Top 10 Cloud Accounting Podcast episodes of 2019

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Creation Date January 6th, 2020
Updated Date Updated June 1st, 2020
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Top 10 most downloaded episodes of the Cloud Accounting Podcast in 2019.
  1. 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.  
  2. 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  00:16 – Putting a face to fraud - Michael Mann finally appears, at least in pictorial form | Daily Mail UK 01:18 – Practicing for his big act? The Daily Mail article includes a video clip from what seems to be some form of corporate roleplaying/training. Enjoy.  03:02 – Come rain, sleet, snow, or fire alarm, some Big Four firms file returns no matter what!  03:44 – More automation from Square with Square Assistant for AI-powered scheduling and messaging | Square  04:12 – Square’s hitting the Books … The GL kind | Square 07:03 – Square - reinventing the accounting wheel one double entry at a time 08:04 – Is this all part of Square's plan to become a bank?  11:38 – Square deals meals - Square for Restaurants brings management tools to the table | Square 12:53 – Meals on wheels? Along with the management toolset, Square for Restaurants integrates with Caviar, their meal-delivery service 14:55 – Outside looking in? How do accountants and bookkeepers stay relevant in the face of the ever-increasing automation and DIY accounting tools?  16:39 – Who's really in charge? With Big Tech firms  controlling the software on your PC, how much control do you have left? | Yahoo! 20:13 – There is no such thing as free! Reckon cuts off customers until they buy new licenses | The Sydney Morning Herald 21:36 – QB Desktop Payroll gone come 2020 | Intuit QuickBooks 23:36 – Hubdoc Xeros in on better functionality with new permissions features | Xero Blog 24:33 – Can a Xero change its Stripe? Xero adds several new functions to its Stripe integration  25:39 – Bill.com's moving on up to the midmarket with their latest round of features | Finextra  28:00 – Veem and Zapier have joined forces to add even more functionality to Veem's payment service | Veem 31:57 – Need to learn how to use Zapier? Find a trainer, like Heather Satterly to help you out | Nerd Enterprises 32:06 – Gusto adds to their FreshBooks integration | FreshBooks 33:01 – No more slacking off, with new custom workflows in Slack | Slack Blog 35:06 – ScaleFactor unleashes a small-biz credit card | BusinessWire 36:08 – Small banks-tech company collabs aren't just a fad, but how much is too much when it comes to growth? | Bank Innovation 36:45 – Chime broke the bank, literally, when their app completely shut down | CNBC 38:14 – Well, actually, Galileo, the company powering Chime, was the true source of the outage  38:49 – Galileo didn't seem to have time to worry about the Chime outage. They were too busy touting their latest $77 million raise 41:16 – Leave your hubris at the door, please - these bank-tech firms might want to start focusing more on their 'users' and less on their egos 42:47 – Shirts, and stickers, and merch, oh my! Get your official and limited edition Cloud Accounting Podcast stuffs now!  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!  October 22-25: Sage Intacct Advantage in Las Vegas October 29-30: AcuityCon in Atlanta 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   TranscriptBlake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver. David Leary: And I'm David Leary. Blake Oliver: David, I have a photo of Michael Mann! David Leary: How is that? Did you break into his house, and take his physical photos? Is it a digital photo? How is this possible? Blake Oliver: I don't know, actually ... Believe it or not, the best coverage on this is from The Daily Mail in the UK. They have an exclusive article, "Unmasked - the MyPayrollHR CEO who stiffed thousands out of their salaries is finally pictured as worker tells how crude forgery sent the 'Warren Buffett' of Clifton Park into collapse." David Leary: But [00:00:30] it's not even a real photo, right? It is a cell phone video of some training they were doing at work, possibly- Blake Oliver: Something like that-  David Leary: -on a cell phone. Then they screen-grabbed that. There's still not a real photo, on the internet, of this guy; like, he never did a selfie. Blake Oliver: Yeah, and our listeners, of course, can't see the picture that we're looking at. I'll do my best to describe Michael Mann. You know who he looks like to me? He looks [00:01:00] like Jason Biggs, the guy who played Jim in American Pie. David Leary: Oh, like when he's 50 years old and maybe has some pounds on him? Blake Oliver: Yeah, like when he's older.  David Leary: I can see that.  Blake Oliver: He's gonna play him in the TV movie. David Leary: Okay ...  Blake Oliver: So, we now know what he looks like. That's it. If you'd like to see that picture, it's in the show notes. David Leary: You can watch the video, too. They were obviously roleplaying something? Maybe it was a training for other employees. There was supposedly a meeting at MyPayrollHR, but if you listen to the audio, [00:01:30] it's this weird interaction between him and this other person, and I think it was creating a fake scenario. They were acting. Blake Oliver: Oh, weird. Actually, I didn't realize it was a video. So, I'll have to go watch that now. That's great. David Leary: Yeah, the audio's really hard- it's really hard to hear, but it's worth checking out ... Then, they have a nice little map about ... The Daily Mail is really sensationalizing this. It's Michael Mann's Coast-to-Coast Empire, and it has little logo,  and it shows one, two, three, four, five, six, seven, eight, nine, ten, eleven, twelve - twelve different cities that are all tied into this. It's worth checking out. Blake Oliver: Yeah. I'm just [00:02:00] amazed that the readership of the Daily Mail in the UK is that interested in following this. Is this our royal family, here in the US? Is this dirt really that interesting? David Leary: I was actually surprised ... Did The Daily Mail just happen to have somebody that was in Clifton Park? I was just really surprised, too, as well. Like how is The Daily Mail all over this as much as they are.  Blake Oliver: They sent somebody to his house, I think. David Leary: They videotaped the FBI raid. They were there for that. I don't know. I don't know ... Maybe [00:02:30] The Daily Mail is a front by the FBI. Blake Oliver: Who knows? David Leary: All right, that's enough of that ... There's a picture, finally.  Blake Oliver: That is not the really big news we wanna talk about today. There actually is some really big news, and I'm gonna let you talk about that, David. David Leary: All right. Well, one part of the news is we don't have any reviews to read this week, Blake. We got zero reviews. Blake Oliver: It was a busy week. It was October 15th; not that long ago. So, people are resting and relaxing after the deadline - the tax deadline. That's my ... That's how [00:03:00] I make myself feel better about it. David Leary: I think I saw a video on the socials. It might have been EY. I'm not even sure which of the Big Four it was, but there was a fire alarm in the building, and everybody was outside holding the laptops, because they could still get some Wi-Fi.  Blake Oliver: They were working?  David Leary: They were filing people's returns. They were working. Yeah, they were outside and at the front counter ... Blake Oliver: That's awesome. Good for them. That's hard core. Well, let's talk about Square. David Leary: Square. Yeah! We've been saying it - if Square ever makes a GL, it's a game-changer. Blake Oliver: Yeah. The background on all this, for our [00:03:30] listeners, is that Square just seems to be releasing crazy amounts of features all the time ... Time tracking. They just added restaurant capabilities. You can now run your restaurant on Square. What else? David Leary: Payroll- Blake Oliver: Payroll ...  David Leary: They have appointment setting, if you're a salon.  Blake Oliver: Yeah, they're adding ... They're going at it from starting with just a little payment-taker, point of sale ... Building out an entire point of sale; building out all these business features. It's a whole business [cross talk]. David Leary: Marketing automation tools ... Everything you [00:04:00] need to do to run your business, they do, except for a GL. Blake Oliver: David, you and I have been speculating for a while now - hey, when are they gonna build accounting software? Right? That's the big news, today. You found a post on their developer site?  David Leary: Yeah. It's a post in their developers blog, and I have to give credit to Annie Terry, who texted this over to me. She actually came across it, I think, from somebody on Twitter. Hi, Annie ... Before we read this, let's rewind a little bit or talk about this. If you work backwards, Jack Dorsey, who started Square, [00:04:30] started Twitter. When Twitter was started, it was kind of in this new era of Web 2.0, and companies started thinking about things differently. Instead of just building a website or building an app, you would build your APIs first, and then you would build your product offering on top of those APIs. Blake Oliver: Gotcha. David Leary: And I think this is something you probably have heard, like QuickBooks talked about, going forward, they're kind of rewriting some parts of QuickBooks Online. I think maybe possibly Xero has talked about this, as well. Instead of creating your APIs after [00:05:00] the fact, you build on top of your own API. That way, all developers, your own engineers, your whole product runs on this same technology stack. That's how they built Twitter. Blake Oliver: That's truly a platform, when you think about it. The idea of a platform is that it's something you build apps on top of. You build your platform, then you build your own app on top of it. David Leary: When you do that, it's super-scalable. You're not having this weird, like, "Oh, somebody added a feature to QuickBooks," and there's a [00:05:30] ripple effect to a developer, because it's not in the API; versus the API is built first; then, as soon as something is added to QuickBooks for the whole world, all the developers can get to it, too.  Blake Oliver: Gotcha. Okay. That's the background. David Leary: That's why people are ... That's the background. Going by that same logic, there's a blog post on the developer blog from Square, and they call it "Books." Blake Oliver: This is a blog post announcing a new service called Square Books. David Leary: It's not even ... I don't know if it's as much an announcement as it's a kind of a behind-the-scenes, nerdy [00:06:00] engineering look of how Square is doing something. Blake Oliver: And the full title, by the way, which really caught my attention, is "Books, an immutable double-entry accounting database service - Tracking financial transactions at scale."  David Leary: Our listeners could actually go read this article, because it's not as technical, from a nerdy perspective. It's really almost like an Accounting 101 class in how Square now has APIs, and they are solving, and [00:06:30] tracking things in a double-entry-bookkeeping system at the API level. Blake Oliver: It describes the problem they had, which is they originally started out tracking transactions in a non-double-entry way, listing out transactions in a ledger. Of course- David Leary: That's like using Quicken. Blake Oliver: Yeah, exactly, or how merchants in the Renaissance tracked things before the invention of double-entry accounting. There are obviously problems with that. David Leary: Yes.  Blake Oliver: Basically ... It's [00:07:00] funny, too, this is one of those themes, where, developers encounter problems that humanity has already solved for hundreds of years, but they think that they're the first people to ever solve it. They had to come up with doing this in a double-entry way. Now, I mean, they obviously looked- David Leary: Well, he actually talks ... He has a sentence in here, which is really, really great, that actually I like. He goes, "You're right, most engineers over-engineer stuff. They reinvent the wheel." Blake Oliver: Yeah. David Leary: He's talking about this, and he gets at a point in the article, and he's like, "To address consistency, we picked a well-established [00:07:30] public domain battle-tested approach to modeling financials that enables all of our properties: double-entry accounting. It's really well-played on that- Blake Oliver: There's all these screenshots showing how their database changes when they move from a single-entry recordkeeping system to a double-entry recordkeeping system, which, really, when you get down to it, what they're doing, it seems like, is recreating in a better [00:08:00] way, in a public way, what banks do. This goes straight to your argument, David, that Square is becoming a bank, because now they have built, as part of their platform, the recordkeeping system that they need to be one. They're currently using this double-entry system to track their payments, refunds, pending balances, and payouts, but they could easily use it to track customer account balances. Well, and actually, they are doing that, because your Square balance that you have with them that they [00:08:30] owe you, that's an account. It's only a small stretch for that to become a bank account. Square just has to create a banking entity, and they could do it, right?  David Leary: They have transaction entities - journal entries. Blake Oliver: Right.  David Leary: A developer can ... There's a journal-entry API call. Blake Oliver: Somebody, if they make this public ... If I can use their Square Books database, now, as a developer, I could build a double-entry accounting system inside Square, or leveraging square, and [00:09:00] Square could do it themselves.  David Leary: Yeah, I think there's kind of this GL ... The GL is a commodity-  Blake Oliver: GL as a Service.  David Leary: That's one way to think about this, a service, right? I think the bigger impact is A) you're right. It lays the groundwork for them to become a bank. But it also lays the groundwork for them to slap a UI on top of this, and now this is a very, very, very, very serious competitor to QuickBooks and Xero. Like, very, very, very ... It's a well-funded competitor-  Blake Oliver: Yeah, well, because think about it, you sign up as a ... As a small business, you sign up. What's the first pain point you have? [00:09:30] It's not "I need to do my accounting," It's-  David Leary: You wanna get paid.  Blake Oliver: -"I need to get paid." So, if now, your payment-service provider, your swiper can do your accounting, why wouldn't you just sign up? Because they're gonna import all your transactions correctly coded. There's no ... So much of bookkeeping is just making sure that the transactions get in from that point of sale into the accounting system properly, with batches and stuff, but Square could just do it automatically. It's almost hard to believe they wouldn't do it. You heard it here first. David Leary: There's no doubt - Square [00:10:00] is getting into this game. It's very, very clear, and especially if you follow the history of Twitter at all. There's no way they don't get into this game. If you really follow Twitter, they'll do it ... That's what Twitter did. Their APIs were totally wide open at first, and they let a bunch of other people build crazy ... I remember my first three years on Twitter, I never actually used Twitter. I was using everybody else's products- Blake Oliver: Right. David Leary: -that used Twitter under the covers. Then, eventually, Twitter kind of started blocking some of the API access, and then made everybody use Twitter, and that started getting all the good features, like retweets [00:10:30] and things like that-  Blake Oliver: Now, I don't know if- David Leary: -and you could see this same strategy-  Blake Oliver: Yeah, but I don't know if that ... That happened with Twitter because they needed the advertising, so they had to have people on their app to sell ads. They couldn't- they hadn't figured out how to do that through the API, right? Maybe if they'd figured out how do it through API, we'd still have all these different apps, but ... They acquired-  Tweetbot, I think, is one they acquired, right? They acquired the tech they didn't have to make the app better, and then they forced everyone to use it. But I think that Square, if they really think about it, could decide to let people build [00:11:00] GLs on top of Square that leverage Square's Payments, because that's where Square makes the money. David Leary: Yeah, and then, pushing all their other products- Blake Oliver: Right. David Leary: -as well, through their UI. This is gonna be ... This is coming. There's no doubt. That's the next announcement from Square's is like, "Hey, we have a UI." They already have 220 terabytes of data in this system, so they've been using it. The interesting thing is it's a small team of three people, so this was a very- a big brag by the engineer here. This is major, [00:11:30] major, major news that I think there's been one tweet about, thus far-  Blake Oliver: Well, because it's on the developer blog, which people don't pay attention to-  David Leary: Only developers do. Blake Oliver: Only developers do. On the other side, the non-developer blog, the mainstream blog, there was a giant release this week, as well - I think it was this week. They released Square for Restaurants. Now, you can use Square to ... You don't have to have a separate system for managing all your [00:12:00] restaurant stuff. You can just use Square for that. Square, you know ... I don't know, I feel like they've been mostly used for like cafes or small shops, like retail, but you couldn't use it to manage a full-service restaurant. David Leary: Yeah, and that's where people would make that jump from Square to a product like Revel point of sale-  Blake Oliver: Exactly. David Leary: -which is really good for restaurants. So, yeah, now they're attacking them. Square's attacking a lot of people on a lot of different fronts.  Blake Oliver: Waitstaff can place orders with conversational ordering. There's employee [00:12:30] management built in; staff performance, and time-tracking, tip-splitting, fraud protection. You can make changes to the menu on the fly. You can customize and preview exactly how your menu appears on the point of sale. You can customize your workflows, so you could select different items to straight-fire automatically. I assume that's terminology in the restaurant industry ... Oh, and they integrate with Caviar, which is the Square-owned meal delivery service. Now, you don't have to have a separate service [00:13:00] to accept delivery. You can just use Caviar or tell your customers to use Caviar. That was the big release on the product side. Then, there was a smaller announcement called Square Assistant. It's an AI- David Leary: Oh, yeah, I saw that. Blake Oliver: Yeah, and AI-powered automated messaging tool from Square Appointments. This is part of Square Appointments, an existing app that's part of the Square ecosystem. It allows customers to respond directly to SMS appointment reminders to confirm, cancel, or change their appointment. [00:13:30] It automatically applies to customers and handles all coordination around bookings without any action needed from you. That's cool. There's a picture showing how it works with a customer getting the confirmation and then replying, saying, "Oh, I need to cancel or reschedule," and it doing it all for you. That's another example of something that is hugely valuable to the business owner, way more than accounting, and Square built that first, and then they can build on all the other stuff, and we're [00:14:00] gonna be naturally funneled to it, as customers, because we're already in their ecosystem. David Leary: I think a five, six years ago, back when I was younger, and I made the 40 under 40 list, one of the questions, I think, was what is gonna be the biggest challenge for accountants, and bookkeepers in the future? An argument I've been making for years is you are not part of the conversation. If you go back 15 years ago, somebody would start a business on day one; day two, they would go to Office Depot and buy QuickBooks.  Blake Oliver: Right.  David Leary: Day three, they'd find an accountant or vice versa. Now, on [00:14:30] their phone, they're setting up their whole business. They're getting a swipe- a Square-type product; they're receiving payments; they're setting up appointments; they're using all these apps. The bookkeeping part is six months down the road. You're not even in the conversation. Square's complete proof of that, right? It's everything else- they're solving all the business owners' problems, except for bookkeeping. But, obviously, now, we just learned that they're gonna attack that, as well.  Blake Oliver: That's what we need to be thinking about. as accountants, is how do we stay in [00:15:00] part of the conversation or what markets do we serve where we are still a part of that conversation? Because there definitely are ones where accountants are part of the conversation. Although, I think I could make a counterargument, David, that accountants have been sidelined from that conversation ever since QuickBooks came out, in a lot of ways, because QuickBooks was that first software where, instead of the business owner going to the accountant to say, "All right, I need to get set up and do accounting," they would just go to Office Depot, and buy QuickBooks, and start without the accountant. David Leary: Yeah, [00:15:30] it's probably the scratch of that surface, for sure- Blake Oliver: It was the beginning of it. David Leary: -but I don't think it's easy; like, literally, somebody in their car with their phone [cross talk] it's that easy to do. Blake Oliver: Really, what happened is that bookkeepers and accountants started supporting QuickBooks and became ProAdvisors. It was business owner goes, buys QuickBooks, runs into trouble, needs help, goes, and gets the ProAdvisor, and that's how the relationship forms. With this, there'd certainly be a similar thing. As soon as Square GL comes [00:16:00] out, or Square Books rolls out - whatever their accounting software, Square Accounting - then you wanna jump on that as an accountant, so that you can serve all those new customers. David Leary: There's no reason, as an accountant, or bookkeeper, you can't have Square as your niche, like, "I only support the Square stack, tech stack, and only take clients on Square, across the board. Blake Oliver: Yeah, especially in the Square niche ... "I only serve restaurants that are using Square," or something like that. Yeah, cool. David Leary: Absolutely.  Blake Oliver: All right, enough about that. David Leary: I have an article that I cut last [00:16:30] week. Now, an article this week; maybe bring it back. Blake Oliver: Okay.  David Leary: Last week, it was an Op-Ed article I saw that I thought was just interesting, but we had too much other news, so we didn't catch it. The title of the article is "We're Losing Control of our Computers." Really, back in the day, you could buy a computer; you could install any software you wanted on that computer, anywhere you get the software. CD-ROMs, download from anywhere on the globe. Well, Mac and the new Mac OS, they've announced they're not gonna let you install software, if you don't get it from the Apple [00:17:00] store. So, Blake, if you were an engineer, and you wrote your own little teeny bit of software, and you wanted to run it on your own computer that you own, you can't do that. Blake Oliver: Yeah, but this has been a thing for a little while with Macs, in that if I ... I actually had this happen, where, recently, if I download something not from the Apple Store, or the App Store, I should say, I have to do a little work around. I have to do a key combination and [00:17:30] click a submenu to open the app and get around it not being from the App Store. The idea is we don't want less-sophisticated users to download malware. So, you have to be a power user and know what you're doing, in order to open that app. David Leary: Yeah, but apparently they're going even more extreme than that now. If you wanna be able to do those types of things ... This ties back into this article; it talks about how Adobe, in Venezuela, canceled all the people that are using Adobe's cloud product. They just canceled [00:18:00] all their accounts. You just can't use it anymore, just because you're in Venezuela. You just don't have control over this. Blake Oliver: Right.  David Leary: Now, to tie it back to our industry ... 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 three; F-R-E-E. To be clear, you cannot get this promo anywhere else. It's only available to the listeners of The Cloud Accounting Podcast. David Leary: Reckon ... Are people familiar with Reckon? Are you familiar with Reckon? Blake Oliver: A little bit. David Leary: Reckon, essentially, is the third-party provider that, in a way, branded QuickBooks in the Australian market. Blake Oliver: Right, right. They were QuickBooks in Australia. David Leary: Essentially, yes. It was a separate company, but it was almost like a development [00:20:00] deal type of thing. You used to be able to just buy it. Then, if you had to reinstall it, you could call, and get it reactivated, and get a new keycode to install it. All that desktop software was keycode-driven, and you had to activate your subscription. What they're doing now is they're just shutting people's off; they're deactivating their keys. You can call them, and you gotta buy a new key, and a new version. You've lost ... They're forcing people to ... Because Reckon's a little desperate, I think, to ... They're not competing, obviously, with the Xeros [00:20:30] of the world, and in Australia. They're basically- Blake Oliver: Well, they- David Leary: Are you trying to argue? They’re playing dirty [cross talk]  Blake Oliver: Well, they have to move to a subscription model because that's where everything's headed. So, the only way to do that is by requiring people to upgrade. David Leary: Well, yeah, going forward, but to turn off something they already paid for ... Blake Oliver: Did they? That seems like-  David Leary: Yeah, that's the problem ... That's the problem; it's crossing a new line. Blake Oliver: Well, they paid for ... Technically, when you pay for software, you don't own it. You're just licensing it. That's why it's called [00:21:00] a software license, even if it's installed on your computer. This is really an issue of consumers, or businesses not really understanding what they agreed to in the past. You thought that when you bought that CD, you were buying software. You're not.  David Leary: The industry standard is usually, okay, you bought it, and you can continue to use it ... "Maybe we won't give you the tech support. Sorry, we're not gonna support it anymore, but if your computer still runs it, you've still got the disc, you still wanna use it, more power to you." But what they're doing [00:21:30] is they're disabling existing situations out there, and that's really not okay.  Blake Oliver: Here's a great example that in the U.S. ... Did we not talk about this? QuickBooks announced that they are no longer going to support Payroll in the Desktop product after, what, early in 2020? Did you hear about this? David Leary: I did see that. We have so many articles, and then sometimes, things fall off the radar.  Blake Oliver: Yeah. David Leary: Yes ... They're getting out of the QuickBooks Desktop Payroll game.  Blake Oliver: Basically, all these people who bought QuickBooks Desktop, who- Payroll [00:22:00] is part of that product. They paid for it. Now they are no longer going to be able to keep using Desktop with the integrated Payroll. They're gonna have to either use one of the other Intuit Payroll products that's online, and then sync their data into Desktop, or do ... I don't even know if you can do that; maybe do manual entries- David Leary: Well, Payroll in QuickBooks Desktop was always you got it, but if you wanted to calculate things, you had to pay for the tax table, and so I don't know if that article-  Blake Oliver: Now, you can't even do that [00:22:30] anymore, right? David Leary: That, I did not see. I feel like I saw that as a headline. I never actually saw any article about it. Maybe I saw it on social media, possibly, and that's why; I just saw a tweet or a Facebook post about it. But, in theory, the tech's still there [cross talk] Blake Oliver: But it's useless, if you have to do your own calculations. David Leary: Well, you'd be amazed-  Blake Oliver: Nobody's gonna do that. David Leary: Noooo, you'd be amazed. I was on the Payroll team at Intuit, and it was maddening. People manually- to avoid spending $100 a year on getting. ... I'm going back a decade ago, people [00:23:00] would, every week, manually calculate paychecks to avoid spending $100 a year on tax tables.  Blake Oliver: Gees.  David Leary: Hundreds of thousands of people, every week, would do that to avoid paying for a tax table. I don't know ... Maybe I'll have to do some research over the next week, and see if I can find an article or this ... But I did see the announcement, now that you bring it up. I have no clue about it, though. Blake Oliver: All right. Well, we'll figure that out, and then get back to you on that. Since we- David Leary: That was enough about desktop software- Blake Oliver: Since we just talked about QuickBooks, [00:23:30] let's talk about Xero and their latest release. We haven't covered that yet. So Hubdoc, a Xero-owned product, now has more sophisticated permissions for users, so business owners can control who can access their documents by assigning user roles, which they apparently didn't have before. There's three types of user roles that include: upload only, standard, or accountant/bookkeeper. The difference between [00:24:00] standard, and accountant/bookkeeper is what I'm really interested in. Standard users can upload documents, view, and download, manage the organization settings, and then, optionally, publish documents to the GL, manage automated connections, or manage other users. Those are optional. Then, the accountant/bookkeeper can do everything that the users currently can. I guess the idea is let's create a user type that can't manage all the other users, where we can control whether or not they're publishing to the [00:24:30] GL. That's the Hubdoc update. The only other thing that was really interesting ... I don't know if this is really news to a lot of people, but they've changed the way that they're integrating with Stripe. Now, you can create your Stripe account as a bank account in Xero, and you connect it. Speaking of Stripe becoming a bank, or Square becoming a bank, it actually looks like a bank account now, in Xero, and you can connect to it like it's a bank. Then all the transactions import every [00:25:00] day, and you can reconcile those, whether or not you're using Stripe as a payment service on your invoices in Xero. It's really neat. Then you can set up bank roles, of course, and then any transfers your bank account work like transfers between the accounts and Xero. Then, you can also now do auto-pay on credit card invoices with Stripe in Xero. You set up a repeating invoice, you offer auto-pay, and then, once that is set up, it just goes every single repeating period, whatever [00:25:30] that is. That's it for the Xero updates. What else is new? David Leary: There's a Bill.com announcement. Blake Oliver: Yeah, big one! David Leary: About how they're moving into mid-market. Blake Oliver: Yeah, they are now doing purchase orders. They're gonna sync purchase orders from Oracle NetSuite, and Sage Intacct, and other partners and then allow you to match up those POs with bills on one screen in Bill.com and route for approval. This is big, because this is one of those things that's really been missing for the mid-market, [00:26:00] for Bill.com. David Leary: I think, for me, the takeaway was that they're gonna offer premium customer support, because I do feel like the vibe I've gotten from a lot of accountants and bookkeepers is they just don't get the support they want from Bill.com. Basically, you get fast-track access to chat, email, or phone support for prompt, personalized assistance. They're stepping up their game on that side, as well. Blake Oliver: There's another feature specifically for accountants that I really like, which is multiple client bill approval [00:26:30] through the accountant console, meaning that I, as an accountant, log in and, on my dashboard. I see I have 100 bills to approve across all 20 clients. I can click into that, and then go through, one by one, without having to log into each individual company account in Bill.com, which is really cool for people who do stuff like business management, who are paying bills for lots of clients every single day, or just anyone who does an accounts-payable [00:27:00] function across multiple clients with Bill.com. It's a nice feature. They also are expanding cross-border payments. They continue to do that. Now, they're at 130 countries and 106 currencies, and a new VIP program for qualified accounting firms and clients that conduct high-volume transactions. David Leary: The article actually that I have here says they're gonna be at Sage Intacct Advantage, which we'll be at Sage Intacct Advantage next week, as well. So, we'll have to go and check some of these features out. Blake Oliver: We'll go say hi to [00:27:30] the Bill.com team. If you're gonna be at Sage Intacct Advantage, come say hi to us. Where are we gonna be, David?  David Leary: At the MGM Grand. That's about ... I saw the map, and I don't know where we're gonna be. We'll tweet it. Follow us on the Twitter, and we'll definitely get that out, for sure. Blake Oliver: David's hard to miss in a conference, you know, given his height, and he's wearing a Cloud Accounting Podcast shirt all the time. So, he should be easy to track down, I think. David Leary: Yeah, just look for red hair. Blake Oliver: Yeah, that's right. What else [00:28:00] is new? Veem, the payment service is integrated with Zapier now. This is super-super-cool because the examples of what you can do with Veem and Zapier are really interesting. It's just a few of the possibilities. Basically, not familiar with Zapier? How would you describe it, David? David Leary: It's a way to [cross talk] Blake Oliver: API service?  David Leary: -digital plumbing between apps. If apps don't talk to each other directly, you [00:28:30] could possibly make two apps talk to each other through Zapier, because Zapier talks to App A; Zapier talks to App W, and you can actually build some rules and connect those two apps together. For example, your customer signs up on your website, and maybe you wanna take their name and address when they sign up on your website and put that into your accounting software. You could use a tool like Zapier to move that data across. Blake Oliver: So, I have a trigger from a form on my website. The action is it creates a contact in my QuickBooks file. With [00:29:00] Veem and Zapier, you can now do cool things like, for example, use the Veem and Schedule, by Zapier's app to set the frequency of your recurring payments and eliminate manual entries. You could potentially use Veem and Salesforce together to automatically send a new payment request, when an order is created in Salesforce; send a payment request from Veem to the customer to pay for that order. You could use the Veem and Harvest app to make sure that, when you have a new invoice in Harvest, you send [00:29:30] a request with Veem. Pretty nifty stuff there.  Check out the show notes, when we've got those done, for a list of the triggers and actions ... Probably the best way to do it. Oh, here it is. I found it. Currently, the supported triggers - meaning what starts a workflow - is an updated inbound payment status, or an updated outbound payment status. If payment is updated, basically, in Veem, you can trigger something. Then, the actions that are supported ... Using [00:30:00] Zapier to make Veem do something - you can send a payment, create a contact, or request a payment. The sending a payment thing is really amazing. Interesting, right? Because you could automate so much with Veem, now, if you've got your contacts in Xero, or QuickBooks, or NetSuite, or Intacct. You wanna pay them a commission, or something like that, and you have some tool that calculates commissions, and that's all in a Google sheet, you could theoretically connect your Google sheet to [00:30:30] Zapier and pay out all those commissions automatically on a preset schedule or something. Just one idea. David Leary: I feel like [inaudible] apps about this before, right? Sometimes, it's hard for you, as the app developer, to think, okay, why would we want to connect to Zapier? But it's really like ... There's use cases that customers want to do or need to do that you can't even think of or imagine. Yes, you're right. By connecting to Zapier ... I think we talked about Practice Ignition, when they announced how they were connecting to Zapier; it opened up 700 other possible combinations [00:31:00] of apps that can now do cool stuff [cross talk]  Blake Oliver: The beauty for you, as a developer, on a small team, especially, is that now you've just built one connection. You maintain one API connection to Zapier, and your customers can do all this stuff that would have been impossible for you to build before [cross talk]. David Leary: But it's not a replacement for your own API. For all you developers listening, you need to have your own API, because Zapier needs to talk to you through your API, for starters. But you need to offer a [00:31:30] true API, and you probably also want to offer Zapier, because there's a bunch of people that maybe they have the brains of an engineer, because maybe they're in accountant, but they don't know how to code. That's where Zapier's nice. Blake Oliver: If you're an accountant, learn to use Zapier, because it's pretty cool. You can do a lot of awesome things with it. Then you can offer this service to your clients. Like, "Let me automate some of these painful things in your business," and they will love you for it. There's people, like Heather Satterly, who are- [00:32:00] David Leary: Training people [cross talk]  Blake Oliver: -training people how to do this. Yeah, it's pretty cool. What else? Gusto has an update with FreshBooks, speaking of integrations. I think they've always had a payroll integration, but now it works better. It's more visible. Now, small business owners can find Gusto in their FreshBooks profile, and then they can set up the integration to automatically book the payroll entries into their FreshBooks account. David Leary: Interesting ... My [00:32:30] impression of FreshBooks has always been kind of that smaller scale, like, "I'm a one-man shop," right?  Blake Oliver: Well, you have maybe a few employees, and you can also pay contractors with Gusto, too. Even if you're a freelancer, maybe you work with a bunch of other freelancers on projects that you run. You've got to pay them out for their work and stuff. Then, Slack has an update. They just released a workflow builder tool, speaking of automation. Did you [00:33:00] see this one, David? David Leary: No, not at all. Blake Oliver: Now, instead of having to use Zapier to do some stuff, you can directly create custom workflows in Slack. So the examples given are standardize how you collect requests from your team, report any outage in real time, and get new team members up to speed with welcome messages. Those are just a few examples. I'm trying to think if there's anything I really like. The recurring progress updates are pretty cool, or fielding [00:33:30] requests from your team - these are these are kind of creating ...  It actually looks a lot like Zapier, when you create a workflow. Like, here's what happens; here's what it collects; here's what it goes and does. For instance, the example here that I'm looking at right now is a helpdesk request. You can create a form inside of Slack that has all the information you need for a typical helpdesk request. Then, once it's submitted, it posts the information into a different channel, like maybe for your IT team. It's a way to setup some quick [00:34:00] automation without having to go by another helpdesk tool or something. David Leary: Anything that you can automate from the app you're already in, the better. Even now, QuickBooks has added- I think QuickBooks Online has added some sort of workflow-y tools. They've started to experiment around, and I think, in the QuickBooks lab, you can add it to QuickBooks, too. Any little teeny bits of automation you can do yourself adds up, right?  Blake Oliver: Yeah. I think we have one last story before we go, right? David Leary: Yeah. I think it really ties into last week, right? A [00:34:30] lot of our stories last week were all everybody's trying to become a bank. There's more stories of that; like AMEX is targeting- actually, sorry, everybody is trying to be a small business bank. Now, there's other articles this week. AMEX is targeting small businesses. MasterCard's trying to go- working with another company to go after employees to help them get their paychecks two days early, and these big, big partnerships.  There's other tech companies that are now entering the small business bank/credit [00:35:00] card account. A lot of people are doing this. I think the most notable this week that I saw a lot on social media was ScaleFactor. So, ScaleFactor now released a credit card for small business. It's kind of similar to what we talked about last week about Expensify. They're gonna be able to control that end-to-end spend. Blake Oliver: Well, and this is really interesting because ScaleFactor is not just software, like Expensify. They are an accounting shop that makes software. They're an accounting firm with engineers, like you like to say. David Leary: Yeah. I think this is gonna be the standard. [00:35:30] I think last week, we even said, obviously, QuickBooks and Xero are gonna do this, too. It's pretty obvious this is all coming. Where this is really kind of heading, and tying it back to last week is ... I think maybe even two weeks ago, we talked about how there's this partnership between smaller regional banks and tech companies. They kind of need each other, because a lot of the tech companies can't become a bank, and a lot of these teenier, smaller regional banks really are not good at tech. Blake Oliver: That's [00:36:00] an understatement, yeah.  David Leary: But I feel like, looking at this and stepping back a little bit ... There was an op-ed piece about how this is not a fad; it's necessary - these partnerships. It was in Bank Innovation. Really, sitting back and thinking about this, I'm starting to wonder ... I get it, everybody wants to disrupt Bank of America, and Wells Fargo, and the big guys, and the Chases of the world, but I'm starting to wonder if maybe there's a reason that little mid-sized- I'm not gonna say peon bank, but there's [00:36:30] a reason that bank is just a teeny little regional mid-sized bank, and it hasn't grown past that. Maybe they're just not ready to grow past that. Now, they're pairing up with tech companies that are being over-aggressive on their growth; does this just lead to breakdowns?  Blake Oliver: Well, then there was a specific breakdown that happened this week. The mobile-only bank Chime went down on Wednesday. Everything broke. You couldn't use ... This is a [00:37:00] one of the challenger banks; one of those new app-based banks where there's no branches. Their app went down; their debit cards weren't working; their credit cards weren't working; you couldn't pay your bills; payments weren't processing. David Leary: This is for 5 million customers. They are a startup, but they've had insanely rapid growth, and most of it is they market there's no overdraft fees, so [cross talk]  Blake Oliver: No bank fees at all. David Leary: No bank fees at all, including overdraft. Blake Oliver: Right. They gained a ton of customers [00:37:30] after Wells Fargo had their problems, and it's unfortunate that this happened. It's the third time they've had an outage since July or something like that. They're in the middle of raising a new round of funding from investors, and they're seeking a valuation of $5 billion. So, not great, right? You figured out, David, that it actually wasn't Chime, itself, that had the issues; it was a partner that they work with. Who was that? David Leary: Remember, last [00:38:00] week, also, I talked about that company's name I couldn't pronounce out of Europe. Revolute ... right? Essentially, they are the same thing. They're a non-bank bank; one of these challenger banks, but they're all powered by the same company. There's a company called Galileo. They power Robinhood; they power Chime; they power all these companies. That's where the outage level happened. Now, it didn't affect all of the companies that are built on top of this technology stack company that's based out of Salt Lake City, in Utah, but the [00:38:30] the bigger thing, which I was amazed by, is, for 48 hours, Chime was down. I think before we recorded earlier today, I saw Chime might finally be up and 100-percent operational. Mind you, 5 million people could not buy groceries. People were at restaurants, and they couldn't leave the restaurant because the card would not swipe. They could not pay the restaurant tab. Blake Oliver: Wow.  David Leary: In the meantime, the company that is powering this technology is announcing and releasing their press releases and talking about how great it is that they just raised $77 million. It's like, what assholes!  Blake Oliver: It's [00:39:00] bad timing. David Leary: It's bad timing, and it's horrible! Their biggest client was down, and they're bragging about how much money they just raised.  Blake Oliver: So, Galileo, just to be clear, to make sure I understand it, is the payment processor API company on the back end. Here's the stack, as I am envisioning it. It is Chime has the app. The app leverages Galileo [00:39:30] for the payment processing. Then, I also learned that Chime isn't the bank; that they partner with Bancorp Bank for the actual banking. Chime's an app that sits on top of a traditional bank, and Galileo for the processing. So, Galileo broke, and then all of Chime couldn't send any payments; basically, couldn't process any payments for its customers. David Leary: The crazy thing was - you start reading people's tweets, their [00:40:00] direct deposits were going to Chime, but you couldn't get your money out. That was the only part that was not down. Money was going into Chime, but nobody could get money out of Chime. It was like Hotel California. Blake Oliver: Well, I guess it's a really good thing that it didn't happen that the inbound payments got blocked, too, because that would be really bad if people's paychecks were bouncing out of their accounts. That would have been like MyPayrollHR times a thousand. [00:40:30] David Leary: But this was kind of like that. People saw their paychecks in their accounts, and they could not access it. Blake Oliver: Well, it's one thing to not be able to pay your restaurant bill with your Chime credit card, but it would be another thing if your biweekly paycheck bounced, and then you had to spend a week or two trying to get another one paid into your account from your employer, who's like, "Why didn't it work?" They didn't know why ...  David Leary: Just to full-circle this, people on Twitter were really affected. People had their cell phone bills turned off. People [00:41:00] got affected by this ... At gas stations, et cetera. They're running out of gas. They can't buy gas ... To some extent, when you're marketing no withdrawals- I'm sorry, no overdraft fees, you're marketing at either the unbanked, or people that are already probably living paycheck to paycheck. Blake Oliver: Right? David Leary: That's the vast majority of their customer base. That's who they're going after. Then, their founders strongly spoke up about this ... It's just that tech hubris. "I completely acknowledge the fact that we feel like we let users down ..." They call them users; they're not customers. [00:41:30] It's just like this disconnect- Blake Oliver: Yeah, the arrogance.  David Leary: We saw this with the Visor tax stuff. People are really- they're truly affected by this stuff, and tech companies have got to get this, or this is never gonna happen. All these people, their 5 million people they got; they're gonna probably lose 4 million. There goes their $5 billion valuation right out the window. Blake Oliver: We'll have to track it. We've gotta get going. This is awesome. We'll continue this; follow up on [00:42:00] all these stories in the weeks to come. In the meantime, David, if people want to connect with you online, where should they do that? David Leary: Easiest way is on Twitter: @DavidLeary. Blake Oliver: And I'm @BlakeTOliver. I'll see you again next week, David. David Leary: Well, yes. We'll see each other in person next week. And if you want to see us in person over the next few couple weeks here, we are gonna be at Sage Intacct Advantage next week. Following that, we're going to- an accounting firm is having their own conference for their own employees, a virtual accounting [00:42:30] firm. We're gonna be at AcuityCon in Atlanta. Now, I don't think you can really go to that, but, hey, we'll be in Atlanta. Then QuickBooks Connect is after that. At QuickBooks Connect, we're gonna be at the Practice Ignition Party. We're gonna be at the VIP party for Gusto, Routable and Jirav. You said you're going to the Digital CPA Conference in Seattle- Blake Oliver: Yep, that's in December. David Leary: Hit the show notes for all the links to all these events that you can come see us in person at. Then, also in the show notes is our merch store that we officially finally launched. We have sold a shirt today! Somebody bought a shirt! Blake Oliver: Yeah! Thank you so much [00:43:00] for buying the shirt! We make- David Leary: We have some limited edition shirts that are only gonna be available til December 12th. Blake Oliver: We made $2 in profit from the shirt. David Leary: This is how it's gonna go. Yes. If you buy a sticker, we make 50 cents in profit, so we should sell more stickers-  Blake Oliver: I mean, $2 in gross profit; I wonder what our net is gonna be on all this. David Leary: Yeah, we'll figure this out.  Blake Oliver: All right.  David Leary: Hey, til next week, everybody. Blake Oliver: Bye. David Leary: Bye.
