseeable future, accounting, banking, cash management, treasury management systems, and ERPs all use the same [00:23:30] date ..." That probably should say 'data,' but they typed 'date.' "This will, over time, merge into one banking-as-a-platform service," which I thought was a really interesting quote, and a stake in the ground- Blake Oliver: I don't see that ever happening. All of these different apps are going to actually use the same format? [crosstalk] That would be like if we all had the same plug for our phone. Is that ever going to happen? No!  David Leary: We can't get the same plug for our phone, that's true ... I don't know how this would happen [crosstalk] So, you're not buying into this convergence? Blake Oliver: Well, I'm just playing devil's advocate. Valerie Heckman: What's interesting with that is the complexity [00:24:00] of all the different banks and how they all operate so differently. It makes certain things hard to have happen and to standardize, when you're trying to accelerate, because you get slowed down by banking. I've seen firms ... I had a great conversation this week around, "Oh, do we tell our clients, 'Hey, not only do you have to use Clio, but you also have to use this bank because we like how they operate and what they do ...'?"  David DiNardo: I'm going to say the opposite. Canada, we're fortunate [crosstalk]  Valerie Heckman: You don't have that many banks ...  [00:24:30] David DiNardo: We have five major banks, so we're able to be even more progressive, because we don't have that [crosstalk]  Valerie Heckman: -don't have over 16,000 financial institutions in the U.S. connect with QuickBooks Online, and those are the ones that connect. I have people tell me all the time about how so-and-so bank doesn't connect. So, what is the total number? I don't know, but what's interesting to me is that I've had some conversations ... We didn't talk about this in our main-stage news, but having those statements get fetched in and brought into QuickBooks Online- Blake Oliver: The Automatic Statement Import.  Valerie Heckman: is coming in spring [00:25:00] to the U.S., and we were able to roll it out much faster in Canada because there are not as many financial institutions to get those statements from, so it's [crosstalk] ... Yeah, it's an exciting thing. Blake Oliver: Yeah, it's huge. We're not talking about just the bank-feed data, we're talking the actual PDF, is that right? Valerie Heckman: Yeah, the statement. The statement, yeah ... That's one of the things that Ariege talked about-  David Leary: The clicking that it's just saved to go get this ... Blake Oliver: Well, because, if you think about it, if you have 100 clients, and you have to download their bank statement every month, [00:25:30] which you should be doing, if you're doing a hard close and filing that away, that's like a five- to 10-minute process for every client, assuming that somebody hasn't changed the password, and assuming that you even have read-only access. Valerie Heckman: Right, right ...  David DiNardo: I think the moral of this is we're coming into a world where accountants have to be that problem-solver. So, my solution would be find the CSV and then do an upload to save the time. We have to look at that automation in different ways to get that file, and that's what the [00:26:00] role of our profession is becoming. Valerie Heckman: If you think about where ... From this article, it sounds like the banks are realizing that it's costing them customers, if they don't have some sort of future plan to align things and build out platforms in ways that help customers navigate that differently than they have consumers, right?  David Leary: I just heard some comments around QuickBooks Connect yesterday. They're starting to get the vibe that maybe the banks are gonna start ... You want bank feeds? You gotta pay us 15 bucks a month. You wanna download statements ... The [00:26:30] banks wanna create their own accounting platforms and keep you in-house, because if you're just downloading that, what's the value the bank at this point? You don't need them at all. Blake Oliver: That's why I think Chase and Bank of America now use Bill.com as their white-label business-payments platform. They get you in there and then, they take away the ability to export the data? Because once you set up all your bill pay, you don't wanna change banks, right?  I've got a little more app news. This one's not as positive, unfortunately. This is a little bit of a downer. Are you all familiar with Canopy? Tax software in the cloud, [00:27:00] which is a very welcome development. There hasn't been a lot of opportunity in that. Well, they were just growing like crazy. We've talked about this on the show, Leary. But it seems like they expanded a little too fast. Canopy founder and CEO Kurt Avarell, stepped down Thursday as the tax software company laid off 73 employees after already laying off 100 employees in March. Chief Revenue Officer Jordan Ray will become the interim CEO. Back in March, 100 employees - that was a third of their whole workforce. [00:27:30] So, now, that's like half of the workforce that's left. What's crazy about this is that, prior to the layoffs, they'd been expanding really rapidly. They were opening this really fancy office in Utah, in Lehi. I don't know, it's kinda crazy to think what happened. We obviously don't know ... You hire, what, like 300 people, and then suddenly, you have to like to lay most of them off. How does this happen? David Leary: Yeah, because I think before we covered that, it was a surprise because we've seen Canopy ... Even though I tend to [00:28:00] be on the business side - I'm not in the tax-management side - but I've seen them at conferences. You see them growing. I always heard good things about them, and then, that one day, they laid off half their staff, and now, the CEO's been let go.  Blake Oliver: Yeah, so-  David Leary: I don't know.  Blake Oliver: What else do we got this week? David Leary: An update on MyPayrollHR ... Not so much MyPayrollHR, but Cachet. So, Cachet is no longer going to process payroll transactions. Valerie Heckman: Wow!  David Leary: So, Cachet, if people remember, with MyPayrollHR, Cachet was the ACH money-moving company. Blake Oliver: They were the ones who got caught in this whole scam. David Leary: Well, they [00:28:30] got caught holding the empty $26-million bag. They didn't do the scam. They just are the ones that had got hammered the most by it. Blake Oliver: Right. David Leary: So, they're basically not going to do ACH transfers into their company anymore. If you're an employer using one of these payroll services, the payroll service will need to wire transfer that money to Cachet. Blake Oliver: Which is causing tons of trouble, right? They had a bunch of late payrolls with different other payroll providers that are not MyPayrollHR that use Cachet suddenly couldn't deliver their payroll on time, because they didn't have the means to do these wire transfers. [00:29:00] David Leary: Yeah, they weren't set up for it. Again, it feels like, with Cachet, they've been in reaction mode. They reacted when they found out the scam happened, and that bad ACH file was uploaded that they tried to do, and that caused pain for employers, or employees of companies. Now, this is causing pain because, for whatever reason, they had to make that decision to no longer let people transfer stuff in ACH. I don't know if they're in trouble, not in trouble; how that's gonna impact them, because that was their business model. They're called Cachet, as in A-C-H is in their name. Valerie Heckman: I wonder if that's a temporary [00:29:30] thing. Do we know?  David Leary: It doesn't say.  Valerie Heckman: Does it say that's forever, or have they just decided to stop that until they can get ducks in a row? Blake Oliver: I don't have the story in front of me, but I think it was a problem with their bank. This whole system is so complicated; there's so many layers, right? You have the payroll service provider; then you have the ACH processor, Cachet; then you have the bank that actually makes the ACH transfers, which is ... We don't even know what that is. I can't remember that Cachet uses. If the bank says, "We're not gonna take the risk anymore," that [00:30:00] has this ripple effect. A great example is this company called PayData, which services Vermont clients ... MyPayrollHR affected a lot of New York employers. This PayData company services Vermont employers. So, PayData had to spend $1 million of its own money to cover the paychecks of 1,000 employees, because Cachet told them that, at the last minute, they couldn't do ACH anymore.  David Leary: This is just an unbelievable domino. It just keeps [00:30:30] rippling because of one guy ... One guy and his bullshit moves.  Blake Oliver: But also because he was kiting checks for like a year and a half, and nobody caught-  David Leary: No, 10 years- For 10 years ...  Blake Oliver: Well, he was doing the fake businesses for like 10 years, but the kiting of checks, I think, was shorter than that. David Leary: Okay. Blake Oliver: Yeah, but still, that nobody caught it? That there's not some AI?  Valerie Heckman: Well, right. I think that's the lesson that I hope everybody who's been listening to you all cover this story over the last ... Was it two months, now, almost? It's that if [00:31:00] we're going to move in the direction that we want to, we have to put pressure on all these other institutions to also ... The theme of QuickBooks Connect, "Own the Future," right? To get to that point where we don't run into these things because people will always find the holes in those opportunities. It's kind of amazing to me that this hadn't happened sooner in a big way. David DiNardo: Well, as a business owner, how do we know apps out there that are not doing the [00:31:30] same thing, or what's the regulation around it? We're advising our clients to use X app, but we don't know what's going on in the background with the security around it to ... Then, it's on, somehow, the businesses and the advisors because we're giving them that advice. David Leary: Yeah because every app that's here has all these dependencies. Everybody's using these micro-service architectures. That app's built on Amazon. Well, [inaudible] since Amazon, but then, maybe they're using some credit-card processing from Stripe. [00:32:00] So, now, they have that dependency in their app. It just trickles down ... They're using some piece of code from some other company; oh, and they're using a bank-transfer service, and they've partnered with this other regional bank. Those are all dominoes, and once one falls, that app, all the sudden, is useless for all your clients, and you're the one who feels the effect of that. Valerie Heckman: This might be a dumb question, but are there- is there insurance around that? What would an insurance plan for a business, or an accounting firm look like when it comes to those things? I don't personally know. David DiNardo: So, after this story, I contacted my insurance, and [00:32:30] got data-breach insurance- Valerie Heckman: There you go! There you go!  David DiNardo: -to protect my company because that could happen. Valerie Heckman: It's the world we live in, right?  Blake Oliver: Every accounting/bookkeeping firm should be looking into that as an option because we're relying on this world of cloud apps. There's a lot of them, hundreds of them, that we might be using, and we need to protect ourselves. So, I think that's a wrap. I know, Valerie, you've gotta get on a plane back to Chicagoland. Valerie Heckman: I do, I do. Yeah. Blake Oliver: And [00:33:00] David DiNardo, it was so great having you on the show. David DiNardo: One other thing. I just want to give a shout out to my marketing team. I wouldn't be on here if we didn't do the social media gig. I recommend all accounting companies to do social media, and get out there, and really look at the marketing around it, as well. Valerie Heckman: Yeah, yeah, Twitter ... Twitter it up; LinkedIn, Facebook, all of it. David Leary: Speaking of those, how would they contact you, David, if they want to? David DiNardo: You can go on my website at www.ENVOLTA.ca, or on [00:33:30] LinkedIn - David DiNardo. David Leary: David, you need to get on Twitter, as well [crosstalk] could not find you on Twitter- David DiNardo: You always said pick one social media and then do it!  Valerie Heckman: Fair enough ... If you want to get in contact with me, probably Twitter is the best way to do it. I'm @VHeckmann. Blake Oliver: As always, I am @BlakeTOliver. And how about you, Mr. Leary? David Leary: I'm @DavidLeary on Twitter. Blake Oliver: Thank you both. David DiNardo: Thanks.  Valerie Heckman: Thank you for having me. Bye-bye.  