  3. SponsorsBQE Core - http://cloudaccountingpodcast.promo/core Show Notes 01:01 – Jennifer is bringing more than debits and credits to her accounting courses at UT 01:50 – Aspiring cloud accountants, get yourselves acquainted with high-quality video-conferencing software, such as Zoom!  02:56 – New new reviews!  04:44 – News from beyond the Cloud Accounting Podcast Studios!  05:09 – Are smart speakers recording your every word? | Consumer Reports  07:15 – Have we sacrificed our privacy for the sake of technological convenience?  11:21 – Caroline’s article relates back to our Sock-puppet discussion 11:48 – Does connection equal increased creativity? | Knowledge 12:54 – It's the newness of the person, their new information and new perspectives that inspires creativity.  13:36 – A substantial piece of David's work over the past decade is due to meeting new people on social media, however, he has yet to find the best way to balance digital distractions and real-world productivity 14:51 – Despite the negative aspects of social, it has opened up a wealth of possibilities for people to share, create, serve, and advance their professions 15:54 – David continually boosts his creative powers by accepting every LinkedIn invitation that comes his way!  17:17 – Be smart about building your personal brand, in order to make the best connections possible  17:44 – David highly recommends reading The Cluetrain Manifesto, and the 95 Theses, to learn more about the human connection to marketing, and social media 18:30 – Wanna boost your career? Stop lurking, start talking!  20:41 – Miguel's articles focus on job searches and hiring practices, such as background checks, as they pertain to social media:                  - When your social media presence affects your ability to land a job | PR Newswire                 - Social-media screening is the new norm for employers | Business News Daily                 - Social doesn’t tell a candidate’s entire story | Workforce                 - How useful is social-media screening? | Backgroundchecks.com 22:26 – Saving face - If you wouldn't want the entire planet to see it, don't post it on social media, period.  23:51 – We're no longer able to lead separate work and personal lives anymore with the advent of social media. 27:33 – Think your private social channel is private forever? Think again, and then think about what you say there!  29:08 – Don't be afraid to talk about the things you do - hobbies, interests, activities - on social media. It gives potential employers a more well-rounded view of who you are and what you can do for them 30:01 – Accounting firms are looking for more than just accounting majors to build diversity within their firms | AccountingWEB  31:15 – Not to worry, though, up and coming accountants! As we discussed last week, there are still many accounting-related jobs available that offer top compensation and career opportunities!  32:36 – Are CPAs losing faith in the US economy? | AICPA 34:18 – Check out Sean Stein Smith's take on blockchain and accounting in episode 36]  35:05 – Cause for celebration? WeWork's failed IPO is proof that the free market system work |AIER  35:18 – Numbers don't really lie ... WeWork's S-1 filing | CNBC 36:35 – Since the trends are heading towards automation, aspiring accountants and bookkeepers should focus on the value-added services they can provide to clients 38:37 – Make learning the technology and the tools your side gig, if you want to get ahead of the game!  40:02 – Learn all the tech tools, not just accounting-related ... Calendars, social media automation, website design to build up basic skill levels employers are seeking 41:14 – Carpe Diem! It's never been easier to start your own accounting or bookkeeping business, with very little upfront expense!  42:14 – Get the itch for a niche ... There are countless opportunities for specializing in the accounting and bookkeeping realm 43:38 – Blake doesn't think regulation will hit the advisory specialty in the near future.  44:32 – When in Texas, don't bother calling yourself an accountant, unless you've got the CPA designation to prove it.   44:43 – In Cali, however, anything goes ... Anyone can call themselves an accountant, no degree required.  46:11 – Traditional accounting will stand the test of time, even though some may venture into more 'futuristic' areas. It's really a matter of personal choice 48:09 – No more snooze-fest - Accounting and bookkeeping can be as exciting and fun as you make it  Connect with Jennifer Email: jennifer.johnson@utdallas.edu LinkedIn: https://www.linkedin.com/in/jennifergjohnson Twitter: https://twitter.com/JENJOHNSONCPA 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. 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 TranscriptBlake Oliver: Welcome to The Cloud Accounting podcast. I'm Blake Oliver. David Leary: And I'm David Leary. Class: And we're the University of Texas at Dallas!  Blake Oliver: Awesome. Well, I think that worked, but in case the audio wasn't quite clear to our listeners, we are joined today by a very special guest; many guests, in fact. Jennifer Johnson, CPA, and Senior Lecturer in Accounting has brought along her entire class as our virtual [00:00:30] studio audience. So, thank you all for joining us, and please give yourselves a hand. Class: [Applause and cheering]  Blake Oliver: All right. Well, Jennifer, thanks so much for bringing your class along and being our audience today. I understand this is Accounting Information Systems. Is that right?  Jennifer Johnson: Correct. Blake Oliver: We're really happy that you reached out to us and suggested doing something like this. What was it that prompted you to ... First, how did you learn about the podcast, and [00:01:00] what gave you this idea? Jennifer Johnson: I've been listening to the podcast for about six months. I just stumbled across it, and ever since I started listening to it, I thought it would be great to introduce your topics to my class. Of course, we get the chance to talk about accounting technology and how accounting is not just about debits, and credits, and audits, and tax returns. This semester, I'm assigning them all the opportunity to listen to various podcasts, of which yours is one. Then, they get to share [00:01:30] the recent news and technology with the course. Everybody's learning something new, outside of the textbook.  Class: Having this event happen is just a technological marvel of the cloud, because we have two different technologies we're using to record. We've never done this before, with a studio audience like this - a virtual studio audience. It's a testament to the cloud. Blake Oliver: Yeah, and for those who are interested in nerding out about the tech, we're using Zencastr to record the podcast audio. That's what we normally do, when we record, because David [00:02:00] is in Tucson, and I'm in Los Angeles. Then, we are now adding Zoom for the video-chat component so we can record locally to our computers to get high-quality audio. Then, we can also reach you through Zoom, which, by the way, students, if you're not familiar with it, I highly suggest you get familiar with the Zoom, because it's what it seems like all of the modern cloud-based accounting firms are using these days- David Leary: Especially if you're gonna be a cloud accountant because you don't wanna have to drive to your clients' offices and do face-to-face meetings. Blake Oliver: Yeah, [00:02:30] no, avoid that at all costs! David Leary: So, we've got news to jump into, which is great because Blake brought articles; I brought articles; you, the students, have brought articles to discuss this week. We do have a couple of reviews we should probably get through, and then, we'll jump into the news. Blake Oliver: This is from Johan Potgieter CA(SA), which I'm not sure what that means. David Leary: I think it's South Africa. Blake Oliver: Oh, CA in South Africa. Got it. He says - five stars - "I absolutely love this podcast! As the Cloud Accounting Manager and fully remote worker for Outsourced CFO, the insight, commentary, research, and witty feedback, regarding everything Accounting, Cloud, Tech, Xero, AI, and everything in between has become a staple source of knowledge and information in my week. For the past year and a half that I have listened to David and Blake on this podcast, I have not missed a single episode." Wow-  David Leary: Thank you!  Blake Oliver: "I can not recommend this podcast enough to any person that is even remotely interested in the wonderful world of Cloud Accounting. Even though they are based in the USA, I find that their content also relates to me as a professional in South Africa. They are truly Cloud Accounting Thought Leaders ;) Keep up the great work!" David Leary: Thank [00:03:30] you very much! That's a great review!  Blake Oliver: Thank you.  David Leary: "Great podcast!" Five stars ... This one's on iTunes. "Engaging and informative. I love listening and staying up to date on the latest accounting industry news." This is from horizon_view in the United States of America. Blake Oliver: TScottT said, "Love your podcast. I can’t get into a lot of podcasts, but I listen to yours on a regular basis. Always informative AND entertaining. I even made my husband listen to several episodes as we were driving home from XeroCon this summer! He’s not an accountant, but I think even he enjoyed it. Keep up the good work!" My [00:04:00] wife won't even listen to the podcast, so that's really a testament. David Leary: Yeah. It's even better if you can get your spouse or significant other to actually subscribe and download the podcast separately. That'd really help out our numbers.  Blake Oliver: Yeah, help our numbers out.  David Leary: One more review. "Hooked! Hey guys, I've been listening to your podcast for the last two weeks. I'm addicted. For anyone wanting to know how to disrupt their profession and stay ahead of the curve, this is mandatory listening. Keep up the great work!" That's from astetic - A-S-T-E-T-I-C ... [00:04:30] Blake Oliver: If you want to leave us review on iTunes or Podchaser, we'll read it on the air. But, let's get to the news, shall we, David? David Leary: Yeah, should we jump in with one of our stories? One of the students' stories?  Blake Oliver: I think, let's start with the students. We're doing this a bit different this week. We have our studio audience here, and I understand that some of you have brought articles to share. So, we would love to go ahead and do that. Who [00:05:00] wants to go first? Alex Dolan: I'll go first.  Blake Oliver: Go ahead and tell us your name. Maybe a little bit about yourself. Then we can get into the article. Alex Dolan: My name is Alex Dolan. I'm a senior student here, or a senior accounting student here at UT-Dallas, and I'm like one semester away from graduating ... All this exciting stuff happening in my last semester ... I found an article from ConsumerReports.org, by Allen St. John and Thomas Germain about [00:05:30] smart speakers and how they pose potential privacy threats and are viewed as kind of invasive by some people. A little bit of a summary of it is that investigative reporting has shown that smart speakers are recording transcripts of voice recordings that are being screened by employees for the improvement of devices, "and not for marketing purposes." Critics say this policy is unfair [00:06:00] to consumers. Perhaps it is spelling a bad habit for big tech for surveillance without the consumer's knowledge. I just wanted to know what you guys thought about this.  Blake Oliver: I have smart speakers. How about you, David? David Leary: I have an unplugged Alexa. It's usually unplugged. Blake Oliver: Are you guys scared by this whole thing?  David Leary: No, I just plug it in when I wanna use it and unplug it when I don't. Just been doing that since day one. So, this is good. Now that we have an audience here, we can take a survey. How many of you are using- actively use a smart speaker?  Blake Oliver: Yeah, raise [00:06:30] your hands, if you've got one. Okay, so, it looks like ... Probably, what, 20 percent? A third, maybe. It's funny, when this article came out, I kind of got paranoid for a moment, because I have a smart lighting system in my apartment. I bought all those light bulbs, Philips Hue light bulbs that you can control with your voice through Alexa. It's kind of a pain to set up, but once you do, it's pretty awesome. Oh, and I just woke her up. Let me see ... [laughing] She's listening to our conversation. [00:07:00] Yeah, I got a little bit paranoid about this, but the good news is that now you can go in, and you can change your privacy settings, which is ... That's what's great about this article that you brought, is it ... Now we have options to control privacy and whether or not these recordings are gonna be listened to by human beings, right? I think there's a broader discussion, which is how much privacy are we going to have in the future? Because everything I read suggests that privacy might be going away, and we may not have a choice about it; in that there's all this- [00:07:30] big data companies now that can take in our credit card purchases, and our loyalty card purchases, and our location data from different apps. There's all these different- David Leary: We talked about that two weeks ago, about how much you tip; that's being tracked now. Blake Oliver: Yeah. Not to mention, there are cameras everywhere now. People have smart doorbells; there are public surveillance cameras. There are companies that just aggregate this data and can use AI to know an incredible amount about you, automatically. I'm not sure there's a way to really stop this. [00:08:00] There's legislation that's been proposed. I think San Francisco banned the use of facial recognition, in San Francisco, by the police department. Ultimately, how much can legislation do? I think it ties into some of the other articles that you guys are gonna share later about social media and presence there. We may just have to get used to a world in which we don't have as much privacy as we used to. David Leary: This article didn't touch on all the apps you use. Every time you turn around, you install some app, and it's asking for access to your microphone. This has probably happened to [00:08:30] everybody ... About three weeks ago, I was complaining to my wife about my teeth were hurting. I went to Twitter, and I got Sensodyne ads in my Twitter feed. I know I didn't Google search that. I've never clicked on a Sensodyne toothpaste ad. It's a little on the creepy side at this point. Blake Oliver: That's creepy. Alex Dolan: I used to work at a pet store, and while I worked there, all the ads on my Facebook  were all about pet food, and pet appliances, and stuff like that- David Leary: Oh because the location [00:09:00] tracking. Blake Oliver: Yeah- Alex Dolan: Well, just because I was always saying stuff about pets' food because I was the sales associate. It always thought I was talking about pets. David Leary: That's the thing with big data, right? It's so smart and so stupid. It thought you were just a person that loved dogs or pets. It's not smart enough to know, "Oh, he works there. He probably doesn't wanna buy any pet stuff," and they still advertise it. Or, it happens, like you buy something on Amazon, and then you see ads for that for the next two weeks ..." You already made the purchase, though.  Blake Oliver: So, what [00:09:30] is the tie-in to accounting here? If I'm gonna stretch here, I would say that we're talking about big data, and if you look at the future of audit, for instance, there's all these applications that are being developed now, such as MindBridge Ai, that ingest large amounts of data and then extrapolate risk on these data sets, without us having to manually do it.  That's essentially the same logic; the same systems are being applied to our personal data to find things out about us, but we can take that [00:10:00] technology, and we can apply it to accounting - to audit, in particular - to hopefully save ourselves a lot of trouble. Of course, the challenge is that we don't always know exactly how it works. Then, as an auditor ... This is one of the reasons that this AI in audit has taken so long to get into use is that we don't often know how machine learning works, because it's an algorithm that we don't understand. It builds itself. So then, how do you ... As an audit partner, how do you use that [00:10:30] tool, if you can't explain it, or if you can't look inside it? Interesting questions, right? All right, well, thanks so much for sharing. Is it Alex? Alex Dolan: Right. Can I ask one more question?  Blake Oliver: Oh, yeah, sure. Alex Dolan: Do you think that audit, in the future - like in the near future, with Big Data - do you think that privacy audit will be something that will exist?  Blake Oliver: That's a great question. If legislation continues to be passed, protecting consumer privacy, then a lot of these big companies are going to have to go [00:11:00] through audits of their consumer data to make sure that they're not collecting too much or that ...I don't know- that they're complying, right? David Leary: I can even see that as being a service you could offer as your accounting firm to your clients. We will help you secure your private data; starting with your financial data online. Blake Oliver: All right, who's next? Caroline Dillard: Hi, I'm Caroline Dillard. I am also a senior in accounting here at UTD. I'm set to graduate next May. Then, I plan to fast-track, because UTD has a fast-track master's program. So, I plan to do that [inaudible] sit for the CPA exam. The [00:11:30] article I brought today is somewhat related to the article you brought up a couple of weeks ago about sock puppets on LinkedIn, and the fake profiles that you wanna avoid making connections with. This article was published on Knowledge.insead.edu. It was written by Pawel Korzynski, and it's called, "How Making New Friends on LinkedIn Can Boost Creativity." Essentially, what it is, it's sort of [00:12:00] a summary of a paper that the author of the article co-authored. Basically it was a report of a study done on engineers. They found a correlation between the creativity and personal innovativeness of those engineers. Then, 1) their willingness to play with new social media technologies, and 2) their willingness to connect with new people that they hadn't previously known.  What I found was interesting is that there's a correlation [00:12:30] between making connections with new people - people you haven't met before - either face-to-face, or through another connection. But that same correlation with creativity doesn't exist, if you're just making connections with people that you've already met. Essentially, there's a correlation between creativity, and then a diversified network of [inaudible] Basically, the study put forth that the reason [00:13:00] for this is, if you're making connections with new people, you're getting access to new information, and new data, and this builds your creativity. I was wondering, 1) your thoughts on it; then, 2) if there's a benefit of connecting with new acquaintances through social media; but there's also the detrimental effects of connecting with sock puppets or fake profiles. What are some things that we can look out for to avoid, when [00:13:30] making new connections?  David Leary: One proof of this ... This podcast would not exist, if it wasn't for social media. Blake Oliver: Yeah.  David Leary: Chances are, I would have never ... I knew Blake through social media before I met Blake, or I knew of Blake, maybe is the better way to say that. I look at other projects and things I've worked on over the last five, six, seven, eight, 10 years, and a lot of these connections have been because of social media. So, it's totally valid.  But, equally, it's really annoying, right now, when I get 10 messages a day on LinkedIn, which I know are from bots, or fake things, or people [00:14:00] trying to sell me stuff that are not engaging. Sometimes, I feel like that sucks a little bit of your soul away. I don't know the best way to balance it. I don't know, Blake, if you came up with a great system, or if any of you, because it gets very distracting. I can't even imagine being a student nowadays with the amount of social media and the distractions. How do you study? Blake Oliver: Yeah, it's crazy. I wasn't a student that long ago, and I didn't have a smartphone. I met my wife in college, and I never had to text her when we were dating, so I can't even imagine what you all go through, having to interpret [00:14:30] a text message of somebody that you're ... We had to talk on the phone. It's amazing what's going on with social media. I would agree with David that our podcast wouldn't exist. We would not have met. Well, maybe we would've met at a conference, but we wouldn't have continued talking to each other, if it wasn't for social media. A lot of the people that I know who are really forward-thinking in the accounting profession, they'd be isolated, otherwise. Maybe you're one person in your firm who kind of is getting what's happening. In the past, you would have been that one person, and your ideas would have been [00:15:00] crushed, and you would have just gone along with what everybody else was doing. But now, you can connect with like-minded people in firms or in industry, all over the country, and you can come together.  There are these groups that exist, and David, and I are part of one together - people who work all over the place, all over the world, and we connect, and we share ideas as to how we can better run our firms, build our applications, serve the community, advance the profession. David Leary: If you think about that, it applies to school, right? It's the same model. You're in classes; you're [00:15:30] going to different classes every semester; you're constantly meeting new people. These collisions are happening. You're at your creative peak there, in college. Then you get out, and you take a job with a company, and you only talk to the same six people every day for the next five years if you stay there that long. Of course, your creativity is gonna get stifled. Blake Oliver: I think the key is use social media intelligently. David, I wanna know, do you still accept every LinkedIn invite that comes your way, or have you changed your behavior? David Leary: Well, apparently, I'll be more creative if I connect with more people, so I just accept them all. Blake Oliver: David, [00:16:00] and I are of different opinions. I won't connect with somebody, unless I can trust that they're real; that we have connection. You can't just look at connections in common, though, because there's lots of bots that are really good at connecting with many, many people, such as David, who don't look at their profiles ... I try to be smart about it. I think the key is just connect with people who you know are real and that you wanna continue conversations with. It's not like online is the future of everything. It's a hybrid, like many things. We take these meetings [00:16:30] that we have at conferences, for instance - maybe a technology conference - and then we continue talking and sharing ideas with those people throughout the year until next time. Whereas, in the past, it would have just been I see this person once or twice a year. I think it's important, too ... I like this article that you brought, because it mentions, at the end, employer policies about social media. One day, when you guys are running firms, or running accounting teams, or finance teams, I think it's really important to let your staff, especially if you have a firm, have their own identities [00:17:00] on social media. A lot of firms, I think they kind of ... They don't like it when the staff are out there on social media. They want the firm brand to be the only thing that's out there; but people don't buy from a brand, they buy from people, when it comes to professional services. You need to be out there building your own personal brand, and I don't mean this in a like a sleazy marketing kinda way. I mean this in a you are, to most people, your social media profile, because [00:17:30] you can only have so many one-to-one, in-person relationships these days, but you can have many, many more, via LinkedIn, or Facebook, or Twitter, or Instagram, or Snapchat, or TikTok, I guess. I don't know ...  David Leary: People wanna connect with other people. They don't wanna connect with companies or brands. There's a good book that you guys should all read. It's called The Cluetrain Manifesto. Even if you don't read the book, there's just the 95 Theses, if you just read that; takes you 20 minutes. It's all about how markets are conversations. [00:18:00] Those guys wrote that over a decade ago, now, and it's so dead on. This is pre-Facebook. I think Twitter was just becoming a thing, and social media was just becoming a thing. They really got that things are changing, and intranets were changing, internally, and the internet was changing the way communications were happening; it's not so much one way anymore. Yeah, being a face for your company is important because that's who people wanna connect with - other people, ultimately. Blake Oliver: The [00:18:30] tip I would leave you with is, as you get out into the professional world, and you start using LinkedIn, don't be afraid to post. If you read something interesting, share that on LinkedIn, and ask a question, and interact with your colleagues, and share ideas and information. It takes guts, I think. A lot of people- the vast majority people never post on social media; they're just lurkers.  I saw a study that, on Facebook, something like 80 to 90 percent of people never post. They [00:19:00] only look at other people's posts, and maybe 10 percent of people are out there commenting, and creating content, and that sort of thing. I can tell you, just based on my own experience, that getting myself from that lurker point into that 10 percent has made all the difference in my career. David Leary: So, let's get into the next couple stories, because I feel like this is the other side of the coin and pendulum here, Blake, of social media. This episode of The Cloud Accounting Podcast is sponsored by BQE Core. If you have niche clients that are architects, engineers, consultants, or lawyers, BQE Core is the app for them to best manage their firm, increase their staff productivity and ultimately increase their profits. Even if you don't have those niche clients, Core is a great tool to use in your own accounting or bookkeeping firm, as well. Core is an easy-to-use all-in-one platform for project management, but includes advanced functionality, like budgets, labor costs, forecasting, contract analysis, and approval processes. Core also includes a standalone accounting module. Even though Core is an all-in-one platform, it still works nicely with other apps offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app and recently launched a cutting-edge voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E. Blake Oliver: We've [00:20:30] got another story from Miguel-  David Leary: Kinda three related stories. Blake Oliver: So, Miguel, same thing for you - your name, a little bit about yourself, and then go ahead and share that story. Miguel Calderon: My name is Miguel Calderon, and I'm also a senior here at the University of Texas at Dallas, and I graduate this December; so, a few more months. Being that we are college students, and our search for employment is a lot higher than probably the average person, I was looking at a couple of articles [00:21:00] for a survey done by CareerBuilder.com. It says, "Roughly seven out of 10 employers search for candidates using social networking sites for background checks, and about 43 percent of those employers continue using social media to check on current employees, once the onboarding process is complete."  Like everything, there's good and bad to this. About 37 percent of the background information supporting the professional qualifications that the employee had in his resume, and [00:21:30] 22 percent of the candidates had great references from the job candidates, probably through one of these bots or something. The bad part of all of this was that 27 percent of the people actually lied about their qualifications in their resumes, and 20 percent shared confidential information from their previous employers. I know you mentioned just on the last topic about using social [00:22:00] media intelligently, but probably saying it on private was my thought. According to this article, about 47 percent of employers said that they wouldn't call a person back, if they couldn't find them on social media. What kind of balance would you ... Can give us, so we can have a balance, or something?  Blake Oliver: I love that you brought these stats. These are fantastic. It really [00:22:30] shows a difference between when I was a student, and now. When I was a student, the advice was just don't be on social media; if you just avoid it, anything public, then you can't damage your employment prospects. But now, if you're not on social media, then the employers want to know why aren't you on social media? And it can hurt you. You're kinda caught. You have to be there. If you really wanna be safe, just don't ever post [00:23:00] anything, anywhere, that you wouldn't want the entire world to see - that's the safest thing to do, right?  David Leary: That's my policy, too. I don't use any of those "Only show this post to 16 of my friends," or, "Only show this to a certain audience," or, "This one's gonna be a private post," because all it takes is one mis-click and you're in trouble. So, I just assume every time I post everything, it's wide open to the world - everybody can see it - and it just keeps me safer that way, knowing I just choose not to put anything that should be private online. Blake Oliver: I [00:23:30] know that's hard, right? Because you wanna be able to have that close circle of friends that you share with. But depending on your ambitions, somebody might screenshot something, and that might come back to bite you someday. Is it really worth it? I agree with David that you should really be the same person you are online, that you are in person, that you are at work. I think there's a big shift happening in the world of work, where ... It used to be that you had this private person that you were at home and with your friends, and then, you [00:24:00] had this professional persona when you went to work. Those two things could exist separately and be completely different. If you've watched the show Mad Men, you see that. Most of the show, the drama is around people having these dual identities. Don Draper, perfect example, right? But now, with social media, with everybody carrying a camera around in their pocket, you can't do that anymore. We can see that there's actually some positive, I think, effects of that. If you look at the whole "Me Too" movement, I [00:24:30] don't think any of that would've happened if it wasn't actually for social media and people getting together online to talk about this kind of stuff. If you do something inappropriate, chances are somebody will pull out their camera and record you doing it. You can't do that anymore. We were just talking about privacy ... This is one of the - I think - good things about lack of privacy is that you can't hide. Either-. David Leary: Unless you're Michael Mann, with the MyPayrollHR fraud [cross talk]  Blake Oliver: That's right. Yes.  David Leary: That guy hid pretty well. Blake Oliver: The best thing to do [00:25:00] is, yeah, every time you post, think, "What it what if my parents saw this? What if my future employer saw this," and then don't do it if it's a question. Also, I don't think that means you have to be buttoned up, because employers, they'll look at your profile, and they'll figure out if it's not real. I think the key is to be yourself to the point where, "I'm not gonna work at somebody's office, if they're not okay with me being myself." It's the only way we all get to a situation in which our jobs don't suck. I [00:25:30] know that can be hard, but it can work out. David has made a whole career out of essentially being himself in a corporate environment. David, you wanna talk about working at Intuit, and your role? You stood out from the crowd there.  David Leary: I was maybe one of the first five or six employees at Intuit that were on Twitter and just started getting out there on social media. It took a big company like Intuit years before they kinda got good at it, or even knew what they wanted to do with it. In the meantime, I kinda saw [00:26:00] it as an opportunity, because if you look at historically ... You guys have probably heard of Guy Kawasaki.  Blake Oliver: He was the chief evangelist for Apple- David Leary: For Apple, for years. Some of you guys play Xbox; Major Nelson, who's on Xbox ... Even though Xbox, the brand,  and Xbox is a platform, there's still these people or these faces of those platforms ... I kind of saw that as an opportunity; like, "Oh, we have this platform, QuickBooks Online; we have a platform for developers - the APIs; but we don't have a face." People wanna talk to a face. They wanna think of a person when they think [00:26:30] about that product. I just went out there and started becoming that person ... A little consciously, but not really. Really, I just helped a lot of people, and it just kind of snowballed and built from that. Blake Oliver: David's being very modest, but he essentially was the face of the QuickBooks Online ecosystem for many of us, looking from the outside; at least that's how I perceived you, David.  David Leary: I was good at smoke and mirrors, huh? Blake Oliver: That's a big thing at a multi-billion-dollar company ... By the way, guys, if [00:27:00] you don't know Intuit, maker of TurboTax and QuickBooks - one of the largest developers of accounting- cloud-accounting software in the world. Yeah ... So, David did it. It may not be easy, but I think you were able to carve out a role for yourself because of it, at Intuit, and it has led to great things. David Leary: One thing, just to build off of these articles - yes, you as a student have to worry about - to get hired - what you post on social media. But I heard something this week, and I'm not sure what I [00:27:30] was listening to, so I’m gonna have to do some digging to get this link in the show notes ... Just the analogy would be this - you now have graduated; you work for accounting firm B, and it's a smaller firm; you guys have a Slack channel, and you guys are communicating on that. Maybe you're talking about all your competitors in there - good, bad, immature talk, whatever it is.  In theory, it's a private channel. Now, accounting firm A gobbles you up, and now you're part of that accounting firm. Slack lets them take [00:28:00] all those Slack messages and merge it into their instance of Slack. Now, every single person could just search all your old messages on Slack, so, even the "private" channels have some risk of not being private, now.  Blake Oliver: That's a really good point. We've kinda known this about email for a long time. When you send an email, that's like a postcard in a lot of ways. Would you put this on a postcard and send it in the mail? Somebody else could read it at the office where you're sending it to ... Same thing with Slack, with email. We have to be really conscious of how [00:28:30] we communicate. David Leary: How many of you have posted something on social media that you fear is gonna not let you get a job? Blake Oliver: I'll admit it, but that was back before anyone was warning anybody about that ... Let's talk about some of the positive things about posting on social media. First of all, I wouldn't have gotten my last three jobs if I wasn't active on social media, and posting, and all that stuff, so that's a great thing, for me, personally. In the last the last three jobs I've interviewed for, I have not had to submit a resume because my LinkedIn profile [00:29:00] and the stuff that I was posting on LinkedIn was plenty. They knew who I was. They knew what I could do. So, that's a big bonus, right?  Some of these other stats of reasons why employers hired a candidate because of what they saw on social media - that your background info supported your professional qualifications; it shows you were creative; that you conveyed a professional image; that you showed a wide range of interests. I think that's important, too. Don't think that because your employers are looking at social media, you can't post pictures of [00:29:30] yourself kayaking or something because you like doing that. That's great, actually. People want well-rounded employees. Especially if you're going into public accounting, they want people who are going to be developing business someday, and if all you do is accounting, you're not gonna be able to bring in business. You're not gonna develop relationships, and that sort of thing. David Leary: We could jump into some of the articles you and I brought, Blake. I have one that actually ties into exactly what you just said. Blake Oliver: Okay, let's hear that. David Leary: This is an article that was on AccountingWEB. "Why Non-Accountants are the Growth Engine for Accounting Firms.". [00:30:00] Blake Oliver: Oh, I saw that. David Leary: Obviously, with all of you being accounting majors, guess what? You didn't have to do that if you wanted to work for an accounting firm. arguably, as they're getting way from compliance work and going to more technology driven and advisory work, a different skill set's needed. What's good is it feels like Jennifer's preparing you guys for that, right- Blake Oliver: Yeah. David Leary: -beyond just compliance work. He goes into very specific thoughts about this, and how it actually even helps with the culture and the diversity, [00:30:30] et cetera. It really drives back to what Blake was saying, that they want diversity; they need different thoughts. Especially in accounting firms, I think there's just one marching order, and people- they need to stray from that more. Blake Oliver: Yeah, and I wouldn't like take this trend as like a bad thing for accounting. It's really a good thing because accounting firms are diversifying, and a lot of the fast-growing accounting firms actually don't describe themselves primarily as accounting firms. They describe themselves as either professional-services firms or consulting firms [00:31:00] that happen to be run by CPAs. So, there's a lot more opportunity inside of these firms that are growing to do a lot more than just audit and tax; not that audit and tax are bad. We had a story last week ... This latest episode on the podcast about how tax manager is one of the best jobs in the country, right? High compensation and tons of opportunity for career growth. David Leary: Well, I think, of the top 15 jobs in America, weren't four to five accounting-related? [00:31:30] Blake Oliver: Tax manager, audit manager, and accounting manager were all in the top 10 or 15. I can't remember. It was a list that was ranked by career prospects. The idea being that it's not really so important what you're doing as how much opportunity you have to grow inside of that field. If you can get to the manager point quickly, if you can get past that staff level and get to manager, then you've got a ton of options for career growth, [00:32:00] and it's a lot more fun. Let's see, what else should we talk about? I've got a story here ... How many of you subscribe to - just a show of hands - read the Journal of Accountancy? Is that something you guys are paying attention to? Yeah? Okay, cool, so, like half? That's great. That's awesome-  David Leary: Those of you who aren't, I'm not either, so, it's okay ...  Blake Oliver: Well, it is the most widely read publication in accounting, so if you don't have a student subscription or membership, I suggest you - and you wanna be a CPA - get [00:32:30] one of those with the AICPA. They're not expensive, and you get the journal as part of your membership. The article that I'm talking about now is the AICPA's Economic Outlook Survey. They do this every quarter, and it's a survey of CPAs who are AICPA members in business and industry holding executive positions in both public and privately-owned organizations of all sizes across a broad spectrum of industries - the CPAs in executive positions in business and industry. They [00:33:00] survey them every quarter. There's kind of a slightly worrisome trend ... CPA Outlook Index - this is the number between 0 and 100 that this survey uses to give you an idea of how positive CPAs are about the economy - dropped from 75 to 72, but the index component for optimism about the US economy dropped 10 points in the third quarter, from 70 in the second quarter to, now, only 60, which is 19 points down from the third quarter of 2018.  [00:33:30] If you've been following the news about a potential worsening of the trade war with China, about a possible recession coming, it seems that CPAs, who are in these leadership positions in industry, are also worried. Doesn't mean that necessarily it's going to hurt job prospects, because accounting is one of those rare industries in which it continues to grow, often, in recessions. Actually, here's the bright spot in here ... For the last five quarters, the number-one [00:34:00] challenge facing organizations has been availability of skilled personnel. If you are a skilled accountant, you'll probably be just fine. David Leary: Yeah. I brought an article for your economics class, I guess. It's written by, actually, another professor, Sean Stein Smith. He's been on the podcast before, really heavily focused on bitcoin and blockchain ... Everybody's familiar with WeWork, right? Blake Oliver: WeWork the co-working platform. Nod your heads ... Yes, no?  David Leary: It's like the library. You [00:34:30] go there to work, except for they have kegs and coffee. It's great ... You go into work [cross talk]  Blake Oliver: -and they have internet; high-speed internet ... Well, I guess they have that at the library, too. David Leary: Anyway, WeWork's had this dramatic rise and fall to where they were about to IPO. I think they had a crazy valuation. They wanted to IPO at $43 billion. Now, they've completely pulled back. They're not gonna IPO. Sean's article basically points out that everything about the failed WeWork IPO proves that free markets [00:35:00] work and that we should be celebrating it. The quote I really love in here, that he wrote, was, "To succeed, any company must create more resources than it consumes, and WeWork simply has not met that requirement." I thought that was just the perfect way to phrase it. Blake Oliver: Markets work and accounting .... It wouldn't be possible without accounting. This is one of those things that we don't talk about a lot, but like the entire capitalist free-market system relies on financial statements, and they worked, in this case. People [00:35:30] realized that you cannot run a real estate company with operating expenses twice your revenue, and go public, and expect people to invest money at this insane valuation. Check out their ... I think it's their S-1 filing? I can remember the name of the form but check out WeWork's filing. It's kinda crazy-  David Leary: Take that article to your economics class and try to get some extra credit. Blake Oliver: So, David, I think we should pivot now to the Q&A section. We've got a special segment here. If you want to ask us any questions, you're welcome [00:36:00] to do so at this time. Jennifer Johnson: We've got a handful of students who've got some questions in the classroom. I'll just pass the mic around to those guys and let y'all answer them.  Blake Oliver: We know that you've prepared questions, but if you wanna- if something has come up, based on this discussion or just is at top of mind, feel free to ask whatever you want. Student: Yes, hello. My name is [Olus Lavi]. I'm a senior here at UT-Dallas. I'm graduating in May. My question is - from the perspective of someone who is [00:36:30] aware of the global trends in cloud accounting, what can a fledgling professional do to put themselves ahead of the curve? Blake Oliver: The question is - from the perspective of someone who is aware of global trends in cloud accounting, what can a fledgling professional do to put themselves ahead of the curve? I could tell you that, based on my study of technology trends, that everything is headed toward more, and more, and more automation. That was true in my career, starting as a bookkeeper. 10 years ago, 80 percent of my job was doing [00:37:00] data entry. I was doing bookkeeping to put myself through school to get my CPA. Within five years, that had inverted, and maybe 20 percent of the job of bookkeeping today is data entry, and the rest can be whatever value-added services you want to provide on top of that. Maybe that's doing cloud-based bill pay, or payroll, or analyzing financial statements, even, if you've got those skills. That happened in the small business world. David, as [00:37:30] the ecosystem guy for QuickBooks Online, you saw that automation happening. David Leary: I saw it even before that. If I go back to early in my career, I'd gotten into quality assurance, testing QuickBooks, before we'd ship it. In those days, you'd have to test it, and make sure everything was perfect, because you were making a CD that you'd physically have to send and ship. If you shipped the bug, it's very hard to send a new CD; costs millions of dollars to do that. Now, with cloud accounting, if there's a bug, they just fix it; somebody refreshes their browser, they have the fix. What I saw, in those days, is things [00:38:00] started moving from manual automated testing, where you were clicking everything, and clicking every button, typing every field, deleting every field, you'd start using tools to automate that. So, I've been on this automation trend for probably 15 years now, I've seen it across the board. Blake Oliver: The accountants who learn to master automation tools and technology are gonna have unlimited opportunities, so that is my recommendation to you. You may ask me, "Well, how do I do that? How do I actually get experience? Because [00:38:30] when I go work for a firm, chances are, they're not gonna let me touch that stuff right away. Maybe I start in audit, or maybe I'm in tax ..." I would say do this on your own time, on the side.  Go find a small business that will let you do their bookkeeping and play around with the technology; build a QuickBooks Online general ledger that's hooked up to some sort of cloud-based bill pay system and try doing integrations. Play around with these different apps. Maybe do an internship in an outsourced accounting department in [00:39:00] an accounting firm. That's how I got all my experience doing this. You can't learn it in school because it's developing too quickly. You can learn the general principles of integrating information systems, but to really know it, you've gotta do it. Even if that's not your dream, say, working with QuickBooks or with Xero, and you wanna work in larger enterprises - you wanna go work for Coca-Cola or something like that - all the principles of integrating systems, and data flow, and automation, they all apply. It's the [00:39:30] same stuff, it's just more complex. If you're working with QuickBooks, or you're working with NetSuite, or you're working with SAP, or Oracle, fundamentally, these are the same principles, and you can learn a lot doing it on the small-business side to train yourself for that enterprise-level work. I would say the same thing about robotic process-automation technology. Companies like UiPath that build this incredible automation technology that you may not be able to get access to, right now, but you could learn how to do [00:40:00] basic automation with macros ...  David Leary: I think you could even just start on your own personal level with small tools, like calendar tools for scheduling. It sounds dumb, but ... "Oh, we're gonna go out for drinks tonight ... or what's the best time we can all go out for drinks tonight?" There's tools ... You can start incorporating these into your life now. There's also tools that can post to social media. You could have it automatically ... I'm just throwing this out there ... Automatically read the show notes in a Cloud Accounting Podcast, and then grab all those articles, and tweet [00:40:30] them out from your account. An employer would be like, "Wow, this person really finds great articles and tweets these out!" But there's all these tools, and just by using those, you're just gonna start building fundamentals on how to connect different apps together, and move data around, and sending data to where you want it to go. Even though it's nothing accounting-related, but if you just get those as a basic skill level, you're just gonna put your head on that path. Blake Oliver: All right, next question. Student: Hello. My name Heather Hoagland, and I very much appreciate you mentioning how important that is, because I currently work at a small company, and I'm doing bookkeeping, so I'm glad that that's giving me experience, and taking me somewhere. My question for both you and David is what would you say to someone who dreams of starting their own accounting business? [00:41:00] Blake Oliver: I would say it's never been easier. That's the beauty of it. I was kind of in your situation, where I was doing bookkeeping. I was getting to apply the skills that I was learning, or the theory that I was learning, in reality, I got to apply the theory in this business. Here I am making [00:41:30] journal entries, making mistakes. Luckily, with accounting, you can always undo your mistakes ... You can delete that journal entry, or you can post a reversing one. I would say you could literally, these days, probably graduate from school, and if you have enough work experience, you could start doing some basic work - bookkeeping, some tax ... You don't even have to go into ... If you're good at selling and marketing, you don't even have to go to a firm and get experience, these days. That's insane. That never used to be the case- David Leary: In this day and age, it's cheaper [00:42:00] than ever, right? You need a laptop, and a Starbucks with internet. If you're just gonna do cloud accounting for others, you can create an accounting firm for almost nothing; relatively cheap. Blake Oliver: You're talking few thousand dollars of investment. David Leary: Yeah.  Blake Oliver: What I would say is that, if you wanna own your own small firm, David always talks about specialization and niching, and becoming an expert in a particular industry, because that's where everything's headed. Accounting firms used to do everything for everybody, and you can see [00:42:30] it changing. Right now, there's a CPA firm just for breweries. There's multiple, actually; there's many. There's people who focus just on working with dentists because their needs are specific. It could go on and on. I worked with a lot of entertainment people here in L.A.  Getting experience in that industry is going to really strengthen you for owning your own firm someday, and I've seen that. Some of my colleagues worked as controllers before owning their own firms. Instead of going the whole public-accounting route, they got out of that as [00:43:00] quickly as they could. They got into industry, and then they learned their craft there. Then you can be a really great management accountant working in public. Student: Hi, thank you. My name is Colton [Irvey]. I'm a senior accounting student. My question is, I'm curious about the growth of the field of advisory, and if y'all think that that particular field is going to see a lot more regulation in the coming years? Or, if not, do you see there could be issues with lack of oversight of these consultants? Blake Oliver: Interesting. The question is, then, is advisory [00:43:30] going to see more regulation? David Leary: As far as like you have to pass some sort of certification, or testing, in order to provide advisory work? Blake Oliver: Because, right now, anyone can be an advisor. You don't have to be a CPA to do it. It's a good question. I don't think that's gonna happen anytime soon, because I think the AICPA has enough on its hands, just trying to deal with the changing CPA exam and requirements for education. They've got a whole initiative called CPA Evolution, [00:44:00] about how do we change the curriculum, the exam, to modernize accounting? Extending the accounting franchise into advisory, unlikely - or the CPA franchise into advisory is unlikely. David Leary: It's interesting, because I think Texas has interesting regulation on - you can't say that you're an accounting or bookkeeping firm, unless you're truly a CPA. Is that correct? You can't call your ... You can't use the word accounting in your company's name-. Blake Oliver: Unless you're a CPA firm? David Leary: I think that's true in Texas. [00:44:30] Would you guys know this? Jennifer Johnson: Yeah, that's correct. You can't technically call yourself an accountant, if you put your services out to the public, if you are not CPA. They do find people and ask them to cease and desist. Blake Oliver: That's interesting, because here in California, that's not the case. That's why I was able to start my "accounting services" firm as a student before I was a CPA. Anybody can call themselves an accountant, even if they don't have a degree here. It's kind of a total [00:45:00] free-wheeling situation in California.  I actually am not- I'm not a huge fan of regulation, in general. I think a lot of accountants and CPA tend to be a little more conservative, when it comes to that, because we see our business-owner clients suffering from overly burdensome regulation, especially here in California.  But in that one case, I think it's kinda confusing to the public that we have certified public accountants, but then, anyone can call themselves an accountant. Texas is actually ... It's funny. It's kinda flipped. Normally, [00:45:30] California is overly regulated, but in this case, Texas has more regulation and, I think, is doing the right thing. Jennifer Johnson: Great. I think we have one more question unless somebody else has got one?  Student: Hey, how you doing? My name's [inaudible]. My question is do you think professional accountants will be doing the same thing they do today, in five years, or in 10 years?  Blake Oliver: This is interesting, because it ties into this discussion that we have had over the last few months, this summer, about [00:46:00] the move to advisory from compliance. There's a lot of people out there saying, "Oh, compliance is getting automated. You gotta do something else." By compliance, I mean traditional service areas, like tax and audit. My view is that that's not going away. It's just a lot of the administrative and rote work in those fields is going away, which is actually great, because that's why being a tax manager and audit manager is gonna be a great job, because there's a lot less crap you've gotta deal with; a lot less boxes to fill in and all that stuff. What do you think, David? David Leary: I think [00:46:30] the answer is more of what kind of professional accountant are you? I guarantee you there will be professional accountants still doing stuff 10 years from now, the same exact way they did it 20 years ago. Blake Oliver: Yeah.  David Leary: So, I think it depends on who the professional accountant is, and that's gonna define that. Blake Oliver: We see that in surveys of growth rates of firms. 75 percent of firms are growing at about five to six percent per year, which is standard for the industry, and that's considered good. If you're a traditional accounting firm, if you [00:47:00] grow five-six percent, you're happy.  The firms that are leading the way are growing 20 to 30 percent, which is insane rates of growth for a professional services firm. That's what I saw, when I had my own firm, because they're doing things differently. Yeah, it depends, I guess, if you're part of one of those high-growth firms or if you're part of a traditional firm.  Maybe in the past, I would have been more critical of that traditional firm. But honestly, if that makes you happy; if that's what you wanna do, that's great. It's gonna be a good business for a long time, like David said. But if you wanna do [00:47:30] something completely different, there's a lot of opportunity now to rewrite the rules. David Leary: Hopefully, you all want to be accountants, still ... We're not ruining this ...  Blake Oliver: Yeah, yeah. Actually, can we see a raise of hands of who in the class is intending, at this time, on going into accounting? Okay, good, yeah. So, most folks. We haven't ... We should've taken a poll at the beginning and then at the end to really know if we made a difference. We're not statisticians. [00:48:00] Jennifer Johnson: I think the difference really is that they get to see all the different opportunities, now, and you're not just boxed in to having to do a tax, or audit, or just basic accounting-  Blake Oliver: I think that accounting is the biggest secret in school, right now, because it has this image that has ... Over the last hundred years, we've had this image of being this boring, stodgy profession. Now, you can pretty much do anything, and you can make a lot of money, and you [00:48:30] can have a lot of fun. I always tell people, I used to be a musician before I got into bookkeeping and then into accounting and got my CPA. I think that what I get to do as a CPA in technology is way more interesting than when I was a musician. People don't believe that, but it's true. It's changing so rapidly. If you're a lifelong learner, if you love learning new things and trying new things, there's plenty of opportunity for that. I guess, with that, we can [00:49:00] wrap it, right? David Leary:  Do we get to say "Class dismissed" or anything like that? Jennifer Johnson: Yes, you can dismiss the class.  Blake Oliver: So, as always, you can follow me on Twitter. I'm @BlakeTOliver. You can also connect with me on LinkedIn. I would love everyone in the room today ... Feel free to reach out and connect. If you do, though, just write me a note so that I know you're not a bot. How about you, David? David Leary: I'm really easy to track down on Twitter - @DavidLeary. I'm also on LinkedIn at David Leary, and you can find The Cloud Accounting Podcast on all the socials. We [00:49:30] probably need to get on Instagram. I imagine many of you are Instagrammers, and we're not there yet, so we probably- we should get on that here. Blake Oliver: Yeah, but it would be the same picture every week of just us talking. We'll have to figure that one out.  David Leary: I'd pick out random fashionable clothes on the closet and post those to the Instagram. Blake Oliver: So, thank you all, and thanks for joining us. Best wishes to all of you in your careers. David Leary: Class dismissed.  Class: Thank you! 