Getting to know Acuity LIVE from AcuityCon in Atlanta
Cloud Accounting Podcast
SponsorsOnPay: http://cloudaccountingpodcast.promo/onpayOnPay is offering an exclusive promo code only for the listeners of The Cloud Accounting Podcast to get three free months of OnPay payroll service for any of your clients that you set up by February of 2020! Visit the sponsor link, and use code "CAP3FREE" to take advantage of this offer! Show Notes 01:17 – Acuity - firm of the future today - operating almost completely with a remote workforce!  03:54 – Is your job on the automation chopping block? Find out, here  04:30 – Even with the gloom-doom reports, the demand for accountants is still going up | University of Oxford – Oxford Martin School  06:14 – Kenji notes that the fear of automation is driving curiosity and adaptation in the face of such huge changes 08:30 – Meet Sammy and Lisa! 08:59 – Sammy defines bookkeeping as a combination of traditional bookkeeping services,  some more  listening, and more advisory 09:37 – Lisa's definition of customer success is matching clients with the right tech, at the right time, so they can benefit from Acuity's full range of services 11:29 – Bank feeds are a constant source of frustration for accountants and clients alike 13:38 – Acuity's bookkeeping team uses a standard tech stack, including QBO and Xero, to ensure consistent service 16:53 – Accounting FOR food trucks FROM a 'food' truck - a new career move for your hosts?  17:42 – We ain’t afraid ’a no oversized accounting-tech ecosystem chart! | Accountex 18:29 – Lisa thinks that eventually, the mind-boggling array of accounting apps are going to consolidate into bigger, better tools.  19:01 – The Cloud Accounting Podcast - World-class recruiting tool! Listen, learn, and find excellent new hires!  20:17 – Meet Graham and Ann!  21:06 – Ann gives the rundown on Acuity's controller team functions 23:02 – Graham explains how Acuity's CFO group makes life easier for clients 23:52 – The bigger the data stack, the bigger the responsibility.  24:19 – When do you need CFO services?  27:01 – Graham shares some advice on getting into the advisory game 30:04 – What is community-adjusted EBITDA?  30:34 – Non-GAAP metrics can be used to get a clearer picture of a company's performance 31:06 – GAAP might not be fairly addressing human capital, but Acuity is by investing in its people 32:08 – Is accounting still relevant?  32:51 – When it comes to providing stellar service, data is king, even if it's non-financial 35:10 – The WeWork snafu is proof that the free market works 37:02 – Adapt or die? | TechRadar 37:59 – David says data is going to level the playing field and what really matters is people, culture, and company values  Connect with the Acuity Team Acuity: https://acuity.co/ Matthew May, Founder, VP Sales and Marketing LinkedIn: https://www.linkedin.com/in/thetechcpa/ Twitter: @thetechCPA Kenji Kuramoto, Founder & CEO LinkedIn: https://www.linkedin.com/in/kenjikuramoto/ Twitter: @kenjikuramoto Lisa Gilreath, VP of Operations LinkedIn: https://www.linkedin.com/in/lisa-gilreath-2ba506a/ Twitter: @lkgilreath Ann O'Dea, Controller Team LeadLinkedIn: https://www.linkedin.com/mynetwork/invite-sent/ann-o-dea-a61263118/ Sammy Siddique, Cloud Accounting Team Lead LinkedIn: https://www.linkedin.com/in/sammy-siddique-64446932/ Twitter: @sammy3042 Graham Wood, CFOLinkedIn: https://www.linkedin.com/in/grahamwoodjr/ Kai Moon, Senior Customer Success Advocate LinkedIn: https://www.linkedin.com/in/hikaimoon/ Twitter: @hikaimoon Get in TouchThanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus. Meet Blake and David in person!  November 5-8: QuickBooks Connect in San Jose November 5: Practice Ignition PreCon Party in San Jose November 6: VIPartners Party with Gusto, Routable & Jirav in San Jose December 9-11: Digital CPA Conference in Seattle Limited edition shirts, stickers, and other necessities.TeePublic Store: http://cloudacctpod.link/merchSubscribe Apple Podcasts: http://cloudacctpod.link/ApplePodcasts Spotify: http://cloudacctpod.link/Spotify Google Play: http://cloudacctpod.link/GooglePlay Stitcher: http://cloudacctpod.link/Stitcher Overcast: http://cloudacctpod.link/Overcast   TranscriptKenji Kuramoto: One of the risks the profession has, in general, is that it's gonna be slow to adopt change. It's gonna be slow to move ...  Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver. David Leary: I'm David Leary. Acuity: And we're Acuity!  Blake Oliver: We're live in Atlanta with Acuity.  David Leary: So, Atlanta's famous. They have ... What's here? Chick-Fil-A? Blake Oliver: Yes. David Leary: Waffle House. Home Depot. Coca-Cola. Blake Oliver: Coca-Cola. [00:00:30] David Leary: Delta ... Industry titans, and now, there's the next industry titan for accounting coming up. Blake Oliver: And that is Acuity. David Leary: Acuity.  Blake Oliver: We are joined today by- Matthew May: Matthew May. Blake Oliver: And- Kenji Kuramoto: And Kenji Kuramoto.  Blake Oliver: You two are ... How would you describe yourselves, Matt? Matthew May: Oh, I'm a recovering auditor- Blake Oliver: Recovering auditor. Matthew May: -that now helps companies that need accounting.  Blake Oliver: And Kenji? Kenji Kuramoto: I mostly try to manage Matthew, which is a very difficult challenge ... But yes, we consider ourselves recovering CPAs. We're basically [00:01:00] now trying to help small businesses with their outsourced accounting. Blake Oliver: You guys decided to have everyone in your firm, Acuity, get together. Is this the first time you have done AcuityCon, or is the first ...? Matthew May: This is the very first AcuityCon.  Blake Oliver: Wow! And we are so honored to be joining you. David Leary: But to rewind that, though ... They're not a traditional firm. It's just not like all these people are here in your building every single day. Matthew May: No, we're meeting people face to face for the first time that we've worked with for five or six years. Where, like, Cyndi Cole was like, "This is the [00:01:30] first time I've met anybody!"  Blake Oliver: Who was it that hasn't met anyone in person for five years? Matthew May: Cyndi.  Blake Oliver: Cyndi! Wow! That's amazing. So- David Leary: Because you're all virtual; you're all remote. Matthew May: All of us.  Blake Oliver: I went up to the office that's upstairs. We're in the Atlanta Tech Village. It was shockingly small for ... How many people work at Acuity now? Matthew May: About 80.  Blake Oliver: 80? Kenji Kuramoto: We're just over 80, and it's the smallest square footage of an office we've ever had. We like that ratio - highest headcount - smallest square footage of office seems to be a metric that we're interested in. [00:02:00] Blake Oliver: Yeah. Good KPI for that, right? Well, that's awesome. We are here at AcuityCon in Atlanta, and the title of this session that you have graced us with is The State of the Industry. David, and I, about two hours ago, started frantically trying to figure out what exactly is the state of the industry? Because this is how we do all of our episodes. We record every week, and about 30 minutes before the episode, we realize that we need to record something, so we take all the articles that we have been reading throughout the week, and we try to [00:02:30] come up with some sort of theme.  Sometimes, we achieve that, and sometimes, it's just a random string of articles. Those of you who listen are well aware of that. But I think that, actually, what's great about this session; great about being here is that we spend a lot of time talking to each other about what we think is going on. But now, we get to actually listen to you guys. So, we're gonna flip the script, and we're gonna ask you what you think the state of the industry is, as what I would consider one of the leading [00:03:00] firms that has invented a new way of accounting. David Leary: Well, whenever we do the podcast, and we're talking about all these things - remote working, technology, the way you treat your employees, the company culture [crosstalk]  Blake Oliver: Moving to advisory services ... David Leary: In our brains, we're hoping people like you are listening to us. So, the fact that we're here, and you're actually facing us and rolling your eyes [crosstalk] is pretty exciting. Blake Oliver: We're hoping that you can share some of your stories [00:03:30] with our thousands of listeners. So, we have prizes today. David, do you have ...? David Leary: I have a very limited number of shirts. I think I have seven. So, I guess the way we'll figure out if you get to interact with us ... We'll get a shirt size and then, if that fits you, you get to [crosstalk] ask a question.  Kenji Kuramoto: Or someone in your family or close to you that has that size [crosstalk]  David Leary: That's true.  Matthew May: Close relative.  Blake Oliver: So, I thought we'd just lay the groundwork with a few statistics, right. We're accountants; we love [00:04:00] the numbers. Let's talk about what is the state of accounting right now. There's a lot of doom and gloom. I don't know if you read any of those blogs or any of those accounting sites about the threat of automation to our jobs, right? There's a website, actually, called willrobotstakemyjob.com. You can go there, and you can look up accounting. There's a page dedicated to accountants and auditors. It says right there, "You are doomed."  [00:04:30] This is all based on a report that was done in 2013 by Carl Benedikt Frey and Michael Osborne. It's to report called The Future of Employment: How Susceptible are Jobs to Computerization? They analyzed 702 jobs, and ranked them, and found that accountants and auditors have a 94-percent chance of being automated out of a job, which is kind of terrifying. But at the same time, the near-term growth of accounting [00:05:00] is fantastic, as I'm sure you can attest. There's a lot of demand for accountants. The job market is really tight. What's going on here, when we have 11-percent projected growth of accounting jobs, and yet we're all supposedly gonna get automated out of existence? David Leary: Yeah, why are you hiring people? Why do you have [crosstalk]  Blake Oliver: Why are there 80 people in this room? You guys have grown fast, right? I mean- Kenji Kuramoto: We have, yeah.  Matthew May: Yeah, we were eight people, six years ago. Blake Oliver: Wow. So, eight to 80 in six years, kind of defying that 'we're all gonna get automated out of a job.' [00:05:30] Kenji Kuramoto: Yeah. Who were those guys again? What were they talking about? I was talking earlier with Frank from Bill.com, and we were just having a discussion right after we came up here, just about what's- those same fears about automation coming. We were actually kind of joking about other jobs in the past, and things like that, that were supposed to come in and disrupt. Yeah, I think that one of the risks the profession has, in general, is that it's gonna be slow to adopt change. It's gonna be slow to move. We were just talking about it being adaptive. We talked in an earlier [00:06:00] session about this, to where one thing that's been good about our team, and I think has been attractive for people wanting to come and work at Acuity ... Which is the same way, too, I think a lot of ... The reason why we've- you guys, we've hung out with a good bit; Amanda Aguilar and her firm, we've always talked a lot. There's a lot of us who are very interested and curious about some of that change. It's allowed us to be adaptive. So, I think that in, yes, some of the traditional, very manual roles we've been in are gonna be disrupted. Those are gonna go away, but I think we're [00:06:30] already starting to see all kinds of other roles and responsibilities that are a much more better fit for accounts because, really, accountants are knowledge workers. We're not manual ... It's not a manual task we should be doing. I think that's where people are forgetting about the opportunity to eliminate some of the manual jobs and open up more the knowledge-working jobs. I think that's where the growth is coming from. David Leary: Do you have positions currently now in your company that maybe didn't exist as a job anywhere [crosstalk] years ago?  Matthew May: Oh, this year ... This year, we [00:07:00] added our tech-specialist roles, where we have people that just evaluate the bill-pay technology, or just evaluate the expense-report technologies that are out there. That's a new role in our team that we've added over the last 12 months. It's crazy. Blake Oliver: Their only job is to evaluate the tech ...?  Matthew May: No, we do a lot of player coaching ... They're on one of the teams. I think both those people are on- Kenji Kuramoto: Controller team-  Matthew May: The controller team, and then they have a role that is evaluating those technologies. Blake Oliver: Well, you know, you guys get to talk a lot as [00:07:30] the face of Acuity, but we have decided that we want to hear from the people who make up Acuity. Matthew May: Okay.  Blake Oliver: So, I understand that you may have taken volunteers in advance to come up here, or you may just be picking on people- Matthew May: We can pick on whoever we want-  Kenji Kuramoto: Maybe; maybe; yeah, that's right.  Blake Oliver: Who wants to come up and talk with us a little bit? No pressure. Kenji Kuramoto: It's easy. It's all edited, too, right? You can just ...  Blake Oliver: It's easy. Yeah, we edit this thing. Who wants to come up? You get a Cloud Accounting Podcast T-shirt. David, would you mind modeling one of these shirts? Kenji Kuramoto: He's [00:08:00] already wearing one. You guys are both wearing them [crosstalk]   Blake Oliver: -these are limited edition ...  Matthew May: I don't know what you ... Where are the easy ones? Sammy knows everything. I feel like you need Sammy for sure. Blake Oliver: Sammy?  David Leary: Yeah, Sammy should come up.  Blake Oliver: Sammy, Sammy? You wanna come up?  Matthew May: Yeah. [applause]  Blake Oliver: Awesome. One of you will have to give up your seat. Matthew May: Kenji'll allow me to do that, probably.  Blake Oliver: Okay, cool [crosstalk] Actually, how about we take two people from the audience, and that way it's easier. So, who else wants to come up and take Kenji's spot, and Matt's spot?  Matthew May: Oh, I'd totally bring [00:08:30] Lisa up here. Blake Oliver: Lisa. Yes! All right! [applause] You can just put that headset right there. Let's do some introductions. So, Sammy, who are you? Sammy Siddique: I'm Sammy. I'm the team lead of the bookkeeping team. I've been with Acuity since 2013. Lisa Gilreath: I'm Lisa Gilreath. I'm the VP of operations at Acuity, and I've been here for about five years, and I'm responsible for customer success. Blake Oliver: Fantastic. So, let's start with Sammy. How do you define bookkeeping these days? Sammy Siddique: It's broad. We [00:09:00] really- we changed our name a couple years ago to the cloud-accounting team because we wanted to really highlight about how our team services our clients in all different manners and not just traditional bookkeeping, but a little bit more advisory, a little bit more listening. So, we're a lot more broader than just the traditional- the bookkeeper role. David Leary: Just to make sure I heard you correctly - you do not call your staff bookkeepers anymore? Sammy Siddique: Correct. They're technically cloud-accounting specialists. Blake Oliver: We approve of that title. That's good. Lisa, [00:09:30] tell us a little bit more about what customer success is, from an operational standpoint.  Lisa Gilreath: Yeah, I think for Acuity, it is evolving, especially this year. Customer success was born out of the SaaS-based space, and we're professional services, so we've got a different flair on it. But it really is making sure that we are matching our clients with the right technologies at the right time, enabling them to grow, and making sure that they are using [00:10:00] the full spectrum of services that we have to offer. Blake Oliver: So, what's top of mind for you guys? When we talk about the state of the industry, is there anything that is worrying you, or concerning you, or is it just business as usual? Lisa Gilreath: I think it's changing, and it's changing quickly. I think, for our group, the number-one question they have is when is the banking system going to settle down and be consistent? We talk a lot about bank feeds in our group, and broken bank feeds, and some of the frustrations that that brings, in terms of our serving our clients. So, seeing [00:10:30] where the consolidation is going to happen and how that consolidation affects all the ecosystem products at the same time has been a little bit of a challenge. Sammy Siddique: We have definitely had a lot of discussions about automation. We are looking to embrace the automation to see how the team members can refocus and help clients in other areas besides the basic level. Of course, we're always looking to grow and expand in better ways that we can serve. Blake Oliver: Both of you are working from home, or are you working in the office here? Sammy Siddique: We do come [00:11:00] into the office occasionally, but yes, primarily, we're working from home. David Leary: What would you say, Lisa, as far as going to bank feeds ...? Because I've heard this gripe a lot about bank feeds. Let's say there's- Blake Oliver: And this is something that folks in Australia and the UK just don't understand- David Leary: They don't understand, our listeners there ... Now, maybe there's an executive at Chase, right? They're in the small business division. They want to really understand what this problem is. What are the problems you're seeing- running into with bank feeds - besides them just being down - that you have with your clients? Lisa Gilreath: Yeah, I think [00:11:30] one of the biggest challenges for us, on the customer-success side, is that customers do not understand why the bank feeds don't work and why they have to continually go in and connect them. Every time a bank makes a change, Hubdoc goes down, Xero goes down, QuickBooks goes down. Then, we're left in the position of saying that we can't deliver the work because we don't have the banking information. It leaves a bad taste in the customer's mouth, in terms of delivering services smoothly and on a timely basis. We're [00:12:00] little in the whole scheme of things; Chase isn't taking my call- Blake Oliver: Not yet.  Lisa Gilreath: Not yet.  David Leary: They will now, now that you've been on The Cloud Accounting Podcast ... Blake Oliver: Yeah, exactly-  Lisa Gilreath: It's a whole new world now.  Blake Oliver: Let's talk about Chase, all right? In a perfect world, people don't realize- clients don't realize that bank fees are screen-scraping tools, right? They're literally logging in on our behalf, and there's no API connection between the bank and the accounting system, in a lot of cases, right?  David Leary: Yeah, there's ... I mean, billing APIs would be coming from [00:12:30] that app side, right?  Blake Oliver: Yeah.  David Leary: Building an API for your own use is hard. It's work. It's very scalable once you do it but building an API for the rest of the world to consume is a whole 'nother monster. Banks are not used to making their data public, so they're going through a learning curve right now, and it's gonna be hard. Blake Oliver: Have you thought about just making your clients go on all one bank; trying to do that? That's impossible. I hear laughs.  Lisa Gilreath: Yeah ... We're pretty transparent in all the softwares. We can't even make them go on to Xero or QuickBooks alone; [00:13:00] or we don't choose to make them do that. We make recommendations, in terms of who we think the better banks are, in terms of ease of working, but that really actually changes from month to month. Blake Oliver: That's an important thing to point out and emphasize is you are agnostic, when it comes to which general-ledger application ... Do you standardize on anything, or do you just say, "We're gonna try a little of everything, we’re gonna work with whatever the client's working with ..."? David Leary: Maybe this is a question to Sammy, since [00:13:30] you're looking into automation. How can you automate anything, if you don't have a standard tech stack, and you're just using whatever apps the clients are using?  Sammy Siddique: We do have a standard tech stack in bookkeeping. Each client has to choose QuickBooks Online, or Xero for their basic, and then we'll have ... We do Bill.com; we partner with Expensify, Gusto, different things. So, as long as they're sticking with our preferred technologies, the bookkeeping team can service them. David Leary: So, you have some sort of guardrails of streams; you're not [00:14:00] gonna support 25 different ' take a photo of receipt' apps, but you're gonna [crosstalk] Blake Oliver: What if I come in with this really great small payroll processor, called MyPayrollHR, and I'm like, "These guys are the best!" ...  Lisa Gilreath: Honestly, if they fall in the similar parameters, we'll be willing to try it out and work with them. We can service clients that are not on those, but just not on my team. We'd probably dip into the controller, and the CFO team. So, we won't necessarily say no. It's just like maybe, "Just not in our team ..."  Blake Oliver: What about verticals? [00:14:30] I think Kenji mentioned earlier some refocusing on different verticals, or you went broad- Lisa Gilreath: We have not had verticals up until this year, and we're still not walking away from all of our clients that aren't in those verticals. But we have taken the stand to really start building deeper in verticals, starting with SaaS and creatives being the top ones that we really see a concentration in our client base; then really kind of building the tech stacks around those [00:15:00] specific verticals and marketing out towards them, specifically.  This episode of The Cloud Accounting Podcast is sponsored by OnPay. 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 a little behind the times. With OnPay, you get the best of both worlds - a great app from an established company that's been providing payroll for over 30 years in all 50 states. OnPay is an easy-to-use, full-service payroll with simple, straightforward pricing, and it includes all their features - employee self-onboarding, HR tools, health insurance, worker's comp tracking, and 401(k). With an accountant's dashboard and partner program combined with best-in-class integrations with Xero, and QuickBooks, OnPay is the right fit for all your clients, whether they have just one or 500 employees. They also handle all the complicated stuff that other payroll providers don't, like agricultural payrolls, including Form 943, multi-state payrolls, and employees with H-2A visas. I'm really excited to tell you that OnPay is offering an exclusive promo code only for the listeners of The Cloud Accounting Podcast to get three free months of OnPay payroll service for any of your clients that you set up by February of 2020. Head over to CloudAccountingPodcast.promo/onpay. That is Cloud Accounting Podcast dot promo forward slash O-N-P-A-Y, and use code "CAP3FREE," when you sign up your clients. That is C-A-P, the number 3, F-R-E-E. And to be clear, you cannot get this promo anywhere else. It's only available to the listeners of the Cloud Accounting Podcast. David Leary: In a way, wasn't Acuity, just from the get-go, in the startup vertical? I mean, this building, the Atlanta Tech Village, if I understand it correctly, only allows SaaS-based startups in here. The only business that's not a SaaS-based startup is Acuity - the accounting firm. That'd be like, if your niche was food trucks, and  they have those food-truck roundups, and you or the bookkeepers showed up with your food truck, but you didn't sell food; you just did bookkeeping- Blake Oliver: Oh, my gosh ...  David Leary: -and you were there every single time. Blake Oliver: David, this is brilliant! We should start an accounting truck and just drive up to all the other food [00:17:00] trucks- David Leary: And just do their books. Blake Oliver: -and do their books. We could drive around to them wherever they are- David Leary: This is it. Blake Oliver: -and have a Twitter account, right? That's how people know where we are, and they- Lisa Gilreath: You could compete with QuickBooks Live. Blake Oliver: You're right! We come to you. It's not just in a little box on your screen. Literally, we will drive to your house, or your place of business and do the-  David Leary: Right.  Blake Oliver: I feel like this has been done. David Leary: Don't release this until I spin it up.  Blake Oliver: Okay. Lisa Gilreath: They may wanna pay you with free lunches. You might wanna reconsider there.  Blake Oliver: I don't know. I mean ... In L.A., the food-truck scene is pretty awesome. [00:17:30] I might take them up on that. David Leary: All right, bank feeds are fixed. We have this amazing, perfect world; everything's automated. What do you solve for your clients then? What services are you gonna provide? Lisa Gilreath: Systems recommendations. Blake Oliver: Systems recommendations. Lisa Gilreath: There are so many. The ecosystem is huge. In onboarding our staff, when they first come on, there's always a sense of intimidation, a little bit, about they don't know all the softwares; like, "I don't know to give the right ones." Then I always pull out the Accountex picture, and say, "Good luck ..."  [00:18:00] Blake Oliver: That's terrifying. Have y'all seen that ecosystem diagram with like 500 apps? Lisa Gilreath: Every software that is in each space, and that kinda thing. It is very overwhelming. Blake Oliver: David knows them all. He learned them all [crosstalk]  Lisa Gilreath: Yes. Alphabetically, right? David Leary: I have them in my CRM, actually; every one of them.  Lisa Gilreath: That's where I really hope that we become better in making good system recommendations based on our verticals. Then, also, preparing for eventual consolidation in some of those spaces. Blake Oliver: What do you mean by consolidation? Lisa Gilreath: I think [00:18:30] we're gonna have apps that are gonna be really good at certain things and, at some point, they're gonna gobble each other up. Blake Oliver: We've already seen some of that, right?  Lisa Gilreath: Right.  Blake Oliver: Auto Entry; Sage; Hubdoc; Xero.  Lisa Gilreath: Exactly.  David Leary: I think even bill pay ... Two years ago, I feel like nobody used to be with Bill.com, and I feel like every single ... Some of the news I even brought today, every time I turn around, another app's announcing, "We now do bill pay." Lisa Gilreath: Right. Blake Oliver: Well, thank you so much, Lisa and Sammy. Really appreciate you jumping on the podcast with us. Lisa Gilreath: No problem.  Blake Oliver: Any parting words for our listeners? [00:19:00] Lisa Gilreath: Yeah. So, first of all, if you are a listener, you should know that The Cloud Accounting Podcast is a great recruiting tool. Blake Oliver: Really? Lisa Gilreath: Because our newest hire, Kai, back there in the corner, hiding behind the camera, actually was a referral that called into you guys, or reached out to you guys, and you sent them our way. We're very thankful to have her. So, listen; network- Blake Oliver: We'll take our 20-percent commission on the first-year salary. [00:19:30] David Leary: I have a question, because I feel like Matt, and Kenji are pulling my leg a little bit because he says, "Oh, we make all our staff listen to every single episode." Is this true or not true? Sammy Siddique: We definitely recommend your podcast. At least once a month, we are reminding the team; make sure we are blasting it. We are huge advocates of the podcast, so, please, please, if you are not listening, start listening. Lisa Gilreath: Yeah, absolutely. If, on one of our team calls, you've heard me say, "Oh, that was recently discussed on The Cloud Accounting Podcast," raise your [00:20:00] hand. Blake Oliver: Wow, and I see half the room [crosstalk]  Lisa Gilreath: You make our job a lot easier. Blake Oliver: Well, thank you. Thanks for that. Lisa, Sammy, you made this episode much easier, so thank you for your participation. Lisa Gilreath: Thanks for having us.  Sammy Siddique: Thanks for having us.  Blake Oliver: All right, so we've got our next two victims here. We have Graham; "Graham Wood, CFO," is what your name badge says. Is that an apt description or can you elucidate upon that? Graham Wood: That pretty [00:20:30] much says it. Blake Oliver: And we have Ann; Ann O ... Ann O'Dea: O'Dea.  Blake Oliver: Ann O'Dea. Thank you for joining us. What's your role? Ann O'Dea: I'm the controller team lead. Blake Oliver: Controller team lead, all right. Would you mind tipping that microphone just down- you can adjust it down a little bit. David Leary: You have an accounting-firm name - O'Dea and Associates. Blake Oliver: Yeah, that's a good one. Ann O'Dea: Yeah. No ... I wanna be at Acuity.  Blake Oliver: That's right. Ann, what's your role? Ann O'Dea: I'm the controller team lead. Blake Oliver: Controller team lead. Okay, let's talk about controllership if you don't mind, Graham. We're gonna go controller, [00:21:00] and then, CFO ... Graham Wood: Go for it.  Blake Oliver: So, what is controller ... What's the controller team do at Acuity, Ann? Ann O'Dea: One of our main tasks is when a client wants to be accrual basis rather than- the cloud-accounting team handles cash basis. Then, if they move to accrual, you bring on a controller; or just to help out with the tech stack that they don't do, you bring in a controller? Blake Oliver: Gotcha. All of those month-end close procedures to get ... You do GAAP financials? [00:21:30] Ann O'Dea: Yeah, GAAP financials. Then, we also help in the beginning with new clients, doing cleanup. So, before the cloud-accounting team takes over, controller will come in and straighten up the books; get them so that they can go from that point. David Leary: Is it kind of like a virtual controller? You have multiple clients each ...? Ann O'Dea: Yes. Blake Oliver: When does a client generally graduate or need controller services? At what point ...? Are there any indicators when you know, like, this is the time? [00:22:00] Ann O'Dea: Well when they need the accrual basis. Definitely, if they're in the SaaS area with deferred revenue, they want that, so-  Blake Oliver: They're gonna go raise money? Ann O'Dea: Yes. Blake Oliver: Okay, gotcha. You mentioned, SaaS. That's one of your big verticals that you're serving there. Ann O'Dea: Right. Blake Oliver: Any others in particular where you focus a lot in?  Ann O'Dea: Well, myself, personally, also professional services, just because my background was in professional services. Blake Oliver: Okay gotcha. What were you doing before Acuity? Ann O'Dea: Right before Acuity, I actually was at a private school; a non-profit. [00:22:30] Before that, it was an accounting firm. I did a lot of the lawyers, doctors, creatives, that sort of thing. Blake Oliver: How long have you been at Acuity? Ann O'Dea: I think this is actually my one-year anniversary, like this week. Blake Oliver: Congratulations [applause] Graham - Graham Wood, CFO - how long have you been at Acuity? Graham Wood: 10 years. Blake Oliver: 10 years. Wow. We only thought Acuity was around for eight, so you were like [crosstalk] Graham Wood: I was [00:23:00] ahead of my time. Blake Oliver: That's great. What does the CFO group do at Acuity? Graham Wood: We're more strategic. We look at funding exercises. We build financial models. We give advice. All of us have been around for maybe not quite as long as me, but we have a lot of experience. We've got a lot of stripes on our back, so we impart whatever wisdom we can, possibly, on the existing [00:23:30] CEOs, COOs, sometimes board members. David Leary: Would you say ... My understanding is Acuity really started out as trying to just be a virtual CFO, or CFO-only firm. Graham Wood: Correct. David Leary: Has your job gotten easier now that you guys have worked backwards and do bookkeeping, where you're controlling the whole data stack to the data that now gets to you to make decisions? Graham Wood: No. It's gotten more difficult, actually- David Leary: Interesting. All right. Graham Wood: -on our side. It's one of those things that, yes, we do get more information now, and we believe it's better information. But with that comes a lot [00:24:00] of responsibility of transcribing it, basically, to the existing staff, management, managers, you name it. Blake Oliver: We talked about when a client needs controller services, generally, they need to go accrual. Graham Wood: Right. Blake Oliver: They may need GAAP financials, raising money. When do I need CFO services from Acuity? Graham Wood: Well, the biggest that I see is when they're ready to go out for funding. It's one of those that now, it's time to build a financial model. It's time to really go through the financials, [00:24:30] make sure they make sense, and once you do that financial build, defend it. Blake Oliver: How did you learn to build financial models? Graham Wood: Trial and error. Blake Oliver: Really ... Did you learn from somebody? Did you teach yourself? Did you buy a book? Graham Wood: No. It's mostly self-taught. Blake Oliver: Self-taught?  