  4. SponsorsBQE Core: http://cloudaccountingpodcast.promo/core Show Notes 01:44 – Another five-star review!  02:52 – Some familiar faces made CPA Practice Advisor's 2019 40 Under 40 list | CPA Practice Advisor 04:10 – AICPA held a not-so-time-zone-inclusive webinar on diversity and inclusion | Accounting Today 04:59 – David's Home Away from Podcast, AutoEntry,  just got acquired by Sage! | Sage 07:18 – Better late than never - Blake finally files is taxes!  10:15 – Fyre Festival - Accounting Version | Financial Post 11:17 – Testing, testing … Is this thing on? CPA Canada failed to test its test-taking software before unleashing it on test-takers | Going Concern 14:45 – Wanna play with numbers AND carry a gun? | Journal of Accountancy 14:56 – AICPA has released new standards for forensic accountants | AICPA  15:21 – Tipalti raises $76 million in a recent D funding round | CPA Practice Advisor 15:46 – Fundbox packs a bigger punch now with $176 million in Series-C funding |  17:23 – Speaking of Intuit, QuickBooks Online is now offering mileage tracking, and if adding some other performance-enhancing elements in its September round of updates | QuickBooks 19:31 – Not-so-thrifty glitch in TurboTax results in a $216 million tax bill for one probably very unsuspecting thrift-store employee | Forbes 21:53 – Out with the V, in with the X ... Microsoft ushers in a newer, shinier function for Excel | Microsoft  24:35 – Wells Fargo and Plaid's new data-sharing agreement gives customers even more data control | Bank Innovation 26:00 – BBVA wants to be a lover, not a fighter, using its Open Platform, and further innovation to help fintech startups | Bank Innovation  28:45 – Sharing the love, fintechs are pairing up with smaller banks to overcome the no-charter hurdle | L.A. Times 31:54 – It’s a numbers game – accounting-related positions are the best jobs to have in America! | MarketWatch  35:57 -  A position that allows you to learn and move upward leads to the highest amount of job satisfaction 37:57 – Tech is top priority … Really, it is! | Deloitte Controllership Digest  40:11 -- Make sure you come back next week for more important survey results, like the third-quarter AICPA Economic Outlook Survey!  40:36 – The moment you've been waiting for! More news and insight on the MyPayroll fiasco!  41:32 – Meet two of the frontline reporters in the MyPayrollHR situation - Chelsea Diana, and Michael Williams 47:44 – It's important to note that there is no indication that the employees of MyPayrollHR  knew what was going on.  49:16 – It's still not clear where all that money went, or if parties, like Cachet, who eventually covered the missing payroll, will be reimbursed 49:40 – Just how big of a tangled web did Michael Mann weave?  50:22 – At least three banks claim a combined loss of $36 million due to fraud, but did not name Mann, or MyPayrollHR in their disclosures 50:58 – This Michael actually laid eyes on that elusive Michael, and can confirm he is human, sort of ...  51:40 – The Big Chill - Mann's check-kiting antics resulted in frozen accounts at both Bank of America, and Pioneer Bank 52:55 – Mann, and MyPayrollHR's parent company, Valuewise, had their hands in a variety of business, ranging from staffing to healthcare, and beyond 57:22 – Though Mann has admitted to $70 million worth of fraud, it's up in the air what will happen next 59:27 – No matter Mann's motive for committing this fraud, the key takeaway for accountants and bookkeepers recommending payroll services to clients is to know exactly who you're dealing with!  Connect with Our Guests!Michael Williams Website: https://www.timesunion.com/author/michael-williams/ Twitter: https://twitter.com/michaeldamianw?lang=en Chelsea Diana Website: https://www.bizjournals.com/albany/bio/25841/Chelsea+Diana LinkedIn: https://www.linkedin.com/in/chelsea-diana/ Twitter: https://twitter.com/AlbBizChelsea 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. 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 TranscriptChelsea Diana: I think there's one really important line from the complaint that says a lot about what's happening here, and it's that Mann said he used almost all of the $70 million to sustain certain businesses, and purchase, and start new ones, which means that he was using his money on actual businesses, it just wasn't the business that he was saying it was for, essentially. Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver- David Leary: And I'm David [00:00:30] Leary. Blake, it's been another week. Blake Oliver: Another week. David Leary: More accounting news.  Blake Oliver: More accounting news, more coverage of MyPayrollHR. You secured us an interview with two of the reporters on this case, right? David Leary: Yes. We have a special interview we'll drop in towards the end of this episode, so stay tuned to the end, and you can hear that. It really ties into some of the articles I brought ... What else did I bring? I had some stuff tied into criminals and CPAs. Blake Oliver: I filed my taxes on TurboTax Live. I'll tell you all about that. We [00:01:00] have to talk about the Fyre Festival for accountants up in Canada. David Leary: I think I saw that go by on social. Blake Oliver: That was crazy. Some disaster with CPA Canada, the exam they do there. David Leary: We have app news, as always. We have some banking tech news. Blake Oliver: You've got a big announcement with AutoEntry. I'll let you share that. Excel has a new feature that's super-nerdy, super-cool. It's a new function, actually; we've got some QuickBooks Online updates. I wanna talk later about the number-one job in America-. [00:01:30] David Leary: Podcaster? Blake Oliver: It's not podcaster. It's not podcaster. David Leary: YouTube star?  Blake Oliver: Almost. David Leary: 40 under 40 came out. Blake Oliver: Oh, yeah, some people got 40 under 40. First, we gotta talk about the review we got. David Leary: Yes.  Blake Oliver: This is from Tom- five stars - "I really enjoy your Cloud Accounting Podcast. I am a CPA & CMA working in industry my entire career and I'm looking for ways to apply my background in accounting operations, process improvement, and process automation, [00:02:00] including RPA, to help others. Your podcast is a great way to catch up on current issues and challenges. Thanks, David and Blake." Thank you, Tom. We really appreciate that review and the feedback. David Leary: Like always, go to iTunes, or Apple Podcasts, and leave reviews; go to Podchaser and leave reviews. They really help spread the word and help us get new listeners. Blake Oliver: We will read it on the air. David Leary: The new listeners are important because if ... The 40 under 40 list was released this week. I don't know if you saw that at all, Blake?  Blake Oliver: Yeah, some friends [00:02:30] of the show on the list, who made it.  David Leary: Some friends of the show on the list. Blake Oliver: By the way, this is CPA Practice Advisor. They annually create a list of the top 40 accountants under 40. Then there's a separate list of 20 folks who are related to the accounting industry, often the vendor side, who are also under 40. David Leary: So, some of the people who have either been on the show, or we've talked about on the show before ... Caleb Jenkins is on the list. Hector Garcia's on [00:03:00] the list. Will Buckley from Xero. Ben Richmond from Xero, who we interviewed that time. Blake Oliver: Cathy Iconis is on there. Aaron Berson, great to see you on the list. Elizabeth Pittelkow Kittner-. David Leary: Joshua Lance is on there.  Blake Oliver: Ingrid Edstrom, Garrett Wagner, Lindsay Stevenson, Patrick Lee. Who else am I leaving out? So many names-. David Leary: Does Eric Green have the most additional letters behind his name?  Blake Oliver: Well, let's see- David Leary: He has five?  Blake Oliver: How many designations? [00:03:30] Five designations. That's a lot. David Leary: He wins. It's cool, because what I like about this, it's easy to click on people, and there's a small summary; especially for people you don't know, it's nice to click down, and drill down, and see who they are. One takeaway for me, and that I wanna thank everybody that's on the list that said the way they stay on top of accounting news, they mentioned The Cloud Accounting Podcast in their profile-  Blake Oliver: That is awesome. David Leary: Got the little chills from that. Thank you, everybody who threw out a plug and put us in their ... Maybe this is like a chicken and egg thing. Maybe they're on the list because they [00:04:00] listen to The Cloud Accounting Podcast. Blake Oliver: Yeah, it's possible ... David Leary: I have a teeny story, just to throw it out there, to get it out of the way, before we really jump into the big, big news. Blake Oliver: Okay. What's that? David Leary: AICPA held a free webinar on diversity and inclusion. Blake Oliver: Okay.  David Leary: I was like, "Very interesting!" I clicked on it. I was gonna RSVP to it, but guess what time it started at? 7:00 a.m. Pacific. Blake Oliver: Yeah, that's not very inclusive of the folks on the West Coast. Come on. David Leary: Or maybe- Blake Oliver: Or the [00:04:30] night owls-. David Leary: Night owls, exactly. So, I did not attend the webinar. I just thought that was a little entertaining, that it's an inclusion webinar, and it was done at 7:00 a.m.. Blake Oliver: Well, David, let's get to the news. David Leary: All right.  Blake Oliver: I wanna talk to you about the big news that happened today. It's Friday, and I woke up to news that AutoEntry, who you are affiliated with, who you work with ... People know you as- you're the resident thought leader at AutoEntry. They just [00:05:00] got acquired by Sage. David Leary: Yes, it's huge news, right? Because Sage is one of the big players in the cloud-accounting space we talk about all the time. There's Intuit; there, Sage; there's Xero. Now, Sage has acquired AutoEntry. So, as of now, I work for Sage; AutoEntry's a part of Sage. We're part of the Sage Family, the Sage team, which is interesting. Blake Oliver: There weren't a lot of details in the post. You probably can't say, if it's not public yet, but how much money this was for, what's [00:05:30] the nature of the deal, what's gonna happen to all the AutoEntry people?  David Leary: Yeah. As you can imagine, things have gone very fast. I don't know much more than what's on those- out on the official Sage press release that went out. Because this was done- It's in Ireland and England, right? This is 1:00 a.m., my time. My phone's been kinda buzzing all night. I woke up, saw it, went to the gym ... There's a lot happening really fast, and I don't have all the details, but I can definitely see the big takeaway [00:06:00] is how Sage is committed to AutoEntry being part of an open ecosystem. Blake Oliver: Mm-hmm.  David Leary: For me, personally, I feel like that was always a big kick I had when I was at Intuit about being committed to an ecosystem that's open. If you think about it, 15 years ago, an acquisition like this would just be- that would be it. AutoEntry, from that point forward, would only work with Sage, right?  Blake Oliver: Right.  David Leary: I think all of these players in this industry now have a more mature view to where it's okay, because maybe you're an accountant, or an accounting firm, and you have lots of clients on Sage; maybe [00:06:30] you have some clients and QuickBooks, and some on Xero, and some on other products. You can still use AutoEntry across all your clients. You're not gonna have to ... If you switch to these clients, now you have to use different software. It's just a more mature thinking by all the companies involved, nowadays. Blake Oliver: Yeah, I saw some of that speculation on Facebook; like, "Oh, now that AutoEntry is part of Sage, am I gonna be able to use it with QuickBooks? I think the answer is definitely- is gonna be definitely yes, right? It's not [cross talk]  David Leary: Yes, it's very clear. It's the same, in [00:07:00] a way, like how TSheets- when QuickBooks bought TSheets, TSheets still works with Xero, and other products. The same thing, when Xero bought Hubdoc, right? Hubdoc still works with QuickBooks. That open-ecosystem mindset is really, really still there. Blake Oliver: That's your news of the day. My news of the day is that I finally filed my taxes. I used TurboTax Live this year, and- David Leary: Did you talk to Claudell?  Blake Oliver: No, not Claudell. It was Clifton. [00:07:30] I talked to Clifton today ... I had procrastinated on actually filing, because I didn't owe anything. I'm pretty good about prepaying, so I'm not due until October 15th, because I did an extension. I scheduled my call with a CPA named Clifton. I didn't have any errors in my file, so basically, we had a 10-minute discussion, in which he said, "Yeah, you did a great job!" Then I filed my return. David Leary: Was it a video conference? Blake Oliver: Yes. David Leary: What was that experience [00:08:00] for you like, as the consumer, the customer? Blake Oliver: The way it works is I go inside of TurboTax, where I'm working on my return, and I say that I want a review, and it gives me some options for times. I select a time and day that works for me. It happened they were available today. Put in your phone number, and then, at that time, you get a call from the TurboTax Live hotline, or whatever it is, and it connects you to somebody via phone. Then, [00:08:30] from inside of the TurboTax application in your web browser, you can press a shortcut that then displays a six-digit code. You provide that code to whoever you're speaking with on the phone, and then they can see your screen. You can see them through their webcam, like a small version of them, like icon view.  David Leary: It's like joining a Zoom or a webinar, but it's right inside ... You're not getting extra software; you're not getting separate downloads; you're just doing it inside TurboTax, itself. Wow ...  Blake Oliver: Yeah, and it's [00:09:00] smart, because they're using the phone for the audio. Even if you lose the computer connection, or there's a problem with the browser, you can still talk. They don't see you; you see them, and then, they can direct you as to what to do on the screen. They can't actually control the screen, though. David Leary: So, you use the phone, which eliminates a lot of possible complications if somebody doesn't have the microphone configured right, or their computer- Blake Oliver: Very slick. David Leary: Yeah, that's a really smart idea. Okay. Blake Oliver: He went through some of the typical concerns with me. I [00:09:30] was comfortable that it looked right. They have an option where you can actually- you can upload the return to them and send in all of your documents, and they will actually verify that you put in the numbers correctly, but it takes three to five days, and I didn't really want to go gather all the documents again and send them, so I didn't bother doing that. I could have had a CPA sign off on my return and file it for me, if I'd wanted to, as part of the extra fee I paid, but I declined not to. I'm not sure if I'm gonna do it again next year. I think [00:10:00] I might just go it alone, because honestly, unless the return kicks up an error, or you have like a really complicated situation ... Definitely, as an accountant, I was pretty comfortable that I had done it right, but this time, I just wanted to see. I wanted to see how it worked. I had a very good experience. You know who didn't have a good experience recently? It was a bunch of CPAs, or wannabe CPAs in Canada, who were taking the exam to become CPAs, which I understand is called the CFE exam. That stands for [00:10:30] Common Final Examination. I don't know if you saw this article in Going Concern? The headline is, "Let’s Talk About How CPA Canada Totally F*cked Up Last Week’s CFE."  I don't mean to laugh at this, because it sounds like, actually, a terrible experience for these students and professionals. I didn't realize this, but in Canada, they still do their CPA exam in three days, and it's annually, which is way more intense than what we have here in the US,  where it's four [00:11:00] parts, and you can take them at different times of the year-  David Leary: Basically, this is like it happens in these three days; if something goes wrong, you can't, next month, just come back and take your test. This is the- it's an event.  Blake Oliver: Yeah, it's more like the bar exam here, right? Which is- David Leary: What went wrong?  Blake Oliver: Long story short, the CPA Canada started using new software this year, called Surpass, and apparently Surpass, or Surpass, didn't surpass expectations, because [00:11:30] they rolled it out, and it failed miserably. They had massive IT issues to the point where ... Just to give you one example, in Edmonton, the exam was supposed to start on day one at 9:00 a.m., and they couldn't get it to work until 1:00 p.m.. The exam test-takers had to sit in the examination center for four hours with nothing to do with very little food or water, because you can't leave. There are snack bars, but I guess there wasn't enough food-  David Leary: That is the Fyre Festival! There's [00:12:00] no food, there's no water; they just had to sit there. It's the same thing. Blake Oliver: It was described on social media and Reddit as the Fyre Festival for Accountants, which is a nod to the spectacular concert debacle in the Bahamas, where tents were provided instead of luxury accommodations-. David Leary: That's a Netflix special, right [cross talk]  Blake Oliver: -watch it on Netflix. If you wanna see ... If you want to feel better about your business, or if you feel like a failure, ever, just go watch the Fyre Festival documentary on Netflix, because it'll make you feel a lot better about that. Now, when anything gets screwed up [00:12:30] like this, then it's compared to the Fyre Festival. Yeah, apparently, it was just a terrible rollout. You can see how that could be a problem, right? When the exam's only given once a year, there's not really an opportunity to test if the examination software works very well, and there's a lot of room for risk. We have solved that, I think, in the US, because we use Prometric for our CPA exam, which is a professional testing center that tests a lot of exams; hundreds of [00:13:00] licenses and certifications ... You can go to a Prometric testing center. It's basically outsourced testing. They maintain the testing centers, the software; if anything goes wrong, it only affects the people at that center at that day, not everybody taking the exam. There's all these questions as to whether or not the students, or the test-takers are going to get another chance; if their scores are gonna be invalidated. Some people had to take the exam, writing it on paper. They couldn't actually write into their [00:13:30] laptops, and all this crazy, crazy stuff; miserable experiences. David Leary: So, the certifications, though, matter, right? We've been talking a lot about the MyPayrollHR.  Blake Oliver: Mm-hmm. Yeah, yeah. David Leary: ... Here's the plug, again - stay to the end for the interview ... Special Agent Matthew J. Wabby, of the Federal Bureau of Investigation, he actually wrote the affidavit for arrest of Michael [00:14:00] Mann, who was involved in the bank fraud - the MyPayroll bank fraud. What's nice about this, and I think it's exciting ... "Prior to becoming a special agent, I worked in public accounting for approximately seven years, where I became a certified public accountant. I am still a licensed CPA, and also a certified fraud examiner." Blake Oliver: This doesn't actually surprise me, David. A lot of the people who work in the FBI, in financial crimes, are CPAs. It's pretty awesome. You get to be a CPA and carry a gun. There's not a lot of jobs where you get to do that. David Leary: Yeah, and I hit him up on LinkedIn. I was like, "I should have him come [00:14:30] on the podcast!" That would be exciting.  Blake Oliver: Yeah, I don't think it's gonna happen. David Leary: No bite whatsoever, right now. There's two other things that came out, kind of related to this. The Journal of Accountancy has an article. It's a little older one, but Jeff Drew sent it to me, about criminal-pursuing agents. If you wanna see about some of this undercover work, or maybe you want a career change, check out that- it's an older article from October 1st of 2015, but it's all about CPAs that are pursuing criminals. Then, related to that, the [00:15:00] AICPA has just announced that there's gonna be new forensic standards to boost CPAs' credibility when they're actually on witness stands testifying in court. There's a lot of ... It all ties back to MyPayrollHR, which apparently ties to everything these days. Blake Oliver: Should we talk about some more fundraising/app news?  David Leary: Oh, yeah ...  Blake Oliver: Tipalti is a global payables automation solution. They have successfully raised another $76 million in capital, led by [00:15:30] Zeev Ventures. It's a D round of funding. The press release says that Tipalti's gonna use this additional funding to continue to set the pace for innovation in the payables automation space and solidify itself as the leading solution for fast-growing and mid-sized companies across the globe. David Leary: Did you see that Fundbox had a big raise? Fundbox, they raised $326 million, between debt and equity. They actually took on $176 million in equity, and then an additional $150 million in [00:16:00] credit, but they didn't disclose who's providing the credit. Fundbox is ... Before, they were in that instant-loan game. So, if you have invoices; your customer owes you $1,000; you need that cash now ... For a small fee, they'll provide the cash, and then, when you get paid for that invoice ...  Really, their goal is to eliminate that, because there's about $3 billion just locked up into net 30 [cross talk] putting air quotes up. They're really attacking that, and it's all about ... On [00:16:30] both sides of the fence, they're trying to play a middleman through a network - the big, huge company that needs to automate paying their vendors faster, and then they wanna attack it on the other side for the small business owners that need to be paid. This is a real problem that has to be solved. I remember, when I was at Intuit, Intuit changed their policy to pay all smaller vendors within nine days, because they used to ... Like big corporations, eh, whenever-  Blake Oliver: Stretch it out.  David Leary: 90 days ... Stretch it out. We need to maximize this ... It [00:17:00] really hurt small businesses, so Intuit really changed the way they were doing that for [cross talk] Blake Oliver: Look, if their mission- stated mission - is to grow and help small businesses succeed, then it kind of sucks if you're not paying your small business vendors on time, so that's a great policy. David Leary: Then, it looks like Fundbox is now gonna open up an office in Dallas. Blake Oliver: All right. You mentioned Intuit. I've got some QuickBooks Online updates for you. David Leary: Okay.  Blake Oliver: QuickBooks is now going to have mileage tracking, which was previously only available for QuickBooks Self Employed. It's [00:17:30] getting rolled out incrementally, so you might not see it right away, but all users should have it in the next several months. David Leary: I'm opening up mine right now, because I've been waiting for this, because I only do- I only need it once or twice a year, so I don't really need a standalone mileage app. I was dreaming of it being in my QuickBooks. I just unlocked with my fingerprint ... "Never miss a mile ..."  I got it! Blake Oliver: Awesome!  David Leary: I'll have to report on how this goes, next time I drive somewhere. Blake Oliver: It looks pretty cool, because you can have it use your GPS on your phone to record [00:18:00] your start and end points, and you don't have to put in the actual miles on your car that way. So, let me know how it goes. Also new in QBO, performance of reporting has been improved. There is no more need to click 'Load More,' and closing the 'View/Edit' screen will no longer return you to the beginning of a report. Additionally, it's just supposed to be faster overall, which is nice. Reporting is one of those things that has always been traditionally criticized in the online version compared to the desktop version. So, hopefully this'll [00:18:30] appease some of those folks- David Leary: Well, especially for accountants and bookkeepers. Did entry is one thing, but if you're really in there trying to run reports, and drill down on things, and run two or three reports at the same time, any report optimizing is gonna be efficient for accountants and bookkeepers. Blake Oliver: Absolutely. Finally, you can now send customer invoices in multiple languages; six languages are supported - English, French, Spanish, Italian, Portuguese, and Chinese.  David Leary: Wait ... Wow! That seems like it should be a much bigger announcement-. [00:19:00] Blake Oliver: Bigger announcement there? Yeah.  David Leary: I can create my invoice, as I normally do, in English, and then I can just hit a drop-down and say, "Send it in Spanish"?  Blake Oliver: You know, I didn't dig into that, so I'm not sure, but I'm curious to know.  David Leary: I'll have to experiment with that. I'll send you an invoice in Spanish- Blake Oliver: Yeah, send somebody an invoice in Spanish, and see-  David Leary: I'll track my mileage, and then send you an invoice in Spanish and see how this goes-  Blake Oliver: All right, do it. There's some more Intuit news. This is a story that Kelly Phillips Erb reported earlier this month, and [00:19:30] the headline is, "TurboTax Glitch Led to $216 Million Tax Bill for a Thrift Store Worker." It's actually related to, I think, my experience today. This is why it's important to have somebody looking over your return or looking over the work that you did in an online product. You shouldn't just be filing without double-checking. What happened here is that Donna Smith, from Aurora, Colorado, who is a part-time worker at a local thrift store, filed [00:20:00] her taxes using TurboTax last year. She got a surprise when she opened a tax bill from the Colorado Department of Revenue to find that the state claimed she owed $216,399,508 in taxes. Smith, who makes about $10 an hour, couldn't understand the tax bill. Apparently, what happened is that there was an error with TurboTax, where she actually entered the numbers correctly. A TurboTax [00:20:30] spokesperson said that, "For a small number of TurboTax Online customers that filed their taxes between June 13 and 16, there was an issue that caused select fields on their tax return to be incorrectly transmitted during e-file. The issue was quickly fixed, and we have been working directly with the affected Colorado taxpayers, and the Colorado State DOR to help resolve." Actually, I think I have to take back what I said, because apparently, even if it had been reviewed in the software, it wouldn't have been caught, because this was something that happened during the e-file [00:21:00] process. David Leary: It's just this one random person it only affected? Blake Oliver: Just a small number of people-. David Leary: Oh, so it did hit a couple of people. Okay, got it.  Blake Oliver: Yeah, but only people in Colorado, apparently, and only for a few days out of the month. These things happen, and obviously, you can fix that. Just sort of a funny bug. Can you imagine opening the mail and getting that tax bill?  David Leary: No big deal, just ...  Blake Oliver: Continuing along with app updates, Excel has an update that I think is very [00:21:30] relevant to our audience. David Leary: This is what we've come to now? The Cloud Accounting Podcast is back talking about Excel again-  Blake Oliver: Look, Excel is not going away, right? We use Excel- David Leary: No, no ... I prefer Excel. I'm totally- Yeah, I'm down. I'm down. Blake Oliver: So, David, are you a fan of VLOOKUP? You ever use VLOOKUP formulas in your line of work? David Leary: Yes. Yes, I have. Blake Oliver: All right. Well, VLOOKUP has a successor. There's a new generation of VLOOKUP, and it's called XLOOKUP. Microsoft [00:22:00] announced this on their blog, and they started out actually by giving a tribute to VLOOKUP, which is a formula that has been with Excel since the very beginning. It was included in Excel One for Macintosh, released in 1985- David Leary: It was a tribute or a funeral? Blake Oliver: Well, no, it's like a shout out to VLOOKUP- David Leary: Oh, okay, got it, got it.  Blake Oliver: For 34 years, VLOOKUP has been the first lookup function learned by Excel users, and it's their third most-used function. Do you know what the [00:22:30] first two are? Wanna guess? David Leary: Let's pause there for a second. You said 34 years?  Blake Oliver: Yeah.  David Leary: Is VLOOKUP older than you?  Blake Oliver: I'm 36.  David Leary: Oh, okay ... It's like Pre-VLOOKUP/Post-VLOOKUP; got it. Blake Oliver: The two most-used functions are SUM, and AVERAGE, and then, it's VLOOKUP after that. VLOOKUP is one of those functions that like - it's super-powerful. Everyone learns it, right? Then there's all those people that say, "Oh, INDEX MATCH is superior ..." Whatever ... Screw those people. David Leary: Great argument ... What team are you on? Blake Oliver: So, XLOOKUP, and I [00:23:00] don't know if this is gonna be superior to INDEX MATCH, or whatever ... XLOOKUP is named for its ability to look both vertically and horizontally. So, it also replaces the HLOOKUP formula, which I never even used. Basically, all you need are three arguments for XLOOKUP. You need a lookup value - the cell that you're looking for, or the value you're looking for - then you need to choose an array, a lookup array, and then, a return array - what to return. The formula is smart enough to figure out - if you give [00:23:30] it those three things - how to find what you're looking for and return it. It's pretty cool. Some of the benefits of this ... You might be wondering, "Why are we talking about XLOOKUP? What was wrong  with VLOOKUP?" The blog post does a really good job of talking about the limitations of VLOOKUP, which is- one of the big ones is you can't do column insertions or deletions; it'll break your formula, because VLOOKUP requires you to put in the number of the column that you wanna return. If you change the format of your spreadsheet, it breaks. It can't look to the left, [00:24:00] only to the right. It can't search from the back; can't search for the next larger item for an approximate match, which you can now do with XLOOKUP, with the two optional fields. Just an improvement. Spreadsheets are getting better every day. David Leary: Still, which is good. Blake Oliver: Yeah, still, and you still need them. Not going away. Not until we get some AI that can just make all our spreadsheets for us, right?  David Leary: I have some banking news. We talked about, you know, banks lack APIs, on one hand. Then, we're always talking about how these startups now are becoming banks. [00:24:30] Blake Oliver: Okay.  David Leary: So, three articles that are pooled together. One is Plaid. Wells Fargo's entered into a data-sharing agreement with Plaid. A lot of these apps that you use to connect your bank accounts or bank feeds, et cetera, use Plaid. But, what's happened is the way these aggregators have worked, they've always done screen sharing- not screen sharing; screen scraping to pull down the data from the websites, because banks don't have APIs; the banks don't have data-sharing agreements ... Wells [00:25:00] Fargo has entered into a data-sharing agreement with Plaid, but part of that agreement is giving the consumer a little bit more control over their account information on what information is available to Plaid, and then what information is, in theory, available to third-party vendor API- third-party app companies that are using Plaid's APIs. Blake Oliver: Plaid is basically becoming like an API of APIs for the bank, or it’s like [00:25:30] a central place where they can all connect to, and then apps can authenticate with Plaid and get the information they need?  David Leary: Yeah, because if you're an app developer and you wanna connect to 15,000 banks ... You don't wanna do that.  Blake Oliver: No.  David Leary: You can just connect to Plaid, and now, you're getting that scale of that. Blake Oliver: I can see how Plaid could be very, very, very valuable, then. David Leary: Big companies - Venmo, Acorns, Betterment - are all using Plaid to power their products. So, you have [00:26:00] that on that side. Then, BBVA has rolled out its open-banking platform, and it's gonna have four main APIs for startups to use [cross talk]  Blake Oliver: This is a bank? I'm not familiar with them.  David Leary: BBVA Compass - they've dropped the Compass.  Blake Oliver: They're based in Birmingham, Alabama- David Leary: Yeah, and they're actually out of South America, I think, originally. Blake Oliver: So, this is cool. As part of their open banking platform they're going to have four APIs for startup clients. Those include identity verification, a [00:26:30] way to move money, so you can execute custom ACH transactions, bill pay, and real-time transfers, account origination, and card issuance. Well, those are really powerful API calls you can make. David Leary: I've always said this, these banks that get it are gonna win small business. This is gonna be a good thing for BBVA, because they're gonna get a bunch of app developers that, right now, might have to use four different hoops to jump through to accomplish these things. Really, that's the four main use cases for [00:27:00] interacting with banks. It'll be really interesting where this goes next with those guys. Blake Oliver: The big hole, for me, has always been the fact that I can't pay a bill from inside of QuickBooks Online, or inside Xero and have that payment go out through the bank. I have to use some separate application or go into my bank's bill pay. Why can't I connect their ability ... Like Bank of America, for instance. I use Bank of America for my bill pay. Why can I not connect Xero to Bank of America, and when [00:27:30] I wanna pay a bill in Xero, I say, "Pay with B of A," and it pays it, just like online banking? David Leary: At one time, a long time ago, in Quicken, in the olden days-  Blake Oliver: You could do that.  David Leary: You could do this. You had to pay a fee, and the banks would charge Intuit, or you, as the consumer, to do that convenience. But, I think, as time went on, the banks got a little bit more, "It's our data. It's our stuff. We want customers to go to our website, because we wanna sell them other banking products ..."  Blake Oliver: Right. David Leary: I [00:28:00] think it's been a little of that. Now, this is an interesting move because, ultimately, you want people using your bank ... It's kind of in the way we talked about Stripe, last week, right? Nobody uses Stripe, but everybody uses Stripe. It's kinda that same thing. Maybe people will not actually use BBVA, but they'll be using BBVA ... That's where you wanna be, as a platform. You want everybody using you. That's how Facebook won. Facebook didn't care how you used [00:28:30] Facebook - just use Facebook. Blake Oliver: Right. David Leary: "We don't care what apps you use, and add-ons, and all the other stuff," and that's that same type of mindset. So, on the other swing, banks making some strides into tech a little bit. On the other side, there's really kind of a longer article from the L.A. Times. Essentially, the article's about how, "Oh, you don't have a bank charter? No problem.". What's happening is these fintech companies, the Squares of the world, et cetera, are partnering with small regional and community [00:29:00] banks to help them establish FDIC, handle the deposits, and giving them methods that they couldn't really do on their own. The big banks are not gonna go agree to a company like, Square, or Apple, and these companies that are becoming banks, right? Blake Oliver: Right. David Leary: What's happening is the fintech companies are finding these smaller regional banks that probably haven't grown in decades. They see this as a growth opportunity- Blake Oliver: Right, and they're partnering with them. Interesting.  David Leary: Then, in fact, there's actually a whole 'nother company called CAMBR, and [00:29:30] they're actually providing a whole service to play middleman between these. I'll just read kind of the how it works, so it's a little easier to understand. Here's how it works: "A tech company or startup might give CAMBR as much as $100 billion in customers' cash and could then ask the service to spread the money around to potentially hundreds of different financial institutions. As a result, spreading out those deposits, it's more in the fintech caches insured under the FDIC." Blake Oliver: Gotcha. [00:30:00] David Leary: Because you can- $250,000 per account. So, people are specializing in this service, instead of taking all that and just setting it in one bank account. Blake Oliver: Yeah, that makes a lotta sense. There's a lot of treasury management tools for bigger businesses that do something like this, too; a similar kind of concept. David Leary: Then, of course, as you know, as always ... We've talked about this with MyPayrollHR, and we've talked about this with the banking stuff, and we talked about this with the instant paycheck players - regulations wanna come. People [00:30:30] are starting to really pry into this and trying to stop innovation. This episode of The Cloud Accounting Podcast is sponsored by BQE Core. If you have niche clients that are architects, engineers, consultants, or lawyers, BQE Core is the app for them to best manage their firm, increase their staff productivity and ultimately increase their profits. Even if you don't have those niche clients, Core is a great tool to use in your own accounting or bookkeeping firm, as well. Core is an easy-to-use all-in-one platform for project management, but includes advanced functionality like budgets, labor costs, forecasting, contract analysis, and approval processes. Core also includes a standalone accounting module. Even though Core is an all-in-one platform, it still works nicely with other apps offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app and recently launched a cutting-edge voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E. Blake Oliver: Let's talk about the number-one job in America. It is not YouTube star. It is not to-. David Leary: Podcaster host-  Blake Oliver: Podcaster, unfortunately, not yet. This is a story that was published in MarketWatch, and-  David Leary: I've got one more guess. Hold on! Blake Oliver: Okay. [00:32:00] David Leary: I wonder if this is like a satisfaction game ... Blake Oliver: Well, the criteria are important, right? Let me tell you how they define best job, because that's a good question, in and of itself. This survey that this article is based on defines the best job as the one with the best career prospects. Extrapolating that, if you have good careers prospects and the ability to move up that - assuming that you enjoy the work you're doing - you will enjoy your career. So, [00:32:30] what job in America has the best career prospects and also has a high income? And it's not software engineer. That's the surprising part. David Leary: Some part of me thinks you're gonna say CPA? For some reason, I feel like you're gonna say that-  Blake Oliver: Yeah ...  David Leary: -but I'm thinking maybe it's something healthcare-related? Some part of the healthcare field is highly rewarding financially, but also personally rewarding. I don't know what that would be ... That would be my guess. Blake Oliver: The number-one job is tax manager. [00:33:00] Tax managers have the strongest career opportunities rating according to employees in this position. They had a median base salary of $112,000 a year and 4,800 job openings on Glassdoor, as of July 5th. This is from a study that was released by Glassdoor, the salary/job site. I thought was pretty interesting because it's not software engineer. The article says, "With the infiltration of technology into [00:33:30] financial services, there's a renewed emphasis for tax managers to build closer client relationships," the report's authors said. So, basically, what's happening is that tax is becoming much less of a grind. If you're a tax manager, meaning you've gotten to the point in your career where you're allowed to actually talk with clients, then it becomes a fun thing, because you're working with the clients; you're solving their problems; you're answering their questions; you're creating a ton of value, because, as a tax manager, you're tending [00:34:00] to work with larger small businesses, folks who really could use some planning. I think this buttresses in a lot of ways what we are talking about here on this podcast, that technology can make our jobs a lot better, and it won't necessarily automate them. It's gonna automate the boring stuff, not the fun stuff, as long as you can move up into that role. If you're just churning out returns, putting numbers into boxes, no, that job is gonna go away, but-  David Leary: It means there's a change in skill [00:34:30] set, right? Blake Oliver: Oh, yeah.  David Leary: You just can't be a tax expert. You need to have some people skills. You need to learn how to do some presentations and storytelling. You need to really be a little bit more well-rounded versus just tax.  Blake Oliver: You wanna know who else is on the list, behind tax managers-  David Leary: Oh, this is like a ranking. Blake Oliver: It's a ranking, yeah.  David Leary: Oh ... Yeah, rattle off the top 10. I'd love to hear this. Blake Oliver: All right, number one is tax manager. Following that, we've got salesforce developer, product designer, strategy manager- David Leary: Salesforce developer is very [00:35:00] specific. Wow! Blake Oliver: I know, right? Everyone needs a Salesforce developer, because every company's got Salesforce now, and you need an admin for it. Strategy manager, HR manager ... Number six, audit manager - another accounting job, and traditional, right? Tax and audit - the traditional bread and butter of accounting are still great jobs. I think that's because audit is becoming more automated. If you're a manager, it's a pretty nice thing not to have to do a lot of grunt work anymore. Then, there's data scientists, business development manager, Java developer. Number 10, close [00:35:30] to my heart, marketing manager, which is basically what I've been doing for the last couple of years, now that I went from public accounting over to the software side; and product marketing manager, 11; right there, that's exactly what I was doing. I was doing product marketing.  David Leary: Where does CPA or bookkeeper fall into ... Is it on the list anywhere?  Blake Oliver: CPA is not a job title- David Leary: A title, okay, yeah.  Blake Oliver: -but you can assume that the tax managers and audit managers are probably almost all CPAs, most likely. David Leary: Yeah, yeah, makes sense.  Blake Oliver: Accounting manager is 15; also [00:36:00] a lotta CPAs in there. Dentists are 18. Physician's assistant, 19. You mentioned healthcare, David. Product manager, 20. Compliance manager, 21. These are jobs with a lot of career opportunity. The point is that it's not really important what you're doing, it's important that you have opportunity in your career, because that's when you have high job satisfaction, when you feel like you can learn, and move up, and make a difference. David Leary: I think that's a lot of the titles of the people that were in the 40 [00:36:30] under 40. So, full circle - you pulled it back to that. Blake Oliver: We experienced this, this summer, David, this debate as to ... Not debate, it's just this constant trope, or what people are saying at conferences, which is, "Oh, compliance is being automated and we have to move to advisory.". David Leary: Yep.  Blake Oliver: I think this shows that it's not true. It's not that compliance is going away. It's that some of it is getting automated, and what do you do with the extra time you have is you are more advisory. It's a fusion of compliance and advisory. That's [00:37:00] where the real opportunity is. Being that-. David Leary: You actually provide advisory based on the compliance work that you have done. Blake Oliver: Exactly, yeah. You're adding value to that traditional compliance work. David Leary: I got no more articles, Blake.  Blake Oliver: Oh, well, I got a few more things. Let's see how we're doing on time. David Leary: Oh, good, good. We're good. Blake Oliver: There's one other small thing I wanted to share here, and I'll save the rest for next time. You know that I subscribe to the Deloitte Controllership Digest, as I have been living in sort of the world of the mid-market in the last few years. David Leary: Yes. Blake Oliver: They did another one of their [00:37:30] snap polls, where they email out a polling question. The people who read the publication respond, and we can probably assume that most of them are in accounting jobs, and controller jobs. David Leary: Because nobody would be subscribed to this [cross talk]  Blake Oliver: Why would you? You'd have to hate yourself, I think, to do that, right? It'd be like if you were subscribed to this, David, you'd read it before bed. But, I read it with my coffee in the morning. So this flash poll asked, "As the final quarter of 2019 [00:38:00] approaches, what is the top priority you and your company will be focusing on?" The answer, according to 47 percent of the respondents, is, "Automation or system improvements." Almost half, their top priority is automation or system improvements. Next on the list? Only 15 percent is accounting standards implementation. So, tech is just crushing it, when it comes to top priorities, over traditional stuff, like lease accounting, and revenue [00:38:30] recognition, and all that stuff. David Leary: I wanna see, at the end of the quarter, how much you actually spent working on the automation, because I feel like this is one of those like, "I'm really gonna automate stuff next week. That's my top priority this quarter," and then, it doesn't happen ...  Blake Oliver: I don't know. I think it's happening. I really do. I think there's a lot of investment going on right now. You can certainly see it with the valuations and investment in these companies we talk about every week that are getting investment. They wouldn't be getting investment, if they weren't gaining customers, in an ideal-  David Leary: I [00:39:00] think it's obvious that so many departments are not automated, so, there's just upside [cross talk] Blake Oliver: There's a ton ... Half. There's at least half are just traditional. David Leary: I think this goes to what we were talking about before, when you were talking about different accounting jobs that have been outsourced, and that some of these departments, they're being funded to do the automation, and they're not doing it. Then, two years later, "Let's just outsource the whole thing ..." You're right; you probably need to automate your [00:39:30] systems and make internal improvements, or you're whole department's probably gonna get just wiped out. Blake Oliver: I'll read the other items on this survey, so that the folks who are saying, "Hey, this doesn't add up to 100 percent," don't get upset, because I would ... David Leary: Oh, these damned accountants! Blake Oliver: I know ... I said automation/system improvements as 47 percent; accounting standards implementation, 15 percent. Next, organization changes and talent acquisition, 14 percent. Interesting to see how that's fairly, fairly low. It's third, right? Cost reduction-. David Leary: Well, wouldn't you need the [00:40:00] talent acquisition to do some of the automation?  Blake Oliver: I mean, maybe ... I don't know. Maybe we'll see. Cost reduction, 14 percent; mergers and acquisitions or other transactions comes in last at 10 percent. Lots more to talk about next week. I'm gonna save this good stuff, including the AICPA Economic Outlook Survey for the third quarter. We'll dig into that next week, hopefully, and an idea that the Federal Reserve should create its own cryptocurrency; because we haven't talked about blockchain in a while. But, now-. [00:40:30] David Leary: Blockchain's back, because I think Bitcoin's up a little bit, right? Everybody's hot and heavy on that again.  Blake Oliver: But we gotta get to the MyPayrollHR story, which we are continuing our coverage of. David, you have secured two of the reporters in Albany, New York, who have been hot on this story and have been breaking all the news we've been talking about. I'm really excited to talk to [cross talk]  David Leary: They've been to the MyPayrollHR headquarters. One of them sat in court, and actually has seen Michael Mann, [00:41:00] himself. The other one had- they both have talked to Michael Mann's lawyer on multiple occasions. These reporters are heavily involved in this story. Blake Oliver: All right.  Michael Williams: I'm Michael Williams with the Albany Times Union. Chelsea Diana: And I'm Chelsea Diana, with the Albany Business Review. David Leary: Chelsea and Michael, welcome. Thank you for joining us on this special interview regarding the MyPayrollHR fraud. Chelsea, we wanna start with you. Can you explain a little bit who you are and what your role was [00:41:30] in the MyPayrollHR case?  Chelsea Diana: Sure. Like I said, I'm a reporter with the Albany Business Review. I've been covering the intersection of money and technology for the Business Review for about five years. We're part of American City Business Journals, which is a national network of business publications. We're in more than 40 cities across the country. My role in this story is that we got a tip a few weeks ago from a restaurant owner, saying that their direct deposits had been withdrawn. I [00:42:00] called their accountant to see what was going on, and, at that time, there were rumors that it could be some kind of fraud, but it was all real speculation. David Leary: At that time, yeah. Then, Michael, what you do, and what your role is in the MyPayrollHR case?  Michael Williams: Sure. I'm a business reporter with the Times Union. I've actually only been here for about a month, so I just kind of dived into the deep end with this story. Prior to this, I was a court and crime reporter for The Orlando Sentinel, down in Orlando. I [00:42:30] came into this story pretty much the same way that Chelsea did. We got a tip that payroll deposits had been reversed, and it sort of started from there. David Leary: Started from there ... The reason I brought both of you on, because I think both of you have written multiple articles, and I think we've used these on the previous episodes. I think we've referenced a lot of your articles, so I was like, we should have you two on, because you guys have probably done the most research and are probably the most prepared to speak to a lot of this. I'm hoping in the next couple minutes here, we kind of figure out how we went from four weeks ago, like you [00:43:00] both said, employees' paychecks getting un-deposited from their accounts to the latest news ... It's like high school basketball players are having to find new schools, but it's all tied to MyPayrollHR, so I think it's kind of interesting. Blake, did you want to give a quick recap of what we've talked about the previous episodes? Blake Oliver: Yeah. For our listeners who are not familiar with the MyPayrollHR fraud scandal, quick recap - earlier this month, shortly after Labor Day, the week after Labor Day, MyPayrollHR, [00:43:30] a small payroll processor in New York state with about 4,000 customers, suddenly shut down; sent an email to everybody who was a client saying, "We are no longer going to be able to process your payrolls."  That alone was worrisome, but what really started this whole mess was that employees who were getting paid that week saw their paychecks deposited into their account and then suddenly withdrawn, and withdrawn twice in many, many cases. This [00:44:00] was due to a problem with Cachet, the ACH payment processor that was partnered with MyPayrollHR. Basically, what happened is somebody at MyPayrollHR changed the account numbers in the batch file sent to Cachet Financial Services, causing that settlement account, where the payroll should have come out to the employees, to be underfunded- not funded at all. Cachet advanced the payroll to the employees without realizing what was happening. Then, when they realized that the employer money had not [00:44:30] been transmitted to that account, tried to take it back; tried do it twice because of an error causing huge problems for many of the employees in this case. Bank accounts overdrawn by large amounts; people unable to pay rent; unable to buy medication. It became a national story on NBC Nightly News, and CBS Morning. We've been covering it for a while now. The money is in a bank controlled by MyPayrollHR, which is frozen. Michael [00:45:00] Mann has been arrested and charged with a crime. We still don't have a photo of him. Michael Mann is the owner of MyPayrollHR [cross talk] David Leary: Yeah, Chelsea, you and Michael probably have dug just as much as we have. Did he not even take a selfie? Chelsea Diana: I don't know- David Leary: How is there no photos of him?  Chelsea Diana: Please send a photo, if you have one! Blake Oliver: We don't know what he looks like. We do know that he is working with the U.S. Attorney. He has been charged with, I believe, the crime with bank fraud. That kinda brings us up to date [00:45:30] with where we are. with the podcast, and following your coverage, Chelsea, and Michael. Thank you so much for all these amazing articles helping us figure out what's going on for our audience - many of whom are CPAs, who recommend payroll services, or provide payroll services, or bookkeepers who do the same thing. Yeah, so that's where we're at. David, what do we want to get out of this interview? What's next? David Leary: Yeah, I think one thing is just going back to the shutdown in the building, I think, in our brains, we're imagining [00:46:00] it was a little like that movie Boiler Room, where it was just, everybody vanished. They were gone. So, Chelsea and Michael, did either of you actually go to MyPayroll offices? What was that like there? Chelsea Diana: Yeah, I went to the offices a few days after it closed. The signs saying where the offices are had been taken off the walls. There were some paper taped to some of the windows looking in. From my understanding, the employees kind of came in for the day like normal and [00:46:30] were called into a meeting, and they were all let go and told to go home.  Michael Williams: Yeah, pretty much the same for me. I went there. The news broke Friday, September 6, and I went there later that afternoon. Pretty much like Chelsea said, the sign had been removed from the wall. Everything was dark inside. It looked like they had sort of started the process of moving out of their offices. I spoke with this one woman who worked for an insurance agency that shared the hallway with MyPayrollHR. She said that she [00:47:00] basically saw people moving stuff out of the office. She said that one employee came to her insurance office and inquired about open positions, and basically that all the employees at MyPayrollHR were sort of blindsided by this. I know that you all had referenced an email sent to MyPayrollHR employees on previous episodes that basically told them to pick up their belongings in a parking lot adjacent to a liquor store to sort of avoid any kind of attention from the fact that the company shut down. [00:47:30] Blake Oliver: Have either of you've been able to speak to employees that have maybe more insight into what went down inside of MyPayrollHR?  Chelsea Diana: I've spoken with a few employees. They all seemed very shocked and had no idea that this was going on. Michael Williams: Yeah, same for me. It seems like a lot of these employees had been getting a little bit of flack and a little bit of hate from everybody who's been affected by this. Just to be clear, there is no indication that the individual employees at MyPayrollHR had [00:48:00] any idea that any of this was happening. Basically, from the conversations that I've had with a couple of employees, they walked into work one day not knowing that they were gonna walk out and not have a job. Chelsea Diana: Their paychecks were pulled back, as well. They don't have a boss to cover their paycheck [cross talk]  Blake Oliver: Oh, wow. I didn't realize that they were affected, too. Chelsea Diana: Yeah, they were, and now they don't have a job, so it's pretty sad.  Blake Oliver: Where we left things, at least where the ... We've been following the [00:48:30] money trail through your reporting, and it seems that there is a frozen account at Pioneer Bank, which was the bank that was providing services, banking services, to MyPayrollHR. Do either of you have any more insight into where all this money went? It was something like $35 million total for this payroll; $26 million, I believe, was net paychecks to employees, funded by employer accounts; then another, I think, $9 million payroll taxes that were [00:49:00] supposed to be remitted to the IRS. Where is the money right now? Do you think that it's going to be recovered? Is Cachet going to get their money back - the ACH processor that essentially floated the payroll? Chelsea Diana: I don't think that's clear, at this point. The complaint said that the money had been transferred to Pioneer's bank account, and it had been frozen. Usually, in these investigations, [00:49:30] the money within bank accounts are frozen for quite a while, especially as the person whose name was on the bank account is out on bail. So, I don't think it's really clear at this point. David Leary: Michael Mann, he was the CEO of MyPayrollHR ... He hired a lawyer, and I think both of you spoke to his lawyer. Then, since that episode, he's been arrested, and he's confessed to $70 million in fraud, and this has taken place over nine years? What is his web? Blake Oliver: Yeah, help us untangle this, because we're hearing about [00:50:00] all sorts of shell companies. There's this school that he was funding down in Florida. Maybe you can ... Even though we don't know what Michael Mann looks like, maybe you can give us an idea of who he was and what was this whole web of lies he was weaving? Who wants to go first? Chelsea Diana: As far as the $70 million number, we know at least where $36 million of that $70 million has come from. [00:50:30] We know Pioneer Bank, Chemung Canal Trust Co., and Berkshire Bank have all filed disclosures saying that they had money impacted as part of a fraud. Blake Oliver: These are banks that were lending money to Michael Mann and his various companies. Chelsea Diana: None of them mention Mann by name, or MyPayroll by name in the disclosures, but they have been sent to reporters in response to questions. Michael Williams: Yeah, Michael Mann appeared in federal court [00:51:00] this Monday. I was actually in the courtroom and saw him there [cross talk]  Blake Oliver: Oh, so you have actually seen him? David Leary: Oh, oh!!! Michael Williams: I have. He actually does exist. He is a real person. He's not an international fugitive.  Blake Oliver: All right? Michael Williams: He looked pretty reserved; pretty quiet. I've been in the courtroom, several times, for several different cases, and he didn't really seem anything that out of the ordinary. Spoke very briefly, just sort of greeting the judge, answering short [00:51:30] procedural questions. All said and done, the hearing was only about 30 minutes long. Blake Oliver: I understand he confessed. What did he confess to, exactly? Michael Williams: What he confessed to, according to the FBI complaint, was basically- he said that he was going through some business and financial pressures. So, around 2010, he started basically ... What Bank of America is saying is that Bank of America froze Michael Mann's account, because they found that he had been kiting checks.  Basically, he was writing [00:52:00] checks to one account ... Say he was writing a check to a Pioneer bank account, but he deposited that check in the Bank of America bank account, and then he basically reversed that process by writing a second check from the Bank of America bank account to the Pioneer Bank account ... Basically artificially inflating his funds, according to the FBI complaint. Bank of America finds out about this, somehow; freezes his account at that bank. Pioneer also finds out about it; freezes Mann's account [00:52:30] of their bank. That's sort of the domino that got this entire situation rolling were the frozen funds in the account. David Leary: But he's been doing this kiting for almost a decade and using these inflated numbers to acquire other businesses and get other loans. Blake Oliver: Can you describe for us ... Chelsea, do you know what are the different types of businesses that he's associated with, at this point, that we're aware of? Chelsea Diana: Sure, there's a big variety. A lot of the way that I kind of [00:53:00] figured out the web of businesses that he's in is just looking at what other companies were incorporated under Valuewise, which was the parent company of MyPayrollHR. Under Valuewise - this parent company, which says it's a consulting company - there was a physical therapy clinic practice in the Midwest; there were several staffing agencies; there was a staffing agency called HireFlux, out of [00:53:30] North Carolina, that set up RNs with jobs at nursing homes and things like that. There's just all of these different businesses. A lot of them are staffing-related; a lot of them are not; a lot of them are healthcare related; a lot of them are not. It was just kind of fascinating to see how many different types of companies he had his hand in. Blake Oliver: Do we know if these are legitimate businesses, or just fronts, or shells? Any insight into that? [00:54:00] Chelsea Diana: Yeah. Of the ones that I have verified, some are definitely legitimate businesses. I always recommend, if you're looking to work with a business, and you go to their web page, if they list who their CEO is, with a picture of who it is ... If they if they have faces of CEOs and things like that, then it's pretty likely a legitimate business; if they've been quoted in other news stories, other media outlets, it's likely [00:54:30] a legitimate business. For a lot of those businesses, I found those details, but some of them, I couldn't. That doesn't mean that they weren't legitimate, it just means that they have less of an online footprint. Blake Oliver: What's the deal with this school? Is it a school in Florida that Michael Mann was funding? Chelsea Diana: Yeah, it was an elite basketball academy. He wasn't funding the school. He was just funding the basketball portion of it. So, essentially, [00:55:00] if you want to play D1 college ball for like Georgia or any of the big D1 schools, a lot of kids go to these prep schools. In this case, there were two schools created- two of these academies created under Michael Mann's name. One was in Georgia, outside of Atlanta, in 2017, and another was created - it [00:55:30] was essentially moved to North Carolina over the summer. The schools were connected with religious schools. What I learned is that he essentially paid a coach to- a former college coach to teach these guys how to be a better recruit and how to get on a D1 basketball team, along with paying for the tuition to the private school. Blake Oliver: Wow, so that's all shut down now? What are these kids gonna do? What happened? [00:56:00] Chelsea Diana: I saw a story from a paper in South Carolina, where one of the recruits lived. The kid had just planned on going to this school, this fall. After a few days, he was heading back to his old high school. Blake Oliver: Wow, so lots of people affected; not just the employees of the companies using MyPayrollHR, but employees of these other businesses, and of this school that Michael [00:56:30] Mann was helping to fund. David Leary: Do we know Michael Mann's background? Does he have ... He's a little bit in temp agencies, a little bit into payroll, a little bit into basketball camps ... I saw he's involved in some big national basketball tournament possibly, as well. Chelsea Diana: Yes.  David Leary: Then he's got some physical therapy business, I think you said. What's his background? Is he just an investor? What do we know about him? Chelsea Diana: He worked in healthcare consulting for a while, which is where the healthcare [00:57:00] connection comes in. Then, I know that he played basketball, himself, in college. I don't know where. That may be where the basketball connection comes in? Blake Oliver: So, Michael, you were in court when Michael Mann was charged with this crime, with the bank fraud crime. You've seen him. What is next in this story? Michael Williams: Yeah, that's a really good question. It's hard to say where the criminal proceedings are gonna go, although the fact that [00:57:30] he basically, according to the FBI complaint, admitted to committing a $70 million fraud is somewhat indicative of what might happen, but, really, it's hard to tell. Really, the big question right now is which businesses of his were legit and which were basically shell companies for this alleged fraud that he admitted to in this complaint? Also, who knew about this before it was revealed? He's had several business [00:58:00] partners. Right now, it's a bit unclear which of his companies were legit, and which weren't, and who knew about this in the 10 years that, according to the FBI complaint, he says that he was perpetrating this fraud [cross talk]. Blake Oliver: And he is- sorry, go ahead, Chelsea. Chelsea Diana: I think there's one really important line from the complaint that just says a lot about what's happening here. It's that Mann said he used almost all of the $70 million to sustain certain businesses, and [00:58:30] purchase, and start new ones, which means that he was using this money on actual businesses. It just wasn't the businesses that he was saying it was for, essentially. Blake Oliver: That brings us to the question of why change this ACH number in the first place? Why? What was the motivation for that? David and I have speculated that maybe diverting the money from the settlement account at Cachet to Pioneer Bank was a mistake; that [00:59:00] perhaps he was doing a search and replace on some other account numbers of ... Maybe there was fraud involved in the payroll with some of these shell businesses, or employees, and he didn't mean to do that, because it makes no sense. David Leary: Yeah, it's either he made a mistake, and he accidentally moved the entire payroll. Then, obviously, that raised red flags, or it was he just got in over his head, the opportunity was there, and he finally just pulled the trigger. Blake Oliver: Total desperation move or something. Well, thank [00:59:30] you so much, both of you, for joining us today. Really appreciate your insights and your coverage. It's been super-interesting to observe all of this happening. It's a real cautionary tale for accountants and bookkeepers who rely on payroll services for their clients, because most accounting firms outsource this now. So it's a lesson in know who you are working with. Like you said, Chelsea, if [01:00:00] you can't find the owner of the business on the website, maybe that's a sign. David Leary: So, if you had to take a guess, are we gonna be having you back on, nine months from now, 18 months from now, four years from now. When is there gonna be closure to this, to where there's a sentencing taking place and that type- the investigation will stop?  Michael Williams: It's really hard to say. I guess that sort of depends on what Michael Mann gives to the FBI, or to the U.S. Attorney's office, as part of a potential deal that he [01:00:30] might make with them. It really depends on what his level of cooperation is with the investigation. This could be a months-, if not years-long process to see the conclusion of the criminal case, at least. And that's not even to say the conclusion of all the civil cases, the lawsuits have been filed against MyPayrollHR, against Michael Mann, himself, against Cachet Financial Services. Yes, we're going to be reporting the story for months, [01:01:00] if not longer. It's definitely gonna be a really long process. Chelsea Diana: We don't know how he's going to plead yet, either. I think a lot of it depends on if he pleads guilty or not guilty. Blake Oliver: Right. Well, given that he already confessed, it would be a little bit late- Chelsea Diana: Right. You would think ...  Blake Oliver: -to plead not guilty, but you never know. Chelsea Diana: You never know.  Blake Oliver: Well, Chelsea, Michael, thank you so much for joining us. Chelsea, if people want to follow what you are writing and covering online, where's the best place for them to do that? Chelsea Diana: Yeah, the best place is probably our website, Bizjournals.com/albany. That's B-I-Z journals, with an 'S'. [01:01:30] Blake Oliver: And Michael, how about you? Michael Williams: For me, it would be TimesUnion.com, and I would definitely recommend anybody in the Albany area to subscribe to your local newspaper if you haven't already. Chelsea Diana: Yes.  Blake Oliver: Wonderful. Thank you both and have a great weekend. Chelsea Diana: Thanks so much.  Michael Williams: Thank you both for having us.
  5. SponsorPodchaser: https://cloudacctpod.link/reviews Show Notes 01:41 – General Counsel Slavkin describes Cachet Financial Services as a sort of third-party vendor for payroll processing companies.   05:59 – Every ACH provider has their own patented process for payroll  06:45 – How MyPayrollHR’s owner, Michael Mann, did the deed, in technical detail   09:03 – Slavkin claims the  assorted employee banks are to blame for the whole payment reversal fiasco  10:32 – According to Slavkin, banks have 60 days to either accept or reject reversal files  11:29 – Cachet eventually decided to return all funds to the affected employees, using their own funds  12:10 – Though Cachet covered the payroll, some employees have yet to receive their funds back  13:32 – Slavkin notes that employee banks are waiving overdraft and other fees related to this incident  14:18 – NACHA’s statement re payroll-deposit reversals | Personnel Today   14:38 – Slavkin doesn't agree with NACHA's claim about reversing payroll deposits.   16:21 – Lesson learned: ABC - Always Be Cautious ... Before the MyPayrollHR event, Cachet never had controls in place to detect fraudulent activity from the client side. Now, after the fact, they do.   18:56 – According to Slavkin, Pioneer Bank is holding at least some of their money "in trust" ... They just have to find a way to get it.  23:18 – Timeline of the aftermath – from discovery through contacting FBI and more  24:38 – Wall Street Journal reports that Mann is cooperating with the U.S. Attorney and FBI ... | The Wall Street Journal   25:02 – Where in the world is Michael Mann? Either nobody knows, or they're not saying 26:30 – Blood and turnips - Slavkin was unable to accomplish much of anything when she contacted the FBI for help  31:50 – Pioneer Bank – another victim? | Times Union   33:30 – Was this a crime of desperation, or a crime of greed?  Connect with Cachet Financial ServicesThe Cachet Crisis Hotline number is 877-579-8557Connect with Our Guest, Wendy Slavkin, General Counsel for Cachet Financial Services http://slavkinlaw.com https://twitter.com/slavkinLaw 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. 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 TranscriptWendy Slavkin: First of all, the file got manipulated by MyPayrollHR, prior to uploading into our system. They were a client of ours for 12 years. Michael Mann purchased it, I think, about six years ago; had a great relationship with them, never had any problems. So, there was not an alarm when he manipulated that account number. This was something that we just could not foresee. This was our client. David Leary: So, Blake, [00:00:30] I have a special guest interview for us right now. We have Wendy Slavkin. She is the attorney for Cachet. They are the ACH money movement company that was involved with the MyPayrollHR fiasco/mess. I don't know ... Wendy, what would you say is the best way to describe this, at this point?  Wendy Slavkin: First of all, I'm general counsel for Cachet. We have many attorneys, but I'm the general counsel. I've kind of been overseeing all of this. How would I describe it? I would describe [00:01:00] it as - from our end - a $26 million fraud. David Leary: So, I imagine your last 21 days or 20 days have been a little insane. Did you wanna walk Blake and I through that, and then, we'll ask any clarifying questions along the way maybe?  Wendy Slavkin: Can I give you a little background about my client- David Leary: Absolutely.  Wendy Slavkin: -and how they kind of played into this whole disaster? Cachet Financial Services is a company located in Pasadena, California; been around for 22 years. One of the things we do is we get involved in the movement [00:01:30] of money through the ACH - automated clearing house - system. Our clients are hundreds of payroll processors all across the country, much like this particular one we're dealing with, MyPayrollHR. Typically, what we do is we enter into an agreement. We call it a re-marketer agreement, but it's kind of like a third-party vendor agreement with different payroll processing companies. These payroll processing companies, back in the old days, or the 1990s, as I like to call it, they [00:02:00] printed hard checks, paper checks that they would typically mail or messenger-deliver to different employers for their payroll. Nowadays, a lot of employers are going the way of direct deposits, meaning they deposit the money directly into the employee's account, and we're doing away with paper checks. These payroll processors, for the most part, are unable to do the direct deposits themselves. They're just not set up. They don't have the proper licensing, [00:02:30] and facilities, and bank relationships. They'll enter into an agreement with somebody like us, like Cachet Financial Services, to do the direct deposit part of it. We're, in a sense, like a third-party vendor for these payroll processors. David Leary: Got it. So, me, as a payroll processor, I have my expertise, which is calculating paychecks. Wendy Slavkin: Right. David Leary: Having relationships with small businesses, but you do all the money movement and the bank relationships on the backend side. Wendy Slavkin: Exactly. What most people don't understand is the ACH process [00:03:00] is a two-step process. The first step is the collection step. Typically what'll happen is employers will go into whoever their ... In this case, MyPayrollHR system. They'll upload all the information for the payroll for their various employees. They upload that into MyPayrollHR system. MyPayrollHR, in turn, will upload a file into our system, Cachet's system, that may contain various [00:03:30] and many different employers with their employee information. The collection part of the first step is that the file that MyPayrollHR sends to us will say, "Take money out of A, B, C, D, E, F, G employer; take money out of their accounts to be used for payroll." That's the first step, the collection step. When it goes the way it's supposed to go, we will then- Cachet ... It's all done electronically. It's [00:04:00] not like there's somebody sitting in front of the computer watching all these numbers go by. It's all done electronically, through our patented system. Our system will then take the money out of the employers' accounts. The way it's supposed to go is we move it into what we call our settlement account or a holding account if you like. All the employers' money would be moved into that one account. That's if it goes the way it's supposed to go. The second step to this ACH process is disbursement. That file [00:04:30] that MyPayrollHR uploaded into our system would say, "Okay, now you have all this employee money. Direct the money to these various employees across the country." That would be the disbursement. That's how the employees would get their direct deposit. That's how it's supposed to work. Are you with me so far? Blake Oliver: Help me understand. I've heard about a file. What sort of file are we talking about? What is it? Wendy Slavkin: It's a huge computer/electronic file. We sometimes call it a batch file, but it's got all [00:05:00] kinds of information in it that MyPayrollHR, or any payroll processor, would upload into our system that contains the payroll for that particular payroll processor's employers. Then, the second part, again, the disbursement, would be all that money is now in our holding- our settlement account. What we're gonna do with that is we're gonna follow the second part of that file that was uploaded and put it into all these employee accounts. That's how it's supposed to work. What happened here- David Leary: These files ... If [00:05:30] I'm using Cachet as my ACH service provider today, and next year, I get a new contract with a new company, do I just use the same file, or do I have to create new files to their standards? Wendy Slavkin: No, you would have to create new files to their standards. We provide the payroll processor with specifications; call 'em specs. Those specifications say, "This is how it has to look. This is our settlement account where the money has to go." Every ACH provider [00:06:00] has their own patented system. If you recall, there was another one of our competitors was involved in this mess, NatPay. NatPay has their own patented proprietary system, and they were able to do the same thing to NatPay's system that they did to our system, which I'm just about to explain to you. David Leary: When we say NatPay, NatPay was handling the [cross talk] tax deposit from MyPayrollHR. Wendy Slavkin: -from MyPayrollHR's employers, right; their quarterly tax payments or whatever. [00:06:30] David Leary: Okay.  Wendy Slavkin: We do that, too. Cachet does that, too, but we weren't contracted- we didn't have a contract with MyPayrollHR to do that part of it. NatPay had that contract. David Leary: I understand. Wendy Slavkin: Although we do that for other employers- other payroll processors, I should say. What happened in this case is when ... Before MyPayrollHR uploaded the file into our system, remember I talked about the specifications that are required for the payroll processor to upload the file? [00:07:00] They went in and manipulated the account numbers so that instead of the money going into our settlement account, it went into- it was diverted to a different account at MyPayrollHR's bank, which is Pioneer Bank, and that was controlled by MyPayrollHR. Our system went and gathered all the money from the employers; instead of it being moved into our settlement account, it was diverted into an account controlled by MyPayrollHR at Pioneer Bank. That's where the glitch happened. [00:07:30] When our system went to find the money to pay to these employees, it saw there was no money in our settlement account. it kind of, I guess, follows the money. I don't know exactly how it works, but the program is set up ... It found the money in this account at Pioneer Bank, and it went to grab that money to pay all these employees across the country, and that account came back as frozen. David Leary: But, in the meantime, Cachet is starting to put money into [00:08:00] employees' bank accounts all over the country. Wendy Slavkin: Right. It kinda happens a little bit simultaneously. This was two weeks ago, actually, today. Cachet got in the office and found out this bank account came up frozen, and we were $26 million in the hole. Blake Oliver: Negative $26 million balance in that settlement account. Wendy Slavkin: Right. Blake Oliver: Okay. Wendy Slavkin: Because we, Cachet, guarantee these ACH transactions, our bank requires us to do that. When [00:08:30] that bank account came back as frozen, it went ahead and advanced the money into all these employees' accounts across the country, but it was Cachet's money it was using to fund that payroll. What happened is because it was our money, and we have no obligation to make payroll for these 400-plus employers, 1,000 employers across the country, we went ahead and we initiated what's called a reversal file as part of our fraud protocol to get the money back from the employees, [00:09:00] because it was our money; it wasn't employer money. The first reversal file that was created was done improperly. It didn't comply with the protocol necessary to do a reversal file. We assumed that the banks, the receiving banks, which would be the employee banks, would automatically reject that reversal file because it was improperly formatted. The banks should have automatically rejected that first reversal file. Because we assumed the banks would do that, we [00:09:30] created a second reversal file. So, what happened is, then, a week ago Monday, that's when all hell broke loose, so to speak. All these employees' accounts were not only being debited for the direct deposit they received from us, but a second time, as well. If there was $500 dollars put in their account for that direct payroll, they were getting debited $1,000.  When we found out what was happening, we contacted our bank and had our bank reach out to all these receiving [00:10:00] banks, more than 100 banks - receiving banks being the employee banks - and personally instruct them to reject both reversal files and put the money back in the employee accounts. David Leary: This is all electronic, and it's happening very fast, so by the time you realize these things ... You're manually contacting, I'm assuming, by telephone and email, 100 banks. Wendy Slavkin: Our bank reached out to all these banks by telephone, fax, e-mail, however they could, and instructed them to reject both [00:10:30] reversal files. Now, something that's little known in the banking industry is when a bank receives a reversal file, they actually have 60 days to accept or reject it. So, in other words, when an employee's bank receives a reversal file, they may conditionally accept it, but that doesn't mean they're sending the money back to us. They never sent ... No bank has yet sent money back to us, to Cachet. They conditionally [00:11:00] accepted ... They, in a sense, put a hold on that money. When they got the second reversal file, they put a hold on another amount of money. But it doesn't mean that they sent the money to us. They just put a hold on it. By law, they have 60 days to decide, are they going to accept the reversal or reject it? Even though they conditionally accepted these, it doesn't mean that, ultimately, it would have been accepted. The first one, ultimately, would have definitely been rejected. Why [00:11:30] we had our bank reach out, a week ago Monday, was to make sure that both reversal files were rejected, and the employees would get their money back. We saw the extreme heartache this was causing on all these employees, so we made the decision - we're just gonna let them keep their money, even though it's our money. So, in effect, we funded the payroll, and paid 8,200-and-some-odd employees across the country; we would try to get the money back from Pioneer Bank and other sources. [00:12:00] Blake Oliver: So, it's September 18th, right now. Have all the employees been made whole, at this point? Do they all have their payroll and those reversals cancelled? Wendy Slavkin: From what I've been told, not every employee. The majority of employees have been made whole. The ones that haven't been made whole; I've gotten calls from some of them. My client's gotten calls. We've instructed them to talk to their bank to see what's the delay in getting the money back. If their bank doesn't [00:12:30] cooperate, I've been referring them to an email of a person on our end that has been designated to handle all these and to try to interface with the banks to get that money back into their account as soon as possible. I know the majority have been made whole. There's still some that haven't. If they haven't been made whole, it's really their bank that's holding up the process. Understand, a lot of times, these smaller banks, they're gonna hold onto the money as long as they can. They [00:13:00] earn interest on that money. They're sometimes a little more reluctant to release the money than some of the major banks are. But I've been told that even, in some cases, B of A and Chase Bank, in isolated instances, have been reluctant to release the money. Hopefully they're in the process of doing so or will be doing so. Our goal is to make every employee whole, and that's what we've been working on to accomplish. Blake Oliver: What about the overdraft fees, the bank fees? They could add [00:13:30] up to hundreds of dollars for some of these employees. Wendy Slavkin: Right. What we understand is that the banks are waiving those fees. That's what I've been told. Blake Oliver: There must be hundreds of banks involved. Are all of the banks?  Wendy Slavkin: From what I've been told, they are waiving those fees, and we're doing whatever we can to make sure they waive those fees. Blake Oliver: I was reading an article on Personnel Today that talks a little bit about the NACHA rules. This is the way that all the banks move around money with ACH- Wendy Slavkin: The National Clearinghouse Association- Blake Oliver: -and the federal government administers [00:14:00] this thing. That's what you guys are licensed with, or you have an account with them? Is that how it works? Wendy Slavkin: They're governed by the NACHA rules, yes. Blake Oliver: Gotcha.  Wendy Slavkin: It's not that we do. We have a relationship with our bank, and our bank is governed by those rules. Blake Oliver: So, in this article, there's a statement from NACHA, which says, "Reversing a valid payroll deposit is not permitted under the NACHA rules that govern the ACH network. NACHA is investigating the responsible parties and is working with financial institutions to undo or remedy any invalid transactions." [00:14:30] Wendy Slavkin: Yeah, I saw that article. Blake Oliver: So, is that the reason why Cachet reversed its [cross talk]  Wendy Slavkin: No, no, that's not. Blake Oliver: Okay ...  Wendy Slavkin: I don't necessarily agree with that. There's actually a recent case that came down that disputed that statement. I don't have a cite for you, but I'm in the process of finding out about it. We decided to reverse it because we saw the hardship it was causing to the employees, basically. I was getting calls, and my client was getting calls. People couldn't [00:15:00] pay their rent. They couldn't provide for their children. That's why we decided to have the banks reject those reversals. NACHA did not get involved in helping us. From what I understand, and this is my own understanding - there may be something more to this - but it was our bank that facilitated in getting these reversals rejected by the banks. Blake Oliver: So, let's go back to this file and the process or the workflow by which these ACH transactions [00:15:30] are initiated. When the file was manipulated and uploaded, did any alarm bells go off in the Cachet offices? It seems like this just got executed, and then only after this started to happen was somebody alerted. What are the controls in place to make sure that this doesn't happen? Wendy Slavkin: That's a great question. First of all, the file got manipulated by MyPayrollHR, prior to uploading into our system- David Leary: Just because we haven't talked about this yet, MyPayrollHR has [00:16:00] been a client of yours for how many years? Wendy Slavkin: Well, they were client of ours for 12 years. Michael Mann, the guy who is the owner, purchased it, I think, about six years ago; had a great relationship with him; never had any problems. Just like we've never had this happen over the last 22 years. There was not an alarm, when he manipulated that account number. Trust me, there's been an update to our system. [00:16:30] There is now an alarm. I have to say, Cachet is great about ... We update our security protocols all the time, Most of our clients have had their systems hacked, and cyber terrorism, and the Russians, and this and that. We continuously update our security protocols. This was something that we just could not foresee. This was our client. At the beginning of the conversation, [00:17:00] if you recall, I said we have our own patented system, and we didn't catch it. NatPay has a completely different system, their own patented system, and they didn't catch it. It was something that was very extraordinary and out of anything anybody could foresee. History is our great lesson about protecting us in the future. So, now we have something in place that would prohibit a client from ever doing that again. It was kind of the farthest thing from [00:17:30] our minds, because usually it's not the payroll processor, it's a third party who hacks into a payroll processor system. We've been parties to those kind of situations, but never this, where our own client decided that they were gonna manipulate the system. Going forward, it will never happen again; I'll tell you that. History, in this case, has been our great teacher, but there was nothing in effect that would have alerted us to it, until what happened, once they got to work a week ago, Wednesday- or two weeks [00:18:00] ago today, I guess, and we found out that we were $26 million deficit. Then we started looking at the system. You can print out the reports, and we were able to find out that they had manipulated the account numbers before they uploaded to our system to divert the money to Michael Mann's company's account at Pioneer Bank. Blake Oliver: Yeah, let's talk about that. The money should be all sitting in an account at Pioneer Bank, [00:18:30] right? Wendy Slavkin: Well, we hope so. From your mouth to God's ears, as we say. Pioneer Bank has not been very ... Of course, we immediately called Pioneer Bank, and they won't give out any information. It would be like me calling your bank and asking for information about your account. Unless you're a named account holder, the banks legally cannot give me any information. David Leary: We see that with accountants and bookkeepers. They have to ... The owner of the business has to give the accountant or bookkeeper access.  Wendy Slavkin: Exactly, and I'll go back to that in a second. Pioneer [00:19:00] Bank filed, with the feds, a form called an A8, I believe, and it disclosed that they had $19 million dollars in that account that they had frozen. We look at it as that $19 million dollars is, in a sense, trust money, because it was money that came from an employer for the purpose of paying payroll that Cachet ended up paying. So, that $19 million belongs to us.  Of course, we are in [00:19:30] the process of filing a lawsuit against MyPayrollHR and Michael Mann, and subpoena those bank records, and trying to get that money back to us. Now, where the other $7 million is, I don't know yet. We don't know what other accounts Michael Mann has there; what kind of assets we have there. What I heard was that Pioneer Bank loaned Michael Mann a great deal of money, like over $30 million dollars, and they suspected something fishy going on, so they just were trying to put a hold on as much money [00:20:00] as they could. But again, that money in that particular account does not belong to Pioneer Bank. It belongs to Cachet. So, interestingly, and I said to you I'd get back to you on this, when we got to work that ... It was interesting that Michael ... This was very well-planned because the payroll was right before the three-day holiday if you recall. The chances of us finding out about it was gonna be delayed a day, because banks were closed that Monday for Labor Day. When we found out Wednesday, there was a slight delay [00:20:30] because of the bank closure. I think Michael Mann probably planned on that happening. We immediately called Pioneer ... Excuse me, we did call ... Pioneer Bank wouldn't give us any information.  We called MyPayrollHR and tried to speak with Michael Mann. He wasn't available. I don't know who my client spoke with over there, but they couldn't give us any information. Michael Mann finally called us back that Wednesday. That'd be two weeks ago, about 2:30 in the afternoon. He said, "Oh, it's all gonna be ..." He reassured [00:21:00] us everything was gonna be fine. Our request was that he conference call us and his bank with him to give the bank permission to talk to us and tell us what had happened [cross talk]  Blake Oliver: -sorry, can we go back to ... I wanna make sure this is really clear in my head because I'm confused about the timeline.  David Leary: So, 2:30, right, Pacific, for you, Wendy?  Wendy Slavkin: Yes.  David Leary: Which is East Coast, 5:30, which means- Wendy Slavkin: After the bank had closed-  David Leary: After business hours. Okay.  Wendy Slavkin: Exactly. Don't [00:21:30] you think it's interesting that he called us after the bank closed? Blake Oliver: I'm sorry, what set this off on Wednesday? Take me back to the beginning. Wendy Slavkin: My clients came to work Wednesday morning, and they started getting notices, computer printouts, that that- what had happened; that the account was frozen at Pioneer Bank- Blake Oliver: Oh, gotcha.  Wendy Slavkin: -and the system had looked to our accounts and us, personally, to underwrite that payroll.  Blake Oliver: So, the file got uploaded on the 3rd, in [00:22:00] the evening. Is that how it happened? Wendy Slavkin: What day was it? it got uploaded before the three-day holiday? What was the [cross talk]  Blake Oliver: Oh, it was before the 3rd, okay.  Wendy Slavkin: Yeah, that's what my point was, was that three-day holiday, the Labor Day holiday-. Blake Oliver: Labor Day was the 2nd of September. Wendy Slavkin: Right. So, they must have uploaded at the end of the month, which would have been the 30th, I'm assuming; that Friday. Tuesday was a holiday. That was the 2nd. I mean, Monday was a holiday; the 2nd. We didn't find out til [00:22:30] the morning of the 4th, because there's usually like a two-day delay. Whereas, before we might have found out on the 2nd or the- but we didn't, because a bank was closed, or maybe the 3rd. There was a further delay to the [cross talk]  Blake Oliver: Got it, because it took two days for the money to go from the employer accounts into- Wendy Slavkin: Well, I don't know if it took two days for the money to go to the employer's accounts. It took two days for us to be notified that the account where the employer's money was, was frozen-  Blake Oliver: Yeah, okay-  David Leary: -because when banks are closed, banks are closed, right. They just don't operate [cross talk]  [00:23:00] Wendy Slavkin: -we might have gotten notice late Tuesday night, when nobody was there. I don't know. But it was Wednesday morning that everything fell apart.  Blake Oliver: So, Wednesday morning, they come into the office. They realize what has happened. Now, take me through on the day on Wednesday.  Wendy Slavkin: We tried to contact the client, MyPayrollHR. I wasn't part of this conversation. They spoke with a couple people there who didn't know what was going on. Left a message from Michael [00:23:30] Mann, who is the owner, is the sole shareholder, to call us back. We also called Pioneer Bank, who wouldn't release any information to us. Michael Mann finally called us back that afternoon, the 4th, at about 2:30 our time, Western time. It's interesting he called us back after the banks closed on the East Coast ...  We had a couple questions. One, is everything gonna be okay? He assured us it would [00:24:00] be. Then, our main request was that, "We want you to get on the phone with your banker and us in a conference call so we can talk to the bank to find out exactly what's going on and why that money is being frozen." His response to us, and he was calling, I think, from a cell phone, and I was on the phone along with representatives from Cachet ... His response was, "I'll call you back in 10 or 15 minutes." Well, needless to say, he never called back, and we could never reach him again despite attempts to reach him. [00:24:30] Blake Oliver: Since that call, you have not been able to reach him, two weeks later.  Wendy Slavkin: We haven't spoken with him. I just read an article. Not sure if it maybe was The Wall Street Journal that said that Michael Mann has an attorney, and he's working with the U.S. ... Because the U.S. attorneys opened a case out in Albany, New York, along with the FBI back there; that he's working with the U.S. attorney, cooperating with him. I don't know what that [cross talk] David Leary: I saw that article, as well, this morning. Between this morning and your conversation with him, he pretty much fell [00:25:00] off the face of the earth. Nobody could contact him. Nobody knew where he was. Wendy Slavkin: Right. Exactly. My conversation with him was Wednesday. By Thursday, if you recall, they posted something on their website, the company had closed its doors. Then, Thursday afternoon, I heard, as part of the rumor mill, that he had fled the country. Then Friday morning, I had heard that he had been arrested. So, of course, I reached out to my FBI contact, and the FBI ... Their [00:25:30] response is, "We can neither confirm nor deny." He wouldn't tell me anything. You know, the FBI, they wanted a lot of information from us, but they were not- so far, have not been very forthcoming on what they know. Blake Oliver: I feel like if he was in custody, that would be- we'd know about it, at this point. Wendy Slavkin: Right. That's what we had heard, in the payroll industry rumor mill ,or whatever. Then I had spoken with a reporter that morning from Albany, and I don't remember who; this was Friday morning, and said, "I [00:26:00] heard he was arrested. Do you know if that's the case?" because she was back there, and she goes, "I can tell you; he hasn't been." I said, "Well, how do you know that?" She said, "Because I know people who know him." I said, "Really? Can I have their names?" She said no. Then I figured, okay, he wasn't arrested yet. Then, when I heard that, I don't know, was it a day or two ago,  that his house had been raided, but they didn't arrest him ... So, I don't know if he was there. It mentioned his wife being there. I [00:26:30] don't know. The FBI plays it very close to the vest. We, by the way, when that Wednesday, two weeks ago, when this all happened, I reached out to the FBI office here in Westwood. You know where that is - Wilshire and Veteran - because I had this image that I told them what had happened, and they would immediately go to my client's offices like the white knights and want to help us. That's not how it works. Apparently, they get a lot of crank calls. They said to me, "The only thing we can do is for you to [00:27:00] arrange for a walk-in interview on Friday [mind you, this was Wednesday] and bring all the documents that we have." I said, "But you don't understand. This guy could leave the country. Aren't you gonna do something?" "Well, we don't work that way." They had to do a background check on me, on my client's representative. We ended up meeting with them Wednesday, met with a woman ... Basically, it was I thought it was gonna ... They call it interview room, but basically it's like a plexiglass [00:27:30] window, like you're at a bank, and you're talking to her through that. She just happened to be the duty agent on call. I think she understood maybe five percent of what I was trying to explain to her, because it's a very complicated process, and unless you're involved in financial crimes, you really don't understand it. By that time, two other FBI agents had reached out to me - one from Boston and one from Pennsylvania - that apparently employers had reached out to them. So, it lent a little bit of credibility [00:28:00] to what I was telling her. My message sure was, "I'm not telling you how to do your job, but I know the FBI has resources and is able to have things accomplished that I cannot. If they do anything before the banks close today, Friday, please have somebody reach out to Pioneer Bank and tell them not to release any of that money."  Whether they did that or not, I don't know. I know that I sent a cease and desist letter to Pioneer [00:28:30] Bank, telling them not to release any of that money and have since also sent a similar letter to Bank of America, because we found that Michael Mann has some accounts at Bank of America under different names that we thought might be involved in this fraud.  Blake Oliver: There's so much going on here. It's incredible. I feel like this like a true crime financial ... A Financial True Crime episode [00:29:00] right here on our show. David Leary: Is there a little bit more background on Michael Mann. Blake Oliver: Yeah, who is this guy? David Leary: He purchased MyPayrollHR, but I tried to Google for him. I went deep-diving, deep-diving, 10, 30, 40, 50 pages in. It's almost like he doesn't exist. But he has another company, apparently, that owns MyPayrollHR- Wendy Slavkin: From what I know, that company is called ValueWise. Is that the name you came up with?  David Leary: Yes. Yes. Wendy Slavkin: ValueWise, I was told, and [00:29:30] our other attorneys who are working on this, I think it's like a parent company. He also- they also go by the name of Cloud Payroll. We've since found out a bunch of other entities that he has something to do with. There's a senior home care company, a bunch of other companies that he ... I don't know if they're shell companies. I don't know if they're valid companies. I've gotten calls from attorneys outside of California and inside California that represent people that factored [00:30:00] some of Michael Mann's accounts with these other entities. I don't really know the extent of it. I thought the FBI, when the story broke, about the FBI raiding his house, that nobody has any pictures of him. They couldn't find any pictures of him. I don't know really anything about him. I know that for six years he's ran this company, and everything has worked like clockwork. But apparently, what we've learned after the fact is that ... The rumors started circulating that [00:30:30] he had some big financial problems. All these other entities have come up that he is associated with. I don't know how it all plays into this or not. I know that I really don't want to complicate the story more, but what I understand is that he's been, I think, moving money to different places that we don't know about. Blake Oliver: Let's talk about Pioneer Bank and their involvement in all of this. You mentioned that you weren't able to get a hold of them back when [00:31:00] this initial- Wendy Slavkin: It's not that we couldn't get a hold of them. They just wouldn't give us any information. Blake Oliver: Since the 5th, the 6th, when this all happened, have you been able to talk to Pioneer Bank? Have they given you any information? Are they being helpful? Wendy Slavkin: No, they're not helpful to us. I'm assuming they're cooperating with the FBI and the U.S. Attorney's office, and I think some of the reports even said that when [00:31:30] they filed this A8 form, they noticed some sort of fraudulent occurrences in the account. They're claiming that's why they put a freeze on it. Whenever there's some sort of fraudulent activity at a bank, they have to disclose it, and they do that through, I think it's called an A8 form or an 8A form. That's where we found out that they're sitting on $19 million. Blake Oliver: In this SEC filing, Pioneer Bank reported that they originated a loan to MyPayrollHR for $36 million dollars, and $16 million [00:32:00] of that had already been provided. Going beyond the-. Wendy Slavkin: What did you just say? I didn't understand what you just said. Blake Oliver: They originated a $36 million loan and $16 million had been provided-  Wendy Slavkin: Had been provided?  Blake Oliver: I don't know what 'provided' means exactly, but I'm guessing that means they had advanced the $16 million out of a potential $36 million. I'm just trying to figure out what is going through Michael Mann's head? Like, what is the point of all this? [00:32:30] Why did he do it? We don't know where he is. Nobody knows seems to know - or maybe the FBI knows, but they're not telling us - but nobody knows where Michael Mann is. Wendy Slavkin: He could have been at his house when they raided it. We don't know that. Blake Oliver: Yeah, I feel like they would have arrested him, right?  David Leary: The interesting thing in this conversation ... We're in this industry. It's very interesting to us, but CBS's Morning Show, the host of that show was asking that question, "Where is Michael Mann?" [cross talk] They were asking that this morning. Wendy Slavkin: -yeah, I spoke with them, as well. Oh, they were asking that this morning? Yeah, I [00:33:00] don't know where he is. I don't know if the FBI knows. I know that article in The Wall Street Journal said that Michael Mann was cooperating with the U.S. Attorney, which would indicate to me that the U.S Attorney or the FBI knows where he is, but we don't.  Blake Oliver: Just to clear things up, this is not the same Michael Mann who directed The Last of the Mohicans. Wendy Slavkin: No, it is not.  Blake Oliver: That also confuses the Google searches. Wendy Slavkin: Yeah, no. This guy has nothing to do with the entertainment world.  Blake Oliver: Now, I'm just talking out loud. Why would Michael Mann do this? [00:33:30] Wendy Slavkin: Well, he obviously ...  It seems to me, why anybody does this kind of stuff is because they need money. He saw a way to grab some cash or maybe to pay off his obligation at Pioneer Bank. I don't know. I can only guess. I think he obviously had some financial difficulties and was trying to, however he could, get money, and he thought this was a good idea. Blake Oliver: It's interesting. Maybe he was trying to get the money out of Pioneer Bank, and they froze the account, which would mean [00:34:00] that he didn't get it. But then there's the question of what happened to the $16 million that Pioneer Bank loaned him. Maybe that's gone, and Pioneer Bank will end up being on the hook. Wendy Slavkin: Right, and there should be $26 million in that account; which Pioneer Bank declared in writing, there was only $19 million in that account. So, we don't know where the money went. Blake Oliver: Maybe he was able to - and I'm just speculating here - maybe he was able to get some of it out before they froze the account. Wendy Slavkin: Perhaps/ Your guess is as good as mine. David Leary: The ripple effect of the impact of this crime. It's Pioneer [00:34:30] Bank, possibly. It's Cachet. It's the bank in Florida-  Blake Oliver: It's also legislation. David Leary: -thousands of employees. Thousands of employees. You have possible legislation coming down the pipe. Even the MyPayrollHR employees were affected. I saw that email where they told them to meet in a liquor store parking lot to pick up their personal belongings. The ripple effects of who this has impacted is really, really far-reaching. Blake Oliver: David, you found that story about how the New York state legislature is now [00:35:00] considering legislation to more- well, to regulate payroll companies like this, payroll services like this, which have never been regulated [cross talk]  Wendy Slavkin: Well, the payroll services is a pretty unregulated business. Again, we've never had a problem like this with a payroll provider, ever. 22 years, this has never happened. And I assume it's not happened to our competitors, like NatPay, or they would have protected themselves against it. You know what I'm saying? The whole thing [00:35:30] is very enlightening. It's just horrible. Like I said, the employees will all be made whole. If they haven't already, they will be. Like the FBI said to me, "We realize that you're the victim here, once the employees are made whole ..." but at a tremendous cost to both the employees, the employers, and to us. Blake Oliver: David, I don't have any more questions. David Leary: Wendy, I feel like you filled in [00:36:00] a lot of gaps that we were [cross talk]  Wendy Slavkin: I hope so.  David Leary: -because we were trying to piece along this timeline, ourselves, based on ... Every day, there was two new pieces of news [cross talk] it's nice to hear the whole story. I think our listeners will really appreciate hearing this whole entire story. Wendy Slavkin: Yeah, it's important to walk through the process. People don't understand how the ACH system works. A lot of people think the money automatically goes from the employer account to the employee account. It doesn't work that way. It's a little more complicated than that. Again, Cachet's, [00:36:30] personally, for me ... I've spoken with a lot of these employees directly, and the stories are- they're just awful. One woman's child had an asthma attack and she couldn't get medication ... My heart goes out to them. This man has created so much havoc. He does belong in jail. I don't know what's gonna happen, but that's where I think he should be. But I appreciate your time, and thanks for having me on. David Leary: Maybe we'll have you on again- Blake Oliver: When we finally figure all this [00:37:00] stuff out. As always, you can connect with me on LinkedIn. I'm on Twitter: @BlakeTOliver. And you, David?  David Leary: I'm @DavidLeary. Blake Oliver: We will continue on covering the MyPayrollHR fraud- payroll fraud story for you. Thank you, Wendy, again for your time. Appreciate it. Wendy Slavkin: My pleasure. You're welcome.
  6. Sponsors BQE CORE: http://cloudaccountingpodcast.promo/core Rewind: http://cloudaccountingpodcast.promo/rewind Show Notes 03:22 – MyPayrollHR's simplistic sayonara | Krebs on Security  05:40 – Some questions, some blame, a whole lotta wrath | SearchHRSoftware  07:28 – Governor Cuomo's statement | NYDFS  09:06 – Will the real Michael Mann please stand up? | TimesUnion  10:32 – a brief primer on how a payroll service processes a payroll  12:03 – Bait and switch ... MyPayrollHR redirected employer funds from the holding account to one of their internal accounts  16:02 – Really, Cachet? You're the ONLY victim?   17:05 – Apparently, Cachet needs bigger, louder, more neon-y warning signs when things are going awry with clients  19:21 – The FBI wants your intel, if you know anything about the MyPayrollHR situation.  20:58 – Breaking up isn’t hard to do when you do it with email, right?    23:17 – Payroll company using fraudulent means to report on fraudulent activities of another payroll company? Probably not the brightest bulb in the lamp ...  25:10 – Earlier this year, Key Bank was at the center of another payroll provider debacle | Albany Business Review  29:20 – Stop back next week for the latest intel on the ongoing MyPayrollHR melee!   29:37 – QuickBooks Live test-drives a new pricing tier based on the user's annual expenses | Firm of the Future  31:57 – Congratulations to Gusto for having cool workplace digs! | Inc.com   32:46 – More on Clio's astronomical $250 million raise, straight from the CEO's mouth | LawSites   33:19 – Visor, the tax-prep company we talked about in Episode 70, is still incognito   34:21 – Will California set precedent with AB-5 and shake up the gig economy? | CalMatters   37:43 – Has anyone bothered to ask Cali gig workers whether they WANT to become part-time employees vs contractors?   38:37 – David sees this legislation as just another part of the innovation lifecycle running its course  40:40 – Madeline Pratt serves up some thought food on the shelf life of influencers | Fearless in Training  41:25 – As David promised, an assortment of links from LinkedIn, and a sampling of leaderboard-y goodness? from AccountingWEB:                       https://www.linkedin.com/feed/update/urn:li:activity:6577777378490109952                     https://www.linkedin.com/feed/update/urn:li:activity:6577554625778581504                     https://www.linkedin.com/feed/update/urn:li:activity:6575309489593954304  42:43 – Are influencers operating in an echo chamber?   45:49 – Last, but definitely not least, we got some new reviews in!   46:45 – Hear Blake's best interpretation of a smooth voice ...   47:12 – We did make a list! Thanks to all our listeners, and reviewers for making it happen!    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. 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 TranscriptBlake Oliver: So, imagine your paycheck goes into your account. It gets taken out, and then more money gets taken out; amounts that don't even match the payroll. One employee had their account go -$999,000 - a withdrawal of like a million bucks. Everybody's freaking out. Nobody knows what is happening. Apparently, MyPayrollHR had just shut down. Reporters going to their office in Clifton Park ... It was empty. There were no employees. There was no sign. It just disappeared. This episode of The Cloud Accounting Podcast is sponsored by BQE Core. If you have niche clients that are architects, engineers, consultants, or lawyers, BQE Core is the app for them to best manage their firm, increase their staff productivity, and ultimately increase their profits. Even if you don't have those niche clients, Core is a great tool to use in your own accounting or bookkeeping firm, as well. Core is an easy-to-use, all-in-one platform for project management, but includes advanced functionality, like budgets, labor costs, forecasting, contract analysis, and approval processes. Core also includes a standalone accounting module. Even though Core is an all-in-one platform, it still works nicely with other apps, offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app and recently launched a cutting-edge voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E.  Blake Oliver: Welcome [00:01:30] to The Cloud Accounting Podcast. I'm Blake Oliver. David Leary: And I'm David Leary. Blake, here we are - another week.  Blake Oliver: Another day, another dollar. David Leary: I got some news stories this week. QuickBooks Live had an update; a teeny update on Visor. Apparently, people are discovering their 2017 taxes were not filed, so that continues on- Blake Oliver: Well, you know, David, that sounds great and everything, but I have what may be [00:02:00] the biggest story in Cloud Accounting Podcast history; bigger than QuickBooks Live - MyPayrollHR. We talked about this at the end of last episode. I kind of buried the lead. David Leary: Well, the story broke right when we were recording- Blake Oliver: Yeah.  David Leary: We had no time. I was upset at the podcast. I was like, "Why didn't you tell me about this over the weekend? I could've just deep-dived on this for hours!"  Blake Oliver: It's crazy. I've been following this since we did our last episode, and it is just a mess. MyPayrollHR is a payroll processor based in Clifton Park, New York; small payroll [00:02:30] company. So, think Intuit Payroll, or Gusto ... But these guys have only 4,000 customers, mostly small businesses- small or medium businesses. Picture a restaurant with 12 employees, or actually picture a senior care service in San Antonio, which has 1,500 employees in 23 states. So, pretty big group of clients. 4,000 of those small businesses; small to medium. David Leary: Yeah, and I think they were around for 12 years, so they were a legit payroll company.  Blake Oliver: Legit, yeah.  David Leary: They were [00:03:00] around for about 12 years. I think they kinda carved out a niche with a lot of temp staffing agencies. Blake Oliver: Well, the big news is that ... Let's see, it's Friday, September 13th, as we record. So, on Thursday, September 5th, MyPayrollHR sent out an email, a very brief email, to all of its customers, and I'll read that email. They said, "Dear client, we regret to inform you that due to unforeseen circumstances, we are no longer able to process any further payroll transactions. Please [00:03:30] find alternative methods for processing your payrolls. For any payroll batches submitted during this week, including any payroll reversals from last week. Please be prepared to find an alternative method to pay employees. We are working to release any funds that are in transit as a result of this matter. We will provide you with updates via this medium as we receive them." David Leary: Okay, so a company's gonna fold. They're going under. This should be a big deal, because, in theory, the payroll and the payroll taxes that are being moved should be going through an escrow account that should [00:04:00] get to the employees. Okay, fine, so next week's payroll, I'm done. I have to start a new- I have to find a new payroll provider. Blake Oliver: Well, actually, no. They said ... The email says that this week's payroll is not gonna happen. Actually, they're already going out of business, and now I have to suddenly find a new way to pay my employees today- David Leary: New way to pay my employees, yes [cross talk]  Blake Oliver: That's a big red flag, right? So, this was, again, Thursday, the 5th of September. What happened, according to a customer of MyPayrollHR, Agape Animal Rescue, Tonya Willis, [00:04:30] was interviewed about this. On Thursday the 5th, an employee called her. She's the executive director at this animal rescue. The employee said that the deposited pay had been withdrawn from her account, and apparently it happened to all seven of the animal rescue organization's employees. So, Willis called MyPayrollHR, which is doing their payroll- David Leary: So, normally with payroll, the direct deposit happens. It's in your account, and it's in your account. I've been direct deposited for 25 years, and I've never had the payroll [00:05:00] ever withdrawn. Blake Oliver: Right. So, imagine, your payroll goes in, and then all of a sudden, it goes back out. The employees are starting to freak out. So, Willis called MyPayrollHR, and she told the reporter that an employee said there was a "glitch in the system," to keep track of the missing money, and that there were no worries. There obviously wasn't a glitch in the system, and the worries were just beginning, because money continue to drain out of the animal rescue employees' personal accounts. It didn't stop with just one paycheck reversal. [00:05:30] Most of the employees had multiple reversals, so now their bank accounts are negative. Imagine, your paycheck goes into your account. It gets taken out, and then more money gets taken out. The amounts - there are various customer stories in the articles that have been written over the last week and a half - amounts that don't even match the payroll. One employee had their account go -$999,000; a withdrawal of like a million bucks. Crazy, right? Everybody's freaking [00:06:00] out. Nobody knows what is happening. Apparently MyPayrollHR had just shut down. And  reporters going to their. Office in Clifton Park, it was empty. There were no employees. There was no sign. It just disappeared. David Leary: This is where the smaller local media really start picking this up in each town. I didn't know the local media picked it up here in Tucson, Arizona. I saw. Everywhere there's a small business and there's employees that have money getting withdrawn, it's a great local story. Everybody was kind of jumping on that. Blake Oliver: Because these [00:06:30] customers are all over the country. They're not just in New York State. Business owners are calling their local news station and saying, "Hey, this is a story. You guys should cover this." It starts getting picked up on local TV news; the same way the malware infections are starting to get picked up. It's this grassroots kind of news story that starts happening- percolating all over the country. The press, the national press, the industry press, or at least the folks focused [00:07:00] on security HR start to pick up on this, so now we're starting to get more details. This week, we started to get a lot more details about what is going on- David Leary: Because it didn't make any- none of this made any sense, right? Blake Oliver: Right. David Leary: We've never seen a company just shut down and completely vanish like this. One of the surprising things was Governor Cuomo, in New York state, last week, issued a press release that they're gonna start investigating. They're reaching out. Jumped all over that. Blake Oliver: I'll read this statement. Governor Cuomo issued [00:07:30] a press release that said, "The sudden and unexplained shutdown of MyPayrollHR in Clifton Park is disturbing and completely unacceptable. Its reckless actions have left employees across the state and the nation with negative bank accounts and forced businesses who depend on its payroll services to scramble and find ways to compensate their employees. These businesses and workers deserve answers. And I am calling on the Department of Financial Services to investigate this irresponsible company's actions. This is not how we do business in New York, and we will not allow these bad actors to take money away from the hardworking people in this state." That [00:08:00] was one of the first really high-level political/executive responses to this.  David Leary: Then, on Twitter, people were getting very accusatory of the banks involved, of MyPayrollHR, because I think, from the employee's perspective, they just see this bank that they're not- they don't know. Nobody knows what bank is doing the ACH deposit, but they're seeing these withdrawals, so these people are panicking ... sort of ... Like people are hacking into their own individual accounts and stealing money ... It was just very, [00:08:30] very confusing for everybody involved, and the accusations that were on Twitter were really getting rampant.  Blake Oliver: There's a private Facebook group that was created for the employees who were affected. There's thousands of people in that group now. I'm not in that, so I don't know what's going now, but I know that some of the folks in the accounting community are in there helping to counsel them; tell them what to do with your bank, if you wanna get your money back, all that stuff. Let's talk about what actually happened, because I think I finally pieced together the outline of how this potential [00:09:00] fraud was perpetrated [cross talk] David Leary: Because twice a day, there's been some new piece of information. Blake Oliver: So here's what we know. So, MyPayrollHR, based in Clifton Park, New York; the CEO is named Michael Mann. But you found, David, he's invisible online; very difficult to track down, right? Couldn't find a picture of him- David Leary: Yeah, because immediately when I saw this, I started going to their LinkedIn pages, looking around, poking around. Nobody has images. They're not there. The name's been removed. It's just initials - his LinkedIn [00:09:30] profile. You just start Google searching, and this guy just doesn't- these people don't exist. I was actually kind of surprised at how invisible they were. Blake Oliver: The company, MyPayrollHR, is owned by a holding company called ValueWise Corporation. That website was shut down. No longer online, although you can access it through Wayback Machine, and see old versions of it, which some of the reporters have been doing. MyPayrollHR has been around for 12 years. Michael Mann apparently bought the company six years ago. It [00:10:00] was operating just like a normal small payroll company. Now, here's how it went down. Here's how this whole thing went down. This has to do with the way that payroll services actually make direct deposits happen. Payroll services don't have the ability to move money themselves. They have to partner with a payment processor. In this case, the payment processor - there were two of them - the one handling most of the money was called Cachet Financial Services, or [Cash-Et], however they pronounce that ... They're [00:10:30] based in Pasadena. The way MyPayrollHR would normally process a payroll is they would generate essentially a text file. They don't say it in the article, but I'm guessing like a CSV. That file tells the payment processor which employer accounts to debit, and which employee accounts to credit for their net payroll checks. Pretty simple, right? The way the money moves is Cachet, the payment processor, reads [00:11:00] those instructions and then debits the employer accounts. The money goes into a clearing account that Cachet controls. Then it gets taken from that account and credited into the employee accounts. That all happens very quickly. David Leary: A company like Cachet might be providing this service for hundreds of payroll companies. Blake Oliver: Right. They have an account with the National Clearinghouse - NACHA - that manages ACH among all the banks. David Leary: ACH?  Blake Oliver: Yeah. David Leary: Got it.  Blake Oliver: That payment processor [00:11:30] also has a bank partner to manage the clearing accounts. In this case, the banking partner of the payment processor is Pioneer Bank. Apparently what happened is that that text file, that file with the payment instructions, or the money-moving instructions that came from MyPayrollHR, contained manipulated account numbers. David Leary: Cachet had the numbers to put money in employees' accounts. Then Cachet realized, "Wait a second. We never got our part of the money to be putting in people's [00:12:00] accounts," and that's why they went to retrieve it, because they basically …  Blake Oliver: According to the lawyer for Cachet, MyPayrollHR manipulated the account numbers in the electronic file so that the money was taken out of the employer account and put into an account controlled by MyPayrollHR, not the Cachet settlement account, as it should have been. So, instead of money going from the employer into the settlement account, or the clearing account, it went into an account controlled by MyPayrollHR Cash. Cachet had already initiated [00:12:30] the transfer of the funds from their settlement account into the employee funds, making that account go negative. David Leary: This is the same process. For 12 years, assuming they were partners in this for 12 years, Cachet, every week, would get that file, import it in, payroll runs; do it every single week. They really had no reason to suspect a partner of 12 years- this file would have manipulation inside of it. Blake Oliver: Here's where things started to get really messed up. Apparently, Cachet, and, actually, this is according to their lawyer, [00:13:00] realized what was happening, but too late. The money had already been moved into the employee accounts. So, they initiated reversals to get its money back. The lawyer, Slavkin - I think it's Lisa Slavkin - said it's a standard process, but they messed up when they initiated that reversal, because the first reversal wasn't coded properly. Then they sent a second file. I guess the banks should have ignored the first file, but they didn't, so that's why so many employees had two paychecks- two [00:13:30] paycheck amounts withdrawn from their accounts. David Leary: I mean, I can see how that happens. You're Cachet. You're probably in a panic. "Oh, my God! We outlaid $26 million. We did not get the $26 million we were supposed to get." Somebody raced to go start to recover that money. Then a mistake was made. Then a second mistake was made. So, yeah. Blake Oliver: Right now, just knowing what I know, I'm thinking this is crazy that a payroll processor could send a file with payment instructions to [00:14:00] Cachet and there's no controls, no internal controls, to prevent the account numbers from being changed; that Cachet would simply execute without checking instructions saying to a debit all of these employer accounts and credit an account controlled by MyPayrollHR, and not Cachet's settlement account [cross talk]  David Leary: Didn't Cachet even kind of half admit this, saying that they have policies and procedures; they've had to stop external threats, external hackers. They've stopped external fraud ... Something internal like [00:14:30] this, they didn't see it coming. Blake Oliver: Yeah. They apparently weren't prepared for an internal threat like this, or a partner threat. Then there's a big question I have about whether or not it was even proper for them to reverse these employee transfers, because, according to an article on a site called Personnel Today, which seems to be like an H.R. publication, it may not even have been appropriate, according to NACHA rules. You can't just debit an employee's account for a valid payroll transaction. Cachet [00:15:00] was trying to claw back the money, but that wasn't appropriate, potentially. David Leary: There's a possibility they broke some standards or some laws by trying to recover that money. Blake Oliver: Yeah, and Cachet actually had a change of heart - after the employee started freaking out, and the banks are calling - and abandoned that process, because the employees who were quick to notice this was happening and do something, called their banks, and said, "Hey, these are not valid ACH debits, stop them." Then, the banks that were doing better customer [00:15:30] service actually did and stopped those ACH debits.  David Leary: Just a side note, a side conversation on this, I saw a lot of that chatter on Twitter. People who had smaller banks, they were getting better customer service, and these things were getting stopped, but the major banks, the Bank of Americas, the Chases, et cetera, weren't stopping this. Blake Oliver: That is what we know about Cachet. Their response, I think, with the press had something to be ... Left something to be desired. Wasn't there a quote from that lawyer? Something like- David Leary: Oh, they're [00:16:00] the victim. They're the only victim in this [cross talk]  Blake Oliver: She said, "Really, we're the only victim." Yeah ...  David Leary: Which I kinda get, because when it's all said and done, the employees are gonna get their money-  Blake Oliver: Right.  David Leary: But they're really not the only victim, because there's also, when you pay employees, you have to have federal money; you have to pay the tax deposits. Blake Oliver: Right. David Leary: Well, apparently that bank who handled- there's a different ACH company that handles the tax deposits. Apparently, they're claiming that they're out of money now, as well. Blake Oliver: There were two separate processes - one for the payroll tax, one for the net paychecks. [00:16:30] They both seem to have been scammed. Here's what's interesting is that ... I'm trying to figure out this timeline. How did this happen? Apparently, the last time that Cachet was in touch with Michael Mann, the owner of MyPayrollHR, was on September 4th, the day before this all went down.  Cachet was trying to do a conference call with Mann, and Pioneer Bank. Apparently, Pioneer had already frozen his Pioneer account. Mann told Cachet [00:17:00] that he would call them back in 15 minutes, but he never called back. And then he never responded to phone calls. There was this sign that there was a problem and that the bank account had been frozen. Yet Cachet still allowed this payroll ACH file to be uploaded like normal. There's also this loan from Pioneer Bank, right? You know about that, David. What was this loan?  David Leary: Yeah. Pioneer Bank coincidentally is in the same business park as MyPayrollHR. Blake Oliver: They share a parking lot. David Leary: Yeah, share a parking [00:17:30] lot. They're right there. That makes sense. Businesses are like this. You're like, "Hey, we see these guys every day. I'm gonna take my business to that business, because that's what I know. They're right there ..." They're almost co-workers, in a sense of a word; you figure people that are in the same office park/office building ... I don't know how much they worked with MyPayrollHR. They may have just been MyPayrollHR's bank, but not MyPayrollHR's ... They're not doing the actual payroll part of the processing. They're [00:18:00] not part of that part of the equation. Apparently, they gave a loan of $36 million dollars to MyPayrollHR and provided $16 million of it already. They also report there's some sort of - this is in the article - "deposit activity" from the payroll company. So, normally that-  Blake Oliver: Right. Because the employer money was diverted from the settlement account at Cachet to Pioneer Bank. David Leary: Correct. Blake Oliver: So, I'm wondering ... Here's [00:18:30] here's my theory, Michael Mann got a loan from Pioneer Bank; Pioneer Bank advanced $16 million of it. The bank said that. They had to file this report with the SEC about the exposure. Pioneer Bank gave him $16 million. Michael Mann withdraws that money. Pioneer Bank sees that huge withdrawal and freezes his accounts, because that probably went against his loan agreement, I imagine. He grabs the money, [00:19:00] they freeze his account, and then he has the money from Cachet, diverts that into the Pioneer Bank accounts, and maybe that unfroze it, and then he was able to get the money out. That's my theory. He's already out of the country, probably. He got away with it. There was all this shady behavior going on, apparently, the day before, and yet this still happened. FBI is investigating. They've tweeted out asking for information. If anyone knows about anything, they should email MyPayrollHRvictims@FBI.gov. [00:19:30] Provide your company contact information, number of employees, and the estimated financial impact to your business and the employees. This made the national news. Like I said earlier, it was on NBC Nightly News last night. It was on CBS This Morning, this morning. It made Fox News. David Leary: It's fascinating, because I think there's a lot of unknowns. The actual money ... Where's the money at is the biggest question, and then- Blake Oliver: Where's Michael Mann?  David Leary: Where's he at? Right? But the money, it feels like [00:20:00] they could trace that. It feels like, "Okay, it moved from this bank to this bank to this bank ..." There's probably parts of the story that are not public yet, right?  Blake Oliver: Yeah.  David Leary: Where this guy is ... Were there co-conspirators involved?  Blake Oliver: Maybe somebody at the bank, at Pioneer Bank. So, I'm thinking maybe he wired the money out of the country. If that happened, and there's no extradition treaty - there's no way to get the money back - then he really did get away with it. What else is the end game? Was it fraud, in the sense that he's trying to steal the money, or was it just he was trying to keep [00:20:30] the business afloat until he could get this loan from Pioneer Bank? He was just trying to play the game to survive ...  David Leary: That, or is he compromised? Was he planning this for a very, very, very, very long time? Was this a long play? He bought it six years ago, and he had this long play to do this?  Blake Oliver: Here's the thing, though. Something that makes me question whether or not it was fraud or makes me think it was fraud was this email to the employees that you found? David Leary: Yes, that was very strange. Blake Oliver: Here's [00:21:00] the email that went out to the employees. The employees, apparently, most of them, didn't know this was happening, which would explain why, on Thursday, when that woman called MyPayrollHR - the business owner, the executive director who was questioning it - the employee said, "Oh, it's just a bug. We'll fix it." Here's the email that went out to the employees. I think this was on  Thursday; same time when the clients found out, but I'm not sure exactly. It says, "Hi all. I am sorry to inform you that it is now official that MyPayrollHR will no [00:21:30] longer be conducting business. I am lucky to have worked with you all and wish you the best. If you had a personal belongings at the office, you can meet Bob and I tomorrow morning between 8:30 and 9:00 to get those. In an effort to avoid any safety concerns or potential media attention, we gathered some personal belongings from a few people's desks. We'll be in the Price Chopper parking lot over closer to the liquor store. We will have the key FOBs disabled, so that you do not need to travel in to get those to us. We recommend that you log into the website to get your last two pay stubs. You can certainly [00:22:00] print them all, if you would like. We do not know how long we will have access to that information." Then there is information about health insurance, and they say they don't even know if it's been terminated or ... [cross talk]  David Leary: It was like this email was from their HR person, because they cover unemployment; they cover COBRA health insurance type stuff; they cover about their 401k plan. So, somebody obviously cared about the employees. Like I said, they were a legit company. That's what's even crazier about this. It wasn't- Blake Oliver: It's just nuts. So, yeah, that's [00:22:30] the story as well as we can ... Hopefully that made sense. That timeline is the best I can reconstruct it. We'll certainly be talking about this, I think, in the weeks to come. David Leary: Well, there's a bunch of side action, too, on this. Blake Oliver: Oh, yeah? David Leary: So, all these other payroll companies, all of them have been out there on social media, on Facebook, on LinkedIn - LinkedIn, I think, was the worst. I feel like every ADP sales rep had the exact same message, "Affected [00:23:00] by MyPayrollHR? Give us a call!" They're just capitalizing this from a marketing perspective. It's so bad that one company even stole- they flat-out stole somebody else's content. Do you know Shannon Theis? Blake Oliver: Online, yes.  David Leary: She's a bookkeeper or accountant in our industry. She, on Facebook, put out a post about what people should do if they were affected by this - a valuable content post. Another company, a payroll company called American [00:23:30] Time and Labor, stole her content and put it out as their own in a press release. A bunch of places all picked up the press release, because that was in Business Wire. I kind of find it ironic that a payroll company used fraudulent marketing techniques to capitalize on the fraudulent behavior of another payroll company. Blake Oliver: Not the right way to do PR. Not the ethical response, and how crazy-shady ...  This episode of The Cloud Accounting Podcast is sponsored by Rewind. For years, Rewind has been successfully backing up thousands of small businesses' data that is stored in cloud apps, like  Shopify, BigCommerce, and Mailchimp. Saving these small businesses from CSV importers, employee mistakes, and app integrations that didn't go as planned. Rewind has also backing up QuickBooks Online company data, too. That's right, cloud-accounting world, I did say, "Backup QuickBooks Online company data." It only takes seconds to install what is essentially an insurance policy against major disaster or just those small business owners that likes to get "creative" in the accounting system. Rewind works automatically in the background, capturing all the changes to your QuickBooks Online in real time. If something does go wrong, Rewind is the only service that gives you 100-percent control over what you need to restore it, be it one transaction, multiple transactions, or all the data. To learn even more about Rewind and access a special offer just for listeners of The Cloud Accounting Podcast, head over to CloudAccountingPodcast.promo/rewind. That is Cloud Accounting Podcast dot promo forward slash R-E-W-I-N-D.  Blake Oliver: So, [00:25:00] here's my takeaway from this. Apparently, payroll services like this are not regulated, so that could change, based on this. There have been other payroll fraud stories. Earlier this year, Key Bank filed a lawsuit against a payroll processing company in Indiana for, apparently, a $122 million overdraft. I can't name them off the top of my head, but I have heard of other smaller payroll service fraud issues. David Leary: Somebody sent me [00:25:30] a link to an article in Australia. Apparently, the son of the head of the Australian Tax Office, which is like the IRS, he committed some huge $150 million payroll fraud. Blake Oliver: Oh, wow.  David Leary: With lavish gifts, and mistresses, and the whole nine yards. It was- Blake Oliver: It's almost easier to do a payroll fraud than to do a bill pay, or a bookkeeping fraud because the reports are so complex, most business owners never read them. Even if you're in a CPA firm, you're doing payroll manually. [00:26:00] How many partners actually go and look at the detail of these payroll reports before they sign them? We talked at the Accountex conference with Dawn Brolin, who's a fraud expert - that interview will be coming out soon - and she mentioned payroll as being one of the top threats; that payroll fraud is super-common. Not necessarily a service, itself, but people manipulating the payrolls to pay themselves extra or more, create [00:26:30] fake employees, all that stuff. It's something you've gotta really keep your eye on, if you're a business owner or if you're a CPA who has anything to do with payroll for your clients. David Leary: Couple takeaways here. One is the import files. This goes back to everybody ... "Oh, I'm just gonna take some file [a CSV file, or the old IIF files for QuickBooks, back in the day] and import those in." Fundamentally, there is no error-checking on those, so you're just risking your data; you're risking data corruption or, in this case, data fraud. This is [00:27:00] why APIs are much more secure. I'm surprised .... This goes back to the ACH system, itself. It's fundamentally- what? 1971 it was created? '72? Blake Oliver: Yeah, it's essentially- ACH is people uploading a bunch of text files with account numbers and routing numbers; that is- and amounts, and maybe a description line. That is how basic it is. That's why it's actually really easy to manipulate a payment instruction file. Apparently, what happened here is [00:27:30] you can literally just open it up on Excel, modify it, save it, and then upload it, and just change all the numbers; which, if you had some sort of online system, you could have controls in place to prevent that from happening, or you'd have alerts. The whole industry just needs to catch up. I think we might see some regulation. You know what? I wouldn't be surprised if one of the presidential candidates had a statement come out this next week. David Leary: Oh, this is right up Elizabeth Warren's ... Absolutely, Elizabeth Warren's gonna make the podcast again. It's right outta there. [00:28:00] There's a startup company that- it's called DailyPay. So, it's again, one of those companies where you get paid every day. They look at your time records, and they ... We talked about these last week. They're not really payroll advance, or payday loans, but they're just paying you instantly for your day's work.  