Graham Wood: Yep. Been around long enough that I can claim that now. Blake Oliver: So, just building up a three-way financial-statement model from Excel from scratch? [00:25:00] Graham Wood: Well, when I joined Acuity, we were fortunate enough to have a model that we used. It wasn't the easiest, shall we say. Had to have a lot of technical help from the founders trying to decipher how in the heck is this thing working, and why is it not working? So, we went through that. After two or three years of struggling with that, I decided I'm just gonna do it myself. So, I gave up the company model- Blake Oliver: And [00:25:30] you just built your own. Graham Wood: I built my own.  Blake Oliver: What do you enjoy most about being a CFO? Graham Wood: The interaction with the people, and that comes through the CEOs. They're asking for expertise, and I've been around long enough now that there's a lot of experience. That's what people pay for now. When you think about a CFO, you think experience. You don't think on-the-job training. It's just not gonna happen. Blake Oliver: You mentioned companies going out to raise money. You've been there. You've done that. How many times [00:26:00] have you helped companies raise money even now? Graham Wood: Well, not really, but the last time I tried to add it up, it's over $200 million. Blake Oliver: $200 million in fundraising- Graham Wood: In fundraising. Blake Oliver: Okay, got it, wow. So, I'm a CPA. I am in a traditional firm. We do a little bit of bookkeeping and maybe some GAAP accounting, a little bit, but really we're tax and audit. That's most traditional firms - tax and audit. We want to get into the [00:26:30] advisory side of things. Do you consider what you do to be advisory? Am I using the right term? Or do you like dislike that word? Do you like that word? Graham Wood: No, advisory is probably the correct word to use. I actually like that more for me ... For my side ... It's just, they ask me, "What's your experience been? What have you been through? What do you feel like is gonna happen?" They'll ask me, "How's an investor going to react?" So, I tell them what [00:27:00] I've been through before. Blake Oliver: What's your advice to firms that want to get to that advisory point? Because David, and I go to all these conferences, all these sessions, all these webinars, where we hear people say, "You gotta move your firm to advisory services!" We see you guys doing it. How do you actually do this? David Leary: Before you answer that, though, I think there's a lot of [crosstalk] There's a lot of mindset that, "Of course, he's a CFO. Of course, they can get into advising. It's easy. They're a CFO ..." But just a show of hands - a lot of you are bookkeepers, [00:27:30] I think, that are here on the bookkeeping team. How many of you consider what you do sometimes advising to the clients, like you're offering advice? What, 20, 30 percent, 40 percent-  Blake Oliver: Yeah, at least.  David Leary: -all consider themselves being advisors. Blake Oliver: Well, there's definitely advisory work you can do at any level, right?  Graham Wood: Right, and they are right. They are advising the client because they're asking, "What should I do?" That's great, when you've got the bookkeepers, controllers being asked, also, "What should I do?" But when you're talking to a CFO, then, there's [00:28:00] a lot at stake; the future of the company, sometimes. "Can I make payroll in two weeks? When am I going to be out of cash? How much money should we raise? What do you think the valuation is going to be? What's my option pool look like?" You name it. Blake Oliver: Going back to my question, David, if I may- David Leary: I'm sorry, go ahead.  Blake Oliver: I want to become ... I want to be like you someday, Graham.  Graham Wood: Old?  Blake Oliver: You know, this podcast host game is just not what it was cracked up to be. I really want to get into [00:28:30] the CFO stuff ... Do I just have to do trial and error? Do I follow you around and learn your secrets? Graham Wood: No-  Blake Oliver: Can I shadow you?  Graham Wood: Good luck ... No, you just have to do it. You just have to get out and experience it. You can't do it from sitting behind the desk. You can't do it ... I mean, you've literally got to be in the trenches. Blake Oliver: To be fair, maybe we should have the tax team come up here ... They have to do a ton of advisory on the tax side, right? Graham Wood: That's right. They do. [00:29:00] Blake Oliver: The planning for owners of businesses, and all those tax strategies. Enormous. But maybe people don't always think of what they do as being advisory, even though it is. Graham Wood: I get a lot of advice from my tax guy. "Don't do this. Don't do that. What did you do ...?" Blake Oliver: Does anyone have any news stories? We like to talk about the news on this podcast a lot. Is there anything that, in particular, [00:29:30] is of interest to you that you've been following - accounting/finance-related - in the world of accounting? I'm not ... I don't mean to pick on you, Graham, and Ann; just, you're here. But we can also take questions from the audience, too. We're happy to do so. I believe Matt has a microphone. We've got a microphone if anyone wants to talk. We're here to talk! Let's talk about some of the burning issues and fun stories that we've had going on. Acuity: I've got a question.  David Leary: Okay. Acuity: What do you guys think [00:30:00] about community-adjusted EBITDA?  Blake Oliver: Yes, the question is what do we think about community-adjusted EBITDA? Which, I believe, is a WeWork non-GAAP financial measure. Acuity: Correct.  Blake Oliver: Woo! Yeah, I've been doing my reading. This is a question I'd love to hear opinions on is the rise in non-GAAP financial metrics in reporting by public companies ... There's been some [00:30:30] chatter, some articles written about whether that's a good or a bad thing. Graham Wood: Well, it's more data, that's all. Just use it for what it is. I mean, is it something the SEC's going to rely on? No. But if it gives somebody a better insight into the company's performance and the metrics therein, I don't have a problem with it. Blake Oliver: Well, and it is good now that we require that companies reconcile their non-GAAP measures to [00:31:00] GAAP, right? We didn't used to do that. That was only a few years ago that that happened. Ann O'Dea: Right. Graham Wood: Right.  Blake Oliver: That's good, but it still raises the question ... David, and I actually just had a great interview, the podcast episode that dropped today ... We did an interview with Ethan Rouen of the Harvard Business School, who wrote an article about how GAAP doesn't fairly address human capital, investments in human capital, because we are expensing all of our investments in people.  Actually, Kenji [00:31:30] and Matt know what I'm talking about, right? You're paying today to ... This is a training, right? The reason you're bringing all these people here together is an investment in your people. Is that an expense that should just happen once and you're done? No, this is an investment in the future. But the way that we account for it doesn't seem to suggest it's an investment. Graham Wood: What do you do? Capitalize it and amortize it? Over what period of time? Blake Oliver: I don't know [crosstalk] That's your job- David Leary: -this is why we brought in the Harvard professor last week. Blake Oliver: -Ann's supposed to figure that out.  Graham Wood: What was his [00:32:00] answer? Blake Oliver: Yeah, he didn't have ... He wouldn't ... We couldn't nail him down on anything specifically. Graham Wood: That's Harvard. Blake Oliver: But there's this question of the relevance of accounting. We do all this hard work to put together these financial statements. It's a lot of work - from the bookkeeping, to the accounting, to the controller, to the CFO. Then, who looks at it- Ann O'Dea: Right. Blake Oliver: -a lot of the time, right?  Ann O'Dea: Right. Your assets are at book cost. They're not at fair market value. Then, [00:32:30] the client saying, "Well, that's not even what anything's worth." Blake Oliver: Right. Then, we're expensing all of our research and development in the period, but that's all to generate intangible assets in the future, a lot of times, right? Graham Wood: We don't have a perfect system. There is no doubt about that, but at least you know what's there and can theoretically trust it.  Blake Oliver: What about non-financial metrics? When you create reports for your clients, do you put in that stuff? Do you go beyond just [00:33:00] what's in general ledger? Graham Wood: Minutes spent on the website by each customer, or things like that?  Ann O'Dea: Yeah. You try to figure out ... When you're talking to your client, you're trying to figure out what they are interested in. If minutes on the website is gonna drive their sales, then you wanna capture that for them, or if ... Whatever it is ... What's that driver of sales so that they can see - is it growing; is it shrinking? So, any of that can help them. I mean, it's what you just said. It's more data. The more data they can look at ... Accountants [00:33:30] always get back to the numbers of the data, basically, but it can help them. Blake Oliver: Right. Graham Wood: True. Human resource capital is something else we tend to watch very carefully because, at least in the software side of the industry, that's 70-75 percent of your cost structure, so you'll wanna know it. Ann O'Dea: Right, and turnover can be very important. Graham Wood: And turnover.  Blake Oliver: Yeah, turnover, right? If I was investing [00:34:00] in a company that had really high turnover, that would be a very strong indicator that there might be a problem. Ann O'Dea: Right. Graham Wood: Unless that's a norm of the industry. Blake Oliver: Right, yeah, compared to industry norms. Graham Wood: Exactly [crosstalk]  Acuity: -go back a second to my thought?  Blake Oliver: Yeah. Acuity: Community-adjusted EBITDA- Blake Oliver: Oh, yeah. I got away from that real quick [crosstalk] Acuity: When reading about this, and I think most of us accountants understand EBITDA, but the definition that WeWork gave of community-adjusted EBITDA not only subtracted out earnings, [00:34:30] interest, depreciation, and amortization, but also expenses like marketing, E&A, and development, and design costs ... That is crazy, isn't it? Aren't we just completely making things up at this point? Maybe it's not a reason that they didn't go public, and this whole ... I don't know. That, to me, starts getting to where that is ...  Blake Oliver: David had a really good point on a recent [00:35:00] episode about like- David Leary: I did?  Blake Oliver: Well, you brought up a really good point. I don't know if it was your point. But you said something like this proves that accounting works, right? The fact that ... Was it you ...? David Leary: Oh, no. Sean Stein Smith wrote a really good article we talked about. It's the free market works ... The fact that they reported this. People started looking at the numbers, and because of that, people discovered, hey, maybe it's not there. Then, the IPO didn't happen. Ultimately, that's what we want in our society. There's no perfect GAAP numbers, but it [00:35:30] doesn't matter. They were just good enough for people to dig under the covers-  Graham Wood: But they didn't start looking at it until he was ready to go public, right? It was the investors that started. Blake Oliver: Right. So, that's a success story, right? The failure, the massive failure of WeWork is an accounting success story because we saved all those investors from a terrible investment ... That's how we should be ... That's what we should be saying to our friends and family, like, "Guys, WeWork losing $40 billion in value is awesome!" You know? Graham Wood: In a matter [00:36:00] of days. Blake Oliver: In a matter of days, right, which just goes to show you that the whole thing was insane to begin with. David Leary: Except for I saw an article now, arguing ... We've got another question coming up here ... Arguing that the founder, that he's gonna be like the poster child of every MBA now, because he figured out how to extract $1.7 billion dollars of value by destroying value. They're saying he might've planned this the whole time of just knowing the capitalization, and the investors were just begging him for something like [00:36:30] this- Blake Oliver: And all the self-dealing, right? They had to basically pay him off to leave. It's like a billion dollars to leave his company- David Leary: He may have planned this whole entire thing is what the article ... It's a very egotistical move ... If that's the fact, he is the king of all kings. Blake Oliver: Yeah, and I'm glad you said that, and not me, because he now has $2 billion dollars ... Another question? All right, Kai Moon, customer success; welcome to the show. Kai Moon: Thank you. I'm happy to be here. I had looked at a few articles before you guys [00:37:00] came. Blake Oliver: Yes!  Kai Moon: One of them was back from the 22nd of this month. If you've heard of Splunk, their CEO ... I read this article about how he kind of says, "In the coming age, there will be only two types of companies. There will be those that are willing to seize the opportunity to make things happen with data, and those who will no longer exist."  So, as we're talking about this issue of automation and maybe [00:37:30] folks seeing risk to their jobs, how could we maybe leverage this? I think we have a whole history of ... Data's always been around, but we're better at capturing it. So, now I think the next step is how do we get better at interpreting that and maybe making that a new part of accounting and financial services? It's already there, but I think it's gonna have to have a really big learning curve. David Leary: I don't necessarily know [00:38:00] if that's true. I think the data is ... There's more, and more, and more data and, to some extent, it's just gonna be an equal playing field. Everybody's gonna have the same access to all the data. Nobody'd gonna have a competitive edge. Right now, we're probably in a time where there's a competitive edge, but eventually, it won't matter. What it's gonna come down to is your people, your culture ... It's the same important values of a company that- the data is not gonna bridge those gaps. Blake Oliver: Well, but somebody like Graham is always gonna need to be there to interpret that data, make sense of it, and tell people, "Here's what to do based on past [00:38:30] situations," right? Graham Wood: Yeah, you're right, but I ... The only thing I can add to that is the term artificial intelligence is now becoming ubiquitous. I mean, nobody really can define it as to what it is. Nobody is really sure what the output is yet, but that will happen. You'll have machine learning, and deep learning, to where then interpreting for you, but how do you interpret [00:39:00] what it's interpreting? Blake Oliver: Well, here's a great example, on this show, is transcriptions. It used to be you had to pay a transcriptionist to manually transcribe your episode, or any audio. It was very time-consuming, and expensive. Now, there are services out there that will transcribe 90-percent accuracy, and then, our transcriptionist, her job is to verify that it's correct.  Then, she adds value by putting together the show notes that [00:39:30] you may read. She's not just transcribing anymore; she's suggesting ... She's saying, "Hey, let's organize things this way. You guys should do this next time." I think that's kind of a nice parallel to bookkeeping or accounting in that it's not just about entering the data anymore, it's about how can we ...  Graham Wood: Right. Well, you know, data is a cold fact. That's all it is. A CFO, a bookkeeper, or a controller is [00:40:00] actually putting a human touch on it. I don't think you're ever gonna see that go away. Blake Oliver: Love that.  David Leary: So, we're not gonna see a chatbot CFO- Graham Wood: And that was free. Blake Oliver: Yeah. You're gonna send me your hourly bill, right, after this?  Graham Wood: It's already prepared. Blake Oliver: It's already prepared. The AI bot has prepared it, based on your calendar [crosstalk]  Graham Wood: Exactly. Blake Oliver: That's great. Well, Kai, thank you so much for that question. I think we may be ... That's really our time. Graham Wood, thank [00:40:30] you so much for joining us. Graham Wood: Enjoyed it. Blake Oliver: Thank you, AcuityCon! [applause] 
#AccountexUSA: Meet Cash Flow Mike
Cloud Accounting Podcast