Blake Oliver: Right. It's basically a payday loan. It's just under a different- it's another way of doing it. David Leary: Yeah, but they don't charge ... .A lot of them aren't charging the employees, because what they're doing is they're charging the companies, because the companies are providing this as a service or benefit to their employees. Anyways, this [00:28:30] company DailyPay, they actually set up a relief fund of $25,000 to cover any of the overdraft or late fees that employees may have suffered because of this. Blake Oliver: See, that is the way that you build goodwill. Don't capitalize on the pain of people by advertising to them. Actually help them out. That's great.  David Leary: Except for I have mixed feelings on this, because I clicked the link to go to it. You can't actually fill out the form there. You've got to send an e-mail. They're gonna gather the email of every employee that's been affected by this, and now they can market their service [00:29:00] to these employees. I question it a little bit. I think the intentions are good, but there should just be a form that people fill out, submit receipts, and work on getting a refund. But it's like, immediately, "Send us your email address." Blake Oliver: That's the big story. I mean, we've almost taken up our entire time here today. David, is there anything else we wanna talk about? David Leary: I think we've kinda beat that story ... I imagine we'll have more information next week, because I think you're gonna start seeing the money trail. He's gonna have to be most wanted. I mean, people have gotta be looking for this guy, at this point. [00:29:30] There's too much money. There's $35 million just gone. Wanna jump into regular news?  Blake Oliver: Yeah, so, David, what else is new? David Leary: QuickBooks Live has their September update out. They've been really proactively communicating all the changes they're doing. They're now running some new tests on their website, which they're going to test some tiered pricing points, based on your annual expenses. Blake Oliver: I was wondering when this would happen, given that, up til now, it's been a straight $400 dollars a month, no matter what kind of business you are, no matter how big or small you are. That [00:30:00] just didn't seem sustainable to me. David Leary: Yeah, this is kinda that next tier on their journey of trying to figure out how this is gonna be priced. Other than that, I didn't really see any other updates related to this. It's just really they're practicing this new tiered pricing. Blake Oliver: So, let's look at the pricing. I just opened up the page. Thank you for the link. Tier one is $200 a month, and that is for 0 to $25,000 in annual expenses; tier two, $400 a month. That is for $25,000 to $150,000 in [00:30:30] annual expenses; not revenue expenses, which I think is important, because a lot of businesses are pre-revenue when they sign up. Tier three is $600 dollars a month, and that is for $150,000-plus, which ... That leaves a lot of room, given that the potential market for QuickBooks Live is right up to ... It could be up to $10 million a year in revenue, or at least a million. From $150,000 to a million is a lot of range.  David Leary: Yeah, maybe they have more. But in the grand scheme of the bell [00:31:00] curve of QuickBooks users, most are probably gonna fall into tier one/tier two.  Blake Oliver: This is so funny, though, because it's like watching Intuit build a bookkeeping service and go through all the same mistakes that I did, and I've seen other people go through. They're doing the same thing. First you start out with just one price, and then you realize, "Oh, okay, some clients are much more complex. Let's create tiers ..." We'll see a lot more sophistication as the months go on. David Leary: Well, what I actually like about them basing it off the expenses versus number [00:31:30] of transactions, because you might have [cross talk] all transactions that are the same, but they're low. It's just me, being a small business owner now, I feel much more comfortable with a model like this, than [cross talk] it's tied to my realistic expectations of what I can afford, and I can pay, versus just a random number of pieces of paper or something that I have to scan in.  Blake Oliver: I agree with you. Hey, I got something app-related. Here's an article that popped up on Inc.com. The 10 Coolest Offices of 2019. Right [00:32:00] there on the list is Gusto, in San Francisco. I don't know when it was, either last year or a couple years - it was recent - they bought a warehouse on Pier 70 in San Francisco and turned that into the Gusto headquarters. It's super-cool. You gotta look at the pictures. It is this three-, four-, five-story warehouse. They left the original crane that moves horizontally [00:32:30] through the warehouse in the space. I'm not sure I'd wanna sit under the crane, but- David Leary: No, that stuff's safe. Blake Oliver: Yeah. Hopefully, in an earthquake, that thing won't come down, but it looks pretty cool. If you're in San Francisco and you're a Gusto partner, definitely go check it out and say hi to Will Lopez. David Leary: Some follow-up ... We'll put a link in the show notes, but if you're interested in learning more about the Clio story and their $250 million raise, the CEO was interviewed on a podcast called LawNext. It really goes a little bit [00:33:00] deeper than some other blog posts. It's a good conversation he had with Bob Ambrogi on that [cross talk] we'll put that in the show notes.  Blake Oliver: Yeah, that was something we talked about last episode. So, if you missed that, check out episode 111 - all the details about the Clio giant fundraise of $250 million. David Leary: I think I mentioned it briefly, but it looks like Visor Tax ... Way back when we did episode 70, we talked about Visor Tax. Visor Tax was a tax service that was promising, "Hey, for $99, we'll do your taxes, and you get 24/7 access to [00:33:30] a CPA." Turns out CPAs weren't doing the taxes. It turns out worse than that. Taxes weren't even being filed. It was kind of a big nightmare last April for tax deadlines-  Blake Oliver: Yeah.  David Leary: -but then I saw recent tweets; people are complaining that they're discovering their 2017 taxes were never filed. Blake Oliver: So, is Visor still in business? Are there still people working there?  David Leary: That's not clear. They haven't updated their website in a while. They still have that "Because of the tax deadline, we're overburdened right now," or whatever, but they haven't changed- the website hasn't changed in months. Blake Oliver: I have a [00:34:00] feeling they're done. If they still haven't filed people's taxes, there's a lot of liability there now [cross talk] maybe a class action lawsuit coming- David Leary: I don't know how they can push through that. Yeah, that's not good for them. Blake Oliver: I have an update on California matters, which could end up impacting all of us.  David Leary: Oh, I was hoping you'd bring this. This is ... Blake Oliver: It's the AB5. It's the bill that would reclassify a bunch of gig economy workers into part-time [00:34:30] or full-time employees. This would affect Lyft and Uber. It was specifically targeting them, but it will end up impacting a lot of businesses. CalMatters.org has a great article talking about who is in and who's out of AB5, because, like any legislation, there are businesses that have lobbied to be excluded from this new treatment. David Leary: My gut instinct would be where do accountants fit in? Where do bookkeepers fit in? Where do ...?  Blake Oliver: There's [00:35:00] a good infographic in the article listing out the jobs impacted by AB5. Here are the groups of people that would likely be forced to reclassify into employees, due to the new stricter standards for freelancers: rideshare and delivery services, such as Uber, Lyft, DoorDash, Post Mates, truck drivers, janitors and housekeepers, health aides, newspaper carriers, unlicensed manicurists. The licensed manicurists get a two-year exemption, land surveyors, [00:35:30] landscape architects, geologists, campaign workers, language interpreters, strippers, and rabbis are all going to have to now be employees rather than contractors. I don't know why rabbis, specifically ... The groups that will be exempted include ... These are people who aren't going to be impacted and will continue to be able to be contractors: doctors, some licensed professionals, such as lawyers, architects, and engineers, financial services, which includes accountants and investment [00:36:00] advisors, real estate agents, direct sales, provided the salesperson's compensation is based on actual sales rather than wholesale purchases or referrals, commercial fishermen until 2023, builders and contractors, professional services, such as marketers, HR administrators, travel agents, graphic designers, grant writers, fine artists; freelance writers and photographers, provided that the worker contributes no more than 35 submissions to an outlet in a year, hairstylists and barbers, as long as they set their own rates and schedule, estheticians, electrologists, and manicurists. I [00:36:30] have no idea what an electrologist even is. They have to be licensed, though, to qualify as exempt; tutors, provided they teach their own curriculum - does not apply to public school tutors. Lastly, AAA-affiliated tow truck drivers are exempt. Whooo ... Quite a list. David Leary: The two companies that are fighting this the most is Uber and Lyft. They have huge pocketbooks and huge legal teams, so it'll be interesting to see where - for the next coming election - where this [00:37:00] all lands, in California. Blake Oliver: Like you said, Lyft and Uber are likely to be the most impacted, although the trucking industry, that's a big deal. That's really gonna change things for truckers. Lyft and Uber have vowed to fight this at the ballot box. So, in California, we have a direct initiative system where anyone, if they get enough signatures, can put a measure on the ballot to be voted on, like direct democracy, right? The voters of California will likely get to vote, [00:37:30] themselves, at the next election as to whether or not this bill should be struck down. It'll be interesting to see how many people care about Uber, and Lyft, and the workers. I'm really curious to know how many actual drivers want to be contractors versus employees. Has anyone asked the drivers what they think? The big impact is going to be higher costs. If this goes through, then Lyft and Uber are gonna have to charge more for rides, because they're gonna be having to pay [00:38:00] into all these benefits for part-time employees. I'm torn on this. I see the point of  some people, this is their full-time job, and they're not getting Social Security, and Medicare; they're not getting unemployment - all these protections for workers. But then, for a lot of people, Lyft, and Uber, it's a part-time thing. It's what they do extra. David Leary: Side hustle. Blake Oliver: Yeah. You're just making it harder now for Lyft and Uber to have those people come on the platform and come off of it. They'll probably use fewer of those side-hustle people, and probably more closer to full-time people, because it's just always cheaper to have [00:38:30] fewer employees, because you just have less to worry about. David Leary: Well, some of this is the innovation lifecycle, right? Somebody creates something innovative, and then it starts getting regulated, and then it becomes someone stodgy. Then Lyft and Uber, themselves will want regulations, because it keeps competition out of the market. It's just this cycle goes on, and it has gone on for history. Eventually, some new startups will disrupt this whole game. Blake Oliver: Let's not forget, this could really impact cloud-accounting firms, because a lot of firms [00:39:00] employ contractors. I did this with Cloud Sourced Accounting. I employed a lot of contract bookkeepers to work part-time in my practice, especially if they were out of state, and I didn't wanna deal with employment. Now, we eventually switched them all to employee status, because we didn't wanna deal with the risk of having them reclassified, or something like that, at some later date.  I think there's a lot of firms that are using contractors, especially during busy season. In [00:39:30] California, anyway the new rule is that if it's core to your business, if it's a core service in an accounting firm - doing taxes, for instance, it's a core service - then you won't be able to pay those people as contractors, necessarily. Although the exemption is for accountants, so I guess bookkeeping ... I don't know what the definition is. You'd have to actually dig into the law and see if that specific person is exempt or not. Anything else we wanna talk about?  David Leary: We could talk about influencers. Blake Oliver: Oh, like Instagram influencers? [00:40:00] David Leary: Instagram influencers, LinkedIn influencers ... "QuickBooks stars." There's a lot of different people in this space that are influencers. Arguably, we're in that space, right? Blake Oliver: Do you consider yourself an influencer, David? David Leary: I don't know ... Jokingly, because [cross talk] there's been a lot of discussions happening ... I'm not answering the question, right?  Blake Oliver: Okay. Would you ever put influencer on your LinkedIn subtitle? David Leary: No, I did better than that ... There's been a lot of arguing going on, on [00:40:30] LinkedIn, about influencer lists - this list, and this list ... I actually just changed my last name to- Blake Oliver: David Thought Leary.  David Leary: So, I'm not an influencer. I'm a thought leader. That's the other set of people. Madeline [Pratt] wrote a blog post on her blog, Fearless in Training. Her argument is, because of social media, people could decide to become an influencer or a thought leader and then exploit social media to become that versus, you know, in the olden days, you'd have to put in work for 10 years, and then you just ... You didn't set out to be [00:41:00] a thought leader or set out to be an influencer. It just happened. What's happened now is this whole influencer economy is just ... You probably get emails, and you probably get LinkedIn connections, and they have it right in their title - "I'm an influencer; I'm a thought leader." Blake Oliver: Yeah.  David Leary: She has a good blog post on it. We'll get the links in the show notes; there's two or three threads on LinkedIn, because some people have [00:41:30] made lists of the top LinkedIn influencers in the accounting industry. Then there was this other four-quadrant chart ranking other people. Then, obviously, Avalara puts out that top social media people on Twitter. There's these lists that are out there. I think they're all what they are ... My competitive side's like, "I wanna be number one," but I can't get it. I have an ego. I wanna be number one in these lists. At the same time, they're really just a way for people to just get attention of all of the other people and get free exposure. [00:42:00] Simple as Avalara. Avalara makes that list of those 100 people, every week. Guess what happens? Those 100 people talk about Avalara, and the list. It's the same reason some of these companies will do, like, "Hey, come vote on these things. Vote for the top bookkeeper. Vote for the top accounting firm." It's just so you ... Whatever property's doing that voting, you're banking your readers or the people on the list drive traffic to your site to go vote for them. It's [00:42:30] all about eyeballs, and all that, but people are very, very argumentative about this. People are accusing each other of collusion to fake the numbers. It's a little on the crazy side the last two weeks. Blake Oliver: The funny thing is, I imagine that most of the people looking at this stuff are ... It's just a bunch of influencers all influencing each other. It's just an echo chamber [cross talk] ... Here my thoughts on this. First of all, don't call yourself an influencer or a thought leader. That's something that other people should [00:43:00] be calling you. Right? David Leary: So, I have to go change my LinkedIn name now?  Blake Oliver: Well, I like yours because it's funny, right? But whenever I see somebody who has thought leader in their LinkedIn profile, upfront there, I just ... I don't know. I understand self-promotion; you gotta do it. Sometimes, you just gotta call yourself something for other people to start doing it, too, but I don't know ... I don't like that. The problem with a lot of these folks, or some of these folks, is it doesn't seem ... There's people out there talking about how to build a firm, [00:43:30] how to sell a firm, how to be great at sales, how to make your marketing amazing, and they've never done it themselves. That's problematic. But I think people see through that, right? I hope they would. I think the other big problem with these lists is that it just incentivizes bad behavior. Like the Avalara list, that's cool. It's fun to be on that list, but then, the way this list is generated is based on how many people are liking the stuff that you post on Twitter, or how many people are retweeting it. If you really wanna just game [00:44:00] the system, you just gotta create a bunch of controversy, and say a bunch of nothing, and just get retweeted. It's not about actually saying anything meaningful ... You can game the systems. Same thing as a list that's based on how many LinkedIn followers you're getting. All right, well, I could just pay somebody to go and connect with everybody on LinkedIn. Anyway, it's just silly, and I bet nobody even cares, anyway, outside of the people who are on the list. David Leary: Absolutely. In the grand scheme, and we talk about it all the time ... In [00:44:30] the grand scheme of everything, we don't exist. The people on that list don't exist. We're just ... We don't exist.  Blake Oliver: Nobody knows who these people are. David Leary: Everybody's very upset about this. Blake Oliver: So, David, we need more followers so that we can advance to the top of these lists-  David Leary: You're going right into this. Blake Oliver: So, if you wanna help me conquer the influencer heap of just, like, crap, connect with me on LinkedIn. Send me a message with your invite, please, and let me know that you're a listener. [00:45:00] I would love to connect with you and learn more about what you're up to. I'm also on Twitter: @BlakeTOliver. How about you, David? David Leary: Oh, I'm at David Leary on Twitter, but apparently my focus right now is LinkedIn. I have to get more LinkedIn followers to move up on these other lists. So, go to LinkedIn, and follow me, and like my stuff on LinkedIn, because that's ... My ego needs that. As always, you can find The Cloud Accounting Podcasts on all the socials. Just search for Cloud Accounting Podcast, and you can stay on top of all the news articles and things that we post out during the week. [00:45:30] And then, what else? What else? What else? Blake Oliver: Head to my website at BLakeOliver.com and click the blue Subscribe banner at the top to get on my email list, and I will email you the show notes and notify you when new episodes are up. David Leary: And don't forget to head over to your favorite iTunes podcast player and leave a review; there, or-  Blake Oliver: Oh, we got some reviews we have to read, David. David Leary: Oh, yeah, let's read those, and then we'll give the other location for Podchaser.  Blake Oliver: Here's the first one. This is from HealyHoops - five stars - "Go-to podcast [00:46:00] for tech-forward accountants. Blake and David are the leaders in accounting tech news, gossip, and thought leadership ..." Oh, no ...  David Leary: Thought leadership! Got it!  Blake Oliver: " ... All accounting leaders should pay attention to these guys to know what accounting technology is coming around the curve." Well, thank you, Healy. You said it, not me. David Leary: Now, we can put that on our LinkedIn profile. That's awesome. Here's one. This is cloudaccountingpro - five stars. This one's actually on Podchaser- Blake Oliver: This is from cloudCOUNTINGpro. David Leary: Oh, cloud COUNTING ... See, I have to get thicker glasses, Blake. Okay, cloudcountingpro - "Blake and Davis ..." I hope this is just a typo ... " ... hash it out on each [00:46:30] episode with an in-depth look at the news and technology in the accounting industry. Each brings a unique perspective that comes together to form the best accounting podcast around. Blake's smooth voice doesn't hurt." Blake Oliver: Oh, why, thank you ... David Leary: "[Bingeing] their episodes, your ears (and your brain) will thank you." Blake Oliver: Awesome. Last one from JazFun. "The speed of technology has nothing on David and Blake. They truly are ahead of the curve, and it is entertaining and fun to listen [00:47:00] to each podcast; talking about truly relevant information that affects our day-to-day lives. The Cloud Accounting Podcast is a requirement if you are in the accounting industry." And I think that's Jan, so, thank you, Jan, so much for that review.  David Leary: Thanks for all your support. We are now the number-one business-news podcast on Podchaser because of all your great reviews! Thank you, thank you, thank you, so much!  Blake Oliver: All right, that's it for me, David. David Leary: All right, that's a wrap. Bye.  Blake Oliver: Bye.  
  7. SponsorsBQE CORE: http://cloudaccountingpodcast.promo/coreSign up for Inclusion Without Assimilation, an event for for finance, accounting, and fintech, in Boston, on Friday, September 6 from 9 AM to 11:30 AM EDT at the WeWork at 501 Boylston Street.Show Notes 00:22 – Can you charge premium fees if you call yourself a bookkeeper?  01:11 – What are the odds that David will escape federal grand jury duty and get to attend Accountex 2019?  02:56 – Meghan shares the inspiration behind the  Inclusion Without Assimilation - Encouraging Diversity and Inclusion within the Accounting, Finance and Fintech world event, featuring some of The Cloud Accounting Podcast’s former guests – Jina Etienne, and Nayo Carter-Gray 07:57 – The reviews are in! David and Blake run down some more reviews of the show from iTunes and Podchaser 10:37 – Intuit’s ecosystem, and revenue continue to grow, according to their latest earnings report | Intuit 13:20 – Well, they do say imitation is the sincerest form of flattery .. QuickBooks’ latest addition, employee benefits options, looks a lot like Gusto’s product offering | Intuit QuickBooks  15:07 – The Xero-OnPay partnership - in search of a bountiful harvest from the ag industry | Xero Blog 15:32 – In light of Expensify’s recent CPE-credit offering, Blake explains why this might be a no-brainer when it comes to increasing engagement | Business Wire 18:07 – Cash – more than $6 billion of it - is still king in some of Uber’s global locations | MarketWatch 21:31 – Strategic move or smokescreen? UPS eliminates 60+ accounting jobs in Texas | The Dallas Morning News 24:13 – Tax preparers who don’t raise their rates are leaving a load of money on the table | Accounting Today 26:15 --  Meghan talks about changing the scope of services along with raising rates, and why bookkeepers are typically the first to try out new strategies, like perpetual accounting  | CPA Practice Advisor 27:55 – 34.3 billion reasons the IRS needs a bigger budget | Indiana University  29:07 -- Why Matt Paff (another former CAP guest) is showing MYOB the door | LinkedIn 30:53 – In the aftermath of last week’s WeWork discussion, a listener, Amy Walker, CPA, shared how she’s witnessed coworking spaces, like WeWork, evolve into more of an enterprise solution 32:55 – A Work-from-Anywhere strategy benefits both companies and their employees | Harvard Business Review 34:43 – Can help desk software help accounting firms help their customers? | Future Firm 37:19 If you’re not into more software, Blake, David, and Meghan share some other strategies for tackling customer service 39:00 – Bookkeepers, who’s really your client? Why there’s more value-add when books are done for the business, not just the tax return | AccountingWEB Connect with Meghan Blair-ValeroTwitter: https://twitter.com/FoggedInbooksLinkedIn: https://www.linkedin.com/in/meghan-blair-valero-6825b11b/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. 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 TranscriptMeghan Blair-Valero: The name of my firm is Fogged In Bookkeeping. Although, interestingly, we're undergoing a name and branding change to Snow & Blair and that's what we will start calling ourselves this fall, because bookkeeping doesn't pay. It's become commoditized. The computer can do that. We've, for a long time, provided a premium service, but you can't charge a premium when you call yourself a bookkeeper. Blake Oliver: Welcome to the Cloud Accounting Podcast. I'm Blake Oliver. David Leary: And I'm David [00:00:30] Leary, and Meghan, we didn't coach you up at all, sorry.  Blake Oliver: That's your cue. Meghan Blair-Valero: I'm Meghan Valero. Blake Oliver: Awesome.  David Leary: Meghan, you're here on the podcast. Welcome!  Meghan Blair-Valero: I'm so excited to be here today, guys. Blake Oliver: Yeah, I've followed you on Twitter. We have followed each other, and now we get to talk to each other. Meghan Blair-Valero: And I heard we might actually get to meet real life eventually. Blake Oliver: Yes! David Leary: Yes!  Blake Oliver: I'm gonna be at Accountex in a couple weeks. The podcast is going to Accountex. I understand you'll be there, too, and I'm [00:01:00] really excited to meet you and everyone else who's gonna go. David Leary: Three's a 78-percent chance I get to go. Blake Oliver: Oh, yeah. You have a federal jury duty- David Leary: Federal grand jury duty, and I did some research. There's a 22.4-percent chance of me being picked [cross talk] Blake Oliver: You asked people on Twitter, what should you do? Should you buy the non-refundable plane ticket, or should you buy the refundable plane ticket for twice as much? I think the smart answer was, since you have an 80-percent [00:01:30] chance of going, you should buy the cheaper ticket. David Leary: That's where I'm at, well, because I'm kind of in the mindset of if I buy the non-refundable, the more expensive ticket, and I go, I'm gonna be mad that I overpaid 2X for a ticket. Blake Oliver: And you'd be out the same amount, which is approximately $300. David Leary: Exactly. I'll be less upset or equally as upset if I don't go, and I'm just out 300 bucks. Hopefully, though, if everybody can do a little cheer [00:02:00] for me, maybe I won't go, or maybe I'll just tweet out some crazy stuff. Then they won't let me in the jury. Meghan Blair-Valero: I think the real risk-management-analysis question here - what are the consequences of not showing up? David Leary: I don't know. Am I even allowed to be talking about this? Blake Oliver: I don't know, man- David Leary: This could be bad ... This might be the end of me being on the podcast. Blake Oliver: You can actually get out of jury duty now, because you can say, "I already talked about it on the show, on The Cloud Accounting Podcast, and everybody listens to that. So, I'm now biased!"  Meghan Blair-Valero: You're a member of the press. Blake Oliver: Yeah, [00:02:30] you're a member the press, David. David Leary: Oh, so I can't serve on a jury, maybe. That's true.  Blake Oliver: Yeah, exactly. The real lesson here is, everybody, if you're going to Accountex, you're gonna be in Boston, look for The Cloud Accounting Podcast, and definitely come by and say hi to Blake. Blake Oliver: I'll be there doing a bunch of interviews. Not sure exactly who we're talking to yet. We're finalizing those details, and I'm looking forward to having a booth at the event. David Leary: Then, Meghan, you are running an event in Boston- Meghan Blair-Valero: Around the same timeframe; Friday morning. Blake Oliver: Tell us about that.  Meghan Blair-Valero: Friday morning from 9:00 to noon, we are gonna be hosting an event [00:03:00] called Inclusion Without Assimilation, encouraging diversity and inclusion within the accounting, finance and fintech world. We're gonna be right down the street at WeWork on Boylston Street. So, less than two blocks. Blake Oliver: What was the inspiration for this event that you're putting together? Meghan Blair-Valero: I think we all recognize that, within the accounting and CPA world, there is not enough diversity of people. We see that reflected in not all, but a lot of the [00:03:30] accounting conferences and professional forums that we attend. We wanted to provide an event for folks where that was not the case. The case has been made to myself and others, repeatedly, that there's not enough qualified people of color, women, or LGBTQ, whatever your diversity-inclusion makeup is. I think we all just know that that's malarkey; [00:04:00] that these people are out there. You might have to look for them. You might have to travel outside your own real close social circle, but there are plenty of qualified people out there. So, in a period of about two-and-a-half weeks, we have put together a qualified panel, found a space, found sponsorship, and are executing an event in Boston. We hope it will serve as a model for others that want to do this. David Leary: Is this [00:04:30] event just one panel discussion, or is it gonna be two or three speakers? Can you elaborate on who's doing it, or who's [inaudible] Meghan Blair-Valero: We're gonna have two featured speakers, and then a panel. We are lucky enough to have Adrienne Penta. She is the founder of The Center for Women & Wealth at Brown Brothers Harriman. She recognized very early on that the conversation with women around investment and family wealth transfer needed to be a little bit different. She is going to come and speak to everybody about, [00:05:00] even in a big business environment, a big bank, you can create these opportunities and change up the conversation in a big way. She is going to be followed by Jina Etienne, who you have had on your show; it's how I discovered her. You guys had her on at Scaling New Heights, and I think she really has hit the nail on the head that, when you have conversations about inclusion, you don't leave out the white guy. The inclusion has to be for everybody. If you're asking people [00:05:30] in your company, no matter the size, to leave their true self outside the door, you're not actually being inclusive. She has real rubber-meets-the-road ideas about how we can do this better. She's gonna give a short presentation. Then we're gonna bring in Nayo Carter-Gray from 1st Step Accounting, Michael Ly from Reconciled, and Jagathi Gururajan, who is the founder of Fintech Women in Boston - locally to us - along with Jina and [00:06:00] Adrienne. We're gonna have a panel discussion about really being inclusive in our work environments, encouraging diversity in our industry, and how we help promote and move forward a variety of different people from all different backgrounds and create welcoming environments that hopefully change up the makeup of our industry, as we go forward in a time of a lot of change. Blake Oliver: That event, again, for our listeners is Inclusion Without Assimilation. [00:06:30] It's September 6th in Boston. Should we put the link to that Eventbrite page in our show notes? It that the best place for people to go to sign up, Meghan? Meghan Blair-Valero: It is. It is. Blake Oliver: All right. We'll have that link there in the show notes. Head over there and register. David Leary: Maybe we should jump into the news this week. Blake Oliver: Yeah.  David Leary: Before that, we do have reviews. Let's preview the news, quickly ... Intuit released their earnings. Blake Oliver: I've got some QuickBooks Online updates. Expensify has a new CPE course you can take, if you need some CPE; we've got layoffs. [00:07:00] I think I mentioned the layoffs last week, but never got to them, so I'll be sure to talk about them, this time.  David Leary: I have a think about Uber taking cash. Blake Oliver: Okay.  David Leary: It's very hard- it's an accounting problem. Blake Oliver: Interesting. I've got a bunch of tax stories. The IRS is actually so underfunded, it's losing out on billions of dollars of revenue. A great article about bookkeeping and advisory that I think will be interesting, and maybe Meghan could give her input on that. Security issues, again; lots of security problems. This [00:07:30] one definitely we gotta talk about is Ryan Lazanis has an article about using Help Desk software in your accounting firm. David Leary: Perfect. So we'll jump into the reviews. We have a lot of reviews this week, and the reason why is we finally have popped the cork, and now people can write reviews - not on iTunes. We have about seven reviews, I think, for this week. So, I think I'll just jump in with the first one, and Blake, I'll let you read the next one, and we'll just hammer all these out. Blake Oliver: All right. Sounds good. David Leary: All right. So, this one is an iTunes review. [00:08:00] It says "Nerd's podcast ... Top podcasts for accountants. Want to know what's happening in our industry. You have found the place to go. David and Blake are engaging, cutting-edge, and do their homework to provide an insightful and engaging podcast. Keep your practice relevant by staying in the know. Listen to The Cloud Accounting Podcast." Blake Oliver: Thank you! cflaherty said, "Five stars. This podcast is a great way to stay on top of the latest trends in accounting. It's a must listen!!"  David Leary: Steve Chase, "This is the podcast to listen to if you are a bookkeeper or an accounting firm owner. I enjoy listening to so many great tech news accounting [00:08:30] discussions and interviews. It's great content and I'm very excited to be tapped into this podcast as we journey together in the knowledge economy. Thanks, David and Blake!" Blake Oliver: JimBrown said, "A great podcast that even touches on the UK perspective directly. As a mid-sized firm over here trying to look at digital workflows, adopt a cloud first policy, and connect all our applications seamlessly, it's hard to keep up with everything that's going on, and you guys do a great job of providing an overview of changes and some insight into what they mean." David Leary: Joel Lacayo left a five-star review. "This is the most up-to-date current content [00:09:00] for the entire accounting industry! Whether you are getting into the industry or are an experienced pillar of your own professional network, this podcast will allow you to always have a grip on the pulse of where the accounting world is headed." Blake Oliver: blueprintbrian said, "There's no better way to hear about top news stories in the accounting ecosystem. David and Blake share the news of the day, but I love it when they have special guests on that share their stories. That Shawn Kanungo interviews from Xerocon San Diego 2019 was amazing!" And it was. If you haven't heard that, go check out the archives and listen to Shawn Kanungo talk [00:09:30] about moving from being a linear accountant to an exponential account. David Leary: Amy McPherson, "I am the owner of a small firm working exclusively with nonprofit organizations to help them build efficient financial management systems. This podcast is a must-listen for our entire team. Blake and David have deep roots in the SaaS accounting community and really understand what's important for us to know. They provide an invaluable service of finding the interesting news stories that impact our work and package it into a dialogue that is easy to listen to. I never miss an episode and don't know how [we got] [00:10:00] along without it. Thanks, guys, keep up the good work!" Blake Oliver: And finally - thank you, everyone, for sticking with us through all these reviews - Nayo Carter-Gray said, "This is the absolute BEST podcast to stay up to date with all things going on in the future forward accounting space! Blake and David have a great chemistry and they often have great guests on the show. I tune in for every episode." Thank you, everyone, for all those reviews. David Leary: The reviews help, and they mean a lot. It means a lot to me, personally, to read these and hear from everybody, but they really help others discover the show. So, it's super-important. Either on iTunes, leave a review, or on Podchaser.com, [00:10:30] leave a review there, as well- Blake Oliver: And we will read it on the air. Let's talk about Intuit earnings, right? What's new?  David Leary: Intuit earnings. Yeah, so, Intuit announced their earnings Thursday; yesterday. I think the big news is just the revenue's up like crazy; up 15 percent, year over year. The QuickBooks Online ecosystem grew by- revenue grew by 35 percent. The number that's really amazing is QuickBooks Online finished the year with 4.5 million QBO [00:11:00] subscribers. Blake Oliver: Wow ...  David Leary: That grew at 33 percent. Blake Oliver: Yeah, that's amazing. David Leary: Did you have a chance to listen to the conference call at all? Blake Oliver: No, I did not listen to that. Anything interesting?  David Leary: I did not think there was anything that we haven't already spoken about. But Sasan did talk about- they think they can disrupt the mid-market. QuickBooks Online Advanced, they're looking to go up mid-market. They're very, very bullish on QuickBooks Online- I'm sorry, QuickBooks Live, which we've talked about before in the past. The only real nugget [00:11:30] that I think came out of there was there was a comment that they're really gonna possibly focus on product-based businesses, specifically omni-channel.  40 percent of all QuickBooks users are product-based businesses, and they wanna make sure if they're selling a product and the product's in QuickBooks, they can get it onto all the e-commerce stores they need to get it on. It's interesting that Intuit wants to attack that, and if they can solve it, it's great. But it's also super-super-hard. The whole e-commerce, multi-stores, multi-channel ... A lot of people are trying to attack that. If Intuit can do it, it would be amazing. [00:12:00] It's just- it's gonna be tough. It's a really, really tough space to pull everything together perfectly in one spot. Blake Oliver: So, Meghan, you're a ProAdvisor, am I right? What's the name of your firm? Meghan Blair-Valero: The name of my firm is Fogged In Bookkeeping. Although interestingly, and not because of QuickBooks Live, but sort of simultaneously - they sort of hit us at the right moment - we're undergoing a name and branding change to Snow & Blair. That's what we will start calling [00:12:30] ourselves this fall, because bookkeeping doesn't pay. Blake Oliver: Oh, interesting. Meghan Blair-Valero: It's become commoditized ... The computer can do that. We've, for a long time, provided a premium service, but you can't charge a premium, when you call yourself a bookkeeper. David Leary: Oooooh.  Blake Oliver: Wow. So, this is the QuickBooks Live effect in action, right here. Meghan Blair-Valero: Yeah, yeah.  Blake Oliver: Not that QuickBooks Live is completely responsible for it, but a lot of these companies that are getting into this game - commoditizing bookkeeping for a flat [00:13:00] monthly fee that is just way too low for most of us, as professionals, to compete with, right?  Meghan Blair-Valero: Exactly. We had started this process six months before that announcement came, and it just felt really well-timed. Blake Oliver: Well, I've got to update about QuickBooks, the August 2019 What's New in QuickBooks Online? The big news is that Intuit has added employee benefits to QuickBooks Payroll. Now you can compare, buy, and manage employee health benefits through QuickBooks. When [00:13:30] I saw the screenshot of the different plans available and all that, I said, "Oh, wow, this looks a lot like Gusto." I don't know if you've seen that, Meghan. Do you use the Intuit Payroll in QuickBooks, or are you using something else? I'm curious to know. Meghan Blair-Valero: No. We offer a payroll services outside of Intuit QuickBooks. The majority of our payroll clients are here in the state of Massachusetts, and we have found that they have a really hard time with those smaller state taxes. The things that change more frequently have funny thresholds. [00:14:00] We've just never found it to be a good solution for us. Now that Massachusetts is rolling out this paid family medical leave, which they put a pin in for a little bit, and now we're back at the deadline again, it just doesn't meet our needs. The paid family medical leave in Massachusetts will cover independent contractors, as well as employees. Blake Oliver: Oh, wow.  Meghan Blair-Valero: Which is a huge change for all the payroll software companies, including Intuit, and Intuit just doesn't have a solution for how to deal with that yet. Blake Oliver: What do you use? Meghan Blair-Valero: We use Evolution [00:14:30] software, and we partner with a CPA firm outside of Boston that provides our tax filing and advisory piece of it. We do the client services and the administration and the payroll, and it's a really profitable market sector for us. Blake Oliver: Gotcha. David Leary: I have a payroll-related story. Blake Oliver: Okay.  David Leary: Xero, who previously we've covered, has gotten into a deep partnership with Gusto, which is a payroll provider. They're now getting into a deep relationship with OnPay. So, OnPay is an online payroll [00:15:00] service, similar to what we were just talking about, but OnPay must have some sort of better understanding of farm payroll and farm credit ... Xero, who's obviously chasing agriculture here in the U.S. is now gonna go into a deeper partnership with OnPay, targeting agricultural. Blake Oliver: So, this is interesting because my mom grew up on a farm, and that family farm is still in the family. So I'm gonna have to tell my cousins about this. Maybe they can use OnPay and Xero, now.  David Leary: We'll get some in-the-field [00:15:30] reporting. Blake Oliver: I have more app news. Expensify has added CPE credits to their training and certification course. When I saw it, I thought, This is brilliant!" Every single app that offers a training course should offer CPE for it. Why don't they? Because, it's not that hard to do. I've been doing it for a few years now at FloQast, doing ... We got CPE-certified. We do webinars that are CPE. It's amazing just how much more engagement you get. We doubled our webinar attendance rate just by offering CPE. I'm [00:16:00] thinking every single app that has some sort of training course for their app - offer CPE. Give it away for free. I think this is probably just the beginning of a whole Expensify CPE program, where it would make sense to offer more courses down the road. I've seen a number of apps do this successfully. So, if you are a developer and you're listening, it's worth it. Go fill out the form, so you can offer CPE, or, if you don't wanna do that, you can partner with somebody who [00:16:30] is already doing that. Amanda Aguilar, of Elefant Training, she suggested online, "Hey, we can help you create those courses and offer them with CPE, and you don't have to go do it. David Leary: With both of you being accountants, if you're going to continue your CPE, if you have a choice - I'm gonna learn about App A or App B - and App A has training with CPE, are you buying it by default, and gonna do that training first, regardless, even if the other app might even be the better app? Is that the logic? Blake Oliver: I'd be curious to know ... Meghan, do you have [00:17:00] to get- do you need CPE? Meghan Blair-Valero: I don't need CPE. I very conscientiously made the choice to work within the accounting field without being a CPA, and I think that there's pros and cons to that. I'm sure that that's a great debate in the industry that we won't soak up time with here. I'm not required to get the CPEs, but I do attend a lot of those classes throughout the year to try to stay involved in the industry, and make sure I know what's going on, even though I'm not [00:17:30] required to be professional. Blake Oliver: As a CPA, I don't think it would make me take one class versus another. It would really depend on the application. I'm not gonna choose between competitors because of the CPE, but it would certainly make it more likely for me to actually take the time and effort to do the training course, which, if you're a developer, you need people to do that, so they understand how things work and [00:18:00] they're successful in your partner program. David Leary: Yep, that makes sense. Blake Oliver: All right, what's next? David Leary: I have a thing about Uber. Blake Oliver: Let's talk about Uber. David Leary: Uber's customers paid more than $6 billion dollars in cash last year. Blake Oliver: I don't understand this, because I've never paid cash for Uber. How does this work? David Leary: This is like 30- sorry, 13 percent of all the rides were cash. Blake Oliver: What? Meghan Blair-Valero: What?  David Leary: Because they're in places like India, Brazil, Mexico, some parts of Europe, the Middle East, Latin America, they take cash. It's [00:18:30] a very risky, hard thing to account for. Blake Oliver: Right. David Leary: That's basically the article. It's just a shocking, jaw-dropping amount - $6 billion- to have to account for. Blake Oliver: Wait, how does that work? The driver takes the cash, and Uber ... How does Uber ever get their cut? David Leary: Well, they have to implement very expensive systems, so the drivers can collect it and deposit it. Blake Oliver: Oh, wow ...  David Leary: Then it rolls up. The interesting thing, for me, the observation, is the whole selling point I always liked about Uber or Lyft  is it eliminated [00:19:00] that weird, "Oh, I gotta have cash for the taxicab driver ..." Blake Oliver: Yeah, that's the worst part.  David Leary: They get there, and they want a tip, and you never have enough ... It's all weird, right? Blake Oliver: Yeah. David Leary: [That all went away]. You'd press a button and get out of the car, or get out of the car, and press the button 20 minutes later, if you want. I'm really surprised that big percentage of their business is that old model. Blake Oliver: Wow.  Meghan Blair-Valero: I'm not [cross talk] Blake Oliver: Go ahead, Meghan.  David Leary: You said you're mad?  Meghan Blair-Valero: No, I'm not surprised. In America, and even more so in Australia and the UK, we're [00:19:30] very credit card and such focused, but internationally, cash is still king. When we look at clients that are doing things across borders, and even when we get large groups of employees that are coming internationally on visas, cash is still king. They're very suspect of the check. It's just a different cultural attitude towards the exchange of value. I'm actually not surprised that, internationally, once you said that that was the [00:20:00] bigger market ... Which is one of the challenges of fintech, is how do you work and expand in those markets? David Leary: Uber actually admitted this in their prospectus, because now that they're public, they have to put this information out there. They said that sometimes there could be violent crime; there could be tax avoidance. There's real genuine concerns that sometimes they may not see this cash at all. It's a risk, now, which they probably never talked about before, because they weren't public company. This episode of The Cloud Accounting Podcast is sponsored by BQE Core. As many of you know, I'm all about the niches and niche apps. Putting your business clients in the proper niche app is providing them with a 100-percent solution versus, at best, the 85-percent solution of a standalone accounting app. If you have clients that are architects, engineers, consultants, or lawyers, Core is the app for them to best manage their firm, increase their staff productivity and ultimately increase their profits. You don't need to juggle between multiple apps. Core has it all in an easy-to-use, all-in-one app for project management, including time, and expense tracking, budgets, forecasting, client billing, and accounting. Even though Core is an all-in-one platform, it still works nicely with the apps like Google Drive, Dropbox, OneDrive, QuickBooks, Xero, and AccountRight, offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app and recently launched a cutting-edge, voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E. Did I mention that BQE Core works great for bookkeepers, CPAs, and accounting firms, too? Blake Oliver: Speaking [00:21:30] of business models that don't work, or inefficiencies, I should say, UPS is eliminating 64 accounting jobs at its facility in Coppell, Texas. The reason? Outsourcing. A UPS spokesperson told The Dallas Morning News that the package delivery company is outsourcing transactional finance and accounting work, in order to let employees, "do more strategic work that can make a greater impact on our business and provide them with enhanced career opportunities." Small number, but I saw this [00:22:00] on Going Concern, and it follows United Airlines- their coverage of United Airlines laying off people; Walmart laying off accountants- David Leary: Every week, it's another story. Blake Oliver: Yeah, it's interesting because there's always ... We're talking a lot about there's not enough CPAs; there's not enough accountants; that the job market's really tight. But I think what this shows is that it's only tight if you're keeping your skills up to date. If you're still doing the same thing you were doing 20 years ago, and I imagine these employees are probably cutting paper checks and  just [00:22:30] doing really old-school type of accounting work, then you will get outsourced, and somebody is gonna take your job that's using automation. David Leary: We talked about this a few weeks back, where, ultimately, their data shows and the senior management is approving budgets to give to accounting departments to improve processes, and it wasn't getting done. Then, what's happening is two-three years in a row of that, they're just saying, "Forget it. I'll just outsource the whole thing." Blake Oliver: Mm-hmm.  David Leary: If any of you have budget money from your upper management to implement some [00:23:00] automation and to improve your accounting department, you probably should do it, because if not- Blake Oliver: You probably should use it.  David Leary: -you're gonna be on the podcast next week. Blake Oliver: Hey, so, Meghan, I'm curious, you do bookkeeping now, primarily. In your new firm - what's it called again, the new enterprise? Meghan Blair-Valero: Snow & Blair. Blake Oliver: In Snow & Blair, are you gonna be still doing that, or are you gonna be doing tax? How do you do the taxes for your clients? Meghan Blair-Valero: We partner with CPA firms and accounting firms to do the tax piece. We really are focused on bookkeeping, [00:23:30] general advisory, compliance, really getting good technology and fintech implemented to streamline processes and eliminate waste - a lot of the same things we're talking about there. Blake Oliver: Do you know how often that CPA firm you work with raises their rates? Do they do it every year, every couple of years ...? How often do they do it? Meghan Blair-Valero: We see on average of every two to three years. Frankly, in my opinion, they're not doing it often enough, because the CPA firms that we [00:24:00] work with, we vet pretty heavily, and they're doing a lot of advisory. We require quarterly meetings with people's CPAs. They should be doing their tax planning as we go. There shouldn't be any tax planning happening April 1st. Blake Oliver: That fits really well with a chart that I saw in Accounting Today on how often tax preparers raise their rates. Apparently, only 37 percent of tax preparers raise their rates every year; 32 percent do it every two years; 16 percent do it every three years; and then other [00:24:30] is 15 percent. I don't even know ... Maybe they don't raise their rates ever. I saw this and I thought, wow, that's crazy that they're not raising ... That everybody isn't raising their rates every year, because it's money left on the table, big time. Even if you manage to catch up with, say, somebody who is doing it every year, you have to do it more. If you raise your rates five percent every year, in order to catch up - if you do it every two years - you've gotta raise your rates more. That just seems like bad management, or bad practice management, [00:25:00] if you're not doing that. David Leary: Maybe these firms are getting extra-efficient, and their costs are going down. They don't need to raise their rates, because their margins are increasing. Blake Oliver: Actually, that's a good point, David. I didn't even think of that. David Leary: Sure, yes-  Blake Oliver: You should be raising your rates, anyway, just for inflation, right? Actually, I understand this ... When I was in a practice, it was hard to do it, because I didn't have necessarily a system for always raising rates every single year. Well, I did. once, I implemented proposal software. We did Practice [00:25:30] Ignition. Then, there was the annual renewal, and that was an opportunity to raise rates. But I'm curious to know, Meghan, do you raise your rates every year? Are you systematic about it? How do you do it? Meghan Blair-Valero: I'm completely guilty as charged. We've been really focused on, the last three years, getting people onto sort of fixed-fee engagements - what's popularly known in the industry as value pricing. It's more of a change of scope that comes with a change in price. So it's not that people are seeing, "Well, I'm paying [00:26:00] more for the exact same work." There's usually some change in that scope. It's not that we're trying to hide anything, but it's more of a conversation and more of a rolling thing that's happening. I think that's becoming more of an industry trend. There was recently an article - I think it was in CPA Practice Advisor - about the perpetual accounting methodology and really seeing a move towards doing away with annual engagement letters and some of the formality that we associate [00:26:30] particularly with CPA practices. That's always been the trend within the bookkeeping industry, because we're not bound, again, by the same sort of rigidity. I think you see some of the trend movement happen in bookkeeping first, because it's easier. Blake Oliver: Gotcha. So, you mentioned you're doing value pricing now, or you've transitioned your firm to doing value pricing. What about a CPA firm that you work with? When they do the taxes and the tax planning, are they still billing hourly or are they doing ...? How [00:27:00] do they price it for your clients? Meghan Blair-Valero: Nearly every CPA firm we work with is working on a fixed-fee engagement; although I doubt they would call it value pricing. Blake Oliver: How would they price out a typical return? Meghan Blair-Valero: They would price out the typical return based on the number of K-1s, and various investment portfolios that they would be needing to work with. The majority of our clients are high net worth individuals and people that make private equity investment - seed to A stage - so that really drives what's [00:27:30] going on, once we've established a relationship with them. They know the consistency of the bookkeeping that they're getting, but they don't have to worry about sifting through the mess. Blake Oliver: Interesting. Not raising your rates is basically leaving money on the table every year. I was guilty of it. A lot of us are guilty of it, obviously, according to the stat - only 37 percent do it every year. That's money being left on the table by tax practitioners. The IRS is also leaving a lot of money on the table, according to [00:28:00] new research from Indiana University Kelley School of Business. The IRS left $34.3 billion dollars in revenue on the table from big business in the last few years. That's because the IRS is underfunded, and they don't have enough auditors to audit big business. This is the first study that actually attempted to estimate just how much revenue is being lost, because we don't have auditors [00:28:30] going out and questioning the aggressive tax positions of some large corporations - $34.3 billion. Meghan Blair-Valero: That's a lot of money to leave on the table. Blake Oliver: I know, right? That's the thing that's funny ... The IRS should be the first thing that we fund, because you're spending money to make money, essentially. If you ask me, underfunding the IRS is just another way of creating a loophole for big corporations, which gives them an advantage over small businesses that may not be taking these aggressive tax positions. David, have you got any other stories? [00:29:00] David Leary: Yeah, I have an entertaining article from Matt Paff. He's down in Australia. He was on the podcast once. He really talks about how Xero- QuickBooks Online, they can really start, with apps, attacking mid-market. He's a big believer in that, and his focus has really been on that mid-market enterprise-level type software. He wants to stay close to his roots, and he has three clients, or three businesses he runs. He's been running them as an experiment. One company on Xero; one on QuickBooks Online; and one on MYOB. [00:29:30] He's so frustrated now he's stopping the experiment on MYOB. He has a nice little "7 Reasons why I dumped MYOB Essentials." It's a LinkedIn post. It's kind of shocking. Number-one reason was reports don't have totals. Blake Oliver: What? David Leary: Yeah. There was no total on a report, and he puts a screenshot in there. Many of the reports are just PDF. You can't get to them any other way. You can't output them to Microsoft Excel. He's upset about that. He's upset that they [00:30:00] don't have integrations to very many apps. He gave a specific example, because he uses LivePlan to monitor their business plans, and it doesn't integrate with MYOB. It only integrates with QBO and Xero. You can't do recurring transactions; it's very light on payroll; it's super-light on mobile - the mobile functionality is not great ... It was such a painful experiment, he's just done using that. That's probably not good for MYOB. Blake Oliver: No, yeah, not [00:30:30] that great.  David Leary: It wasn't like, you know, people do those articles - "I'll compare these three apps side by side," and they write a blog post, and they looked at each app for two hours. This has been going on for a couple months, and he just can't handle it anymore. Blake Oliver: So, David, you remember our talk last week about WeWork? You brought that story about WeWork's financials. David Leary: Oh, yeah, WeWork and the questionable business model. Blake Oliver: Yes. Well, Amy Walker, CPA, had some feedback for us on that story. She is in a coworking [00:31:00] space in Houston. It's not a WeWork. She also picked that coworking space up as a client. Since moving in three years ago, she says that the dynamic has shifted more to enterprise. Companies in other cities are using it for a satellite office. Some downtown companies are letting suburban employees office at the coworking space, instead of spending hours on the freeway. She's had the chance to watch it evolve over the last few years, which I thought was interesting, because when you and I talked about it, I [00:31:30] mentioned that I was at the WeWork in Hollywood, here in Los Angeles, and when I was there back in 2015, I didn't see a lot of big businesses at the WeWork. That has apparently shifted, and Amy's story backs that up - that more and more big businesses are using coworking spaces for their employees. David Leary: Yeah, because I think coworking spaces used to be- I don't wanna say hipster places, but it's gonna be your independent, your web designers, your independent coders, subcontractors, people like that. But just like everything else, like South by [00:32:00] Southwest, eventually the corporations discover it, and they've rolled in. Blake Oliver: Meghan, where do you work? Do you have a coworking office? Do you work at home. How do you do it? Meghan Blair-Valero: So I actually built an addition on my house five years ago that has some office space, a reception area for the occasional walk-in client - because we still have a few of those - and then the rest of my team works remotely from around the country. We have office space because it's convenient, but not because we need it. Blake Oliver: Gotcha. Everybody on your team works [00:32:30] from home, or do they work from like coworking spaces? Meghan Blair-Valero: I have two people that come into the office, and everybody else works remotely; although, we did have our whole team on Nantucket Island for the first time ever in the history of our company, all at once, this summer, which was special. Blake Oliver: Wow, that's awesome. So, Meghan, you might be interested to hear about this survey- not a survey; it's a research study in the Harvard Business Review. The article is, "Is It Time to Let Employees Work from Anywhere?" If [00:33:00] you're a listener of the show, you know that I'm a big fan of remote work, and there's a lot of studies that find that remote work is great for employees, and that people are actually more productive. Here's another one. We haven't had a big one in a long time. These researchers, publishing in the Harvard Business Review, studied the effects of a work-from-anywhere program instituted in 2012 among patent examiners at the U.S. Patent and Trade Office.  They analyzed productivity data for patent examiners, which, you know, they're highly educated, specialized professionals. [00:33:30] Maybe we could think of them kind of similar to bookkeepers or accountants. They analyzed productivity data for patent examiners who switched from a work-from-home program to a work-from-anywhere program. After switching to work-from-anywhere, the examiners work output increased by 4.4 percent with no significant increase in rework. Another study that shows that if you let people work from anywhere, they're more productive. Meghan Blair-Valero: We have security [00:34:00] protocols built in for our employees, but we really do encourage that. Many a person, for me, has fired up a hotspot on a soccer field, or someplace else, so that they could do what they needed to do as a parent, or as a child of a sick adult, or whatever that might be and get the work done and meet the deadline. David Leary: You have to work anywhere. I actually tweeted this out this week. I was at the car dealership getting my wife's car serviced, and I thought I was being super-productive. I had [00:34:30] my laptop. I took a meeting. I was hammering away. I was just in the zone. Then some guy shows up, pulls out his laptop and a second monitor, and just one-ups me. People are gonna work where they can get work done at, when they can get it done. Blake Oliver: Here's something that may help you build a work-from-anywhere program for your firm, and that is help desk software. Ryan Lazanis over at FutureFirm.co wrote one of my favorite blog posts I've read in a long time. It's called "Help Desk Software For Accounting Firms - What & Why" and [00:35:00] he basically dives in deep to the concept of help desk software, which, if you work in software, you are very familiar with this, because these are the apps that you use to do customer support. People email support at 'MyApp.com' and then all of those emails go into a shared inbox, where they can then be worked on by your customer support staff. We're all very familiar with the using this when we contact Xero, or QuickBooks, or any of these apps. Well, [00:35:30] Ryan says the accounting firms should be using help desk software, too. He lists out some options - Zendesk, Teamwork Desk, Groove, Freshdesk. There's lots of them.  He mentions a lot of the benefits. Some of the benefits include having a centralized place to search all client communication. You can avoid email slipping through the cracks, because whoever received it didn't remember to respond. You can get a pulse on support. You know how quickly your team is responding to client questions, to client [00:36:00] emails. If you have a, say, 24-hour response policy in your firm, then you can actually monitor and implement that and make that happen, and you can use automation. You can create these templates that you use over and over again to respond to clients for questions that they have all the time and save time. You get the analytics ... I'm a big fan of this. I didn't actually ever use help desk software in my firm, when I had my firm, but it is something that, if I did it again, I would absolutely [00:36:30] use. I'm curious to know, Meghan, if you use any help desk software, or if it's something you've looked into, or if you're curious about that. David Leary: Or chat software, even?  Blake Oliver: Chat software, too, yeah.  Meghan Blair-Valero: We are users of Slack, internally, for chat, and we do queue up a ticket-type system in there, but, for the most part, our customers don't need a lot of support in that way. We are just on a regular system. So, no, we don't use a ticketing system like that, but we do use [00:37:00] Slack to remotely, on the fly ... When bookkeepers are making their own hours, and somebody else is picking up any sort of a support need, or bookkeeping need on the fly. Although I'm always a big, big believer in that there's no such thing as an accounting emergency. Blake Oliver: Yeah, that's true. Most of the time, there isn't, right? David Leary: There are small ways to tiptoe into this. Just create an email address for your company; a generic either 'help@blah-blah-blah' or 'support@blah-blah-blah' and make [00:37:30] all your clients use that one universal inbox for your company. Then, you can start distributing the email that way. You could even do just rules and distribute that out [cross talk] Blake Oliver: -did is I used Google Groups. I had Google Apps for my firm, and you can create as many email distribution lists as you want, using Google Groups. I had a distro list, or I had an email alias for every client. So, it would be ClientXYZ@cloudsourcedaccounting.com. Then, [00:38:00] if they emailed that address, it would go to all the people on the account, and it would be all saved in a shared inbox there. So, at least we had the emails all going to the right people. Everybody had a copy of it. Then it was nice, because I - as I was handing off clients that I'd worked on personally to staff as we grew the practice - could still go into that shared inbox, and I could see all the emails for that client, but I could unsubscribe from those emails, or I could receive them as a digest if I wanted to. Meghan Blair-Valero: That's [00:38:30] why we're use utilizing Slack is we're taking a similar methodology, but we're getting things out of the inbox, because that just creates, for us, more of a security risk of malware, or ransomware, or something like that sneaking in. We've really taken all of our internal communication out of email. The only things that end up in email are from clients. We've tried some other ways around that, and we just really haven't been able to find a replacement for our email inbox yet. Blake Oliver: I've [00:39:00] got one last story that I want to get Meghan's input on, while we've got her. This is "Bridging the Gap Between Your Roles as a Bookkeeper. It's an article that appeared on AccountingWEB, by Billie Anne Grieg. She writes from the perspective of an independent bookkeeper who is preparing the books for a CPA firm or a tax preparer to do the books. So, Meghan, I think this kind of fits what you do, currently- Meghan Blair-Valero: Right up my alley.  Blake Oliver: I love this article because [00:39:30] she challenges- or she asked the question of the reader - who do you work for? As a bookkeeper, do you work for the CPA, or do you work for your client? Who's really the client? I think what we would wanna say is not the CPA, right? I mean, yeah, we work with the CPA, but the CPA is not the client. She says the way that most bookkeepers are trained to prepare the books, or the way that we actually do it, really is making the CPA the center and making the CPA [00:40:00] the client, because the books are often done on the tax return basis.  They're done cash basis. Any expenses that can't be deducted on the business tax return are excluded from the books, are posted to equity, owner's draw, shareholder distributions, et cetera. Depreciation is only done once a year, using the numbers the CPA provides and the purchases that fall under that Safe Harbor threshold are posted as expenses instead of assets, even though it might make more sense to show them on the balance sheet. The [00:40:30] disadvantage of doing books specifically just to satisfy the compliance aspect of the tax return is that you're not getting the full picture; that the books can be a useful management tool, in addition to being a tool for the tax return. She says if you want to really create value, as a bookkeeper, then it's worth not doing the books for tax prep only and doing their bookkeeping for management purposes. This is what I would do for my bigger clients is we [00:41:00] had them on accrual basis books, so we could then convert to cash, and we would include a lot of that stuff that may not be tax deductible, but it's a part of their business. An example in this article is baseball tickets, which may not be deductible, but they're still a business expense. You have to do a little more work to get it ready for taxes, but as long as you have that understanding, you can still do it. I thought this was a great article because everyone's talking about advisory - how can we all move to more of an advisory model - and what better way to do that than [00:41:30] to actually be preparing books that are more useful, month to month, not just once a year. David Leary: That's what she says; she's like, just have one conversation about - your books have two purposes. One, to run your business and make business decisions, and the other is for taxes. That's advising, right? Blake Oliver: Yeah. David Leary: I agree. It's a good article. It's good find. Blake Oliver: So, Meghan, I'm curious to know what do you think about this? How do you do it? Meghan Blair-Valero: We start every conversation and every engagement with that conversation, almost verbatim. We work for the client. The purposes [00:42:00] of the books are primarily to run the business. It is your management accounting system. The taxes, which are important - they're very important - but they should be secondary to running your company and making informed decisions. You can almost always create a tax return out of a set of books that's been prepared for the purpose of running a business. Blake Oliver: Well, that's all I've got this week. David, if people wanna get in touch with us, they wanna talk to you, where should they go to find you? David Leary: The [00:42:30] best place is gonna be on Twitter. I'm @DavidLeary. Blake Oliver: And I am @BlakeTOliver. And Meghan, if people wanna connect with you online, find out what you're up to, what's the best place for them to go? Meghan Blair-Valero: Twitter @foggedinbooks.  David Leary: Now, are you gonna have to change your Twitter handle, now that you're getting away from using the word bookkeeping?  Meghan Blair-Valero: I think so.  David Leary: It's a full-blown rebrand. Blake Oliver: Rebranding is so much fun. Meghan Blair-Valero: Full-blown. David Leary: You can find The Cloud Accounting Podcast on ... Just search for it. It's on Facebook. It's on LinkedIn. [00:43:00] It's on Twitter. Please follow us there, as well. Blake Oliver: If you wanna get the show notes emailed to you every week, automatically, head over to my website, BlakeOliver.com and click the blue Subscribe banner at the top. Put in your email address, and you'll get a link to the show notes whenever the episodes are published. That will include all of the links to all of the articles that we talked about, making it really easy for you to go and dig in deeper to any of these topics if you liked them. David Leary: When you listen this week, email the episode to a friend, so they can listen, too. Blake Oliver: David, I'll [00:43:30] talk to you again next week. Meghan, I look forward to seeing you soon in a couple of weeks at Accountex. Until then, have a great weekend. Meghan Blair-Valero: See you soon. Thanks for having me.  David Leary: Bye, everybody.  
  8. Sponsors BQE CORE - http://cloudaccountingpodcast.promo/core  Rewind.io - http://cloudaccountingpodcast.promo/rewind Show Notes 01:25 – Happy Birthday, Blake!  03:26 – David takes QuickBooks Online Accountant for a spin the real world 05:30 – The new titanium-flavored Apple Card – all hype, no substance? | ZDNet  07:45 – A few of QBOA’s underperforming features - the Accountants Apps Program and Slack -  are getting the boot as Intuit keeps searching for a more perfect integration 12:04 – Xero’s Marketplace gets a new look, and some shiny new toys! | Digital First*Correction: Jonathan Misfud is the author of this Digital First article. Blake mistakenly credited Sholto Macpherson. Apologies for the mix-up!  14:03 – Is Square biting off more than they’ll eventually be able to chew?  Square is taking a bite out of the hassle of managing a multitude of third-party food-delivery orders with their new orders platform | Square  With constant development of new tools, APIs, and features, Square aims to be the middleman between everything from orders to accounting systems.  18:18 – Meet the winners of CPA Practice Advisor’s Tax & Accounting Technology Innovation Awards, which includes a win for BQE Software – one of our sponsors. If you missed it earlier this year, check out our interview with CEO Shafat Qazi, and an excellent demo of BQE’s award-winning Core Intelligence AI. 24:05 – No magic here, just smoke and mirrors – yet another AI startup, Engineer.ai, is less than straightforward about human v. AI workload | The Verge 27:14 – What’s behind the allure of hiring non-accounting grads at CPA firms? Expansion of services, requiring more skill-diversified staffs, or the declining quality of a formal accounting education? | Journal of Accountancy 30:29 – The high cost of being an ethical, and skilled auditor – an eight-percent reduction in fees? | Accounting Today  35:14 – “We” is getting people Worked up over their IPO, some wonky financials, and their standard operating procedure | LinkedIn 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. 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 TranscriptBlake Oliver: As reported in the journal, CPA firms are recruiting non-accounting graduates in record numbers. 31 percent of accounting-firm hires were non-accounting graduates in 2018. So, almost a third of people who are going into accounting firms now did not major in accounting. This episode of The Cloud Accounting Podcast is sponsored by BQE Core. As many of you know, I'm all about the niches and niche apps. Putting your business clients in the proper niche app is providing them with a 100-percent solution versus, at best, the 85-percent solution of a standalone accounting app. If you have clients that are architects, engineers, consultants, or lawyers, Core is the app for them to best manage their firm, increase their staff productivity, and ultimately increase their profits. You don't need to juggle between multiple apps. Core has it all in an easy-to-use all-in-one app for project management, including time and expense tracking, budgets, forecasting, client billing, and accounting. Even though Core is an all-in-one platform, it still works nicely with the apps like Google Drive, Dropbox, OneDrive, QuickBooks, Xero, and AccountRight, offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app and recently launched a cutting-edge voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E. Did I mention that BQE Core works great for bookkeepers, CPAs, and accounting firms, too? Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver- David Leary: And I'm David Leary. Blake, happy birthday this week. Blake Oliver: Thank [00:01:30] you. I wasn't feeling that old until I realized I'm only a year away from being Homer Simpson's age, and I started watching The Simpsons when I was Bart's age- David Leary: It's been a long time. You know how I found out it was your birthday? We got a review. Blake Oliver: Oh!  David Leary: The review wishes you a happy birthday. Blake Oliver: All right, well, I hadn't seen that!  David Leary: Let me jump in and read this. It's a five-star review. It's from theJuice711. Now, the Juice ... Maybe OJ Simpson wrote your review? I don't know. Blake Oliver: That'd be pretty cool. David Leary: It'd be really cool. Let me read [00:02:00] this out here. It said, "Great accounting story coverage! Blake T Oliver and David Leary do an awesome job at dissecting accounting related news and keep me abreast of what’s going on in the industry. I love the banter and each person's unique perspective. The show is so much fun to listen and I tune in every week. I highly recommend this podcast to anyone in this arena. Happy B-Day, Blake!"  Blake Oliver: Thank you so much for the birthday wishes and that nice review. Really appreciate it. David Leary: I like how he said "Blake T Oliver ..." He uses your middle initial- Blake Oliver: Well, that's good. [00:02:30] I've branded myself as Blake T Oliver on all of my social media, so, apparently, it's working. David Leary: It's working. That's good.  Blake Oliver: Yeah, I don't want them to confuse me with the other Blake Olivers. David Leary: Is there other Blake Olivers? Blake Oliver: There's like 12. I think one's a lawyer. David Leary: Do you follow all the Blake Olivers? Blake Oliver: No, definitely don't. David Leary: I do. I follow-  Blake Oliver: You follow all the Learys?  David Leary: -I follow every David Leary, yeah. Blake Oliver: So, David, I have a story for you. I was watching Mary Poppins Returns with my son, and I learned what "Leary" means. David Leary: Yes, yes! My kid ...  Blake Oliver: There's a whole song about it!  David Leary: Whole song, I know. [00:03:00] Blake Oliver: Leerie is a lamplighter. Is that true? David Leary: I don't know. My kids were losing their minds over that one, so maybe, I guess ... I've not seen the movie, but they were just like ... Yeah, they almost lost their minds, and fell outta their chairs. Blake Oliver: Like positively or ...?  David Leary: Yeah, but then they were even more excited because they are huge Hamilton fans, and to find out that Lin-Manuel [Miranda] wrote that song [cross talk] Blake Oliver: Oh, I didn't know that. Well, that's cool. David Leary: I think so, yeah. I think he scored the whole thing. I have some QBOA news [00:03:30] that personally involves me. I'm trying to be involved with the PTA at the school. So, I volunteered to do all the reconciliations in QuickBooks Online. I made them invite me as their accountant in QuickBooks Online Accountant. So, I get to experience the world now through the eyes of an accountant with a client. Blake Oliver: Wow. So, you've been in the world of QuickBooks Online for all these years and you've never used it, from [00:04:00] the accountant perspective. David Leary: Not in real life, if that makes sense. This'll be a learning experience. Who knows? Maybe I'll give ... I'll give an update on this, how it goes. Blake Oliver: Yeah, let me know if you need any tips and tricks. Happy to help.  David Leary: If I decide ... This is insane! I'm doing this for free! I should be charging!  Blake Oliver: You should be charging. Yeah, exactly. Well, that's good. So, I have some news. I got an Apple Card. David Leary: Is that the credit card thing? Blake Oliver: Yeah. Remember, Apple decided they're gonna offer their own credit card? They apparently were [00:04:30] sending out invites, and I got one of these invites via email. David Leary: Oh, it must be because you're an influencer. Blake Oliver: Maybe. I don't know. Anyway, I clicked the link and it opened up an Apple Wallet, the app on your phone that has all the credit cards, and all the rewards cards, and whatnot. I have to say, it is the most amazing credit card application experience you will ever have. You go through three screens, and you put in your information, and you get approved right there for an amount, a rate, and it [00:05:00] adds the Apple Card virtually to your wallet on your phone immediately, and you can start using it. You can use it anywhere there's Apple Pay. Then they send you a physical card that's made of titanium. The way you activate- this card is like literally indestructible. It's thick, and metal, and you activate it by touching your phone to the card, and then that activates the card. There's no number you have to dial. I have to give it to Apple; they've made a terrible experience, a really good one. But [00:05:30] the Apple card is gonna cause accountants and bookkeepers a lotta grief. You know why? No bank feed.  David Leary: No bank feed. I think I saw a tweet about that already. Somebody said, "This is ridiculous." I think somebody already tweeted about that.  Blake Oliver: There's no online banking. Goldman Sachs is the bank that is issuing the credit and the card. There's no way to go online and download your transactions. It's all in the phone. You get a summary of your spending and you can make payments and whatnot, but there's not even a way to export it that I can tell. So, [00:06:00] get ready, everybody. If your clients have Apple cards, it's gonna be a big pain in your butt. The interesting thing is it's gonna get more people to use Apple Pay, because if you pay with the card using Apple Pay, not the physical card, but the one on your phone, you get two percent cashback, which is not bad, right? David Leary: Yeah. Blake Oliver: If you pay with actual physical card though, it's only one percent. They're obviously trying to get people- David Leary: Oh ... Nice move, nice move. Blake Oliver: -to use the virtual card. If you buy an Apple product from the Apple Store, it's three percent. So, I'm gonna, of course, use [00:06:30] it to pretty much only buy Apple stuff, because ... I don't know, I feel like the rewards aren't that great for all the hassle you have to go through, especially if there's no bank feed or anything like that. Apple Pay has limited acceptance; it's MasterCard only, so it won't work at Costco; you've gotta have your phone to pay, if you wanna get all that benefit of the two percent. But, from experience perspective, it's pretty great. David Leary: It's a start. Blake Oliver: Yeah. David Leary: I can go to old tweets I have, from 2011, where they were saying Apple is the [00:07:00] new banks - Apple, Microsoft, Google. These are all the new banks. It's coming true. Why don't we jump into the news? I have a little bit of Intuit news, some California news. We have WeWork news ... I don't know, what kinda stuff you got?  Blake Oliver: I got layoffs, accounting layoffs at UPS. The AICPA is working to protect CPA licenses with a new initiative. David Leary: They must've listened to our podcast last week. Blake Oliver: Yeah, maybe. Who knows? Here's a study that found problems [00:07:30] with audit fees for good auditors. Apparently, if you're a good auditor, you get penalized financially. Then, a shift in accounting-firm hiring; accounting firms hiring fewer accounting majors and more non-accounting majors. David Leary: Do you wanna start out with Intuit news? Blake Oliver: Yeah, let's hear the Intuit news.  David Leary: It was in one email, but two pieces of news - two product lines Intuit is killing, and they both have to do with QuickBooks Online Accountant Edition. One was special app pricing. Essentially, the gist of that was if you were a [00:08:00] QuickBooks Online accountant, it was like having your own little smaller private app store, where you could subscribe to some apps, and you'd get a 20-percent discount on that. The way that model kind of worked was Intuit gets 20 percent of the revenue; the accountant or bookkeeper gets 20 percent of revenue or passes that savings to their client; then the app developer gets what's left.  Blake Oliver: You also got consolidated billing, right? David Leary: Yes, and then, that all would appear as a consolidated bill, correct. It was an experiment, and it was super-underutilized. I think they said like less than three percent of all the ProAdvisors were [00:08:30] using it. This is the third time, I think, the Intuit developer team, and Intuit has really tried to play middleman and offer billing. That's the dream, right? You wanna be like Apple. You wanna take 20 percent of every app- Blake Oliver: Well, and Apple gets 30 percent on the App Store- David Leary: 30 percent. That's the dream. But I think it makes sense ... I get that. If you're buying a bunch of $4 games on Apple, you don't want a bunch of bills, you just want one stupid bill and just see all that all at once, right?  Blake Oliver: Yeah.  David Leary: Think about this [00:09:00] from a bookkeeping standpoint - it's much easier to get separate bills from all your different SaaS vendors- Blake Oliver: It is. David Leary: -and to record those into the accounting system than to get one bill, or, mind you, one bill for lots of different clients, and then try to line-item that out? Fundamentally, it doesn't make sense from a bookkeeping standpoint. Never mind, I'm not sure small business owners, or accountants, or bookkeepers, or developers even want it. Blake Oliver: The model, like the App Store, with Apple, only works if you have to go through the App Store. You [00:09:30] cannot pay for these apps otherwise. What Intuit built, you could go both ways; you could purchase directly, or you could go through the Intuit Store. Of course, the developers are gonna want you to pay directly, because they make more money; they don't have to give Intuit a cut. So, they have no incentive to send you to that store. So, I think that probably would be a reason. David Leary: I think, for developers, the theory is it's right there inside of QuickBooks Online Accountant; it's right there in front of the accountant's eyes. They get 20 [00:10:00] percent off [cross talk] but I don't know if that ever happened. Blake Oliver: The question is how much was this actually promoted? How much did they actually put it in front of the ProAdvisors? David Leary: It's pretty in front, when you're inside of QuickBooks Online Accountant. It's pretty front and center. It's very obvious this program exists. So, it just didn't get the traction. It was an experiment. Blake Oliver: So, they're killing that. What else are they killing?  David Leary: They're also killing ... They announced this, I think, at QuickBooks Connect, last year, about a QuickBooks Online- or Online Accountant Edition that integrates with Slack. Blake Oliver: A Slack [00:10:30] integration for accountants to get their notifications sent from QBOA into Slack. David Leary: Into Slack, and their conversations with their teams. I think it may have even had some ability to possibly interact with clients. I don't remember the details on it, but less than one percent ... Less than 0.1 percent of the QBOA firms were using it, so it was completely underutilized. But if you remember a couple episodes back, we were talking about how Microsoft teams is bigger than Slack, now.  Blake Oliver: Slack- in that survey that CPA Trendlines did, that we talked about, on [00:11:00] instant messaging? David Leary: Yeah.  Blake Oliver: Slack didn't even show up. It wasn't even reported as significant. First of all, most firms aren't using IM, and then, the ones that are, are using primarily Skype and Microsoft, which would include Microsoft Teams. David Leary: Like we were saying, most firms are using Office 365, so Teams is naturally going to get traction. Blake Oliver: Yeah.  David Leary: It's kind of a mess, right? I get it ... Like 12 months ago, 18 months ago, the coolest kid in [00:11:30] the world was Slack. It's one of those, probably- a product manager or somebody chased that. It was a cool, slick, awesome attention-getting thing. But maybe if there was surveying of the customers, or really looking at the base, you probably would've built something for Microsoft Teams. Who knows? Maybe eventually they do. So, that's also getting pulled out of QuickBooks Online Accountant. Two experiments that Intuit did failed. The nice thing is they're communicating about it throughout there; they were very clear with the numbers, and really [00:12:00] justifying why they had to pull the plug. Blake Oliver: I got some news on the Xero side. They had an update. So, Xero- I think we talked about that they rejiggered their marketplace. They came out with a new version of it. The app marketplace they've got. Sholto McPherson over at Digital First did a nice write-up on what has changed and improved, specifically. So, it's easier now to search apps by industry vertical. It's also easier to see the up-and-coming apps, like the new ones that are really hot. The app partners [00:12:30] can now update their own profiles, rather than having to send them to Xero, so we're more likely to have more up-to-date information, because Xero is not gonna be updating on behalf of the apps-  David Leary: Oh, wow! I did not know that was ...  Blake Oliver: Yeah, they're using a content-  David Leary: -the process before.  Blake Oliver: They're using a content management system called Contentful, now. My favorite thing, though, is the last item, or one of the last items that Sholto highlights, which is the profile of each app now shows you how it interacts with Xero and what data goes [00:13:00] which direction. The example is A2X, which is a tool that syncs Amazon sales to Xero and vice versa, so it shows accounts going both directions - that's a bi-directional sync, and then it shows currencies going from Xero to A2X. It shows invoices going from A2X to Xero; tax rates go from Xero to A2X; tracking categories from Xero to A2X. And I love that simple diagram, because it gives you such a good idea of what will actually be syncing through the API. David Leary: The interesting thing is, in [00:13:30] theory, a diagram like that could be automated - the creation of those, and every single app on every single app card could have those. What the platforms have the ability to do - QuickBooks Online, and Xero - is see the API calls an app is making and which way the data's going. In a way that should just be a default on app cards, instead of putting it ... I've seen some developers create a slide of that data themselves to try to show people what they do, but there's no reason that shouldn't just be kind of public information - here's the API calls this app makes. I have [00:14:00] app news about Square. Blake Oliver: Okay.  David Leary: So, Square- they've had an API, but it's very just a payments-type API. If you're a developer, you could use their API to take a payment in your app, essentially. Now what they've done is they actually now have an orders API. What that problem solving for- have you ever gone to pick up some Chinese food somewhere, and you get there, and the person at the front counter has 10 tablets? Blake Oliver: Yeah. David Leary: All right, maybe not 10 ... Seven tablets at the front [00:14:30] counter, because he has a tablet for his Uber Eats, and DoorDash, and Postmates ... All those services have all these tablets. Then he's gotta print out the order and [inaudible] it back to the kitchen, where he has to take those orders and type it into his Square cash register to get the order processed. So, they have an orders platform, so all these third-party delivery/ordering services now can just write their orders straight to Square, so you don't need any of those tablets anymore. It all just goes straight into Square [cross talk] point of sale.  Blake Oliver: Interesting! You know why this is really interesting to [00:15:00] me? Because when I was in public accounting, one of my clients was a company called Ordermark, which is based here in L.A. that was founded by the heir to Canter's Deli, which is an institution here in L.A. It's like THE deli. This guy, Alex Canter, started Ordermark, and it does exactly that. It ingests all of your orders from all of these different ordering platforms and spits them out onto one receipt printer in your [00:15:30] restaurant. David Leary: I think that's super important, because I was talking to a restaurant owner about this. It's bad enough all these companies are taking 20 percent off the top of the revenue, but then, it's super-inefficient for the restaurant owner to deal with this. To have it just go straight into Square is really, really, really efficient, and amazing.  Square has a developer blog post about this, but it's really starting to become a bigger play by Square, where they're moving beyond payments, and they're gonna be the center between orders and your accounting system. So, all the customer [00:16:00] interaction that takes place from the order to when you post to the accounting system, Square's gonna try to be the middleman on that. Think about your CRM a little bit, online marketing a little bit, the payment [cross talk]  Blake Oliver: -this is the thing about Square. I see new features coming out, like multiple new features, every single month and quarter from Square. They are developing so much stuff, so fast, and I'm wondering if they're gonna get to a point where they have simply built this bloated suite of offerings that they just cannot optimize [00:16:30] any- because they're just spread so thin. They're doing payroll. They're doing this order thing. They're doing online stores. It's everything. How can they keep up? David Leary: It's interesting- it's funny because the same person who founded Square founded Twitter, and Twitter's constantly trying to do other stuff, and the only thing it does well is Twitter. But Square's had some success doing other things and getting out of just that little Square payment-dongle thing. Blake Oliver: Well, I guess they can do other things, because they make so [00:17:00] much money from their payments platform; just huge amounts of volume. It's okay if they do a bunch of other stuff that doesn't actually make any money. It's like the Google model. Google makes, I don't know, 90 percent of its revenue from advertising, but then they go out and do all this other stuff that really doesn't actually generate profits for the business. David Leary: What Square's doing, by doing all of this, it's keeping ... If you're using Square as your payments provider, and you're paying ... I don't know what the Square rate is; is it 2.9 percent? [00:17:30] Blake Oliver: No, 2.75.  David Leary: 2.75. Then, the typical merchant account salesman comes by, and goes, "Hey, we're gonna give you 2.5 percent!" You're not gonna switch because that EDC terminal for scanning credit cards doesn't do zero percent of what Square does for you in your business, and people will never switch. Blake Oliver: That's a very good point. A very, very good point. I guess that's the same Google model, too, right? By offering all these other things, they keep you in their ecosystem, where they can advertise to you. David Leary: Yeah, like an [00:18:00] Apple credit card. Blake Oliver: Exactly. One last- I’ve got one last story on apps. David Leary: Okay.  Blake Oliver: We missed this. We didn't cover this. We were at The Accounting Show - Los Angeles, and CPA Practice Advisor gave out their 2019 Innovation Awards at the event. I thought we should mention the apps that won. David Leary: Oh, absolutely. Blake Oliver: Here they are. Biller Genie won. They're a full-time automated accounting assistant that helps small- and mid-sized businesses work smarter and improve cash flow by standardizing and automating invoice [00:18:30] procedures and follow-up initiatives. I have actually not seen Biller Genie. Are you familiar with them? David Leary: I have not. I mean, I have not used the app, but I'm familiar with ... I think I'm familiar with all these apps, because I helped launch them on QuickBooks [cross talk]  Blake Oliver: Got it. Automated invoicing ... BQE Software, sponsor of the show, won for BQE Core Intelligence AI, which we featured in a previous episode. If you haven't heard that interview with Shafat from BQE, definitely check that out. Chata.ai - an [00:19:00] artificial intelligence app for financial professionals that uses natural language understanding to find insights in their financial data - won. That's an interesting one. It's natural language processing across your business data. Have you done this one?  David Leary: Yeah, so think about like if you want to do a SQL query, you'd have to understand how to write the query in SQL language. Well, this way, you can just type it in normal language, or just say it out loud, [00:19:30] and then it's going to go and get that data out of your accounting system. Blake Oliver: So, speaking of searching, Checkpoint Edge from Thomson Reuters is a winner. They use "artificial intelligence, machine learning, and cognitive computing technologies to search Checkpoint, IRS.gov, AICPA, EY, and Deloitte, and other sources simultaneously." So, helping tax professionals find answers to their questions without having to do all those complicated searches.  David Leary: They're kind of offering a niche [00:20:00] search service, so you don't have to go to Google. You can use theirs, and it's just gonna be faster and more detailed. Blake Oliver: The way it used to work was you had to use Boolean searches, so you had to really know how to format your searches using syntax and whatnot [cross talk] that's how Google used to be, too, right?  David Leary: -this is by what I was talking about with Chata.ai. Blake Oliver: Exactly. Similar thing - natural language for searching, and then you get the guidance you need.  David Leary: Got it.  Blake Oliver: Jirav won for their Financial Planning and Analysis in the Cloud service, "which connects financial and operational data to [00:20:30] help accounting firms and finance professionals create tailored budgets, plans and models quickly. In a highly intuitive point-and-click interface. Jirav has kind of been hot at a lot of the accounting shows recently. It's like those dashboard applications. There's a number of them. You've got Spotlight, Featurly, Fathom ... But Jirav goes further in that it allows you to build these sophisticated financial models that normally you'd have to use Excel to build. David Leary: Yeah, so I think you're gonna ... If you compare and contrast LivePlan, which [00:21:00] was two episodes ago, we talked about LivePlan ... It's really in the language of a small business owner. Jirav's really going up bigger, and mid-sized, and-  Blake Oliver: Jirav is built for financial professionals. Actually, that's a very interesting contrast to LivePlan, which was built originally for business owners. Jirav does that modeling and planning, but at a very sophisticated level. You can create a model, where your number of salespeople drives your revenue, and you can say, "All right, if I hire [00:21:30] two salespeople in September, how is that going to change my revenue over the next 12 months, based on how quickly they ramp up? And, oh, by the way, every time I hire somebody, all these other costs waterfall through my expenses." You can build a really sophisticated model, where the drivers are like that. David Leary: You wouldn't drop a client there. You'd be in there doing that, either with client, or [cross talk] Blake Oliver: Oh, yeah. Clients would have no idea how to use it [cross talk] David Leary: -the CFO, at that point.  Blake Oliver: This is really for folks who are doing virtual [00:22:00] CFO/controller planning stuff. David Leary: For much bigger companies, or mid-sized companies [cross talk]  Blake Oliver: Yeah, but for CPA firms offering those services. David Leary: Services, got it.  Blake Oliver: The last winner of the 2019 Innovation Awards is XCManalytics as a Service, "which allows firms to measure real-time productivity to make business critical decisions and improve performance by using and aggregating real-time firm data into standard benchmarks, charts and graphs." David Leary: So, it's like a dashboard play just for accounting firms.  Blake Oliver: Yeah, the internal metrics like- David Leary: Internal metrics.  Blake Oliver: -realization, [00:22:30] all that stuff for firms that love the billable hour. David Leary: Got it, got it on that one.  This episode of the Cloud Accounting Podcast is sponsored by Rewind. For years, Rewind has been successfully backing up thousands of small businesses' data that is stored in cloud apps like Shopify, BigCommerce, and Mailchimp, saving these small businesses from CSV importers, employee mistakes, and app integrations that didn't go as planned. Rewind has also been backing up QuickBooks Online company data, too. That's right, cloud accounting world, I did say back up QuickBooks Online company data. It only takes seconds to install what is essentially an insurance policy against major disaster, or just those small business owners that likes to get "creative" in the accounting system. Rewind works automatically in the background, capturing all the changes to your QuickBooks Online in real time. If something does go wrong, Rewind is the only service that gives you 100-percent control of what you need to restore, be it one transaction, multiple transactions, or all the data. To learn even more about Rewind and access a special offer just for listeners of The Cloud Accounting Podcast, head over to CloudAccountingPodcast.promo/rewind. That is Cloud Accounting Podcast dot promo forward slash R-E-W-I-N-D.  David Leary: I have a company that's not gonna get an Innovation Award. Blake Oliver: What's that?  David Leary: Here we go again, another AI startup fraud. Blake Oliver: Oh, yeah. We talked about this months ago - that venture capital firm in Europe, MMC, issued a report that found that 40 [00:24:00] percent of companies that claim to use AI are actually faking it, that they don't actually have AI. So, what's the latest? David Leary: This article was in The Verge, and there's the title of the article, "This AI Startup Claims to Automate App Making, but Actually Just Uses Humans." Essentially what this app did, they took in 40 million- I'm sorry, $30 million dollars in VC money, claiming that they had this AI that would create apps. So, if you need an app created, Blake, you could contact this company, fill out a website, and you'd magically get an app out on the other end.  Blake Oliver: Oh, that sounds great. Sign [00:24:30] me up! David Leary: When they pitched this, apparently, they said they were 80-percent there, and then, really, they don't have any AI at all. Blake Oliver: What's the name of it? David Leary: It's called Engineer.ai.  Blake Oliver: Engineer.ai. Okay, so I wanna create an app. I tell it what I want, and it uses AI to splice together the code. That sounds a little bit suspicious to me already. David Leary: Well, the process was like, "Hey, I need to hire an engineer to build an app. I don't need do that. I could just use Engineer.ai." That's the premise.  Blake Oliver: So, what were they [00:25:00] really doing? David Leary: They had basically a little bit of AI to customize, and just quote you a price, based on what features you wanted. Other than that, they basically were using human-powered engineers to do that. The nice takeaway in this article is he ... They do touch on all the stories we've talked about before - the Siri using humans, and Alexa using humans, and all that type of stuff. They had a nice conclusion at the end here, which I'll read. "But the point remains, humans are required to help AI improve, even when companies are loath to admit it and aren't always transparent [00:25:30] with customers when another person is, in fact, involved in the process. In this case, a whole class of new startups appears to be using AI hype to build new technologies they may not be capable of - or even intent on - actually providing, both because it may be too difficult and because it's easy to pretend otherwise. And these companies are getting more money for it as a result." That's the problem, I think. Companies know that they're gonna get [00:26:00] money if they claim they have AI, so they're claiming they have AI, when they don't have it. Blake Oliver: Well, and they're going to use the money that they're raising to build that AI, but then they find that, "Oh, it's a lot harder than we thought." I think that's what's happening a lot of the time. I don't think it's complete fraud. I think it's just they're ... It's aspirational. It's growth hacking, right? "We're gonna fake it til we make it." David Leary: But you'd think after the whole Theranos thing, VCs would just be more keen to this, at this point, or is it just this constant chase-  Blake Oliver: Oh, no, I think Theranos just made everyone feel like they can get [00:26:30] away with it, right, because- David Leary: Oh! The opposite happened. I believe you. Blake Oliver: Yeah.  David Leary: Got it. Got it. Got it. That's the model.  Blake Oliver: That's the model.  David Leary: That's what you wanna follow. Okay, got it. Blake Oliver: So, I've got some follow-up stories that are related to what we discussed last week with Ben Wann. If you haven't heard that episode, by the way, go check it out. Ben Wann reads a hilarious letter that he wrote in the voice of the AICPA, conceding that the CGMA was a mistake. We talked, on that [00:27:00] episode, a lot about the CPA numbers, the value of the CPA, the future of the CPA, why fewer students are going for the CPA license after they get their accounting degrees. I wanna follow up on that with some numbers. This is an article that appeared in the Journal of Accountancy called "Report Finds Shift in Accounting from Hiring," which I think is kind of a very understated headline for the stats in the survey. As reported in the Journal, "CPA firms [00:27:30] are recruiting non-accounting graduates in record numbers. 31 percent of accounting-firm hires were non-accounting graduates in 2018, which represents an increase of 11 percent from 2016." So, almost a third of people who are going into accounting firms now did not major in accounting, which I think is interesting, as somebody who majored in music, and then got into accounting. I think there's actually a lot of benefits to being a non-accounting major. David Leary: Diversifies the thinking, for sure, at these firms. Blake Oliver: So, [00:28:00] we've got more non-accounting grads. Meanwhile, those CPA firms hired about 11-percent fewer accounting graduates in 2018 than in 2016, and that's 30-percent fewer than in 2014. So, they're hiring fewer accounting grads, more non-accounting grads. My question that I posed on LinkedIn is what does this mean? Does this mean that academia, that the people running accounting programs in schools are failing, that they're not educating the accounting [00:28:30] students in what they need to know to be successful in CPA firms? Is that potentially what is going on? There was a lot of commentary on this post. I liked what Paul Meisner said. He said, "Interesting discussion. Not sure how the U.S. is, but we have had these studies in Australia. The studies have collected data predominantly from larger firms, which are increasingly becoming multidisciplinary. So by nature, these firms hiring outside traditional accounting grads reflects normal business rather than some worrying trend. A [00:29:00] reduction in grad hiring overall here has been attributed to automation of data entry and outsourcing." I'm still not totally sure what's going on. Is it that the accounting major is not as valuable as it was; that it's not preparing people properly? Or is it simply that accounting firms themselves are doing more than just accounting these days? I think it could be both. David Leary: No, I think definitely accounting firms are doing more than accounting. Blake Oliver: But then, the question is, if the whole point of majoring in accounting is to go work in [00:29:30] an accounting firm, or to do accounting, then maybe the curriculum needs to change. If CPA firms are having to go outside of the accounting majors to find who they need, then there's something wrong. We're not teaching people technology. We're not teaching people data analytics. David Leary: Isn't that what's your 150 credit hours to get your CPA should do is you go take a bunch of other disciplines? Blake Oliver: You would think that, but there is no requirement to study anything specific to get those extra 30 hours, [00:30:00] so a lot of people just end up, like me, doing bullshit classes to get the credits, because I don't have time to go major in data analytics or something like that. I'm just gonna go to a community college and get the credits I need to sit for the exam. David Leary: Got it.  Blake Oliver: Yeah, don't get me started on the 150-hour rule. David Leary: That was last week's episode.  Blake Oliver: Yeah. That's interesting, right? That's a big change in the accounting world. I've got some more accounting-related stories here. There's a lot of news in the CPA world this week. There was a story [00:30:30] in Accounting Today, titled "Companies Penalize Audit Firms for Flagging Their Own Weaknesses." There was a study, a report that was issued or presented, I should say, at the American Accounting Association's annual meeting in San Francisco this past week. The report was entitled "Don't Make Me Look Bad - How the Audit Market Penalizes Auditors for Doing Their Job." This is the crazy stat. If you are a good auditor, and you do your job, and you [00:31:00] report a material weakness in internal controls over financial reporting for one of your clients - if you do that in the course of a year, you will see your average fee total in the following year grow by eight-percent less than it would have been if you had not issued a material weakness. So, if you overlooked the material weakness and just didn't happen to report on it, you would benefit with an eight-percent increase in revenue. David Leary: It's interesting, I saw a headline today, and I didn't really read [00:31:30] more of it, but apparently people are saying that G.E. might be a bigger fraud than Enron, and it goes back years, and years, and years, and years [cross talk]  Blake Oliver: -yeah, I saw that news, too-  David Leary: -how this happens ... Whoever was the auditor of G.E. just ignores it, because eight-percent revenue, your growth revenue ... Eight percent from G.E. is a lotta money. Blake Oliver: It's a huge client of KPMG. By the way, KPMG has been auditing G.E. for 110 years. A 110-year relationship [00:32:00] there. So, what do you think the odds are that whoever is managing that relationship at KPMG really, really, really doesn't wanna find anything wrong with the financials, or internal controls? Same thing with Enron, right? David Leary: Yep.  Blake Oliver: This is the crazy thing about auditing is the solution to all of this is always where it seems to be that the people in the profession say, "Oh, we need to take more ethics courses, or we need to put in an oversight board to make sure that auditors are doing their job." Maybe I'm stupid. I've never been [00:32:30] an auditor, but it seems kind of obvious to me that the problem is that auditors are hired and paid by the people they're supposed to be auditing. Auditors are also supposed to maintain independence in both fact and appearance. But you cannot be independent, when you are getting paid by somebody. You can't be independent from them. That's a financial relationship, and the bigger the financial relationship, the less independence you have. David Leary: And then the relationships are deeper and deeper. It's not just, "Oh, we're doing their audit." I [00:33:00] might have a whole team doing consulting with them [cross talk]  Blake Oliver: Yeah, it's possible. Well, there's limits now. Yeah, you may have other business, but even the audit engagement, itself, may be gigantic. This study doesn't even talk about all that other stuff. It just shows that if you are an auditor, and you find a material weakness in internal control, the word gets around and then you're less likely to get hired by other firms. There was a specific example cited.  They didn't name the firm, but they mentioned a firm in San Francisco. [00:33:30] It was a Big Four office in San Francisco. In one year, one office issued no material weaknesses in the 12 public audits it conducted, while the office of another Big Four firm in the same city reported one material weakness in 26 public audits. The following year, the former firm issued 14 audit opinions, an increase of about 17 percent. So, the firm that didn't find any weaknesses had 17 percent more audits. The firm that [00:34:00] found the material weakness? They had a drop in business of 20 percent. They only issued 21 audit opinions. David Leary: Of course, because if you're gonna go with - I'm gonna use the word - incompetent auditor, if you think you might have some problems of their books, because that guy's not gonna find them, of course, that guy's gonna get more business. Blake Oliver: I think of this as like what if teachers had students grading their own papers, or what if, as a student, you hired another student to grade your paper? Who are you [00:34:30] gonna hire to grade your paper? Your buddy, who's gonna go easy on you, right?  David Leary: True.  Blake Oliver: It's just a disaster [cross talk]  David Leary: It's so simple. It's actually so simple, it's insane. Blake Oliver: The system is just set up to fail ... Until we figure out how to fix this, nothing's gonna work. It's all incentives. It's just the wrong setup from- the foundation is flawed. David Leary: Just wait til Bernie Sanders, and Elizabeth Warren hear about this. Blake Oliver: I think this is one of those issues that should not even be politicized in the sense that it's a political- it [00:35:00] can be a political issue, but it shouldn't be ... It should go across party lines, because it just doesn't even make sense, you know? David Leary: Mm-hmm.  Blake Oliver: Yeah, so that's my CPA World- AICPA-auditor news for the week. David Leary: You wanna know what else doesn't make sense to a lot of people? Blake Oliver: What? David Leary: WeWork. So, are you familiar with WeWork? Blake Oliver: Yeah, I had an office at the WeWork on Hollywood Boulevard here in L.A. for at least three years. David Leary: I think maybe, for some of our listeners may not know, WeWork as a coworking space. They've actually changed [00:35:30] their name to just "We"- Blake Oliver: Which I find really, really weird [cross talk] That's like Alphabet and Google. I can't get used to calling Google Alphabet.  David Leary: A coworking space is a place for people- you pay a monthly fee. and you could sit down and use a desk, or you could have a permanent desk there, and you can work. There's, in theory, other like-minded individuals hanging out in that place, and there's coffee, and maybe there's a keg for a beer to drink on a Friday night. Blake Oliver: They got rid of the free beer, though. They used to have free beer on tap at the WeWorks, and they don't have that anymore. David Leary: There's a lot of local independent ones all over the country. WeWork is [00:36:00] the McDonald's. Would that be a ...?  Blake Oliver: They're just massive, right? They're gonna be going public. David Leary: Correct. There's a really interesting thread by Jason Andrews of Stark Naked Numbers. It's a LinkedIn thread, so we'll post it in there, because there's a big discussion about this. But the numbers just don't make sense. People are tossing out comments like, "Is this the next Theranos?" "The expenses are 2X the revenue." Blake Oliver: I haven't dug into the financials, but I took a quick peek at this screenshot of the financials [00:36:30] in the IPO filings. So they've got 2016, 2017, 2018 there. Then you can see the six months ended June 30, 2019. The operating expenses, the OpEx, is humungous! It's double- for the first six months of 2019, it's double the revenue. David Leary: Yeah, and they- half saying that they're a real estate company, but really, they're like a state of consciousness, or like a generation of interconnected, emotional, intelligent entrepreneurs. It's [00:37:00] just really weird speak. My two cents is I think they're super-disruptable. If you think about Starbucks- because, essentially, if you go to WeWork, you sit down, you get your coffee - you have unlimited coffee - you sit at a desk, you do some work, you have some Wi-Fi; maybe somebody you know, you talk to them; you run into somebody you know. It's like sitting in a Starbucks. If Starbucks offered, for 99 bucks a month, a coffee subscription, and had a few cubes, maybe with an extra monitor, maybe one soundproof phone-call booth, it's game over. I [00:37:30] feel like Starbucks could destroy WeWorks in two seconds.  Blake Oliver: I'm not so sure about the Starbucks idea, but I do agree with you that it's not a particularly sticky business model, because these are memberships. When I had my office at WeWork, I paid a monthly fee to have my dedicated office space. You could also just have a desk in an open area, or you could have a hot-desking membership, where you just go in, and you get assigned a different desk. They're all different prices. There's different sizes of offices. The key is their memberships that are month-to-month. I [00:38:00] could cancel this month and pay- I think I could just pay for September and be done, because it's August now, which goes to your point that it wouldn't be that hard for me just to go to some other coworking space and sign up there, because there's not a lot keeping me at the WeWork other than the convenience of it. David Leary: Yeah, and that's my argument, because I've rented desks at coworking spaces before. You're paying $300 a month for a desk. Sometimes, I'm like ... I don't know [00:38:30] if this experience is much different than working in a Starbucks or someplace else with Wi-Fi [cross talk] Blake Oliver: I had my own locked office. The Wi-Fi was gigabit ethernet, super-fast. They have a printer there that you can use on demand. There's a lot of benefits to it, and I really, really liked my WeWork experience. But these losses are crazy. I mean, you could argue they're acting like a startup, so they could, at any point, raise rents, or raise membership fees, and reduce operating expenses, and become more profitable. Regardless [00:39:00] of that, my biggest concern is- or the one that I brought up on social media is if these memberships are all month to month, and WeWork is signing 10-year, 20-year leases on these office buildings, if there's a recession and they lose their members, they're screwed, because the members can just- they can't afford their memberships anymore, they just cancel- David Leary: For sure, they'll go to Starbucks. Blake Oliver: Exactly. But then, Danny Crichton, who is the Extra Crunch Executive Editor at TechCrunch, was kind enough to reply [00:39:30] to me and explain that, in the S-1, which I didn't read, WeWork emphasized how they increasingly have large enterprise customers who sign multi-year deals, which is interesting, because when I was at WeWork in- I think I ended my membership in like 2015-2016. It's been three-four years ... When I was there, I don't recall seeing hardly any enterprise type customers; no Microsofts, no Googles. It was all small startups. It was all independent people. Apparently, WeWork says [00:40:00] that now up to 40 percent of their memberships is large enterprise companies that are renting space for their employees, and these companies have multi-year deals with WeWork. David Leary: It's kind of like what happened to South by Southwest. South by Southwest was young entrepreneurial people connecting. Then, all the enterprise companies discovered it, and now South by Southwest is a big festival of enterprise companies dropping millions of dollars, advertising to each other. Blake Oliver: That's a great analogy. So, that's all I got this week. David Leary: If any of you work at WeWork, [00:40:30] run your accounting firms from WeWork, be interested to know your thoughts on that, in comparison ... Could you do this at a Starbucks? Would it be more convenient? What happens if they double your rent tomorrow, because now that they're a public company, they're accountable to shareholders? Blake Oliver: And are you seeing, as WeWork claims, this larger enterprise segment using WeWork? Because, if that is true, then I have a lot more confidence in WeWork than I would if they were just marketing to small startups, and small firms. David Leary: If anybody has information about WeWork, and they wanna contact you, Blake, what's [00:41:00] the best way? Blake Oliver: I am on Twitter. I am @BlakeTOliver. And you're also welcome to connect with me on LinkedIn. If you do, just make sure you add a note to that invite, so I know who you are and where you came from. How about you, David? David Leary: Contact me @David Leary on Twitter. You can also contact me on LinkedIn. I'm totally fine with the blind connections with no notes. Blake Oliver: Yeah, you just accept all of them?  David Leary: I accept all of them. Blake Oliver: Well, that's how you build up those connections so that you can be defined as an influencer, David. David Leary: Well, this is how I know who all the [00:41:30] accounting coaches are. Alexa: Sorry, I don't know that one.  Blake Oliver: Oh, Alexa just decided to charm in ... Chime in ...  David Leary: And on that note, bye, Alexa-  Alexa: Sorry, I'm not sure about that.  Blake Oliver: Yeah, she has to work on her understanding of the podcast. David Leary: Well, a human has to go process what I just said now. Blake Oliver: Yeah, exactly. David Leary: And give you the response. Blake Oliver: Well, David, great speaking with you. And I'll see you again next week. David Leary: Later. Blake Oliver: Bye. 