SponsorsRight Networks: https://cloudaccountingpodcast.promo/rncloudShow Notes 00:17 – Meet Cash Flow Mike!  00:36 – Cash flow is king - It's how businesses keep their doors open 01:26 – Mike teaches banks effective methods for communicating with small-biz owners 01:50 – Mike teaches from the standpoint of necessary advising, instead of trusted advising 03:41 – Want to add advisory to your practice? Learn how to tap into your experiences and tell that story 04:49 – Mike says it's imperative to start with the end in mind - and map out that advisor/client relationship  06:55 – Since everything you do impacts cash flow, you need to know the reason why  you're making every single transaction 09:01 – Run your firm like you're going to sell it - keep it show-ready every day 09:34 – Stupid cash flow tricks  12:01 – You don't need fancy tools and software, but you do need to track everything - what's coming in, what's going out, and the timing of it all 14:15 – When it comes to cash flow, looking ahead gives you time and options 14:35 – Practice what you preach. When it comes to advisory, if you believe in what you're selling, why aren't you doing it?  15:20 – What comes in should match what's going out 18:39 – A discussion on how having more month than money and oversized growth affects startups like WeWork | NYT  Connect with Mike Milan Linkedin: linkedin.com/in/mikemilan/ Website: https://www.elevatefinancialtraining.com/ Get in TouchThanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus. Meet Blake and David in person!  November 5-8: QuickBooks Connect in San Jose November 5: Practice Ignition PreCon Party in San Jose November 6: VIPartners Party with Gusto, Routable & Jirav in San Jose December 9-11: Digital CPA Conference in Seattle Limited edition shirts, stickers, and other necessities.TeePublic Store: http://cloudacctpod.link/merch Subscribe Apple Podcasts: http://cloudacctpod.link/ApplePodcasts Spotify: http://cloudacctpod.link/Spotify Google Play: http://cloudacctpod.link/GooglePlay Stitcher: http://cloudacctpod.link/Stitcher Overcast: http://cloudacctpod.link/Overcast TranscriptMike Milan: We're gonna spend the next 10-25 years together. You don't just change accountants every week. If we're gonna spend that much time together, where are we going? Blake Oliver: Welcome to the Cloud Accounting podcast. I'm Blake Oliver. David Leary: I'm David Leary. Mike Milan: And I'm Cash Flow Mike. Blake Oliver: Now, is that your legal name, Mike? Mike Milan: Sure. Why not? No, my name is Mike Milan. Blake Oliver: Awesome.  David Leary: Thanks for coming, Mike. We're here at Accountex USA. We are at day two, doing a lot of interviews here. Blake Oliver: Yeah.  David Leary: I think, with your name, we should talk to you [00:00:30] about cash flow and small businesses. Blake Oliver: It seems appropriate. David Leary: It seems appropriate, but, before we jump in, why are you qualified to talk about cash flow? Mike Milan: Well, I can tell you, I've dedicated my life to it. I believe that that's the way that businesses stay in business. I've built 12 companies, so if anybody's had cash flow problems, or seen cash flow success, I think it's me. Blake Oliver: I've heard these stats ... Every year, there's a stat that Intuit or Zero talks about, how like 80 percent of businesses or something crash due to cash flow problems. That's the main [00:01:00] reason they fail. Is that right? Mike Milan: It is. It's 82 percent blame cash flow, in one way or another, as the reason that they failed. What's interesting is that 50,000 businesses filed bankruptcy; 35 percent of those have net profit. Blake Oliver: Really? Mike Milan: So, think about that. That's a cash flow problem. Blake Oliver: Right? Wow. So, they're profitable; they just can't keep the cash moving, and they have to shut down. Mike Milan: Yeah, exactly. Blake Oliver: Who are you talking to mostly? Are you talking to accountants? Are you talking to business people? Business owners? Who ...? David Leary: Banks? Who do you talk to? College students? You teach, as well?   Mike Milan: Yeah, that's right. I'm [00:01:30] actually a ... Ultimately, it's the small business owner; it's the guy that's out there actually trying to live his dream, trying to build what I call a lifestyle-friendly business. In order to do that, I'm talking to the people that actually deal with small business owners. I teach bankers; a course that we call Relationship Banking, which is more or less teaching bankers how to communicate with that small business owner. I work with accountants. Same thing. It's the same practice. You've gotta realize that those three people - the small business owner, the accountant, and the banker are all on a pedestal together. It's not the trusted [00:02:00] advisor in my world; it's the necessary advisor. That's what I want him to become, that necessary part of their life, right? It's a necessary advisor. You mentioned college courses. I'm on the faculty at the Graduate School of Banking at LSU. I've taught at the Graduate School of Banking at Colorado, and the Pacific Coast Banking School up in Washington. A little bit there, but it's all about banking. David Leary: One thing, I think, in my hallway conversations with you, Mike, is you talked about how all aspects of the business are related to cash flow. It's not like there's a tool, and you report out the future cash [00:02:30] flow. Every part of the business is going to affect cash flow. Mike Milan: Every decision. It depends on how you look at it. Every decision that you make has an impact on cash. And, again, most people get focused on the profit, but that's just the result. What I always say is if you wanna know what the future holds, you've gotta bring it to the present. That's why we do forecasting. That's why we do budgeting is to be able to bring that to the present and see how your decisions today will impact tomorrow's cash flow. It doesn't matter ... If I'm sitting here right now, there's an opportunity cost [00:03:00] in cash flow. I actually had to pay to come here to be with you guys to be interviewed on this. David Leary: Thank you for [cross talk] Blake Oliver: To be clear, you're not paying us. Mike Milan: I'm not paying you. That's right. Blake Oliver: I'm a CPA. I'm an accountant. I'm a bookkeeper. I want to get into helping my clients in a more proactive way; not just doing the compliance. I like cash flow as a great starting point for advisory because that's the [00:03:30] thing that needs to be monitored, probably, on a daily/weekly basis, right? If I've never done it before, how do I go about building that as part of my practice, what I'm doing for customers?  Mike Milan: That's a great question, and I'll tell you, this whole industry - accounting - has been transforming, since I came in. I used to be part of Finagraph, which is a cash flow company; app-based company. Basically, what I've learned is that there is a transition. People are trying to get into it. How do I start? I'm gonna say there's a new kind of advisor, a new kind of accountant [00:04:00] that's out there, and it starts with you. All of you, every accountant, every bookkeeper has a story. That story is, "I'm working with other clients. I have my own life experiences." You start there. You've seen things happen in your other clients' businesses that you can translate to somebody else. You don't know the concepts, if you don't know the math, don't worry about it. You've got life experiences, and that's the new advisor, in my mind, is the one that can translate and tell their own story. David Leary: If you're trying to advise a client, even if you haven't looked at their numbers yet, you can be like, "Hey, here's something that I have a client [00:04:30] do ... for example, people with payroll taxes; keeping those in a separate bank account, so when it's time to pay those ... It's just a tool that you can implement, and this is gonna help you not get a surprise at the end of a tax season and have to shell out a big old check, which you don't have the cash flow for." You don't even have to look at somebody's numbers, and you can still provide them advice regarding their cash flow. Mike Milan: Absolutely. I built - shameless plug for me - Clear Path to Cash, which is just a blueprint. It's eight steps, and it starts with - start with the end in mind. If [00:05:00] I'm the advisor, if I was an advisor right now; a bookkeeper or an accountant, I'd say, "Hey, listen, David, we're gonna spend the next 10-25 years together. That's the way I look at our relationship. You don't just change accountants every week. Where we going? If we're gonna spend that much time together, where are we going?"  Try to figure out what their transferable value number is. Now, you might not have heard that term. That's one that I use in banking. Transferable value is when you get done with this, how much money does it take you do whatever it is you want to do next? There's some calculations I have to get there, but that's where I would start is-  David Leary: That's [00:05:30] the 'I wanna live in a beach, and fish' or something [cross talk]  Mike Milan: -that's right. I wanna sit on the deck. I wanna travel the world. Whatever it is. Blake Oliver: Do you have a method? How do you actually deliver this service, or how do I deliver the service as an accountant? Mike Milan: Again, I've got just a strategy, a blueprint, but where I'd start with is let's start with the transferable value number. Then, every day [cross talk]  Blake Oliver: -I wanna make sure I understand that. That's the number I want to get out of my business at the end of it, or ... Mike Milan: At the end of it, and without relying on the sale [00:06:00] of your business. I want that to be gravy. What I want you do is take what we're doing today and make your profit - your transferable value number - a planned event, which means every month, we're working towards that goal, even if that goal is 20 years from now; because we're not gonna be surprised. We're not gonna wait til we're 65, and we sell the company ... We look at the check, and the check isn't enough, and all of a sudden, you've gotta go get a job. My job as an advisor is to keep you in business and make sure that you have your dream fulfilled at [00:06:30] the end. So, you're fulfilling dreams. David Leary: If I'm hearing you correctly, instead of just actual forecasting enough to, "Hey, I need to click on this AR; I've got these AP transactions I have to do; I need to make payroll," and really the day-to-day business functions, you're stepping back and saying, "Hey, look at ... You need to include the money you're taking out of the business as part of the long-term cash flow, and you need to be including that ..." Then, work everything off of that, backwards. Mike Milan: Pretty much. It's a planned event at the end. I'm gonna start here with what I need, [00:07:00] and then, again, work through the balance sheet or the income statement back. What's interesting about that is that ... You've talked about all the transactions. That's where I say that everything you do impacts cash flow. There's thousands of these transactions that happen every day, week, month. What I'm saying is, before you get to the transactions, know why you're making the transaction.   This episode of The Cloud Accounting Podcast is sponsored by Right Networks. In a perfect world, everyone would have 100 percent of their clients on a cloud-based accounting system using cloud-based apps, but the world isn't perfect, and clients have a wide range of needs. For some, this means using desktop-based software. That's where Right Networks comes in. Right Networks is your 100-percent accounting-focused desktop in the cloud that also includes an ecosystem of over 250 connected apps. As you and your clients take the journey to the cloud, Right Networks will be at your side innovating the best ways to leverage the true cloud future by investing heavily in cloud apps, like Transaction Pro and Autofy. They've created an always-on environment that supports 24/7 data transfer. Right Networks also offers no scheduled downtime for maintenance or application updates and meets the industry's highest security standards.  To join the more than 50,000 firms that use Right Networks daily with their clients, head over to CloudAccountingPodcast.promo/rncloud. That is Cloud Accounting Podcast dot promo forward slash R-N-C-L-O-U-D. Be sure to visit the Right Networks booth in San Jose at QuickBooks Connect 2019.  David Leary: It's [00:08:30] interesting, we did an interview - we haven't released it yet - at The Accounting Show LA, and it was about selling your firm. Ultimately, it's kinda the same thought process you're saying, which is, when you make the plan to sell your firm - on day one, when you start your business. It really aligns well with the vibe you're putting out here on this. Mike Milan: You know what's funny is I just wrote a blog and posted it yesterday on run your business like you're gonna sell it, right? Because what's the first thing you do?  If you're gonna sell your house, or sell your car, [00:09:00] what's the first thing you do? David Leary: Vacuum it and paint it.  Mike Milan: Yeah, you clean it up and all of a sudden, you've got a nice place, right? You're going, "Whoever buys this house is gonna have a nice house or have a nice car..." Why not do that to your business? Have it show-ready all the time, because you're gonna get the benefit of the cash that's coming off of it. It's gonna be operating healthily, or very profitably, and efficiently. Get that, because people will pay you more in the end for something that works right. The value will go up. If they come in, and they see that you're running around, and you have all these problems, nobody's gonna buy your problems for [00:09:30] premium dollars. Run your business like you're gonna sell it - that's what I say. David Leary: What are some of the cashflow mistakes you've seen, like nightmare stories? Besides like the guy who filed bankruptcy ... Have you seen some crazy hacks or workarounds people have done just to make cash flow work for them? Blake Oliver: No, no, I wanna hear the disasters. Mike Milan: Disaster? All right [cross talk]  David Leary: I'm sure people do very creative things. Blake Oliver: Yeah. Mike Milan: Well [cross talk]  David Leary: Floating checks ... Mike Milan: Yeah, the floating checks ... I've seen a guy buy a business with credit cards that he just [00:10:00] took out the credit card to get the cash advance, and give a cash advance over ... He bought a $350,000 business on credit cards he applied for all at once. David Leary: That's a lotta points. Mike Milan: That's a lotta points ... Isn't it? You could almost buy a house on points. Blake Oliver: Yeah, but that's very expensive. Mike Milan: Very expensive, right? You're talking 20-some-percent interest. There's other ways to finance your business outside of taking a big collection of credit cards to do it. That's the biggest thing. He lasted almost nine months in business, before [00:10:30] he couldn't keep up with the payments. That's the biggest disaster, because he actually bought a restaurant, put the money into the restaurant, had no operating capital because he financed the whole thing on cash advances, and then couldn't keep it open. Blake Oliver: Okay, so maybe that's an extreme example. What is- Mike Milan: You said disasters!  Blake Oliver: What are some ...? What did you say, David, like common ... Best practices, or ...? David Leary: Yeah, best practices or how to not create these situation,  because I think people get caught off guard. They have to collect ... They don't [00:11:00] have cash ... Not making payroll is probably ... I've heard about that; like you're not a real business owner until you can't make payroll once. That's when you really ... Now, you're truly a business owner. You have to make payroll. You've got to figure out how to pay your employees, right? That's when things get real, right?  Mike Milan: Exactly. The way I teach that, it's all about timing. You can make your profit and loss statement. You see how the revenue's coming in, and how it should look at the end. But, let's face it, that's not the timing of dollars, and I blame it on ... There's two types of accounting - cash-based, and what's the other one? Blake Oliver: Accrual.  [00:11:30] Mike Milan: Yeah, I call it cruel accounting - accrual. It's very cruel, because I think I have money, but I really don't. So, it's 'a cruel' accounting. That's what it is being able to look at the money as it comes in, in addition to how you expect it to be spent - inflows and outflows. There's two parts to it. Most people who do the first part will miss the second part and not understand the timing of payments.  