  9. Sponsors BQE CORE - http://cloudaccountingpodcast.promo/core  REWIND.io - http://cloudaccountingpodcast.promo/rewind  Show Notes 01:38 – Welcome Ben Wann, CMA, CPA, and MBA to the show! 02:39 – Notable industry departures: Matt Rissell exits TSheets amidst some corporate remodeling | BoiseDev Jennifer Warawa parts ways with Sage and the accounting industry | Accounting Today Blake Oliver departs FloQast | LinkedIn 07:46 – Seriously, you are not a tree. Move around! How career expectations have shifted from taking root in one job for decades to seeking new opportunities on the regular 11:08 – VC fundraising activity: FreshBooks raises "most significant investment so far" from JPMorgan Chase | BetaKit ScaleFactor continues to rake in some serious VC coin | Crunchbase 21:05 – Ben reads us a story: “Dear AICPA! I Wrote Your Concession Letter” and explains why he is bullish on the CMA versus the CPA after obtaining both 28:44 – Speaking of designations, where have all the CPA candidates gone? | CPA.com  33:53 – According to a June ADP survey, 25 percent of accounting professionals surveyed said they would not recommend young accountants get a CPA license, or seek some other credential or advanced degree 35:50 – Ben talks about cheese, business process improvement, finance business partnering, and how new technology drives him to educate and help people navigate the constantly shifting accounting landscape 39:00 – Yet another way to Crunch some numbers with the help of freelancers | SmallBusiness.co.uk  42:23 – Something’s phishy … More updates on the iNSYNQ ransomware snafu | Krebs on Security 47:41 – Armanino goes full crypto – first with a range of blockchain services, and now accepting payment via all forms of cryptocurrency | Armanino, LLP  Connect with Ben Website: The Numbers Guys Twitter: @BenWann_CMA LinkedIn: Ben Wann, CMA, MBA, CPA Udemy: Ben Wann | Process Improvement Specialist-Accounting/Finance YouTube: Ben Wann 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. 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 Transcript Ben Wann: “To the esteemed finance and accounting community, after much consideration and deliberation, it is with a heavy heart and misty eyes that we are announcing that we are pulling the CGMA certification from the US market, effective immediately.” This episode of The Cloud Accounting Podcast is sponsored by BQE Core. As many of you know, I'm all about the niches and niche apps. Putting your business clients in the proper niche app is providing them with a 100-percent solution versus, at best, the 85-percent solution of a standalone accounting app. If you have clients that are architects, engineers, consultants, or lawyers, Core is the app for them to best manage their firm, increase their staff productivity, and ultimately increase their profits. You don't need to juggle between multiple apps. Core has it all in an easy-to-use, all-in-one app for project management, including time and expense tracking, budgets, forecasting, client billing, and accounting. Even though Core is an all-in-one platform, it still works nicely with the apps like Google Drive, Dropbox, OneDrive, QuickBooks, Xero, and AccountRight, offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app, and recently it launched a cutting-edge, voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E. Did I mention that BQE Core works great for bookkeepers, CPAs, and accounting firms, too? Blake Oliver: Welcome to the Cloud Accounting Podcast. I'm Blake Oliver- David Leary: And I'm David Leary- Ben Wann: And I am Ben Wann.  Blake Oliver: Ben, thanks for joining us. David Leary: And Ben, where are you joining us from? Ben Wann: I am over [00:01:30] here in sunny Pennsylvania. David Leary: Sunny Pennsylvania. Other side of the country here for us. Blake Oliver: It's Friday afternoon for us, Friday evening for you. I'm excited to have you on the show, because you are a CMA, you are a CPA, and you are an MBA. Did I get all three of those right? Ben Wann: Correct. Blake Oliver: And in what order did you do those? Ben Wann: I did the CPA first, because that's the one everyone knows. What the cool kids are doing. Did the CMA to try and elevate my level of accounting knowledge. Then, the MBA [00:02:00] to round it out. Blake Oliver: But you list them in a particular order on LinkedIn, right? Ben Wann: I do. Blake Oliver: You are a big advocate for the CMA. Ben Wann: Yes. Blake Oliver: I'm eager to talk to you about that and also some of your thoughts about the AICPA and the CPA, since you've got both. That's gonna be really interesting to talk with you about that. Ben Wann: Absolutely. Blake Oliver: What else do we have on the docket today, David? David Leary: So, money. Lots of big raises and money going to companies. That's on the docket today. More ransomware updates, as always. Departures. [00:02:30] We have a lot of departures that have happened this- well, not a lot, but notable departures this week. Blake Oliver: Notable departures of - David Leary: We could start there. Blake Oliver: Yeah. Let's talk about that. David Leary: Matt Rissell is leaving Intuit at the end of the year. Matt Rissell of TSheets. Blake Oliver: Right. So, TSheets was acquired by Intuit, and then Matt Rissell became what, a VP there? David Leary: That's correct. It's been three years already, apparently?  Blake Oliver: Apparently, yeah. I couldn't believe it. David Leary: That's super-fast. Then Sage had news, right? That's it. Blake Oliver: Before [00:03:00] we go into that; I’m reading this article now. Since their acquisition by Intuit ... They were acquired for $340 million. Based in Boise, right? That Boise TSheets office became an Intuit office. It says that it's grown by 160 employees to 400 employees, the majority of whom work in the company's Eagle office. David Leary: Yeah. That changed Boise. Blake Oliver: Yeah. David Leary: Intuit going to Boise was a significant economic impact on Boise. He changed it. Blake Oliver: And [00:03:30] the growth of the customer base ... It seems like this acquisition really worked out, right, because their customer base went from 36,000 to 82,000 customers. Yeah, they're the largest employer in Eagle. David Leary: Wow, congratulations, Matt. It was a good ride. Blake Oliver: I wonder what he's gonna do next. Maybe he'll come on the podcast. David Leary: He had the bout with cancer a few years back, so he's really ... He spends a lot of time with his family. He has his kids and his wife. Maybe ... I imagine he’ll probably take a lot of downtime. He definitely likes doing all that outdoorsy stuff in [00:04:00] Idaho, as well. Blake Oliver: So, who else is moving on? David Leary: I'm gonna let you say it, because I always mess up Jennifer's last name. It's bad, because I've been saying her last name for a decade, and I mess it up. Blake Oliver:  Jennifer Warawa. I think I got it right. She's leaving Sage. David Leary: She's leaving Sage. Blake Oliver: Yeah. That's a big deal, because she's been there for, what, 12 years? David Leary: 11 or 12 years, I think, the article said, yep. She took a job with ... She's getting out of the accounting industry. So, she took a job- she's relocating from Atlanta to Dallas to take a job in construction. Blake Oliver: [00:04:30] For those who don't know Jennifer, she ... What is her role there, or what has been her role at Sage? David Leary: She is an executive vice president, I want to say, of accountants at Sage? Is that the official title? Blake Oliver: I don't know the official title, but I know that she ran that channel program - the accountants channel program, meaning selling, through accountants, the Sage products. David Leary: If I was to say that Matt Rissell is the face of TSheets, could I say Jennifer was the face of Sage? Me being an Intuit person, [00:05:00] if I had to say, "Who do I know at Sage?" I'm gonna say Jennifer. Blake Oliver: Yeah. I would agree with you. She was the face of Sage. At all the conferences, she gave the keynote speaking sessions. She was the representative that everyone knew. David Leary: Was this true for Sage's small business level, all through their enterprise products, as well? Was she at the Intacct conference giving keynotes, as well, or is she just really just the true Sage-branded stuff? Blake Oliver: She was at the Intacct conference last year, and she's been at ... She [00:05:30] used to go to Sleeter Conference, right? [cross talk]  David Leary: -she was there forever, yep. Blake Oliver: Yeah, so she kind of did the whole thing. She's leaving accounting for something completely different- David Leary: Construction, yes. Blake Oliver: Gonna be an exec in a construction company. David Leary: So, the last departure … Blake, you are leaving FloQast. There was a LinkedIn post that went out today. Blake Oliver: Oh, yeah. I am leaving FloQast. That's right. I'm departing at the end of this month, and I'm gonna be doing my own thing for a while. So, I'm [00:06:00] open to helping people with marketing or CAS operations - I ran a client accounting services firm - and just seeing what's next. David Leary: So, VP of Sage? That’s available.  Blake Oliver: The timing is really remarkable. So, who knows? If you want to know why I left, I wrote a short post on LinkedIn that'll be in the show notes, so you can check that out. It’s all about ... Things change fast in a startup, right? We've gotta be agile, and our marketing focus has shifted. [00:06:30] I am not a guy who's gonna go put on a suit. I've spent, unfortunately, too much time in Southern California wearing sandals. David Leary: So, you're not headed to the Big Four? There’s nothing … [cross talk] Blake Oliver: No. David, I think we should make The Cloud Accounting Podcast … Look how far this show has come with just part-time effort. We could really make this thing great or, at least, not terrible. David Leary: You might have time- we could get our Instagram account set up finally. Blake Oliver: Yes! David Leary: We could have some time for that. Blake Oliver: It will be an Instagram account of me in my pajamas every day, working [00:07:00] on the podcast. I think that'd be really successful. David Leary: Who would not subscribe? Blake Oliver: I think actually, Ben, you had a great picture of you and ... You have a partner in your content creation efforts, and he was wearing shorts in front of the camera or something. Ben Wann: Yeah. Everyone thought he was wearing his underwear, but they were actually just normal shorts. So, from the top up, we were all formal, with our hair done, and our jackets, but, from the bottom down, it's all party. Blake Oliver: Yeah, exactly. That's the way to do it, right? We've all been guilty of it on Zoom meetings, and when [00:07:30] we work from home. You dress up, up top- Ben Wann: That's right. Blake Oliver: -where people can see you, and you're nice and cool down below. It's good. Ben Wann: We were talking a little bit before the show about how expected transitions should be. We’ve shifted in the world, from where you go into a job, and that's what you do for five or 10 years at a piece. Now, it should be expected that you go to a job, and you should already be planning to leave that job as soon as you start it. You’ve gotta plan out what you're gonna improve, how [00:08:00] you're gonna automate, optimize. You should have an end path planned out. You shouldn't plan to park yourself. Just seeing people like yourself being able to move to different opportunities strategically, it's just really smart, and it's the trend that's really going on right now. Blake Oliver: You actually wrote about this a while ago, and I remember reading your post about how that's ... That’s how you've thought of your career is that "I'm gonna go into a company, know what I want to achieve, and do my best to achieve that in one, two-" Ben Wann: Exactly. [00:08:30] Blake Oliver: Ideally in a couple of years, right? And then you move on. That's way better than staying someplace for 20 years and not really doing anything or changing anything, I guess. Ben Wann: Yeah. Yeah. I did the podcast with Phil Yaeger, and I talked about how I see myself as an internal consultant. I'm constantly trying to learn, and get better, and be at the top of my game. There's this divide still between what we expect from normal employees and consultants. To me, that's outrageous. Why should your employees [00:09:00] not be held to the same standards? Blake Oliver: Yeah. Ben Wann: If you can get there yourself, you can write your own ticket. I've been fortunate enough to do that, and you're doing it. I hope more people hear this, and they also wanna do that. The world's your oyster. Blake Oliver: It’s nice, too, because I think that's reducing the stigma of shorter-term employment, right? It used to be that if you jumped around every few years, people would look at you funny, but, now, if you do it smartly, and you have a reason for it- Ben Wann: That's right. [00:09:30] Blake Oliver: -and you can justify these changes, then it's ... I feel like at FloQast ... I came out of an accounting firm, doing client accounting services, to go to FloQast to do product marketing, which I'd never done before, never studied product marketing. I view it as I got an MBA in marketing, and I got paid to do it. Now, I can take that skill and go do that either at a firm, or at another software company, or as a consultant. David Leary: I don't think it has to be a jump from a company to a company. When I was at Intuit, I [00:10:00] pretty much, like every two or three years, was at a new job, right? It's about not being stuck in any role- Blake Oliver: Yeah. David Leary: -and constantly evolving and taking on new challenges. One thing you said, Ben, that was interesting is that thought process of thinking about what your exit is on day one. Blake and I did an interview, which we'll be dropping here soon, about selling your firm. That was one of the takeaways from that interview, I remember, was to have your plan for the exit … Don't think about selling your firm 25 years [00:10:30] in- Blake Oliver: Yes. David Leary: -when you're six months away from retiring. On day one of starting your firm, think about how you're gonna sell your firm. Blake Oliver: We talked about significant departures. Let's talk about the fund raising. The money, right? Ben Wann: The money. Blake Oliver: There were two big announcements that I saw this week. It was FreshBooks raised a bunch of money from Chase, and ScaleFactor raised another bunch of money. I don't remember who that was from. David Leary: Let's talk about FreshBooks first, because, I think there's less insanity- Blake Oliver: Yeah. [00:11:00] David Leary: -and discussion on that one. We might have a half hour of chatting about the ScaleFactor race, so, let's jump into the FreshBooks one. Blake Oliver: The story about FreshBooks is that they announced an undisclosed amount of fundraising from JP Morgan Chase. But given this is JP Morgan Chase, I imagine, it's pretty substantial. They had previously raised CA$40 million in Series A 'round in 2014, and $57 million in series B in 2017. [00:11:30] Here's the thing that stuck out for me is that- David Leary: This might be a $100 million race. Blake Oliver: It could be. I know that Chase put a ton of ... I think they put that amount to Bill.com recently, so, I wouldn't be surprised if they were making similar-sized investments, right? David Leary: And it was stated "most significant investment" so far, in quotes-  Blake Oliver: So, it has to be at least $57 million, right? David Leary: $57 million and one penny. Blake Oliver: As part of the new deal, a Chase representative will be joining FreshBooks' board of directors. FreshBooks said it will use the new funds [00:12:00] to continue to expand operations and its business reach. So, having a banker on the board is gonna be interesting at a software company like that. For those who aren't familiar with FreshBooks, they kind of go under the radar sometimes with accountants, because they don't market to accountants, really. It's to small business owners, like owners of micro-businesses, in particular, meaning sole proprietors and all that. They're not like Xero, or Intuit going [00:12:30] after those accounting firms. They are the largest accounting software company in North America, maybe even the world, just by volume of customers. David Leary: I think they count their customers a little differently. What I mean by that is QuickBooks, and Xero will count small business owners that are paying for the subscriptions. FreshBooks kind of ... I'm using QuickBooks. I invoice you through QuickBooks payments. You pay. Blake Oliver: Yeah. David Leary: You're a customer. Then you invoice the other guy, and [00:13:00] Ben pays me through QuickBooks - that's a customer. So, if Xero and QuickBooks counted similarly, in a way, the numbers would not ... It's just they count their numbers in kind of a different way. Blake Oliver: Got it, but it's still millions and millions. David Leary: Oh, yeah. This is how they get to that "We've served 20 million customers." Going by that, Intuit has served hundreds and -300, 400, 500 million, possibly, right? Blake Oliver: Mm-hmm. It's an interesting question - how do you count those? But they're big. Whatever [00:13:30] metric you use, they're big. Let's talk about the ScaleFactor money. David Leary: Yes. ScaleFactor took another $60 million. This, in just 2019 now, in one year, they've taken on $100 million of VC money. Blake Oliver: Wow. That's a lotta money. Just for perspective, I think, at FloQast - I don't know the exact number - we, in six years, raised half that. So, this is a lot of money for any company, [00:14:00] software or otherwise. David Leary: Absolutely. Blake Oliver: What's crazy about this is that ScaleFactor is not just doing software. They are heavy professional services. They are- David Leary: They are an accounting firm, or bookkeeping firm with engineers under roof. So, this is gonna be in that same vein of, arguably, you could say QuickBooks Live is dancing in that space. You got the Botkeepers, and Ceterus, and Pilot, and ScaleFactor, and Bench - these companies we've talked about before in the past. Blake Oliver: The thing that blows my mind about this is that they're raising money as if they are a [00:14:30] software company, which is something where you can scale that really quickly. It makes sense that companies can be valued at many times- many times … 10, 20 times, 30 times earnings. But it's not just a software company. They are providing a service with that software and, arguably, one that's far more important than the software. Accounting firms are typically valued at anywhere from 1 to 1.25 annual revenues. This company ... [00:15:00] ScaleFactor is being valued at ... Well, we don't know ... What do we know, actually, about how big they are? David Leary: Some of the numbers in the article … They don't have 1,000 customers yet. Blake Oliver: Right. David Leary: It's very clear in the article. They say they don't have 1,000 customers, and they recently crossed 200 headcount. So, if you back out that math- Blake Oliver: Yeah. David Leary: Let's say they have 1,000. What's the number of clients per body in the office there? Blake Oliver: They only have 30 CPAs, though, out of those 200 headcount. [00:15:30] So, they’ve got 30- David Leary: But they're not ... Yeah, 30 CPAs, but what about bookkeepers, and people doing the work? Blake Oliver: We don't know. How many of those 200 people are engineers building software is another-  David Leary: Even if they are. Let's just assume they're all ... It's just headcount, right. So [cross talk] 1,000 divided by- Blake Oliver: Just 200? David Leary: 200. So, we're- Blake Oliver: Five. David Leary: It's five. Five clients per employee [cross talk]  Blake Oliver: -right. David Leary: Yeah, five clients per employee. I've talked to accountants, and bookkeepers that have ... They're pushing ... One bookkeeper's [00:16:00] handling 50 clients. Blake Oliver: Right. David Leary: I think you said you had a bookkeeper, in the previous episode, that pushed almost 40 clients a month.  Blake Oliver: Yeah. That's an all-star bookkeeper. It also depends on the size of the clients. Let's give them the benefit of the doubt and say that it's five clients per employee. That would make these clients enormous. David Leary: But they're going after that $400 a month QuickBooks Live customer. Blake Oliver: Right. David Leary: It’s right on the website, their pricing. Blake Oliver: Do we know their average price? What do you think their most popular package is? David Leary: Let's give them the benefit- it’s $1,000. Let's say they're selling [00:16:30] payroll and some add-on things, and it's a higher-end package, and they're getting $1,000 a customer. Blake Oliver: Okay, and let's just assume they have 1,000 customers, right? So then, that's $1 million in recurring revenue. $1 million in recurring revenue makes you worth $100 million in investment. Here's the other thing that's crazy is they said that- this is in the Crunchbase article that you shared, David. It doesn't say what their revenues are, but it said that they have 700-percent ARR growth in 2018, which is just insane, even for a software company ... [00:17:00] For an accounting services business, it’s insane. There's actually a mention in here that the CEO admitted that it was from a very small base, because, of course, if you start small, you can have 700-percent growth. When I had my firm, I pulled this trick, too, right? It's the oldest marketing trick in the book. You start with 10 customers, and you grow to a hundred, and you’re like, "I had 10 time …1,000-percent growth." It’s [cross talk]  David Leary: Based on my knowledge of this space, of these accounting [00:17:30] firms with engineers under roof, they have the smallest number of customers and have raised the most money. Blake Oliver: Here's the thing that's interesting, too. It says they haven't hit ... They expect to hit the 1,000-customer mark this year by adding hundreds of new customers per month. It's August right now, and if they're gonna add hundreds of customers per month to get to 1,000, then let's say it's 200 customers per month. We've got August, September, October, November ... That's 1,000 customers right there. Five [00:18:00] months. David Leary: Which means they're also gonna have to add 20 employees a month to do that [crosstalk] based on their current ratios, which ... That's what's confusing, because the whole bet of doing this engineering-based work with the accounting firms is that you have these insanely awesome ratios. Blake Oliver: Yeah. David Leary: That is not an insanely awesome ratio. I actually really … Think about the money, right? If ScaleFactor is built on top of QuickBooks, and Xero ... It's right on the website, it's very clear. They fully disclosed, right? Blake Oliver: They don't have their own GL. They are using ... They are leveraging in QuickBooks [cross talk] [00:18:30] David Leary: Off the shelf. Pilot, I think, uses QuickBooks. I think there's another service that uses Xero. A lot of these guys are using off-the-shelf. Bench is the only one that, I think, is not using off-the-shelf. They're using their own GL that they've built in-house. If you have $50 million, you should just put $25 million on Intuit, $25 million on Xero, and just ride that out. That's a guaranteed victory. If you believe they're gonna win, you gotta …  Blake Oliver: None of this makes sense to me. Hey, Ben, are you still there? Ben Wann: Yep, I'm here. Blake Oliver: Here, David and I are amateur-analyzing this. David Leary: He's the credentialed guy, right? He's the credentialed guy. [00:19:00] Blake Oliver: You're the credentialed guy. You're a certified management accountant. I know that you had no idea we were gonna talk about this, but I'm just wondering does this any of this make sense to you, just looking at it right now? I don't get it. Ben Wann: It sounds a little unusual. Knowing nothing, just hearing you guys talk, sounds like something's missing, or we're not aware of some type of information. Blake Oliver: My guess is that you've got a bunch of VCs who are looking at ScaleFactor like it's a tech company and that they're applying those kind of metrics, and valuations to [00:19:30] it. Maybe they just don't realize ... Is it possible they just don't realize how heavy the human component is? And that it's not ... Nobody has ever scaled an accounting firm this quickly, or as quickly as you would need to, to justify that valuation. David Leary: And it may not be them scaling internal processes yet. What they've been doing really well is Facebook ads. Half of all VC money goes to Facebook, and Google, and Amazon. If you really watch ... I [00:20:00] see it in my feeds. ScaleFactor is at the top of everything that’s small business, or QuickBooks-related that I search for on Google, I see a ScaleFactor ad. Even other accounting firms … I searched for a different accounting firm that's not even a software-based one, I get a ScaleFactor ad. Everywhere on Facebook, I get ScaleFactor … Lots of this money is going to Facebook ads, which helps you get 700-percent growth, because ... So, they're playing the startup game. There's no doubt. Blake Oliver: You're getting that growth at very high cost, because you’re-. David Leary: The cost per customer has gotta be the highest in all-time [00:20:30] industry. Their probably spending $20,000 a customer right now. Blake Oliver: Well, hey, if any of our listeners have any more insight into ScaleFactor, or how this whole thing works, I would love to know. You can please tweet at me, tweet at David. Let's figure this out, because it's a mystery. David Leary: Even ScaleFactor, yourself. I've reached to ScaleFactor via email before. I've reached out to ScaleFactor on LinkedIn in the past. I've tweeted at ScaleFactor and included this article. I would love to hear from ScaleFactor on how ... Why they're different from these other players in this space. Blake Oliver: Let's get somebody on to talk about it, because maybe we're [00:21:00] wrong. Maybe we're just not understanding it. So, Ben …  Ben Wann: Yes. Blake Oliver: Let's talk about why we brought you on today. Ben Wann: All right. Blake Oliver: I saw a LinkedIn post that you made, a LinkedIn article that you wrote this week, that I just ... I loved it. It's called "Dear AICPA! I Wrote Your Concession Letter." Ben Wann: Correct. Blake Oliver: You published this on the 7th. Actually, so it was two days ago, and then I was like, “We gotta get you on to talk about this,” because this is near and dear to my heart. So, I [00:21:30] was wondering if you wouldn't mind just taking a moment and just reading this for our listeners, because I think it's great. Ben Wann: I'll give it my best shot here. I put myself in the head of the- into the mind of the AICPA.  To the esteemed finance and accounting community, after much consideration and deliberation, it is with a heavy heart, and misty eyes that we are announcing that we are pulling the CGMA certification from the US market, effective [00:22:00] immediately.  With profit on our minds and lust in our heart, we, unfortunately, had entered into a foray that was far beyond our core set of competencies. Our initial estimation of the willingness of people to first purchase a certification to artificially inflate our member count was our first downfall. We had assumed that, after reaching a critical mass of paper certificates, that thousands upon thousands of professionals in [00:22:30] the accounting and finance community would then eagerly clamor to then pay for the privilege of actually studying for and then passing our exam. In addition, we have failed to recognize that the name given to our brand-new certification was not an original idea. It was - how do you say - heavily-borrowed from.  We can now admit, looking back, that we were so hungry to emulate the success of the CMA and how they were, in [00:23:00] fact, the leading global certification that we just couldn't help ourselves. We wanted to build on their success and add our own special sauce by cramming an additional letter into the mix; a 25-percent increase in the value to our members. We want to recognize that we have also disrespected dual CPA and CMA holders by creating this confusion in the marketplace. You have to admit, though, it was amusing to see our [00:23:30] certification pop up on real job postings for a while. We jokingly suggested adding it to the list of key job skills and education, and no one thought that we were kidding. So, well, we just kept running with it. Finally, our biggest failure was to not recognize the innovativeness, the creativity, and the flexibility of our main competitor, the IMA, or the Institute of Management Accountants. Buttressed by a passionate network of [00:24:00] Net Promoter members and a high-performancing board of senior professionals, the organization has only become stronger, and faster over time. In recent years, we've been trounced by the IMA in every market; even the US, our home. It is now time to recognize the foolhardiness of our decision. Each month, we have had to agonize by reading through our competitor's publication, 'Strategic Finance,' to painfully bear [00:24:30] witness to an ever-growing, and truly international list of new members and certification holders that we simply cannot compete with. We recognize that we have a rare window of opportunity now to bow out with dignity, and honor before we are completely ushered into non-existence.  Going forward, I promise you that we here at the AICPA will focus on the things that make us special - creating new rules for auditing, advocating for state-specific CPE courses, [00:25:00] and creating special interest groups to protect entrenched interests. Regretfully yours, the AICPA. Blake Oliver: You include the disclaimer that this is a satire article that was not written by the AICPA. Ben Wann: Correct. Blake Oliver: And should not be ... What’s the legal disclaimer they have at the end of all their podcasts? It should not be relied upon for legal guidance or any of that. I love that. Thank you for reading that, Ben. This episode of The Cloud Accounting Podcast is sponsored by Rewind. For years, Rewind has been successfully backing up thousands of small businesses' data that is stored in cloud apps like Shopify, Big Commerce, and MailChimp, saving these small businesses from CSV importers, employee mistakes, and app integrations that didn't go as planned. Rewind has also been backing up QuickBooks Online company data, too. That's right, cloud accounting world. I did say "backup QuickBooks Online company data." It only takes seconds to install what is essentially an insurance policy against major disaster or just those small business owners that like to get "creative" in the accounting system. Rewind works automatically in the background, capturing all the changes to your QuickBooks Online in real time. If something does go wrong, Rewind is the only service that gives you 100-percent control over what you need to restore, be it one transaction, multiple transactions, or all the data. To learn even more about Rewind and access a special offer just for listeners of The Cloud Accounting Podcast, head over to CloudAccountingPodcast.promo/rewind. That is Cloud Accounting Podcast dot promo forward slash R-E-W-I-N-D. Blake Oliver: David, I think you may be a little confused by this. David Leary: Yeah. I am all for stirring the pot. I love this. I'm all ... And I love some good satire. Absolutely, 100 percent, but in actually reading this, I was smiling. I was like, "This is great. This is really, really great.” You hit a level. But, to be honest, I am a little confused. I'm not in the loop of the inside baseball of what happened, where are you coming from, why you [00:27:00] wrote this? Any of those types of questions, I'd like to understand. They copied a different certification test, and they wanted to try to rebrand it and confuse the market? Can you give me some background on this, Ben? Ben Wann: Yes. Yes. So, a couple of years ago, can’t be more than three or four, they ... The AICPA partnered with CIMA, the UK accountant association, [inaudible], to create this new certification, the CGMA. What they did is ... Initially, all you had to do was [00:27:30] send in a check, and say you had some type of certification in an industry, and you got a brand-new certification. This cheapens and discredits kind of the whole process of the CPA and the CMA. These things take months of effort, sometimes years of studying. Being able to buy a certification to try and win the market is a terrible tactic, and everyone saw right through it. Blake Oliver: Was this motivated by the success of the CMA, like the [00:28:00] CMA was growing, and started, and then the AICPA decided to come in and offer their own credential to compete with it? Was that how it happened? Ben Wann: Yeah, because I guess everyone's seen these numbers with the number of CPA candidates in the pipeline. It's going down. So, the AICPA is looking abroad, trying to strengthen their product and their pockets. They noticed that CMA has really expanded to every other country, except the US, initially, and it's double-digit [00:28:30] growth, 27 percent. Now, they're back in the US, with 20 percent growth here, as well. That’s what they were chasing. Blake Oliver: Speaking of the number of new CPA candidates, the numbers have dropped. I posted a chart that I spotted in a CPA.com white paper on LinkedIn this week that shows, from 2005 to 2010, the number of new CPA versus accounting grads was-that line was trending upward at the same rate. [00:29:00] Ben Wann: Yep.       Blake Oliver: Then, somehow, something happened; between 2009 and 2010, all of a sudden, that dropped, and now, there's a much larger gap. The number of new accounting grads has grown. Ben Wann: Yep.  Blake Oliver: But it looks like the new CPA candidates just continue to drop. Ben Wann: Yeah. There are several things going on here. Blake Oliver: Let's talk about that. What's going on? Ben Wann: The big thing that has a lot of people annoyed is this 150-credit requirement. Before, I guess, 2010-2012, you needed 120 [00:29:30] credits. That's what everyone usually graduates college with, and you had to have two years’ experience working with a CPA firm, and that was your education. Now, they are saying everyone needs 150 credits. For many people, this is a master's degree. It might cost $20,000- $30,000 to complete. There's other paths to get around this. It's just a lot more work, and for what result? It's very unclear to people. Blake Oliver: Yeah. I was joking online that when [00:30:00] I sent my application in for my license, I found out that I was nine credits short of the 150 requirement. So, I went online to the cheapest community college that I could find that had an online program. I think was Oxnard Community College here in LA, and I registered for Intro to Philosophy and Intro to Management. I really enjoyed my Intro to Management class, given that I've already owned and sold a business. That was really, really helpful to me. That's [00:30:30] the thing that's funny about this 150-hour requirement, right, is you can take any- Ben Wann: Correct. Blake Oliver: I don't even understand the original logic behind it. What was the ... David, it sounds like you have something to say?  David Leary: Yeah. It feels like ... One thing, the bell went off for me a couple weeks ago. You said that ... The Cal CPAs- if you're a CPA in California, you have to join that membership. Blake Oliver: Yeah, I think you … Well, I think you have to, right, in order to …? David Leary: But the AICPA is 100-percent optional. Blake Oliver: Yeah, you don't have to be a member the AICPA [00:31:00] to maintain your license, because it's state-certified. David Leary: Okay, and then I've seen people online say, "Hey. I'm probably not gonna renew my AICPA membership." People aren't finding value in this. Some of these things, like, "Hey, we're not getting the revenue we want, let's have another certification. Let's spin up a commercial site like CPA.com," is it something … Does the CPE credit stuff kind of all fall in under that, like they're getting some kickback from the colleges by requiring more credit hours? Is it a revenue game? Ben Wann: Yep.       Blake Oliver: Yeah. It has to be, right?  Ben Wann: With state-specific CPE, this is another issue where people are furious, right? Each state has their own rules. The state of Delaware, where I’m certified, they have their own ethics course. To get certified every two years, you have to do their course that costs money. They're gonna get a cut of that, the state society. What's different from one state to another? Nothing. So, to have these hoops you have to jump through in order to give money to a [00:32:00] state society is ... Everyone’s seeing through it, and we’re tired of it. Blake Oliver: Just to put some numbers behind this conversation, if you look at the chart that I'm ... Obviously, our listeners can't see this chart. In 2008-2009, it looks like about two-thirds of accounting grads were going for the CPA, right? If you just divide the number of new CPA candidates by the number of accounting grads, it was about two-thirds. If you look at the latest data, which is [00:32:30] from 2017, that number has dropped to half. So, that's a huge, huge change, right? Ben Wann: Oh, yeah. Blake Oliver: And if it continues to go down, if fewer than half of accounting grads are going for the CPA, I'm concerned about the CPA's future. As somebody who invested the time and money to get it, I'm disappointed in that trajectory. Ben Wann: Yeah.  David Leary: Shouldn't that be the role of the AICPA to encourage people that are graduating with accounting degrees to become CPAs? Shouldn't that be their number-one most [00:33:00] important function? Blake Oliver: Probably, to get more members, right? Somebody on LinkedIn said that the good thing about all this is that with fewer CPAs, it creates more demand for CPAs, right? Ben Wann: Yup. Blake Oliver: But I don't think that actually is true, because it could backfire in that fewer CPAs mean that people aren't as familiar with it, which means that demand drops, right? In economics, if you decrease supply, you may increase [00:33:30] prices, but you also decrease demand. I've got another chart here, kind of related to this whole discussion. This appeared in the June 2019 issue of "Accounting Today," and it's a survey that ADP did. The question they asked 1,500 accounting professionals. They asked 1,500 accounting professionals the question: "Would you recommend that young accountant get their CPA license?" A full quarter of those accounting professionals either said no, or that they would recommend [00:34:00] something else. Ben Wann: Yeah, I'm one of them. I'm dual-certified. I'm one of ... There's not that many people who can talk on both sides, kind of unbiased. People ask me- Blake Oliver: Yeah. Ben Wann: Unless you wanna do tax or audit your whole life, I'll say, "Go bananas. Do the CPA,” but, otherwise, the CMA is so much deeper. It just prepares you for the job. A lot of people have said this, "The CPA has helped me get my job, but the CMA helps me do my job." Blake Oliver: That, I think, ties in with what I have heard from the community, which is that fewer [00:34:30] and fewer accountants are going to school, and graduating, and thinking, "I'm gonna make partner at an accounting firm someday." That dream of making partner, people just aren't that interested in it anymore. If you aren't buying into that dream, then why would you necessarily need that CPA, if you think, "Well, I'm just gonna go into public for a few years and then leave." Ben Wann: Yeah, it used to be it was a one-stop shop. If you were smart and you went to accounting, you had to do public accounting. You worked a [00:35:00] ton of hours. You got a lot of experience. You were better than the industry peers after two to four years. Then you see all these smart, driven people with a CPA. It’s like, "Okay. They're doing so well, because they're CPAs,” kind of, you know?  Blake Oliver: Yeah.  Ben Wann: But now, there's all these alternative paths where you can be very successful without ever working in public accounting. I had never want to work in public accounting, and I haven't. I'm at the top my game, so I'm doing very well. There's so many opportunities out there. You don't have to do public [00:35:30] accounting to have a really strong career in accounting. Blake Oliver: Let's talk a little bit about your background and what you're up to, Ben. I'd love to hear ... I know that you are working on CPE courses. You may already have some available. You're a big advocate for the CMA. Tell us a little bit about what your projects are, and what you're up to, and where people can find out about that. Ben Wann: Talking about trends, technology is everywhere, and I don't think there's a discipline being more impacted right now than accounting by technology. What we do, how [00:36:00] we do it, where we do it is all changing. So, within 10 years, it's a complete shift. There’s a huge need for people to understand what skills they have to learn and to help people bridge that gap from where we've been to where we're going to go. In my career, I've seen so many people who are just stuck, and they're not gonna get it. What's driving me is I want to help fill those knowledge gaps between theory and practice. Right now, there's not that many sites [00:36:30] for information to understand, "Okay. If I wanna do this, how do I actually do it?" Not "I don't want to manufacturer widgets." That's what's kind of driven me. I'm really into the education side. In that regard, I have actually started producing courses on a site called Udemy.com last year, and now, I'm up to five courses. I have a YouTube channel. I have a website that I run with a team of people called The Numbers Guys. [00:37:00] The basis of that site is to provide the blogs, the really strong blogs that help people understand what a day in the life of an accounting professional- all these different avenues looks like, and how we get our jobs done, and what we're interested in.  I've also really focused on business process improvement, because if we're gonna go into the future, we've gotta get our houses in order. I see that to be a huge opportunity. Then there's also this shift in accountants transforming [00:37:30] from kind of like the stereotype of this boring, dull, introverted person to, now, someone who's not just reconciling accounts but working with the business to turn data into insights. There's a lot of communication. There's a lot of influencing going on. That's known as finance business partnering. My two big things right now are finance business partnering, and business process improvement. Blake Oliver: What's your day job? Because you do this ... You're a very busy guy. You're [00:38:00] doing this on the side at night- Ben Wann: Nights and weekends. Blake Oliver: Weekends. What do you do during the day? Ben Wann: Yeah, that's ... I do that, too. At my day job, I'm an operational controller for a company called Savencia. They make all sorts of cheeses. They're French-owned. We have four factories here in the US, and I run ... I'm in charge of the controlling department. I make sure that our cost accounting is strong, it's accurate, and we're getting good data out to help the [00:38:30] business know what they're doing to make good decisions. I report right into the CFO. Each day, what I love about this job is I'll go from working with the executive team to data entry clerks. I'm in the plant most of the time. It's a really boots-on-the-ground job. Blake Oliver: Sounds delicious, too. Ben Wann: Yeah. Blake Oliver: Hey, David, before we go, we got a little follow up on our ransomware stories over the last few weeks. You wanna touch on that? David Leary: Yeah. Before we jump into the ransomware one, there was the one that's kind of related to the ScaleFactor one. There's a British company called Crunch. It's [00:39:00] Crunch.co.uk. Crunch essentially, has - they're really going after the self-employed market, the freelancers - bookkeeping software. They have their own in-house bookkeepers, as well. So, it's a similar play, right? It's accountants with engineers under roof. But what they announced, they are now going to offer a freelance bookkeeping network – an Uber model – just like QuickBooks Live. This is the third week in a row now some other company is now gonna offer bookkeeping as part of their software package. Blake Oliver: It's gonna [00:39:30] be interesting reading all the reviews of these various services as they roll out. I don't know if anyone's really figured it out yet, right? David Leary: Do you think ... This is hypothetical, and Ben, please chime in on this, sometimes you get an Uber, and that guy's got an Uber light, and a Lyft light, and he's got both phones on his dashboard, or her - whoever's the driver … They're picking some ... One ride, they pick up a Lyft person. Next ride could be an Uber person. Do you think there's gonna be bookkeepers, and accountants out there that’ll, "Hey! I'm doing this …" Because chances are H&R Block’s gonna do this with Wave. [00:40:00] I'm gonna take a Wave customer this time, a QuickBooks Live customer, a Crunch customer. Is it just gonna be really like the gig accountants, or gig bookkeepers are just gonna work with all these services at the same time? Blake Oliver: Maybe, David, now that I'm gonna have some time on my hands, I should just sign up for all of these services and report back. David Leary: As a small business owner, or as a bookkeeper? Blake Oliver: As a bookkeeper. I could go be a QuickBooks Live bookkeeper. I could go be a Pilot bookkeeper. I could go be a ScaleFactor bookkeeper. Crunch bookkeeper. David Leary: It'd be an interesting [00:40:30] experiment. I'm sure there's people that have done driving for Uber, and Lyft and wrote a blog posts about that. Blake Oliver: Yeah, they have, and then they get banned for life, probably. Ben Wann: Blake, that's interesting [cross talk] in there. There's actually people who I talk with, who are making a business out of kind of doing what you just talked about. Trying to get a grasp for all of the apps and resources that are out there and then translate that into, "Okay. If I have this problem, what's really the best solution?" There's a need for that. Blake Oliver: Oh, [00:41:00] yeah, and not nearly enough people who are taking the time to build up that knowledge base. Even in specific industries, like manufacturing, knowing all the different tools available and going to different companies and modernizing their IT infrastructure from a financial accounting perspective. Really, really fascinating. David Leary: Or just cheese manufacturers. Blake Oliver: Just cheese. You could just specialize in cheese. I'm sure there's some very unique aspects to the manufacturing process that you have to track in your ERP, right, Ben?  Ben Wann: Correct. There is. The dairy industry. [00:41:30] Blake Oliver: Yep, dairy. Cool. David Leary: Let's talk ransomware again. Blake Oliver: Ransomware, yeah! Risks …  David Leary: The rewind ... It was yesterday or the day before, iNSYNQ ... Blake Oliver: Yesterday. David Leary: So, the CEO of iNSYNQ ... Remember we talked about it a lot on last week's episode that he was planning on joining us for an interview and then he canceled? We talked about that last week-  Blake Oliver: Yeah, he bailed on us, and now we know who he bailed on us for. David Leary: Then, I saw, two days later, an advertisement for him to go on the [00:42:00] Woodard, Joe Woodard's webinar. So, he was on the webinar and it was- Blake Oliver: Remember, it wasn't a webinar, it was a town hall. David Leary: Town hall. Okay. Yeah, it was a webinar platform, but it was a town hall for people to ask questions about the attack. He answered all the questions that came in. Some of the answers did feel a little prepared. It looks like Brian Krebs actually attended, and he has information. He really did a nice write up about it, and it looks like they [00:42:30] were in for almost 10 days, before they actually encrypted anything. Blake Oliver: Yeah, that's kinda scary that the attackers were in there for 10 days, and iNSYNQ didn't know until they unleashed their attack. By the way, for those who aren't familiar, Brian Krebs is a security researcher who has a blog called KrebsOnSecurity.com. Your entire goal as a software company should be to never show up on KrebsOnSecurity.com [cross talk]  David Leary: -on his blog- Ben Wann: -that’s the wall of shame …  Blake Oliver: Yeah, exactly. So, iNSYNQ, for [00:43:00] those who are not familiar with this whole saga, they were attacked in July 16th or something like that by a malware ransomware attack that shut down their QuickBooks and Sage hosting platform for two weeks. David Leary: My understanding, as of the thing yesterday, there are still some customers who are not 100-percent up. Blake Oliver: Yeah, it's only in the 90th percentile. It's 90 percent, in terms of customers who have access, which is kinda crazy. I know, David, you're gonna go through a [00:43:30] lot of this, but the thing that really stuck out to me is that the reason they couldn't give people backups quickly ... Think about this - if your network gets shut down and infected, that's fine. It can happen, but you should have backups of these QuickBooks files that you can just provide to the customers; but they couldn't do that, apparently, because the backups were not separated from that live environment. So, they could also have been infected with ransomware. I'm not clear on whether they were, but [00:44:00] it's possible that they were, which should never happen. David Leary: Some of this is the confusion caused by these hosting companies, right? With QuickBooks Online, or Xero, or true SaaS software, you don't have to make backups, right? Blake Oliver: Right. David Leary: You can backup … There's tools like Rewind, who's- actually, I think they're sponsoring this episode, right? There's tools like Rewind that will- for data entry errors, right? If you do data entry, and you need to rewind your data, and fix something, that happens. Fundamentally, you don't have to back up your data, [00:44:30] not in the same sense you used to have to … You go to a menu, "File Backup," and you make a true backup of your data on a removable drive. You take it somewhere else - network drive, or tape drive, whatever. These hosting providers, because it's in cloud, people kind of assume they don’t have to make that backup anymore. If people were making a backup and saving it to their own local hard drive, they could’ve just installed QuickBooks to a local computer, restored the backup, and moved on, and just wash their hands off this. Blake Oliver: Yeah. David Leary: There's [00:45:00] confusion on the marketing of this, which is really, really, really ... The worst part I hate about it all is just the confusion, and then the reluctance for them to not admit that the risk is higher on Windows-hosted machines of being ransomwared than a true SaaS play. Blake Oliver: Oh, yeah. Joe said something about how you're just as much at risk on a SaaS provider as a hosting provider, and that's just simply not true. David Leary: Not for ransomware. Now, there's been breaches. There are data breaches. There's no doubt. Breaches are at all-time highs, [00:45:30] but you could argue that those are ... They're getting either its names, socials, credit card numbers. It's marketing data that these huge companies have; it’s essentially, marketing data, but they’re not … If ADP got hacked, I can still run payroll tomorrow. I'm not locked out of my business files. That's the problem with iNSYNQ. Two other interesting [cross talk] Go ahead.  Blake Oliver: I was gonna say, the lesson here, for me, is go ahead and use hosting, but make [00:46:00] sure that you are managing your own backups in addition to whatever they are saying they're doing, so that if their backups fail, you've got your own local backups. David Leary: We went off on that last week, right? "You gotta backup. You gotta backup. You gotta backup." Two things that I thought Brian Krebs surfaced was, one, a Google ad from iNSYNQ. Blake Oliver: Oh, yeah. David Leary: It was pretty interesting. The Google ad says, "iNSYNQ, we're still standing." I'll read the text of the ad: "Competitors are offering empty promises about security to capitalize on the iNSYNQ attack. That [00:46:30] is not okay, but don't worry, we still are. Stick with the company who plays nice. Impacted by the attack? Call our hotline." Blake Oliver: I know why they're doing that, because I searched iNSYNQ on Google, and I saw ads from their competitors, saying, "Hey, affected by the iNSYNQ attack? Come to us, and we'll take care of you." Actually, I just searched, and I found one from TrapTechnology.com/iNSYNQ. "Impacted by the iNSYNQ attack? No contracts. Get a free trial." Ben Wann: Doesn’t hurt to try.  David Leary: And the other piece- Blake Oliver: Oh, NetSuite is doing it. "Affected [00:47:00] by the iNSYNQ attack? Switched to NetSuite today." David Leary: Switch off of hosting! Another thing he pointed out is that Alex Holden, the founder of Milwaukee-based cyber intelligence firm Hold Security, basically came out and pretty much said that if these companies can detect the infection before, they have some elbow room, because a lot of the times, these people will infect- they'll get on the network, and it'll be days before they do any encrypting of files. So, the key is to find the infection and stop it within seconds. Blake Oliver: Yeah. [00:47:30] David Leary: But you're right, if they've already started encrypting stuff by the time you discover it, obviously, we're seeing the repercussions of that. Blake Oliver: Well, speaking of encryption, I got one more story before we go. David Leary: Okay. Blake Oliver: From my old firm, Armanino: they are now accepting cryptocurrency payments. Press release came out yesterday, David, so you'll be happy to hear; that's another accounting firm that is modernizing their payments platform. Ben Wann: What is the angle there? Is that just marketing? I don't get it. Blake Oliver: Yeah. It's really great marketing, and I'm really confused why not every [00:48:00] big firm is doing this. They have ... Armanino started a blockchain cryptocurrency practice. Ben Wann: Okay. Blake Oliver: They've been promoting it, so, why not make an announcement? "We now accept every form of cryptocurrency. You can pay us with anything you want." Because, of course, the tech press are going to pick it up, right? [cross talk] David Leary: It's super-easy, right? It's just like getting QuickBooks merchant services. It's just you're adding a merchant service for 5,000 different wallets. [cross talk] Blake Oliver: -all you have to do is set up Coinbase or something, and [00:48:30] it just automatically converts whatever people pay you into US dollars, right? Just a great example of some easy accounting firm-type marketing stuff you could be doing. David Leary: I'm glad you brought that up, because it reminded me of a thought I had in the car, when I was driving earlier today, about ScaleFactor. I was like, "ScaleFactor's never once played the AI or blockchain card, and they're raising all this crazy money … They're not even playing the AI and blockchain card." Blake Oliver: That's true. Maybe that means they have some actual automation at work [cross talk] David Leary: -and on that note … [00:49:00] Blake Oliver: This was really fun. Thanks, Ben, for joining us. If people wanna follow you online, I know you mentioned that stuff before, but what's the best place for them to follow you personally, and then, your website for your project? Ben Wann: LinkedIn is the place to find me, and then The Numbers Guys is our website. David Leary: No Twitter for you, Ben? No Twitter? Ben Wann: I'm on Twitter. I don't know what I'm doing on Twitter. David Leary: Oh, we’ll have to get you on. We'll get you in the loop. Blake Oliver: That's good, because a [00:49:30] good rule of social media marketing is pick your platform and kinda own it, so you’re doing the right thing, Ben.  Ben Wann: Yep. Blake Oliver: David, where should people find you online? David Leary: I am on the Twitters- would be easy … It's @DavidLeary. Blake Oliver: I'm @BlakeTOliver. You can find me on both those places. David Leary: And, as always, please leave reviews on iTunes, but we have great news for all you not … All you iTunes, and Apple haters, like me, out there. You can finally write reviews somewhere else. There's a website called PodChaser.com. On there, [00:50:00] you can search for Cloud Accounting Podcast, or click the link in the show notes, and you can leave a review on Pod Chaser. What's nice about that is those reviews are starting to appear in other podcast players. It's one place to write a review, and in regards to the podcast player you use, it's going to populate across. Blake Oliver: They got some sort of API connection going on. That's cool. Ben Wann: I listen to a lot of podcasts, and I got turned on to you guys … In the last few days, I've just been listening to what you're up to. This podcast is really good. I've enjoyed it. You guys are doing really great work. David Leary: Oh, [00:50:30] thank you. Blake Oliver: Thanks so much, Ben. That's awesome. Really appreciate that. Now go write a review [cross talk] All right, that's it for me. Talk to you next week, David, and Ben, thanks for being on the show. Ben Wann: All right. See you later. David Leary: Bye, everybody. Blake Oliver: Bye.