David Leary: Are there easy tools ...? What's a small business owner supposed to do? Everybody says this, like, "Oh, cash flow; watch your cash flow." What [00:12:00] do they have to do? Mike Milan: I think it's a simple ... I mean, of course, there's lots of apps that are out there that they can use, but you might be in a position where you're like, "Hey, I don't have an accounting system that works with an app." It's as simple as just keeping track of what's coming in, and what's going out, and the timing of when that's gonna happen. You'll start to see things.  I used to own three restaurants. You don't have AR in the restaurants, but you have a daily sales. So, I would keep just keep track on the Excel spreadsheet - what comes in on Monday; what comes in on Tuesday, Wednesday, [00:12:30] Thursday ... I would do that by week, and I would leave notes to myself out on the end. "This was Mother's Day. That's why your Sunday was so great." It was just notes on why things happened. When I started graphing those numbers, I saw a pattern that developed through the year. Every year, I knew that right around St. Patrick's Day was one of my best months. The weather was turning in St. Louis to the better. People were starting to get out. I had better months in March than I did in July because it was too hot. People didn't wanna be in the restaurant, or out there. They wanted to be at the lake. Just [00:13:00] keeping track of what you're doing is the first basic step to understanding what's happening in your own business. David Leary: That sounds like you're saying timing is very important. It'd be interesting to see that pattern .... If you were gonna give your employees a bonus, maybe don't do it at Christmas. Maybe you do it in March, when you know the revenue is going to be there, and the timing's right. Mike Milan: Perfect. You'll be able to see that seasonality. What I like about it is if you start managing your cash balances that way, you'll start to see it happen, where you're like, "Oh, my God, I'm going into a three-month low period. I don't sell [00:13:30] as many swimsuits in November, December, and January," if I'm a swimsuit-shop person, "so maybe I should keep back some cash in September/October to be able to make my fixed expenses through that." You'll be able to see that and react. I was reading a book today; it was actually by the Dryrun CEO, "Pandemic Cash Flow." David Leary: "Pandemic Cash Flow," yeah, yeah. Blaine, yeah.   Mike Milan: He makes a statement ... I'm not gonna ... Nobody could say that more perfectly, and I'm gonna steal it from him. Blaine, I'm sorry, but it's ... What he says is it's the difference [00:14:00] between walking out into the street and not seeing the bus, or you see the bus coming, and you got time to react. You got options. You just walk out and get hit by the bus, which is not paying attention to cash flow at all, versus seeing it's coming down the block, and I've got options. I can cross. I can stay put. What you're doing by looking at it and looking ahead is actually giving yourself time and options. That's what it takes to satisfy most cash flow problems. Blake Oliver: Ironically, cash flow is often a problem in an accounting firm ...  I'm guilty of this. I do my [00:14:30] books last, right? How can I make sure that I'm managing my cash flow better? Mike Milan: Well, you should already have, we'll say, a blueprint for how you're going to advise your clients. Make that part of ... You put yourself right into the program. If you believe in it, and you believe that what you're saying to your clients really helps them, and helps them make more money, and have more time, and build that lifestyle-friendly business. then why aren't you doing it? Blake Oliver: So, what do I do? How do I make payroll? Mike Milan: How do you make payroll? Blake Oliver: Yeah.  Mike Milan: Okay, that's good, because you're gonna encounter the exact same issues they are. If you're [00:15:00] gonna give them advice on the timing of their collections- they've got people that are paying late; they've got maybe too much inventory, which you won't have that problem, but you probably have more of a collections problem than anything ... But you're also making purchasing decisions that could either be held off on; you could scale back. Here's an expense-control rule, and that's what you really have to do is exercise discipline, and expense control. Here's the rule - a change in gross profit should match the change in operating expense. So, if I have less gross profit, which is money to spend, I should spend less money. Blake Oliver: Right. Mike Milan: It should [00:15:30] be equal dollars. That's one quick rule that you can say, "Okay, well, I'm done $100,000 in gross profit, I need to cut expenses by $100,000." That's the quickest, easiest way to get expenses back in line. Blake Oliver: Challenges, of course, we've got ... Most of our employees are fixed costs in accounting firms; although, you could change that with outsourcing, or- David Leary: I think with accounting firms now, them going to that fixed fee, or getting paid upfront is gonna help. They've shifted that. Instead of an accountant giving services and then collecting maybe 90 [00:16:00] days later, you're getting the cash before you even provide the service. Blake Oliver: Yeah, and I can't believe there are firms that ... Actually, most firms operate this way, so I shouldn't say I can't believe it, but tracking your time; billing at the end of the month; waiting 30 to 60 days to get paid ... When the alternative is bill on the first of the month for that month, because you're operating on either a retainer or a fixed fee. Mike Milan: Yeah- Blake Oliver: [inaudible] engagement. That's what I did, so all of my cash would come in on the third day of the month, and I had that cash to pay all of my employees and contractors [00:16:30] throughout the month. My customers were financing my business, not the other way around. Mike Milan: That's right. That's the way it should be.  David Leary: I think I've talked to some accountants that are doing- they're billing their clients on fixed fee. But what they've done, they've set their clients up on every two weeks because it helps the cash flow situation for the clients, as well.  Blake Oliver: Well, now you could do it every week if you wanted to. It's like with the automated billing systems. Mike Milan: Right, yeah. You can set it up for any recurring-  David Leary: Which helps stabilize the expenses for their small business client.  Mike Milan: You brought up an interesting labor problem, though, especially if you have fixed costs in your labor [00:17:00] pool. I used to have a hotel staffing company. What we used was a labor utilization rate. Any time somebody's individual utilization - which means you're doing more non-billable time versus billable time - dropped below 75 percent, I started thinking I was overstaffed. That's how we decided, as a whole, I wanted everyone working at least 75-percent billable versus unbillable. Blake Oliver: Yeah, and that's one of those ... I think that's one of those metrics that, if you're an accounting firm that inventories your time, you try to track that very carefully, or you should be, anyway.  David Leary: Once [00:17:30] I solve my cash flow problems, is this something that, once I get ... I have my processes in place, let's say. Is it kind of set it and forget it, or do I need to be revisiting this constantly? Mike Milan: I think it's an exercise in discipline. Even successful companies ... I mean, look at it. In 1985, Home Depot, which I think we all think is successful, was 21 days from death- David Leary: Because of cash flow. Mike Milan: Because of cash flow, and because what they were doing is they were trying to do the growth model that Walmart had done, [00:18:00] which is a lot of build, build, build, and cash flow just outran. You can be so successful that you can do something that I call 'grow broke.' It isn't just that I had a problem, and I was being unsuccessful, and I didn't have enough money coming in to match. Sometimes, you can grow so rapidly that you actually outrun your operations. David Leary: Like all the startups- Mike Milan: Yeah. David Leary: -that fail with VC money. Blake Oliver: Now you can go public and be losing billions of dollars a year, apparently. So, the rules don't apply. Mike Milan: It doesn't apply at all.  David Leary: We talked about this on the podcast. WeWork, right? I guess WeWork's expenses is [00:18:30] greater than their income-  Blake Oliver: Their operating expenses are double their revenue, and they're gonna try and go public. Although, there was just this story- Rachel Fisch sent over this story about how they're gonna have to cut their valuation in half, maybe. That's gonna really screw up their IPO.  David Leary: From a cash perspective, how does that cash flow, long term, work? Like, how is this possible, if their operating expenses are 2X their income? How do you make that cash flow work? What would you do for WeWork to solve that problem? Mike Milan: With WeWork, basically what it's doing is that ... It's [00:19:00] okay to run in what's called a negative working capital cycle, which means you actually have your current liabilities are higher than your current assets. That's basically what they're doing, but they're also in a growth mode. There's gonna be a point in time when it flips. That's how all these tech startups in this room do is that they're gonna go expenses out, top end, and when the subscription-based model starts to flip ... Their R&D costs are coming down. They're back into maintenance or mainly just adding a few features. Yet the actual subscription model flips, and it [00:19:30] only works in high-growth, rapid-growth type organizations [cross talk] Blake Oliver: That's when your WeWork rent doubles. Mike Milan: That's right ... But those places are full; I mean, absolutely full, and they just keep adding them. Blake Oliver: There's demand. David Leary: So, if people wanna get a hold of you, Mike, and they wanna learn more about cash flow, locate you?  Mike Milan: I think I'm on the internet. My company's name is Elevate Financial Training, so it kinda says what I do. We have a product called Clear [00:20:00] Path to Cash. Any of those words, if you Google those ... elevatefinancialtraining.com, or clearpathtocash.com, or cashflowmike.com. Blake Oliver: All right. Mike Milan: Any way, you can get ahold of me. David Leary: Just cash [cross talk]  Mike Milan: Just cash me ...  Blake Oliver: As always, I am @BlakeTOliver on Twitter. And you, David?  David Leary: I'm @DavidLeary. Blake Oliver: Thanks for talking to us about cash, Mike. David Leary: Thanks, Mike.  Mike Milan: Hey, thanks for having me. I really appreciate this. This was a good time. Thanks.
#AccountexUSA: Getting to know the Latino market
Cloud Accounting Podcast
SponsorsRight Networks: https://cloudaccountingpodcast.promo/rncloudShow Notes00:40 – Welcome Jose and Tony!  01:13 – Tony explains the Latino Tax Professionals Association’s mission 02:37 – The fast-growing Latinx small-business market is largely underserved in the U.S. 04:59 – Uncle Sam wants you  -  even if you're an illegal immigrant - to pay your taxes 05:32 – There's a delicate balancing act of compliance with the IRS, or the government 06:31 – Jose tells undocumented clients that filing a return is an imperative step in becoming a citizen or getting authorization to work in the U.S. 07:15 – Tony explains how the mixed-status family can mix up your brain when trying to file that type of tax return 09:12 – Jose talks about the absolute necessity for education to prevent Latino small-owners from making huge mistakes with their finances and taxes 11:05 – Talking diversity, and the perceived, or real lack thereof in the accounting profession 12:48 –  Financial illiteracy may be what gets in the way of Latino entrepreneurs being able to grow their businesses | Stanford Graduate School of Business 14:32 – Jose says while most Latino business owners speak English and use English-language products, they prefer to consume educational content in Spanish 15:21 – Translating your educational content into other languages will pay off  in the long run 18:25 – Scaling New Heights started offering Spanish-speaking tracks in 2017  | Woodard.com 19:12 – To reach the Latinx market, try a less salesy, more genuine approach 20:12 – Tony explains how Contabi Alliance takes the mission of serving the underserved to the Latin American countries, providing resources and education for accountants and bookkeepers who don’t have access to the tools and technology available in the States 22:00 – Each country has its own particular accounting rules and regulations to navigate24:35 – There's a huge shortage of third-party apps that connect Latinx accounting software to the global players, such as Xero and Intuit25:25 – What kinds of opportunity exist for Latin American countries that want to expand into the U.S.? 26:54 – Jose may have the world’s longest social media profile! 28:39 – Latino Tax Fest – parties, pools, and education! Connect with our guests Jose Zavala LinkedIn: https://www.linkedin.com/in/jzavala03/ Twitter: https://twitter.com/ztxadvisors Email: jzavala@ZTXadvisors.com More About the Xero Virtual Hour: https://www.xero.com/us/partner-programs/partners/xerohour/ Tony Martinez LinkedIn: https://www.linkedin.com/in/tony-martinez-a095613a/ Website: https://latinotaxpro.com/ Email: antonio.martinez@latinotaxpro.org Latino Tax Fest: https://latinotaxfest.com/ Get in TouchThanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus. Meet Blake and David in person!  November 5-8: QuickBooks Connect in San Jose November 5: Practice Ignition PreCon Party in San Jose November 6: VIPartners Party with Gusto, Routable & Jirav in San Jose December 9-11: Digital CPA Conference in Seattle Limited edition shirts, stickers, and other necessities.TeePublic Store: http://cloudacctpod.link/merch Subscribe Apple Podcasts: http://cloudacctpod.link/ApplePodcasts Spotify: http://cloudacctpod.link/Spotify Google Play: http://cloudacctpod.link/GooglePlay Stitcher: http://cloudacctpod.link/Stitcher Overcast: http://cloudacctpod.link/Overcast TranscriptJose Zavala: ... Just because they don't wanna pay payroll tax, then they start, "Oh, well, he's actually here on an ITIN, or he's undocumented, and I'm paying him cash," and it's like ...  Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver. David Leary: I'm David Leary. Jose Zavala: I'm Jose Zavala. Tony Martinez: Tony Martinez. Blake Oliver: Awesome. David Leary: Hey, guys, we are here ... Welcome. This is our first interview we're doing live at Accountex USA in Boston. Weather's been beautiful. Last night, we went to the Red Sox game. It was- baseball games are long. There was a rain delay. [00:00:30] Then, I learned that apparently they do not do Sweet Caroline at the bottom of the seventh. It's actually at the bottom of the eighth, and Blake and I just couldn't stick it out last night.  But welcome, guys. We're here ... Brought you guys on the podcast today because I want to learn more about the whole Latinx community. I know you guys do things with Latino Tax Pros. You have Contabi Alliance. There's just a lot happening, and hopefully, Blake and I can learn, and our listeners can learn why the Latin market is so important in North America. But then, I'd say like this whole hemisphere, right? Jose Zavala: Definitely. [00:01:00] It is a market that kind of expands based out of here. I know Tony has the numbers, and I don't wanna take it, because I know you guys are doing a lot ... Let me take a step back. I'll let Tony talk about it, and then I'll kind of fill in, because if not, I'm gonna take over the show, so go ahead-  Tony Martinez: No worries. Yeah, we work a lot with Jose because he has a lot of clients who are Latinos, or immigrant clients. When we started Latino Tax Professionals Association, our first goal was to bring people together who [00:01:30] may be Latino or speak Spanish and may need content and education in their language.  Over the years, we started getting phone calls from non-Latinos saying, "Hey, I'm not a Latino. I'm in Alabama. I'm in the Midwest, but I have an influx of these Latinos in my town, in my city. They're opening up businesses. They have families. How do I do their taxes? What forms do I use?"  