  10. Sponsors BQE CORE - http://cloudaccountingpodcast.promo/core  Rewind.io - http://cloudaccountingpodcast.promo/rewind Show Notes 02:23 – Blake and David recap the ongoing iNSYNQ ransomware debacle 03:07 – Official iNSYNQ ransomware update (https://www.insynq.com/support/#status) 04:00 – iNSYNQ feedback from unhappy Tweeters  05:12 – Homeland Security's October 2018 warning about possible ransomware attacks (https://www.msspalert.com/cybersecurity-news/dhs-warning-msps-csps/)  06:18 – Tweeting with iNSYNQ CEO Elliot Luchansky on 7/23 before he backed out of the interview (https://twitter.com/BlakeTOliver/status/1153550898435485696?s=20) 08:21 – Get a clue - You can't control the conversation 08:59 – Should Intuit do more to protect customer data? (http://www.intuithostingprogram.com/authorized_hosts.php)  11:01 – From the Intuit Hosting Program FAQs - "The Commercial and Standard Hosts who participate in the program are solely responsible for the security, privacy, availability and backup of QuickBooks data files and the software that they host, in accordance with their end user hosting service agreements" (http://www.intuithostingprogram.com/faqs.php) 12:40 – Meanwhile, on Apps.com, out of 650 apps, only one has been breached 13:36 – Wake-up call to hosting providers (https://www.channele2e.com/news/msp-judgment-day/)  14:14 – Blake's take on the iNSYNQ Situation 15:28 – Jack Newton on the "unholy combination" of cloud and on-prem technologies - (https://twitter.com/jack_newton/status/1154368009906970625) 16:51 – Slightly ironic? Five Ways to Avoid a Ransomware Attack (https://www.insynq.com/blog/5-ways-to-avoid-a-ransomware-attack/) 17:27 – Rachel sheds light on some of Sage's cloud and desktop hosting elements 22:30 – How "Six Ways How Cloud Computing Improves Accounting Practices" confuses the issue of  cloud v. desktop  (https://www.hostreview.com/blog/190723-6-ways-how-cloud-computing-improves-accounting-practices) 24:56 – Rachel talks about MindBridge, and the benefits of using AI for audits 28:15 – Part of MindBridge's successful marketing campaign (https://www.mindbridge.ai/university-alliance-alumni/) 32:44 – According to Michael Izza, ICAEW Chief Executive, the auditing profession needs to "be prepared to think and act differently" (https://www.cpacanada.ca/en/news/pivot-magazine/2018-08-28-michael-izza-interview) 34:04 – Words of wisdom for auditors (https://www.cpacanada.ca/en/news/pivot-magazine/2019-02-26-mindbridge-ai-auditing) 35:35 – Where IS the best place to find top-level accounting talent? (https://www.accountingtoday.com/opinion/where-should-you-be-looking-for-top-accounting-talent) 37:36 – The IRS issues some 10,000 gentle reminders about cryptocurrency filing obligations (https://www.journalofaccountancy.com/news/2019/jul/virtual-currency-irs-filing-201921691.html) 38:30 – How to pay your $3 million IRS bill in cash (https://www.foxbusiness.com/politics/pot-company-ceo-tax-bill-cash) 40:19 – Expensify takes home some bling for its 2019 Super Bowl 2 Chainz video (https://www.accountingtoday.com/news/expensify-wins-big-in-cannes-for-2-chainz-video) 43:08 – Using Microsoft Excel’s Power Query might leave you vulnerable to malware attacks (https://www.zdnet.com/article/microsoft-excel-power-query-feature-can-be-abused-for-malware-distribution/) 44:16 – SMB lender OnDeck wants to become a bank (https://bankinnovation.net/allposts/operations/comp-reg/smb-lender-ondeck-actively-pursuing-bank-charter/) 45:26 – Lendio, another SMB player, acquires Billy, a cloud-accounting app, rebranding it as Sunrise, perhaps offering a ‘light’ alternative to QBO and Xero (https://smallbiztrends.com/2019/07/sunrise-bookkeeping-app.html) 47:37 – California wants to increase truth-in-lending protections for small business borrowers (https://www.pymnts.com/loans/2019/california-proposed-business-lending-rules-draw-support/) 49:30 – 59 percent of larger firms still haven’t tackled payment automation (https://www.pymnts.com/news/payments-innovation/2019/mastercard-on-tackling-ap-automation-last-mile/) 51:24 – Gusto’s Series-D round raises $200 million for East Coast expansion and continued development on its Flexible Pay feature (https://techcrunch.com/2019/07/24/smb-payroll-startup-gusto-raises-200m-series-d-plans-rd-expansion-to-nyc/) Connect with Rachel Rachel Fisch on Twitter: @FischBooks  LinkedIn: Rachel Fisch, CPB Get in TouchThanks for listening! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, do us a favor and write a review on iTunes. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus.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. TranscriptRachel Fisch: "AI will not replace auditors, but auditors that use AI will replace auditors that don't." This episode of The Cloud Accounting Podcast is sponsored by BQE Core. As many of you know, I'm all about the niches and niche apps. Putting your business clients in the proper niche app is providing them with a 100-percent solution versus, at best, the 85-percent solution of a standalone accounting app. If you have clients that are architects, engineers, consultants, or lawyers, Core is the app for them to best manage their firm, increase their staff productivity, and ultimately increase their profits. You don't need to juggle between multiple apps. Core has it all in an easy-to-use all-in-one app for project management, including time and expense tracking, budgets, forecasting, client billing, and accounting. Even though Core is an all-in-one platform, it still works nicely with the apps like Google Drive, Dropbox, OneDrive, QuickBooks, Xero, and AccountRight, offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app and recently launched a cutting-edge voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E. Did I mention that BQE Core works great for bookkeepers, CPAs, and accounting firms, too?  Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver. David Leary: And I'm David Leary. Rachel Fisch: And I'm Rachel Fisch. Blake Oliver: Hey, Rachel, thanks for joining us so much, on short notice. It's gonna be great to have you here for our regular news episode. Rachel Fisch: Hey, no, it's totally my pleasure. How it came about was kinda funny. Blake and I were just talking about actually a previous episode [00:01:30] about MindBridge, and I had some thoughts about AI, and= accounting, and audit- Blake Oliver: Yeah. Rachel Fisch: -and he's like, "Hey, you should come back, and let's talk about this." So, here I am. David Leary: They're a Canadian company, so you have extra cred to speak on this.  Rachel Fisch: They are, yeah. David Leary: Okay.  Rachel Fisch: Extra special place in my heart for MindBridge.  Blake Oliver: Awesome. We'll talk about MindBridge. I'm eager to learn more about it, and AI in accounting, and everything that's going on in that world. First, some breaking news, or at least a story that has just refused to stop breaking over the last two weeks - the iNSYNQ [00:02:00] outage. We're talking about the cloud-hosting company. It's a hosting provider of QuickBooks Online- I'm sorry, not QuickBooks Online, QuickBooks Desktop hosting, as well as Sage hosting. They have been out for how long is it, David? David Leary: We covered it last week. I think it was June 16th this started, and-  Blake Oliver: June 16th-  David Leary: -they reported it publicly to their customers on the 19th, I think it was? Blake Oliver: Yeah, so, almost two weeks now, they've been ... At least some customers we're seeing on Twitter are [00:02:30] still unable to access their iNSYNQ-cloud desktops. What, that's 13 days? On July 16th, iNSYNQ was the victim of a MegaCortex ransomware attack. That is the sort of malware that gets into your systems and encrypts files. Then the hackers typically demand payment in bitcoin to unencrypt them. Paying the hackers, though, doesn't always get your files unencrypted. You're taking a bet. [00:03:00] Apparently, many people, even though they're able to get into their iNSYNQ desktops now, there are still some encrypted files. There's an update on the iNSYNQ website, as of July 29th, and I should say, we're recording July 29th, and this update was at 5:50 Pacific Time; just a few hours ago. It says that, "Nearly all iNSYNQ customers now have access to their iNSYNQ desktop. Our work isn't done, though, and we'll continue to work around the clock until [00:03:30] every desktop is restored. Your applications may not be immediately accessible and/or populates your account ..." They're saying most people have access; they're not able to access all their applications. They also go on to say, "While we caught the attack early, the malware was able to encrypt some files. We're currently working to determine if they are recoverable. You may see some encrypted files on your desktop with ‘.MegaCortex' as an extension. They are not available to access." David Leary: I thought I saw somebody tweet that. I think I saw somebody tweet specifically that - that they had a file on their desktop that was [00:04:00] labeled that. Yeah.  Blake Oliver: Yeah, so, that's the current status. It is not the best situation. There are definitely still people who aren't able to access. There's folks on Twitter saying that ... For instance, just recently, today, @rh224 said, "Still can't access," and that support lines are ringing busy. Cecilia - username is @ItsMe_CeciliaB - said yesterday that [00:04:30] she was on hold for over an hour and 10 minutes and their server is still down; can't get through to customer support. It's very, very unfortunate. David, why are we talking about cloud hosting on The Cloud Accounting Podcast? Right? David Leary: We talked about the MegaCortex a couple weeks ago. You did extra research after ... Remember, CCH suffered the same problem. Blake Oliver: Yep.  David Leary: I feel like it was only four or five weeks ago. Blake Oliver: Yeah.  David Leary: Then you did the research in the background. That MegaCortex, apparently, is all tied to some backdoor in Windows that [00:05:00] the NSA discovered, a vulnerability, and now it's being exploited everywhere. Blake Oliver: Oh, yeah ... Well, you found this. You found that the NSA issued an advisory months ago, specifically to- David Leary: Homeland Security issued-  Blake Oliver: Oh, Homeland Security ...  David Leary: Yes, on October 3rd of 2018, Homeland Security issued a warning to hosting providers that they had reason to believe there's going to be attacks coming, in ransomware. Blake Oliver: Do you think these hosting providers were aware of this? Do we know [00:05:30] if iNSYNQ knew about this Homeland Security warning at all? It seems like they were not ready for this, but ... David Leary: That I don't know. I found this on ... There's a whole site. We call it QuickBooks Desktop hosting in our world, right? Blake Oliver: Right. David Leary: Apparently, there's a whole other world, and they call it a managed service providers. Blake Oliver: Oh, so these are people who do hosting for all sorts of things, not just QuickBooks, or Sage, or whatever-  David Leary: All kinds of stuff ... They do a lot of stuff for government agencies, as well. So, lots [00:06:00] of people use hosting environments. It's not just a QuickBooks hosting thing. Really, I think if you would take the niche of QuickBooks hosting, they're part of a bigger - they're call it managed service providers - space that's out there. Because what I did is, I started poking around this weekend, and that's how I found this. Blake Oliver: We reached out- I reached out on Twitter to Elliot Luchansky, who is the CEO of iNSYNQ, and asked him if he would come on the podcast. He replied very quickly and said, yes, that he would be [00:06:30] happy to join the podcast. He said, "Thank you for reaching out. I'd absolutely be open to this. In fact, I appreciate the platform to speak to these points with a neutral party such as yourself. We were really excited. We were gonna have him on today. It's Monday-  David Leary: Well, they even tweeted at us, because they listened to the podcast that we recorded last week. They listened to it, and said, "Hey, we got extra clarifications ... Can't wait to join."   Blake Oliver: Then, on Friday, we got an email saying that he backed out. Unfortunately, we don't have Elliot on the show [00:07:00] to ask him these questions. I still have lots of questions, like how did this happen in the first place? When are these people going to actually get access to their files? iNSYNQ with saying that it would be done this weekend, but apparently, it's still not. What about the files that are encrypted? Are those ever going to get unencrypted? We just don't know-  David Leary: Maybe Elliot doesn't know either, at this point. The ideal situation for him would be to show up on Monday and be like, "Everything's fixed! Woo Hoo!" Right?  Blake Oliver: Yeah. David Leary: Obviously, based on what you said was on their site earlier today, they're not out of the weeds yet. He's probably had a very [00:07:30] difficult 14 days [cross talk] Blake Oliver: Yeah, and I don't wanna speculate, but that's unfortunately all we can do, because we also invited him to - if he didn't wanna come on the show - send us a statement, and then radio silence. Nothing.  David Leary: At least they put a statement on their website of where they're at now, because I think some of the problems they've had is people are accusing them of turning their Twitter account off, doing fake tweets-  Blake Oliver: Well, they did.  David Leary: -deleting Facebook posts, or hiding messages. Blake Oliver: This goes back to when the whole CCH outage happened - the way the tech companies handle a crisis like this. [00:08:00] This was a classic example of what you shouldn't do, at least in my opinion. I don't know what you think, David, but what they were doing at first was basically trying to hide it. They deactivated their Twitter account, apparently. Then, on Facebook, they were ... I didn't verify this myself, but people are saying that they were deleting or hiding posts from users about the outage. David Leary: It's Cluetrain 101. Again, everybody that has customers should go read The Cluetrain Manifesto. You cannot [00:08:30] control the message. The conversation's gonna happen with or without you, and you have to jump in and join the conversation. You cannot control the conversation. You just can't. It's impossible in this day and age.  Blake Oliver: That's what we know about iNSYNQ. The last thing I wanna talk about on this subject is Intuit, o it because, you know, I have to pull Intuit into everything, right, David? That's like my job, apparently. One of the sites that I discovered ... I think it was somebody on Twitter pointed it out to me, or maybe you found it, David; it's [00:09:00] the Intuit hosting program website - IntuitHostingProgram.com. This is a site that lists the authorized hosting companies. Apparently, in order to host QuickBooks, you're actually supposed to be authorized by Intuit. There's a wall of logos on this site; it looks like one, two, three, four, five ... 16 companies listed as authorized commercial hosting providers. David Leary: Yeah, they almost have two tiers, like a premium authorized hosts, and then the second tier of some type. [00:09:30] Blake Oliver: If I were a QuickBooks Desktop customer, this is where I would probably go first to find a host, because I'm looking for somebody who Intuit is recommending to me, right? Right up at the top, the headline is, "Are you using and Intuit-authorized hosting company?" "Intuit partners with more than 20 companies who are thoroughly screened to ensure your data is safe and that your business is not at risk. Intuit-authorized hosting companies are listed below. If you have any questions, please contact hostinginfo@Intuit.com." That, [00:10:00] to me, means Intuit is vouching for the security of these providers. My business is not at risk. Then, Byron Patrick directed us to the Frequently Asked Questions, because Byron-  David Leary: He's @byron_CPA on Twitter. Blake Oliver: Yeah. He previously worked in the hosting world. On the Frequently Asked Questions, which is available via the menu, there is a list of questions. The second to the [00:10:30] last one, and you have to actually unfurl it to get this answer .... The second to the last question says, "What does the authorized commercial host and authorized standard host statement and logo mean?" It says, "This statement and logo mean only that Intuit has entered into a written agreement with the commercial or standard host, which legally authorizes them to remotely host certain versions of QuickBooks software for access and usage by properly licensed end-users. It does not mean that Intuit sponsors, certifies, prefers or is officially, or exclusively partnered with commercial or standard hosts."  [00:11:00] Now another question on the Frequently Asked Questions, right above that, "Is my data secure when using the Intuit hosting program?" The answer, "While Intuit provides legal authorization to participating hosts, Intuit does not certify, guarantee, or warrant individual commercial and standard host services, or hosting environments. The commercial and standard hosts who participate in the program are solely responsible for the security, privacy, availability, and backup of QuickBooks data files and the software that they host in accordance with their end-user hosting-service [00:11:30] agreements." That seems to completely disavow any responsibility and does not match up with what I'm seeing on that commercial hosting program page. David Leary: Looking at that page, I can tell you that, based on my experience, the page is a little old; it's in the branding, and the format of the page. It does feel like it's a little bit old. The other reason I'd suspect that that page is a little old and out of date, as well, is the fact that some of these companies have merged with some of the other companies, but [cross talk] Blake Oliver: Oh, and they still have the separate logos. David Leary: Yeah. What [00:12:00] concerns me about that page is, doing a little bit of Google searches ... Just type that company name and ransomware; type that company name and hacked; or, of these companies on that page have now been ransomwared. Blake Oliver: This is four of 20. David Leary: Well, I think one of them's in that second tier, whatever the ... I don't understand those two levels that they have there.  Blake Oliver: Three of the top 16, or the commercial hosting providers, have been ransomwared. Then, there's the standard hosting program, which has another dozen, or 20, [00:12:30] or something like that, yeah ... But that four of them- four of these companies have been ransomed? That does not ... We could start playing bingo on this thing, right?  David Leary: If you just go ... Make the circle a little bit bigger to tax software. Then, now, CCH. That's five. Is this becoming ...? In the meantime, I can think of one. Apps.com, there's like what, 650 apps there, right?  Blake Oliver: Yeah. David Leary: They all go through security review once a year to get to stay on Apps.com. [00:13:00] You think QuickBooks Online, Xero - all the SaaS products that are out there [cross talk] small business ... There was one, ComplyRight, which, I think people know them as eFile4Biz. They did have a data breach, but nobody suffered. The true SaaS players don't seem to be suffering this. It's these hosting players that are having these problems. Blake Oliver: Yeah, well, it's because, as we've said, hosting relies on old technology that is fundamentally unsecure, because it relies on Windows as [00:13:30] the server. Time and time again, we've seen that the whole foundation of it is not secure. There's many holes, and people are discovering new ones all the time. David Leary: There is an op-ed-type opinion piece that's in one of these managed server provide websites. It's a wakeup call to this industry, like, "If we keep being hacked like this, our whole industry is gonna collapse." We'll have that in the show notes to read. Then, I'm gonna get a tweet to read. That is from Jack Newton. He is the founder of Clio law firm software, which is law firm software in the cloud. I [00:14:00] think they've seen ... With a lot of the old legacy law firm software, a lot of that's hosted, and a lot of law firms use these hosted environments. He actually had a really good quote that I want to get. While I pull that up, Blake, why don't you tell us your next little piece of this you have? Blake Oliver: My take on this is just that iNSYNQ owes more to its customers. As a CPA who has been in practice, I'm just so offended by the response on behalf of the customers. If I were a customer, this would not be acceptable to be down for two [00:14:30] weeks and not have access to my files. There really should have been backups available instantly. As a software guy, I sympathize, because I work for a tech company now, and I have a behind-the-scenes view into the difficulty in securing environments, but that doesn't excuse the really, really poor response, both to the customers and, frankly, to us, when we're trying to find information out for the community. To say you're gonna come on the show and then not come on the show, I [00:15:00] think, is cowardly and just reflects a really poor understanding of modern public relations and how you are supposed to interact with your customers and the press - if we can even be called that. I would hope that somebody would think of us at least as representing the community or trying to find out stuff on behalf of the community. That's my take. David Leary: Okay, so I found Jack's quote here. This is a tweet from Jack [cross talk] Blake Oliver: This is the CEO of Clio, the online law firm management software. David Leary: Yep. "Hosted cloud [00:15:30] solutions are the unholy combination of on-premise and cloud technologies, combining the worst aspects of on-prem with a 'false' cloud. Hopefully, this devastating ransomware attack highlights how dangerous this model is and helps kill it."  Blake Oliver: That says it all. David Leary: My opinion on this if I feel like you're paying a premium, right? I think I mentioned this in last week's episode. You're outsourcing your IT. All the marketing materials from all these companies is, "We're gonna keep you from being hacked. We have IT; we [00:16:00] have all the security." You're paying a premium to outsource your IT department. Blake Oliver: Yeah. David Leary: In a way, you're becoming a bigger target, because now, instead of it just being you, lonely- Blake Oliver: You're a small firm, yeah.  David Leary: -small firm; nobody cares that you even exist. They're not actively targeting you. Now, you just pulled yourself in with thousands of other accountants, and now you're a target. You're paying a premium to get ransomwared. It's a little bit insane, and I kinda feel like is the pendulum completely swung the other way now, where you're [00:16:30] putting your clients at risk because you have them on hosted, when maybe you really need to swing the other way to a true QuickBooks Online model, to a true SaaS model?  Blake Oliver: Either that or it needs to be a provider that you have personally vetted; you understand their security policies; in the same way that you would vet your own at your office. We just can't trust that these folks are doing it. The irony, of course, is that iNSYNQ has a blog post called "Five Ways to Avoid a Ransomware Attack." David Leary: That's marketing. That's always gonna happen ... Obviously, Rachel's here.  Rachel Fisch: Hey, guys [cross talk]. [00:17:00] David Leary: -we had to inform Rachel, which was this is not just a QuickBooks story. Rachel's with Sage, and- Blake Oliver: Yeah.  Rachel Fisch: Right.  David Leary: -they do Sage hosting, as well, so this is [cross talk] bigger, bigger influence. Blake Oliver: Yeah, so, Rachel, I know this is not your story. You didn't know we were necessarily gonna talk about this or anything-. Rachel Fisch: That's okay.  Blake Oliver: I'm just curious to know, when people ask you about Sage hosting or whatnot, how does Sage handle this? What do you guys say?  Rachel Fisch: So, I can't speak to the security thing, but [00:17:30] I think one of the things that I get a lot of is that a lot of people, I think, equate Sage with desktop. I think that, historically, we've had really strong desktop programs, which is great to fill that need. But I think I kinda need to announce to the world, hey, guys, we've got a ton of cloud-native products, as well. We are actively migrating Sage Desktop files to Sage Cloud. We [00:18:00] do have- we're working with firms who are going full-on cloud. If feels like it's Sage Desktop versus QuickBooks and Xero Cloud world, and it just isn't. We're actually facing the exact same things, where cloud-hosted does not equal native cloud. We're having all of the same conversations. I'd be interested to see what kind of authorizations ... In this case, where it's got the Intuit-hosted, [00:18:30] authorized-hosting team, and whatever that looks like, I would definitely be interested to see what that looks like on the Sage side, to see if there are any extra steps that we take to protect the clients, for sure. Blake Oliver: Well, I don't know a ton about the Sage Desktop products, but I do know that some of the products have what I've heard described as a hybrid cloud, where the file is ... It's like you take the file and Sage [00:19:00] puts it into the cloud and then you can read-write to that file, but you're still using the desktop interface and software? Rachel Fisch: Yeah. There's different models, and the idea is that you're able to work fully in the desktop in a cloud-connected environment, or be able to collaborate with the desktop file, with your client. So, for example, there's something like Sage Drive, where I can use it with my local drive, and then I can save it in Sage Drive, and then my client's gonna take it down, and do the work, and then put it back in Sage Drive so that I can collaborate. Essentially, [00:19:30] that's just our own self hosting, but then at least you've got our brand behind that, and we're not trying to verify other users or other companies, right? Blake Oliver: Yes, and that's where I think Intuit may have made a mistake in this program, which is in creating these commercial authorized-hosting providers, consumers don't know what that means. Rachel Fisch: Right. Blake Oliver: They see the Intuit brand or the logo on the website, and they think that this is safe. It's clearly not, because it's not like Intuit [00:20:00] is going in and auditing these providers. I guess they have the right to do so, but from what I'm hearing online, this doesn't happen. So, really, they're just trusting these providers. Really, it's a financial relationship. Rachel Fisch: So, people don't read all of the terms, and conditions, and FAQs when they sign up for this stuff? I'm shocked.  Blake Oliver: Amazingly right? Rachel Fisch: I'm shocked.  Blake Oliver: If Intuit isn't going to force people to go from desktop to online, and they're gonna allow people to keep doing hosting, then I think they should provide it themselves to ensure security. That's just my take. David Leary: Maybe this is that domino that pushes it that way ... If you [00:20:30] go back, we talked about it after Scaling New Heights, Right Networks ... They're basically locking down their system a little bit, they're going to make everybody use a web-based interface - all the apps - so you don't install apps to those machines. They're really locking down their environment even tighter, because, ultimately, it is like having hundreds and hundreds of Windows computers just sitting there with anybody doing anything they want to them. Of course, something's gonna accidentally- even on accident; even not purposely [00:21:00] attacked, somebody's gonna accidentally get something infected, so there's lots of risk to this. Should we talk about other news?  Rachel Fisch: I was just gonna say, David, I'm looking forward to the article that will be in the show notes later, that talks about the demise of hosting, because I feel like if they are just now saying, "Hey, guys, if this continues, we might be in trouble ..." They're how many years too late? You're already in trouble! We already need to be moving on, to be going full cloud. I [00:21:30] think if anyone was smart right now, they would really take this hosting spin on a marketing trip, and say, "Hey, we'll like do all your migrations for free, and we'll get you over to the cloud, where it really is secure." Then again, today, I was just talking to a Facebook group owner who said that a bunch of his loyal followers were saying that they think the cloud is just a fad. I'm like, "What?!" Anyway, I guess there are still people who will continue to use these services, as long as they seem secure. So, [00:22:00] we'll see. Blake Oliver: I'm okay with being a fad, as long as we're the snap bracelet of fads, because those things are awesome. My son has one, right? They don't go away. We'll be around for a while. Rachel Fisch: Great, great.  David Leary: The big problem is the marketing, which bugs me. It grays the cloud computing world- Rachel Fisch: I agree. Blake Oliver: Right, it confuses people. Rachel Fisch: Yeah. David Leary: You know, I'm doing my normal - not research about this. I was just getting regular articles, doing my normal weekly reading of articles, and news feeds, and stories for the show. I see this one with this headline. It says, "Six [00:22:30] Ways How Cloud Computing Improves Accounting Practices." I was like, hey, that could be a possible story for the show. I click on it; I start reading it; guess what it's about?  Rachel Fisch: Hosting-  David Leary: Hosted desktop QuickBooks-  Blake Oliver: Oh, no ... David Leary: That does not help anybody, because I think there's ... I've talked to ProAdvisors. I've talked to small business owners. There's people that think they use QuickBooks in the cloud, and there's even QuickBooks hosted, and they don't know, because the messaging is so wrong. Rachel Fisch: Yeah.  Blake Oliver: So wrong.  David Leary: Maybe, if anything happens out of this, it's there's some marketing requirements and clarification of [00:23:00] like you can't say you are QuickBooks in the cloud. You have to say you are QuickBooks Desktop hosted, maybe, just to create clarity on this [cross talk] because it's not ... It's not that it's deceiving. I mean, it's marketing, right? That's a gray word. It drives me crazy, because they've been doing that for six years. Rachel Fisch: Yeah, that's been ... Talking when the cloud was first coming out, and you'd see those bookkeepers going, "I've been in the cloud for 10 years." I'm like, "No, you're desktop-hosted. That's not cloud native. There's a huge difference." This episode of The Cloud Accounting Podcast is sponsored by Rewind. For years, Rewind has been successfully backing up thousands of small businesses' data that is stored in cloud apps like Shopify, BigCommerce, and Mailchimp, saving these small businesses from CSV importers, employee mistakes, and app integrations that didn't go as planned. Rewind has also been backing up QuickBooks Online company data, too. That's right, Cloud Accounting world. I did say back up QuickBooks Online company data.  It only takes seconds to install what's essentially an insurance policy against major disaster, or just those small business owners that like to get "creative" in the accounting system. Rewind works automatically in the background, capturing all the changes to your QuickBooks Online in real time. If something does go wrong, Rewind is the only service that gives you 100-percent control of what you need to restore it, be it one transaction, multiple transactions, or all the data. To learn even more about Rewind and access a special offer just for listeners of The Cloud Accounting Podcast, head over to CloudAccountingPodcast.promo/rewind. That is Cloud Accounting Podcast dot promo forward slash R-E-W-I-N-D.  Blake Oliver: I don't wanna run out of time. As much as I love talking about that-  Rachel Fisch: Right. Oh, right. We've got other things to talk about, yeah.  Blake Oliver: Yeah. Rachel let's talk about AI and audits, because I am obsessed with AI. I love it. I did a webinar recently about AI for accountants, but I never talked about audit, really ... Well, only the high level. What is going on in that in that world? Rachel Fisch: Sure. Well, I think that I think that AI is one of those [00:25:00] things, you know, along with chatbots, and blockchain, and cryptocurrency. Anyway, there's a lot of buzzwords that happen when you're talking about technology in accounting and in accounting firms. It just seems like AI is getting a little bit more traction in certain applications than things like blockchain and stuff like that. I know you've mentioned the Deloitte Controllership surveys, where it's like nobody is doing anything with [00:25:30] blockchain; but who is doing something with what, right? What I've seen about AI is that ... This came up in a previous podcast, when you guys were talking about MindBridge. MindBridge.ai is the website, based out of Ottawa, here in Canada. Blake Oliver: We were talking about they raised a bunch of money, right? Was that the story? Rachel Fisch: Yes. That's what got it to hit your headlines there- Blake Oliver: You know them because they're in- sorry, you said Ottawa? I apologize. Rachel Fisch: Ottawa, yeah. No, they're in Ottawa, in Canada. Of course, every [00:26:00] Canadian knows every other Canadian, so I know those guys. They happen to be Sage partners of ours. We run in the same circles. We've got a lot of the same partnerships. They're a really great team over there. They're really real pleasure to work with. You and I just kind of got chatting about what does this look like? I think one of the interesting things about AI and audit is that everybody can understand what an audit is. When you talk about how to integrate AI with accounting services, of course, [00:26:30] we've seen how successful or not successful that is in some areas. Blake Oliver: Yes.  Rachel Fisch: But when it comes to audit, it is literally eyes on paper, reading GL reports and aligning things for hours, and weeks, and months at a time. This is the work of auditors. To me, this is such a natural case study to introduce technology, like with AI. MindBridge has created an AI auditor tool and that's all it does. It reads data, and it highlights [00:27:00] risk. Easy peasy, that's all it does. Blake Oliver: When you say data, is this my GL? I share this into MindBridge?  Rachel Fisch: Yeah. It has direct integrations, as well as flat file uploads. So, for example, I think it was Robin Grosset, who narrated a five minute AI Auditor overview on the website. It's actually done from an Excel file ripped from Sage 50, but it also has direct integration. So, for example, Intacct, you could connect MindBridge with [00:27:30] Intacct, a direct integration, and it could automatically pull and feed the information that you want. Essentially, what it is, is 100-percent data sample, where it simply categorizes by risk. It's got your high risk, your medium risk, your low risk. Of course, there are things like settings and configurations that come into play here. To me, this tool, used in this way, is the most clear example of the benefit of [00:28:00] AI in an accounting application, when it comes to audit.  Blake Oliver: We're getting rid of sampling. Instead of sampling, we are auditing, literally, 100 percent of the GL.  Rachel Fisch: Exactly, yeah-  Blake Oliver: So, why isn't everybody using this right now? Rachel Fisch: Right! Here's the thing. I've been kind of on a mission to find this out. First of all, MindBridge is having some incredible successes. They have some amazing partnerships. They're going into universities. They're doing all of the right things to get the word out. They've got amazing [00:28:30] content, and marketing teams. They've been doing a phenomenal job. Then, if that's the case, why do so many accounting firms either not know what it is, or are not implementing it in their firms? I came down to three challenges. First, one of the reasons that I've been told is that audit regulation and standards currently do not allow for non-human auditors. Now, here's the challenge with that piece is that I have yet to actually find audit standards and regulations that indicate that it needs a certain number [00:29:00] of human signatures, or a certain number ... I'm not a CPA myself. I don't [cross talk]  Blake Oliver: This is what the resistance is. Rachel Fisch: Yes. This is what the resistance is saying? What I don't know is if those are valid. So, if there happen to be any CPAs listening to this ... I'm guessing that this is something that is going to vary by state society, or by country that you're certified in, but to see what exactly is it about the audit regulation that may [00:29:30] limit technology in this. Now, the challenge with that also is that, in many cases, where standards and regulations aren't keeping up to snuff, sometimes a groundswell of momentum is enough to start changing some of those standards and regulations, as well. That's the first one. The second one is that too many firms think that larger sample size actually equals more problems, so they want to keep the audits limited to smaller sample sizes. This I've seen, as well, is that why do we want to sample 100 percent of the data, if [00:30:00] we're just gonna find more problems, and then we're just gonna have to fix the problems, or then it's just creating more problems for everybody?  Blake Oliver: This just this just blows my mind [cross talk]  Rachel Fisch: Just keep in mind, these are- multiple people have told me this. Blake Oliver: Yeah, no, I completely believe it. It's exactly the opposite of what an auditor is supposed to think and do [cross talk] the ideal situation ... Yeah, please, go ahead. I can't ...  Rachel Fisch: Right, yes. My thing is, if I'm only sampling, what [00:30:30] am I missing? Right? Blake Oliver: Right, yeah.  Rachel Fisch: If I don't do 100-percent data, I'm gonna not select from my sample those exact things that-  Blake Oliver: Yeah, and this is exactly the problem with- the big problem with audit, everywhere, seems to be- Rachel Fisch: Generally, yeah.  Blake Oliver: -in general is that auditors are selected and paid by their clients. Rachel Fisch: Yes. Blake Oliver: The clients don't want the auditors to find problems, and so the auditors don't want to find problems either, right?  Rachel Fisch: Sure.  Blake Oliver: It just creates more work for the auditors, and it makes the clients unhappy. The goal of a [00:31:00] really crappy auditor, or at least an auditor who doesn't care about the quality of the audit, is to do the least amount of work to pass muster and minimize the amount of stuff you find [cross talk] attitude ... I understand why that attitude exists, but it just points out the massive problem with the incentives. I hate it. Rachel Fisch: I totally agree. That actually leads to the third challenge, Blake. It's almost like we've talked about this before ... Firms, they don't [00:31:30] know how to charge for automation, right?  Blake Oliver: Right, right, yeah.  Rachel Fisch: How do I now deal with the internal billing structure that goes with doing a job in six hours, instead of three weeks? They were talking about a 20 to 900 times more likely to be in ... Sorry, let me get that quote right. "MindBridge Ai customers have shown that errors are 20 to 900 times more likely to be uncovered with our AI testing components contributing to the analysis ..." The time savings is [00:32:00] like I can do in one hour what would take me five hours, or the one example that I had, also, was six hours instead of three weeks of doing a manual audit. Why do you not want to get this work done faster or better? Blake Oliver: I'm sorry, say that time savings again?  Rachel Fisch: Get done in six ... One person in six hours, what had previously taken two people three weeks, three full weeks, to do-. Blake Oliver: Yeah. I believe it.  Rachel Fisch: -but the challenge is that an accounting firm knows how [00:32:30] to charge for two people for three weeks, right? Blake Oliver: Right. Yeah, they don't know how to ...  Rachel Fisch: Right. Why would ... They have zero motivation to charge for one person for six hours ... I'm gonna include in the show notes, there's a Michael Izza interview from ICAAW talking about the ... I don't know how to pronounce it, whether it's Carrion or Carillion, you know, the big [cross talk]  Blake Oliver: I say Carillion, but I have no idea. Rachel Fisch: I believe it was PWC that was auditing that one, but they've [00:33:00] had major lawsuits between PWC and KPMG, specifically in the audit department, for doing a really crappy job. With this kind of technology out there, there absolutely is zero use or cause for it anymore. Blake Oliver: This is amazing, Rachel. Thank you so much for coming on and explaining that. I just wanna say out there, to anyone, I changed my mind, Rachel, as a result of this. I used to think that client accounting services was the biggest opportunity [00:33:30] for accounting firms, right now, like big ones. Rachel Fisch: I actually [cross talk] audit.  Blake Oliver: Yeah. I think, after listening to you, its audit. I just wanna put it out there. If you're in the Top 100 firm and you're looking for somebody to fix your- to restructure your audit department, to use AI technology, and get you on fixed-fee billing, you can come and pay me a million dollars, and I'll do it for you, because it's so easy. It's so easy [cross talk] open invitation, right?  Rachel Fisch: Yeah.  Blake Oliver: The realization ... It would be amazing. You'd basically [00:34:00] double your profits, or triple, or quadruple. Rachel Fisch: Yeah. I'm just gonna end with my favorite quote from John Colthart. I'm just gonna call him GM of MindBridge, because he wears a couple of hats, but he says, "AI will not replace auditors, but auditors that use AI will replace auditors that don't," which I think is so true.  Blake Oliver: Amazing. Well, we've got two amazing quotes in this episode [cross talk]  David Leary: Just to break it to both of you, this is not a mindset of just auditors and accounting [00:34:30] firms. Rachel Fisch: No.  David Leary: This is a lot of managers, maybe, is the way to think about this. Back in my QA days, there's ... It's kinda like audit. You're running a bunch of tests- Blake Oliver: Quality assurance.  David Leary: Quality assurance. You're running a bunch of tests. The QA person managers love the most is the QA person that gets done first. "Hey, I ran all my tests, and I found no bugs." Because, if you find a bug, it's gotta be tracked. You have to have somebody make a decision. You have to have an engineer look at it. You have to have an engineer fix [00:35:00] it. You have to maybe change documentation. It's very expensive, when you find a bug. But, to be honest, probably it's much cheaper to find the bug in the development cycle than to have a customer find the bug, and then fix it after the fact. It's the same mindset. People would much rather have five QA people come back and say, "We're done with our testing. We found no bugs," because it looks better reports. It's just easier. Blake Oliver: It's all about setting up the right incentives. So, let's try to get a few more stories in before we gotta go. We don't have a lot of time. I've got [00:35:30] a story here about where should we be looking for top accounting talent. Rachel Fisch: Sure.  Blake Oliver: You guys know that I like the Hinge Research Institute. Lee Frederiksen, over there, has a post on Accounting Today, exactly on that topic. They did some research. Tell me you think about this. A recent study conducted by the Hinge Research Institute revealed that most accounting firms still defer to traditional approaches for attracting prospects, meaning they're using job ads, fairs, topping the list, right? Unfortunately, the data says [00:36:00] that's not where top prospects are looking for their next career move. The number-one way that that top talent wants to get recruited is on LinkedIn. That's where they're going to find and research possible new employers. That's 86 percent of job seekers; but only 66 percent of firms are actively using LinkedIn for job candidates - a 20-percentage-point gap. That's the takeaway - if you want to recruit and retain top talent, you've gotta get away from this old job [00:36:30] fairs, and ads, and you've got to be on online. Gotta be on LinkedIn-  Rachel Fisch: Well, it's the definition of insanity, right? When I go and I talk to all the firms that I do - and I talked to hundreds and thousands in a year - they are very clear about ... Recruiting is one of their top challenges, retention, and retraining. Those three things are not technological issues or technology issues, those are people issues. The [00:37:00] challenge is that they're not changing anything about how the firm is structured to actually change that. In this case, it's, "We're gonna keep doing the same things. We know things are changing. We know we want different things out of our employees now, but we're gonna keep doing the same thing and hope for different candidates." It's all the same pipeline at this point. You've gotta start changing the pipeline. Blake Oliver: That's great. Well, what else is new in the world, David? David Leary: I got two quick IRS-related stories- Blake Oliver: Let's hear it. [00:37:30] David Leary: -for two kind of related things - Crypto and cash. Blake Oliver: Okay.  David Leary: This week, the IRS is now sending out letters. They've sent out what it calls are "educational letters" to taxpayers that it has identified for folks that have not reported their virtual currency transactions or are reporting them incorrectly. Blake Oliver: Yeah, educational letters is just code for threats, right? I saw some of these letters. They're basically saying, like, "Report your crypto profits or you are screwed," right?  David Leary: Well, they're [00:38:00] intended to help taxpayers understand their tax filing obligations for cryptocurrency. Blake Oliver: Okay, yeah.  David Leary: The big one is that 10,000 letters are gonna go out by the end of August. Chances are, if you're in tax, you're probably gonna come across something- Blake Oliver: Well, I'm glad it's 10,000, because that means I probably am not getting caught up in this, since, way more than that ... Way more people than that are transacting in cryptocurrency. David Leary: Then, on the other story, the CEO of a pot company in Colorado, John Lord, [00:38:30] went to the bank with $3 million in physical cash to make a deposit- I'm sorry, to a local IRS office to pay his federal taxes. Blake Oliver: I wish I had been working at that office that day. How cool would that be? David Leary: He recently testified ... There's a committee looking into- figuring out how to deal with banking regulations, because a lot of people don't want to touch this money, because they're afraid the DEA's gonna come in; banks don't wanna touch this. He [00:39:00] testified there that he once rented a bank, a former bank, just so he could use the vault to store all his cash. Blake Oliver: That's amazing. David Leary: These are legit guys running around with that much cash. Blake Oliver: Hey, Rachel, cannabis is legal in Canada- Rachel Fisch: Yes.  Blake Oliver: Do you guys ... You don't have a problem with banking, with it? It's not like here, right?  Rachel Fisch: No, we will take your money. Blake Oliver: Yeah. Wow.  Rachel Fisch: Actually, we ... Yeah, no, I think the cannabis industry has been interesting for lots of different, and other subsequent [00:39:30] industries, or related industries. Blake Oliver: Well, you know, here in the US, we still like to use paper checks, and for certain things, we like to use physical paper money. Rachel Fisch: Yes. Blake Oliver: That's how we roll. No pun intended [cross talk] David Leary: -how much money is in that industry. Kind of a preview, last week, at the Accounting and Finance Show in L.A., we did interview with somebody- an accountant; him and his son are-  Blake Oliver: Bruce Anderson, and son, Thomas Anderson. David Leary: -who a team up, and they [00:40:00] take on cannabis clients. It was a very good interview, and it ties into this. Blake Oliver: Yeah, we'll be releasing that in the next few weeks. I got a story here that I've been hoarding that I haven't had a chance to talk about, but I feel like we should, because I keep thinking back onto it. Remember the Expensify 2 Chainz Super Bowl ad? Rachel Fisch: Yeah, I remember that [cross talk]  Blake Oliver: Expensify, man ... They like to blow their entire marketing budget in one thing every year. If it's an invite-only conference in [00:40:30] Bora Bora, or if it is a music video with 2 Chainz, and Adam Scott from Parks and Recreation ... Well, I'm really curious to know how that paid off for them, like if it paid off, or if [cross talk] Rachel Fisch: The actual ROI- Blake Oliver: Like if it paid off. Yeah. Because like, you know, is it worth spending? I don't know how much they spent, but I'm gonna guess, like, say $5 million bucks to do that whole thing. Well, they did win seven awards at the Cannes International Festival of Creativity for their music video. Among the awards were [00:41:00] the top prize, the Gold Lion in the categories of Production of Exclusive Artist Content and Partnership with a Brand or Cause and Use of Original Music, so congratulations. David Leary: They probably thought it was a special effect. You can take a photo of a receipt, and put it into an accounting system? This must be special effects. Rachel Fisch: What? This is magic.  Blake Oliver: Yeah, amazing. Rachel Fisch: I'm sure it's just a fad, right? All those cloud … It's just a fad. Blake Oliver: Yeah, exactly. David Leary: How trendy is that? Blake Oliver: What else? I got lots more stories, but I don't want to monopolize [crosstalk] Rachel Fisch: You might have to cut this in, [00:41:30] Blake. It took me a little while to find, David. It's about the IRS thing. So, there's this post going around social media right now about the IRS announcement. It says, "Confusing: Doing your taxes. Confusinger: Understanding cryptocurrencies. Confusingest: Doing your taxes when you own cryptocurrencies. The IRS is sympathetic, but Uncle Sam waits for no one," and then it goes on with the announcement of the rest of the post, so I thought that was pretty entertaining. Blake Oliver: That's clever. Any time you can attach a meme to an IRS announcement, by all means, right? It should be done. Rachel Fisch: Right? Yeah. [00:42:00] Blake Oliver: Yeah. Of course, for those who are not familiar with the problems of taxation and cryptocurrency, the big issue is that the IRS treats it as an asset, so every single transaction, you have to compute gains and losses, and it just makes- Rachel Fisch: And not a currency, yeah. Blake Oliver: Yeah. Of course, valuing cryptocurrency is difficult because there is no NASDAQ for crypto. There is no market maker, single market maker, so how do you choose what numbers to use? There's an [00:42:30] entire software world now, actually, just around importing your crypto transactions and calculating all those gains and losses. David Leary: I met an app last week, and I cannot remember the name of it, but essentially you connect all 5,000 different possible crypto wallets that are out there, and they'll track all your ... It's almost like online bank feeds for your crypto transactions. So, they pull it all together, and they let you know your gains and losses, and then do export files out for tax software. Blake Oliver: Thank God for that, right? Otherwise, it would be really, it would be Excel nightmare. Oh, speaking of Excel, and we [00:43:00] talked about malware earlier, Microsoft Excel has a feature that can be abused for malware distribution. David Leary: Oh, no. Blake Oliver: If you have Power Query enabled in Microsoft Excel, which comes turned on by default, apparently hackers can abuse Power Query, which has this feature where it goes out to other servers and pulls in data from the internet – kind of an open backdoor. If you open up the wrong Excel file, and you have Power Query turned on, it can [00:43:30] be used to run malicious code on your system with minimal interaction. So, just a warning ... Microsoft has decided not to patch it, because that is actually an intended feature of Power Query, so just do not open up an Excel file from somebody you don't know. Rachel Fisch: Wow. David Leary: Got it. Blake Oliver: That's all you can do. Rachel Fisch: So, the future of accounting is not Excel? I just wanted to be clear. Blake Oliver: Well, you know, I mean, maybe ... I don't know. We'll let our listeners decide [cross talk] David Leary: Especially if it's an attachment. Don't use attachments with Excel. I have some stories on [00:44:00] small business lending. Remember, we've been talking about this, and we've been wondering how viable some these companies are [inaudible] direction? Blake Oliver: Yeah. David Leary: There's definitely a lot of changes happening in that space as we speak. The first story is “SMB lender OnDeck is actively pursuing a bank charter,” because they want to offer a wider range of products and find cost efficiencies. But, really, if you read deeper in the article, effective August 3rd, JP [00:44:30] Morgan Chase no longer intends to originate new small business loans through them, through OnDeck's platform. Blake Oliver: Really? I wonder why that is [cross talk]  David Leary: They are looking to partner with others. One thing that I initially thought was … Because QuickBooks, QuickBooks Capital, and Intuit is very deeply involved with Chase. Is that gonna be an announcement we see soon as a deeper partnership with QuickBooks Capital? The one thing that was in the article that I thought was really interesting was the stats. Online lenders approved 57 [00:45:00] percent of all small business loan applications in June. 50 percent were approved at small banks, and 27 percent at big banks. It's very obvious that this model of these app-first models that have access to accounting data are giving out the most loans. Blake Oliver: Yeah, and probably not the highest quality loans, and that's ... I'm just gonna say why else would Chase be getting out of it? Maybe it had some bad results. David Leary: So, just another loan player, Lendio, who's also in this space, they've taken it [00:45:30] one more step further. They actually completely acquired an accounting app. They acquired an accounting app, Billy, rebranded it as a new product called Sunrise, and they're giving away for free. So, you use this app to do all your cloud accounting, and they can target loans to you. What’s interesting, though, buried in their article is … I'm gonna read the quote here, okay, and you tell me what this sounds like, "When you sign up for a paid version, Sunrise will assign a bookkeeper within 48 hours, and moving forward, they'll reconcile [00:46:00] your books each month." Blake Oliver: Wait, what? David Leary: All right, I'll read this again. Tell me what this sounds like. "When you sign up for a paid version, Sunrise," which is the accounting app, "will assign a bookkeeper within 48 hours, and moving forward, they will reconcile your books each month." Blake Oliver: Yeah, that sounds very familiar. David Leary: It's another QuickBooks Live play. Blake Oliver: Another one.  David Leary: Everybody is doing it now. Now, this is a small business lender that's doing your QuickBooks Live play. Blake Oliver: Wow, that's a new one. I had not … Yeah …  Rachel Fisch: I mean, we're continuing [00:46:30] to see this convergence of bank and/or payments plus GL, and then plus a service piece, right? H&R Block and Wave, right, books to tax, plus they've got service providers. What else was it? Oh, RBC in Canada- the Royal Bank of Canada acquired WayPay, which is a payments provider, and then they're also working with small business, and they've got some other things going on as well. I think we're just going to continue [00:47:00] to see these multiple convergences of bank and payments, GL, and then some level of service, absolutely. Blake Oliver: Yeah. David Leary: I think in the past, Blake, you, and I have talked about this; this is kind of the Wild West, right? Blake Oliver: Yeah. David Leary: A lot of these companies are based out of Utah because there's no limits on usury that you can charge. Well, there is news now. California has proposed lending rules, and they're getting more support for this. The Department of Business Oversight, they've worked with ... I'm taking this as a coalition, [00:47:30] the Responsible Business Lending Coalition. They are proposing legislation and regulation to control truth-in-lending protections for small business owners.  I'll just read the quote from them, "The proposed regulations recognize that small business financing has changed as many small businesses now commonly pay effective APRs of higher than 50 percent and, sometimes, as high as 350 percent without these rates ever being disclosed again to them." That's [00:48:00] one thing I've always felt about all these alternative lending situations. It's very easy, "Click here! Get $10,000!" Then you're kind of paying it back. They're gray. It's half invoice refactoring, it's half not; it's very confusing, and people don't know the rates they're paying. Blake Oliver: I'm in favor of regulations to require these lenders to disclose the APR on any of these transactions, but I am not supportive of restricting businesses from taking these loans if they want to, because some may have no other option, and if they think it's a good idea, then fine, right? They're [00:48:30] business owners. I think, fundamentally, it's different than usury laws around payday loans because some of ... That's an education problem, right? I don't know ... I'm not a fan. I think there should be disclosure, but not necessarily restricting the amount that can be charged. David Leary: I think we're gonna see more about this, as well, because I think, again … We've talked about her before, Elizabeth Warren; this is another thing that could show up and become a political issue for the election - small business loans. Blake Oliver: Oh, yeah. Elizabeth [00:49:00] Warren loves to- David Leary: She wants to be on the podcast [crosstalk] I think ... She wants to be on our podcast. Blake Oliver: I would love to have Elizabeth Warren on the podcast to ask her about cloud accounting and what the government should be doing to regulate cloud accounting. David Leary: I have another, some ... Kind of related to payments that's gonna blow your mind. Blake Oliver: Okay. David Leary: All right. The headline is “MasterCard: Tackling AP Automation's Last Mile.” This article had two amazing stats. They're talking a little bit more enterprise, bigger companies, Fortune 500, right? [00:49:30] 59 percent of firms have yet to tackle payments automation. Blake Oliver: Oh, doesn't surprise me [cross talk] Sad stat, but what's the other one? David Leary: This is the better one. Paper checks make up 51 percent of corporate payments. Rachel Fisch: Wow. Blake Oliver: Oh, boy. Yeah, and imagine being that Canadian company that's getting all those checks from U.S. customers, you're like, "God! Ahhh!" Rachel Fisch: "No more, please, no more!"  Blake Oliver: Right, no more. Rachel Fisch: To me, this is one of the glaringly ways in which the U.S. is behind, pretty much, [00:50:00] everywhere else, right? If you talk to an Australian, or if you talk to somebody from the U.K, or from Europe, they're like, "We did away with checks, like, how many years ago?" Canadians, we still use them, but they are certainly an exception. They are not … It's how do I pay one out of my hundred people who I'm doing a payroll run for that one person who still wants a check? It's so prevalent in the U.S. that I don't know what's gonna start bending or tipping that. Blake Oliver: Well, [00:50:30] I think it's going to be the next recession because ... I love these Metric of the Month stats that they have on CFO.com that I share from the APQC Benchmarking surveys. One that keeps coming that I keep using in presentations I give is that the least efficient corporate finance departments have four times more employees than the most efficient ones. If you're efficient, you can have 25 percent of the staff of an inefficient department, and that is mostly because of people with paper checks. It’s literally- that's probably a lot of it. [00:51:00] Rachel Fisch: Well, I mean, all the stats - the amount that it costs, the amount of time that it costs to process a check, the amount of money it costs to process a check - all of the data is pointing that ... I don't know if it maybe has to do with the fact that there are 7,000 banks in [Canada] as opposed to the five main ones in Canada and the four main ones in Australia, but I certainly think that probably has something to do with it, just the ability to move money, right? Blake Oliver: Yeah. Any other stories before we go? David Leary: I think Gusto raised another $200 million. They are going to expand the East coast, and I think the interesting one is they plan on building out something [00:51:30] called still Gusto Flexible Pay that's for employees. I know you mentioned payday loans before. It's not a payday loan, but there's another company that also does this, Earnin. Blake Oliver: Oh, yeah, yeah. David Leary: As soon as you clock out at the end of the day, they use your time data; they know you're gonna get paid for eight hours. You could actually just get that money early and deposit it in your bank account. Blake Oliver: Yeah, they're floating the cash to the employees, but the employer can still keep their every two week pay schedule. David Leary: Yeah. This’ll be the death to payday loan places, for sure. Blake Oliver: I hope so. David Leary: You won't [00:52:00] need one. You'll just, "Hey, I had to put braces on my kid." Blake Oliver: Yeah. Studies show that if your employees get paid every day, using this, they're more productive, because they see the fruit of their labor right away. David Leary: That's it for me. Blake Oliver: All right. Well, hey, Rachel, if people want to connect with you online, where's the best place for them to do that? Rachel Fisch: Best place is Twitter @FischBooks. F-I-S-C-H-B-O-O-K-S. Blake Oliver: And how about you, David? David Leary: @DavidLeary. Blake Oliver: And I am @BlakeTOliver. And, if you wanna do [00:52:30] us a favor, leave us a review on iTunes or on your podcast player of choice. We will read it on the air. And David, I forgot, did we miss any this week? I think we didn't get any this week, right? David Leary: No reviews this week, but you know what would be just as good as a review?  Blake Oliver: What's that? David Leary: Is when you're at dinner with one of your accountant friends or bookkeeping friends, pull out their phone and subscribe them to The Cloud Accounting podcast. Blake Oliver: You tried to do this at some conferences recently, David, and people did [00:53:00] not want to give you their phones. David Leary: No, nobody wanted to let me touch their phone and do that. But hey, you know, if it’s a friend, you can do that [cross talk] Rachel Fisch: I will say I got an email from a partner at a firm that I've been working with for a while now, and he said, "So, I'm listening to this Cloud Accounting podcast," and I'm like, "Oh, my gosh! I told you to listen to that." And he goes, "I'm listening to this podcast, and they've said your name a couple of times," and he goes, "It sounds so cool," so people are listening even if they're not reviewing. David Leary: Yes. Somebody at the conference in L.A. came up to me like … It's [00:53:30] always good when somebody you absolutely never met before, you don't know, and they're like, "I listen to the podcast. It's great."  Blake Oliver: That's so great. David Leary: It's always really good that people really listen to us. That's great. Blake Oliver: Yes, thank you to all our listeners for helping us get to this point. We are almost at 100 episodes. This is, I think, 99. I'm not sure because the publishing order may change, but we're very close, if we haven't already hit it. Thank you everyone who has helped us get this far. It's crazy to think where we've come in really just about [00:54:00] a year and, hopefully, we'll get more cloud accountants into the podcast world and beyond in the years to come. Rachel Fisch: For sure. Awesome [inaudible]. Blake Oliver: Thanks, Rachel. Good to talk to you. Bye, David. David Leary: Bye, everybody. Thanks for joining. Rachel Fisch: Yeah, you too. Bye. 

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