We started changing our approach and basically saying, "Anybody that works with this [00:02:00] market, join us, because we have the content; we have the education around it; we have the resources to help you serve that market." I believe there's about 4 million Latino small business owners in the country. They keep growing every year. David Leary: I think I saw something ... It's like eight of 10 small businesses, right now, being started are started by Latinos, I think, in the States, which is ... That's an insane number. Tony Martinez: Yeah, exactly. What's happening is a lot of our members that we work with - the tax and accounting professionals - they're coming to us and they're asking, "Hey, my clients are opening up new businesses. [00:02:30] They wanna incorporate. They're hiring people. How do I do payroll? How do I do HR? How do I do business insurance? How do I do accounting and bookkeeping?" Because the market is very underserved. So, by us trying to fill that void, we get a lot of engagement. Do you see that also [cross talk] Jose Zavala: Oh, yeah, 100 percent. For me, I kind of started doing it, and I started off just doing taxes and everything; just moved into more kind of the cloud-based, and all that. One thing I do see a lot, and a lot of colleagues, in going to all these events, is people [00:03:00] trying to find - how do I serve them? How do I serve the Latinos? I get asked that a lot. Well, they may have an ITIN, because when it comes to ... With an ITIN, it's different. That's something [cross talk]  David Leary: What is that?  Jose Zavala: Identification number. An ITIN is essentially an identification number for whenever you are not a US citizen-  Blake Oliver: If you don't have a Social Security number, that's what you get. Jose Zavala: You get an ITIN. Yeah, but you're not allowed to work on an ITIN. People still do ... Do what you do, but ... It is those situations- because whenever you get to that situation, [00:03:30] with an ITIN, it's like, "Okay, well, how do I prepare the tax return? How do I approach this?" That's something I've seen a lot, and I think that, Tony- they do a really good job over there of educating.  I'll tell you this, I'm part of the VIP program. I had somebody come with a visa. They're like, "Hey, I need to prepare my tax return," with this specific visa that I'd never heard of before. Reached out to them, and within, I think, a day or two, Tony, himself, was like, "Hey, this is what you need." I'm like, "Oh ... Well, all right, then!" It was so much better.  David Leary: Just to back up a second, Jose, you have your own practice. Jose Zavala: Yes. David Leary: ZTX Advisors. [00:04:00] Jose Zavala: Yes. David Leary: Tony, you are running an organization that trains and supports people like Jose in the market. Is this correct, what Latino Tax Pros does? Tony Martinez: Yeah. In essence, Latino Tax Pro is an association with members, and the members are tax and accounting professionals who are serving Latino and immigrant taxpayers. We also have our own tax and accounting firm in Monterey County, California, under Lopez Tax Service. That's the one that our founder, Carlos Lopez, started 35 [00:04:30] years ago. That's where we have our footprint, in Monterey County. Learning from that, we're helping other tax and accounting professionals scale their business, serve the market, hire the right employees to serve the market. We have a program called Start Your Own Tax School, in order for a tax office to find qualified employees to be able to serve Latinos or immigrants. It's all driven through how the tax law applies to the immigrant tax payer. There's 44 million [00:05:00] immigrants in the country. A lot of them are here on visas. Some are residents. Some are not authorized to be here, but they are, and they're making money; even though illegally they're making the money, because they're not authorized to work, but like Jose said, if they're making money, the IRS's approach is "Cool, file a tax return." "Well, I don't have a Social Security number. How do I file a tax return?" No worries. Apply for an ITIN; then you file a tax return. The fact that they're breaking the law by working without authorization doesn't got to do with the IRS. The IRS just says if you make money legal, or illegally, you [00:05:30] file a tax return to pay your taxes on. David Leary: Maybe this is a question for you, Blake ... Where does CPA ethics fall into that? If you know somebody is working illegally, is it your job just to file the return and keep the IRS happy, or is it your job to be the police? I'm putting air quotes here, but ... Blake Oliver: I don't know. We probably should've asked that of the cannabis folks that we talked to a few weeks ago, because that was the issue in California, til recently. I think the compliance is ... I don't know. You guys talk about it ...  Jose Zavala: For me, the way I see [00:06:00] it is this, man ... You're staying compliant. They made income. Whether it's illegal or not, you need to file a tax return. That's the way I see it. We're keeping them at least ... Yeah, the Department of Labor, or whatever it is, whoever other organization may have a problem with you working. If you're working and making money, at least the IRS is going to be off your back. They can't say anything because you're paying your taxes. Yeah, you missed out a couple items here and there. but at least you're paying your taxes. You at least know, hey, that's taken care of. You're not gonna have two hammers coming down on you-  David Leary: Yeah, don't break two crimes-  Jose Zavala: Exactly, yeah.  David Leary: That's [00:06:30] a good policy. Jose Zavala: That's at least what I tell my clients. They're like, "Well, I don't need to file a tax return." Yeah, you do, because eventually you wanna make this legit. You wanna get your residency card, or you wanna be authorized to work here. Then, all of a sudden, you're gonna start filing a tax return, and you've got a $2 million gross revenue business? It doesn't work like that. Nobody is that good overnight. That's gonna open up a red flag. Blake Oliver: We talked about the international issues, the documentation issues unique to ... Well, not unique, but just more significant in the [00:07:00] Latino community when it comes to taxes. Are there any other specific challenges facing the Latino community when it comes to accounting tax that you support? Jose Zavala: Are we talking in the US, or are we talking globally? Blake Oliver: We can do both. Let's talk both. Jose Zavala: Okay, so U.S. [cross talk] Tony Martinez: -what we've been seeing is they call them a mixed-status family. There's about 16 million people in this country that are part of a mixed-status family. What a mixed-status family is - it's individuals [00:07:30] living under the same household with different immigration statuses. You may have people that are here on a visa, or the DACA recipients, or residents, or unauthorized individuals all within the same household, on the same tax return, for that matter. Typical situation - parents are undocumented. They're filing with an ITIN, but children are citizens and filing with a Social Security number. On the 1040 tax return, how do you fill that out? Who [00:08:00] gets certain credits? Who doesn't? Another example - the DACA recipients. They're here ... They're technically not lawfully present. They're only deferred from being taken action on- deportation action because of an Executive order. So, they're authorized to work. They're given Social Security numbers, so they're eligible for what's called the earned income tax credit, if they otherwise qualify for it. However, the Affordable Care Act does not apply to them because they're technically [00:08:30] not lawfully present. These unique situations come up by serving the market ... It's not just the Latino market. It's really the immigrant taxpayer of America, regardless of what country that they're coming from, because they may encounter some of these situations. That's on the family; on the individual side.  On the business side, we've been noticing a lot of small business owners that are really - especially in the Latino immigrant market - they're really good at starting a business. They'll open up a restaurant, construction firm, landscaping. They're making money. [00:09:00] They start paying people, and they realize, "Hey, I'm not doing things right? I need to start withholding payroll tax. I need to hire the right accounting." Do you see that often with serving the Latino market? Jose Zavala: Yes. I'm gonna say this ... They're great at starting businesses. They get out there, and they hustle. Man, they are the hardest working people ever. The only problem is, immediately, they start to look into some of these notary shops, and these unlicensed preparers, which a lot of them are very educated, but [00:09:30] some aren't. They get bad advice. Like, "Oh, you wanna bring on people? They're all contractors." No, no, no, no, no, it's not that easy [cross talk] Blake, you know ...  Blake Oliver: Not in California, yeah.  Jose Zavala: You know ... Just because you don't wanna pay payroll taxes ... Then they start, "Oh, well, he's actually here on an ITIN, or he's undocumented, and I'm paying him cash." It's like, "Whoa ..." There is another level right there that you gotta kinda like, "Hey ..." That's what I've seen. It's just about education, I feel like ... Where I think you guys do [00:10:00] a great job is educating the practitioners to educate the community. That's, I think, the best way to do it, because they're going to- they're coming to us because we're supposed be the professionals. If we can educate right, they're gonna say, "Well, I don't like that. I pay more money." It's like, yeah, you're paying more money in payroll taxes, but you want the IRS to come down, hit you with penalties and interest?  When we're talking about payroll taxes, that's a criminal offense if it goes too long. Then, it's just kinda like, "Oh ..."  David Leary: It almost sounds like this is, to some extent, a niche because ... I've [00:10:30] seen software products, like, "Hey, if we just create it in Spanish, we can go after the Hispanic community," and maybe that doesn't actually make the most sense. But even if this ... If I have a firm now, and I want to ... I'm like, "Hey, look at this growing market; there's an opportunity here." If I just market to them, I actually need a lot of extra tax expertise. There's gonna be situations that I'm only gonna see in that community, just because ... Like you said, there's mixed families; the way they're doing things; they've gotten bad advice. I have to have some level of expertise. I think that's where the Latino [00:11:00] Tax Pros comes in. You're that support structure for me as a firm owner. It's beyond just marketing, right?  Tony Martinez: Mm-hmm.  Blake Oliver: Here's a question ... I've noticed, at least in L.A. - I don't know what it's like everywhere else - the CPA firms and communities tend to be highly segregated in that  ... At least, where I live, I go to these CPA events and it's a bunch of white guys and all their clients are a bunch of white people. David Leary: I've seen Tony at the last four conferences in a row. Tony Martinez: The only one ...  Blake Oliver: Let's say I'm a practice owner, and [00:11:30] I've got my traditional practice. I wanna diversify. I wanna go after these entrepreneurs; the immigrants who are ... But I don't have anyone in my practice who speaks Spanish. I don't know anything about these issues, so it's a real challenge. Can I come to you as ... Would you help me market to Latinos, or learn how to solve their problems, or something like that? Tony Martinez: One of the best ways is to go to one of our events, because we bring people together who are serving the [00:12:00] market. When you go to an event, you're able to meet people like Jose; have those conversations on how to be able to reach out to those small business owners. I know there's also like the Hispanic Chamber of Commerce that has events, and many things around the area that you may want to encounter. One of the best ways that is through hiring maybe somebody that's bicultural, bilingual, who has access to that community. You may wanna be picky [00:12:30] on who you work with, at first, because it might not be a good fit for you. Like Jose said, unfortunately, a lot of people, they're good at starting a business, and you're trying to give them some guidance; they're like, "No, no, my brother-in-law is doing it this way, and he grew his business, so I'm not gonna follow you." It's like, "No, do it right!"  Because a lot of the data ... There's a report by the Stanford Graduate School of Business on the state of the Latino entrepreneurship, and it shows that Latinos, yeah, they start businesses, but they cap out. They can't scale them. A lot of it has to do with not [00:13:00] having proper bookkeeping, accounting; not having ... Financial literacy, in my opinion, is the gap that needs to be filled. That's why I always ... When I meet a lot of the partners, and exhibitors, and sponsors around the way, whether it's a lot of people here, a Paychex, ADP, Gusto, Intuit, Xero, it's like, "Help us fill that gap with education and awareness."  This episode of The Cloud Accounting Podcast is sponsored by Right Networks. In a perfect world, everyone would have 100 percent of their clients on a cloud-based accounting system using cloud-based apps, but the world isn't perfect, and clients have a wide range of needs. For some, this means using desktop-based software. That's where Right Networks comes in. Right Networks is your 100-percent accounting-focused desktop in the cloud that also includes an ecosystem of over 250 connected apps. As you and your clients take the journey to the cloud, Right Networks will be at your side innovating the best ways to leverage the true cloud future by investing heavily in cloud apps, like Transaction Pro and Autofy. They've created an always-on environment that supports 24/7 data transfer. Right Networks also offers no scheduled downtime for maintenance or application updates and meets the industry's highest security standards.  To join the more than 50,000 firms that use Right Networks daily with their clients, head over to CloudAccountingPodcast.promo/rncloud. That is Cloud Accounting Podcast dot promo forward slash R-N-C-L-O-U-D. Be sure to visit the Right Networks booth in San Jose at QuickBooks Connect 2019. Jose Zavala: That's [00:14:30] something that I've kind of made it my mission is there's not a lot of resources in Spanish. You can find education, and webinars, and things with Xero, with QuickBooks, with Gusto. They do things in English all day. A lot of these people, they speak English; practitioners, small business owners, they speak English, but they prefer to consume the content in Spanish. The product can be in English. That's not an issue. It's just the support and the content needs to [00:15:00] be in Spanish. That's where I'm trying to fill in that gap, and that's where I've been working with them; kind of like, "Hey, let me make these videos ..." For Practice Ignition, I made a how-to video in Spanish because I use it so much. I've already had a lot of people, "Oh, I love it. I love it," but then you go back to, "Oh, it's too expensive." Yeah, but then, kind of changing the mindset of how much time are you ...?  Blake Oliver: Yeah, but take some existing content, and have somebody translate that, and recreate it ... Jose Zavala: Yeah. That would [00:15:30] pay off dividends, because that's what I've noticed is they want that content in Spanish. David Leary: I'm gonna repeat this because I know we have a set of app developers that listen to the podcast. What you need to do is you need to create your training and your content in Spanish, but your product, itself, can be in English. Jose Zavala: Mm-hmm.  Tony Martinez: Yeah, exactly. Definitely. Keep the product as is. My advice is get somebody that's bicultural/bilingual and have them in your booth. Have them talk to people. Have them create [00:16:00] those relationships, because people then, you know, they feel more comfortable. They look like you; they speak like you; they hang out like you. Then, if you just build out your support and sales force in maybe bilingual English and Spanish ... That's what they want. They want to basically be able to be guided ... A lot of the software that exists is in English. People use it fine. It's just if they have a question on it, if they want to understand how things work, they want to easily be able to communicate, and that happens to be in a different language ... [00:16:30] Jose Zavala: It's funny you say that because ... It's true because, with Xero ... I'm really actively involved with Xero, and we have a community in Latin America that we meet once a month and we talk. A lot of the big thing they say is the product down there, it could be in English. We speak English ... Again, reiterating, it's just there's no training in Spanish. How am I going to get my colleagues or my small business owners to use it? I have to do it all, and then, they have to translate the videos and they have to do everything- David Leary: It doesn't scale.  Jose Zavala: It's not scalable. That's [00:17:00] what I want to do, and that's what I've been ... Working with them and on my own is to try to change that mindset of there's a different way to work and to try to get past that cap that you were saying. You get to that certain point, and you can't scale anymore. Okay, how do we get from there to the next step? A lot of that is, again, the financial literacy and the education. Blake Oliver: Again, coming from the perspective of ... Pretend I'm in a CPA firm. We don't have many Hispanic clients, Latino clients. We're stumbling [00:17:30] in our efforts to reach this community. How do we go about ... Or maybe it's a software company, too, that has never done this. What are the pitfalls? How do we avoid doing outreach without coming across as just totally out of touch? Jose Zavala: Like trying too hard? Blake Oliver: Yeah. Yeah. Well, you ... Jose Zavala: I think that's a great question for you guys. I'd like to know your thoughts on it, because I've got a few thoughts on that, too.  Tony Martinez: Yeah. Yeah. Something we do at all of our events, including our big event, Latino Tax Fest, we have one big room in English; one big room in Espanol, in Spanish, and we're [00:18:00] giving the content in both languages now. Like we said, most people speak English. They're bilingual, but they may prefer to go to a language that - again, Spanish - and they're consuming the content; people that they interact with are bicultural/bilingual. I never understood why Intuit - I know they have the roadshows - why they don't do like an English and Spanish track in the same location. I mean, the Latino market using QuickBooks is huge. David Leary: I think Joe Woodard's, with the Scaling New Heights conference ... I think they have a Latino track [00:18:30] or a Spanish track now-  Tony Martinez: Oh, wow. That's awesome.  David Leary: It's started in this industry. It's starting, as far as I can tell ... Accountex USA, other than Latino Tax Pros having a booth here and this interview, I don't think anything is happening [cross talk] at this conference.  Tony Martinez: -we also have a regional seminars. They're one-day events, but we do ... We happen to have two rooms. But yeah, to reach out to the market, I would say go to the events, encounter people; maybe hire somebody who is bilingual and bicultural. Blake Oliver: Could [00:19:00] you help me find that person? Tony Martinez: Oh, yeah. Yeah, exactly. Something we're looking to launch is a directory and maybe starting chapters across the country through Latino Tax Pro to have monthly meetups. You can go maybe meet up ... I know we talked about it in Houston- Jose Zavala: That's something we've been trying to get going in Houston. It's just been a little bit hard to do, but I think you're right ... To say it on your point, as well, what can you do without coming off kind of fake or pretending? It's just be genuine. Don't come out there ... Don't sell. But that's [00:19:30] with everything. If you have a software that comes out, and you're like, "Hey, you need to buy this because we're the best!" No. I'm not gonna buy you ... It goes back to just giving the value, and then let them see what the value is. At least that's my personal opinion. I could be way off. but that's just kinda how I think.  David Leary: Let's say you solve the US, right? Latino Tax Pros gets all accounting professionals up to speed and the Latin market is just served in the U.S.. I've been hearing about this thing, it's really attacking the whole- [00:20:00] all Latin countries in this hemisphere. Contabi Alliance. Can you speak to what that is? What the goals are? Because I think it's at a much higher level than just specific to U.S. taxes and U.S. small businesses, right?  Tony Martinez: Yeah, I know, speaking with Arthur Garcia, and Joel Lacayo , they're involved as the co-founders of that. It's exciting what they're looking to do in outreach outside of the U.S., down to the Latin American countries, and again, fill that gap - serve the underserved. I think I keep using that term because [00:20:30] by them serving the underserved, people who may not have these technologies ... From what I understand, a lot of these accountants in Latin America, they're not on the cloud. They may not have access to a lot of the tech stack apps and such. So, they're looking to introduce these technologies and these resources to them to make it more efficient. At the same time, it'll lead to engagement. If we can bring everybody together, we can learn from each other. David Leary: That's a huge market, as well.  Jose Zavala: Conversations with them, from what they told me, they're trying to create a BDO Alliance. Russell [00:21:00] Bedford ... You know, those big international alliances that CPA firms are involved? They're trying to create that for the Latinos. That's kind of the big vision is to create something like that, to where ... Because, with the BDO Alliances ... I was at a firm where we're part of the Was it Russell Bedford, I think? Is that one of them? I don't know. All I know is that those alliances, you have access to CPA firms throughout the whole world, and you can send work back and forth. You refer each other; you get discounts on softwares, and things like that. That's [00:21:30] what they're trying to do for the Latino community, based on my conversations with them. Part of that is, like you said, the education, the training, and getting everybody up to speed, and have a place to where people can go to for those resources that are nonexistent. David Leary: It's a hugely underserved market because you're talking about you have Mexico, you have Brazil. These are huge countries, huge populations, and nobody's really there. They're not- in the grand scheme of the world ... We're still trying to convince people here in Boston, at this conference, to use the cloud, right?  [00:22:00] Tony Martinez: Yeah.  David Leary: Nobody's using it at all. So, it's interesting to see that push. But each of these regions if I'm understanding correctly ... I have some knowledge of Mexico. There's just nuances, right? Like, an invoice, in Mexico. Can you give background on specifics to each region or each country [cross talk] Jose Zavala: So, I know, at least with my experience when I've talked to ... Again, going back to Xero and talking with some of these other partners, a big problem that's out there is when you invoice, the invoice needs to go to the government; it gets stamped that they approved it; then, it comes [00:22:30] back. Blake Oliver: Is this paper? Is it digital? How does it ...? Jose Zavala: It's digital ... The government has an open API that you can connect to it, but the problem is there's no app partners connecting to it. Companies like Xero are having a hard time going into there, because then you still have to use ... There's no third party to connect to it. Now, I know in Argentina, Gonzalo, which, I know you guys had him on with Xerocon- Blake Oliver: Yeah, we were walking the floor, and he chatted with us. I [00:23:00] was just blown away to even ... I had not heard about this alliance. What is it? Contab- Jose Zavala: Contabi Alliance. Blake Oliver: Contabi Alliance. That was my favorite moment, I think, of the entire conference was meeting him and realizing that cloud is- it’s going global. It's inspiring.  Jose Zavala: They've got people in Argentina. Contabi has ... A lot of their directors- they've got people in Argentina, which Gonzalo ... They've got people in Mexico who are kind of championing this with Xero. They've got people in Costa Rica and other places that are kind of the champions of this that [00:23:30] are gonna be directing it into there, which is what I'm ...  Just a quick plug, Xero Virtual Hour, in Spanish ... We're actually doing a Spanish one here pretty soon; I think next week or the week after. I don't remember quite the date, but the plan is to essentially have what the Xero Virtual Hour is, but in that Spanish region and build it up to where we have these partners that are part of the Contabi that use Xero ... The breakout sessions per country, so they can focus on the problems that they [00:24:00] have internally. Because, I mean, I can't help. I don't know anything about Mexican tax.  Blake Oliver: Well, and I'm sure that the development team at Xero would have no idea unless somebody told them ... That actually- to bring it back to that invoice thing, what a challenge! Let's say I'm sending an invoice to David. You're telling me that I can't just send it directly to him. I have to send it to the government; federal government- Jose Zavala: Yeah, based on my understanding. From what I've been told and from what I understand, it has to go through the government. They have to stamp that they approved it, and then, it [00:24:30] can go to David. Blake Oliver: Is that to make sure that they can track it for tax purposes? Jose Zavala: I'm guessing so, yeah. I guess they must have had too much money laundering problems down there, or whatever it is. That's one of the big problems, right now, facing ... I know, like in Argentina, Facturante, which Gonzalo, I think, is a part owner, they've solved that, and they are plugged into Xero. Some of these app partners are starting to come up in these different countries, or some of these just ... I know in Mexico, [GCAS], they built their [00:25:00] own tool internally to do it. A lot of these people are starting to come up with solutions themselves. David Leary: There's a tech scene in Latin America. I have a friend that does a lot of stuff in Nogales, and Sonora, startup weekend type things. But then, I know there's apps, even at this conference, that have development teams in Brazil building their apps that ... Cloud accountants have no idea that some Latinos have built the app they might be using.  Blake Oliver: When I was with Aprio Cloud, a big part of our business was helping [00:25:30] Australian and UK companies start a subsidiary in the U.S.; is that something you're seeing more of, is South American, Central American countries expanding into the U.S. with subsidiaries? Is that an opportunity here? Jose Zavala: Me, personally, I haven't. Tony Martinez: Yeah, I know, speaking with a lot of our members, especially the ones in Florida, they're seeing entities from like Colombia, or Argentina have some sort of enterprise in the States. Their biggest thing is, "How do I report that income to the IRS? How do I file those tax returns?" By [00:26:00] us positioning ourselves as an organization of, "If you have any international issues, go to our event; take our online course; meet Jose, meet Philip, or whoever ..." We want to create an ecosystem to serve those individuals.  Jose Zavala: I think that's kind of what Contabi Alliance is trying to solve is you're an Argentinian company, or a CPA firm, or firm in Argentina, and your client wants to come over here, you're part of Contabi; look up the directory. You can find somebody in Florida, in Houston, in [00:26:30] California that's in that network that can help you with that, and then connect with them. That way, you guys know ... Theoretically, it's the same mindset. Theoretically. Blake Oliver: That's important, because a lot of people when they come here, they don't realize it's 50 governments, not just one that you have to deal with, right? Jose Zavala: Mm-hmm.  David Leary: Don't even go with a local ... Blake Oliver: Yeah ... Don't open an office in New York City.  David Leary: Jose, if people want to stay connected with you, hire you; they wanna become [00:27:00] a client of yours, or they just wanna catch up with you on social ... I know you're multi-streaming to 16 services at the same time. How ...?Actually, it's funny, because I ask everybody who were interviewing to give me their social profiles. Jose just has this list ... I was like, "I don't have space for this!" We're gonna have the world's biggest show notes! So, Jose, please let us know ...  Jose Zavala: So, @ZTX Advisors, across the board. JZavala@ZTXadvisors.com - email. Please reach out. I'd love to meet [00:27:30] people. I mean, that's my biggest thing. I love to talk to people. ZTX Advisors, I think I'm on everything, and it is exhausting, guys. I'm not gonna lie to you. It is. Blake Oliver: You mentioned a Xero Virtual Hour. How can people learn about that, and in Spanish you said, right? Jose Zavala: Yes, in Spanish. After this, I'm gonna retweet the- there's an event link, Eventbrite link. That should have the Zoom calendar meeting. Just follow me on social media, so you guys will be able to see the link there. Then, like I said, the first one is just [00:28:00] gonna be us talking about what the program is; what we want to do. Then, after that, we're gonna try to mirror what the English version is. I know the last one I was part of was cash flow forecasting. They had Helm, Jirav, and these other different app partners there talking; so we kinda wanna do the same thing, but in Spanish. Blake Oliver: Awesome. David Leary: We'll get that link in the show notes. Jose Zavala: Okay, awesome. Thank you, guys. Blake Oliver: How about you, Tony? If people wanna learn more about LatinoTaxPro.org, I guess they should go there, right? Tony Martinez: Yeah, definitely. Then, just search us under Latino Tax Pro. Every [00:28:30] July, we're at the MGM for Latino Tax Fest [cross talk]  David Leary: -interrupt you on that. We weren't able to go this year, but if you go to the Latino Tax Fest conference website, basically it's a video of people dancing, and then another video of people dancing in a pool. This is like the greatest conference party ever. Is there even a conference? Blake Oliver: Here's the problem. I don't know if I could go because I'd have to overcome my fear of dancing. That's why I became a musician, so I didn't have to do that. Maybe I can get the band or something ...  David Leary: But it's big, right? You've got 3,000 [00:29:00] attendees. It's a huge conference. Tony Martinez: Yeah. In 2014, what was our first year of the event, we attracted 500 attendees the first year. What we do, it's three days of classes. They're mostly tax updates. So, people want to get the latest tax law and changes. 500, year one; year two jumped up to 1,000; year three, 1,500; year four, 2,000; year five, 2,500; and this year, we had about 2,800; heading towards 3,000. Blake Oliver: Wow.  Tony Martinez: Again, the same set-up - three days [00:29:30] of classes, two rooms - one English, one Spanish. A lot of these speakers are in both agency PAs, IRS executives. This year, the commissioner of the IRS was our keynote speaker. Again, serving the underserved, I think, is what's leading to the growth, because people go and they wanna learn. They wanna have a community. They hang out with people that look like them, that speak their language, that serve the same market that [00:30:00] they do. Our next push is to start offering bookkeeping classes, accounting classes, because out of the 10,000 members we work with, about half of them also do bookkeeping, in addition to tax. Everyone does tax preparation, but half of them also are doing bookkeeping. There are a lot on the legacy platforms. They need help navigating the app ecosystem. We're working with a lot of app partners to be able to teach and give some more ... Right Networks, for example, we're [00:30:30] doing a lot of content around what is hosting, how you can still be on the cloud, et cetera. Hopefully, you guys can make it next year because it's awesome.  David Leary: I'm penciling it in, or putting it in pen, really- Jose Zavala: Guys, it is a lot of fun. It is. I think it was my first time going, and I was to just like, "Yeah, I don't know why the heck I haven't been back?"  Blake Oliver: Awesome. Great to hear. Hopefully, we can make it there. David Leary: I think that's a wrap. Blake Oliver: Thank you, gentlemen. Tony Martinez: Yeah, thank you, guys [cross talk]  Jose Zavala: Awesome.
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Birthdate
Oct 4th, 1974
Location
Tucson, AZ, USA
Episode Count
126
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6
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2 days, 18 hours