Intuit pushed through a lot of announcements in the lead-up to and during its QuickBooks Connect conference. I’ve summarised them below and added comments on their relevance to accountants on QuickBooks Online (QBO).
Direct Feeds and More with American Express
Intuit has connected its database to American Express so that transactions now flow directly from the credit card company into the accounting software. This is a big strategic play and most probably the news that will make the biggest difference to QBO accountants.
Why? It addresses one of the major shortcomings in cloud accounting software, indirect bank feeds. Intuit’s standard method for collecting transactions for bank feeds is to log into a user’s online banking portal and “scrape” a list of the previous day’s transactions. Intuit then analyses and cleans up the data before sending it to QuickBooks Online users’ files.
This method is not error-proof, leading to omitted or repeated transactions which accountants need to correct manually.
Patchy feeds can result in more work than importing the bank statement manually – no different to using desktop software. Good bank feeds allow accountants to automate data entry, faster bank rec, real-time reporting, and many other good things.
I assumed direct feeds in the US were impossible because deregulation of the banking industry led to the creation of more than 4,000 banks with incompatible IT systems. Hence the American reliance on checks/cheques. (I know. 2015 and they still pay for things with bits of paper.)
Intuit has built a new bank feeds platform for direct feeds from a large number of financial institutions. This means it can sidestep tardy banks by going direct to the card providers. There are only a handful of global credit card companies and they have the budgets to update their IT systems to talk to accounting software.
Now American Express has created a direct feed to QuickBooks Online for businesses that use its Open credit card. Once a user adds Amex’s Connect to QuickBooks app to QuickBooks Online, Amex sends transactions automatically to QuickBooks.
Three reasons why accountants will do well out of this.
- No more correcting feeds. These transactions should be error-free as there is no scraping involved. And the feeds are added automatically – no need to log into multiple accounts to “push” transactions from one system to another. Good news.
- Line item detail. Bank transactions show only a one-line summary of a purchase. These Amex transactions have more detail. This will help accountants allocate them properly without chasing the client for details. For example, an expense related to an airplane ticket will include flight dates and times. Small businesses can snap a photo of a receipt using Amex’s ReceiptMatch app and store it with the transaction record.
- Automatic categorisation. This isn’t just a clean feed, Amex says it will categorise the transactions before they hit QBO. Not sure exactly how this will work as everyone’s chart of accounts is different, but any sorting is great, as long as it works well.
Key points: This is great news and a very clever move. Accountants with customers on Amex will find it much easier and faster to reconcile their accounts. Australian accountants accustomed to direct bank feeds offer weekly or even daily reconciliation. Business owners can pull up reports themselves and see their profit for yesterday’s sales.
If the other card providers take too long it might be worth suggesting to customers a change in card provider. I wonder if this is an exclusive deal with Amex?
Faster Access to Money From More Sources
In September Intuit announced the creation of a US$100 million fund for small business loans. QuickBooks Financing Line of Credit is supported by Intuit and OnDesk, an online lending provider.
QuickBooks Financing is a marketplace of small business finance products covering the full spectrum of credit offerings including, short and long term loans, lines of credit, invoice financing and Small Business Administration loans. All lenders and products are fully vetted by Intuit.
Since 2013 Intuit has been sending customer data to OnDeck and other providers in QuickBooks Financing to calculate the risk of lending to each small business.
Now Intuit wants to lend some of its own money as lines of credit to QuickBooks users. A business owner can apply for a loan with one click from within QuickBooks Online and behind the scenes Intuit sends data from the company file to OnDeck for analysis and a decision on whether to approve it.
QuickBooks Financing Line of Credit will offer the same fast turnaround as OnDeck (same business day) and interest rates between 8.9 percent to 19.9 percent.
Fundbox is another recent entrant to Intuit’s marketplace. A new take on factoring, it lends money against invoices without taking over the customer relationship. Users can advance invoices by clicking several times within QuickBooks and receive approval in less than three hours.
Faster processing of requests for loans is great for small business owners. There’s nothing worse than getting knocked back for a loan that took hours of work to apply for. And the ability to apply as a business rather than with your personal credit history – as US banks often do it – is fairer.
But loans can get businesses into trouble as much as they get them out of it. Just because a business owner can get money doesn’t mean they should.
Key points: Accountants need to make sure they are front and centre in discussions about borrowing money. The sources continue to grow; peer-to-peer lenders, banks, venture capital and so on. As QuickBooks becomes more integrated with lending, your clients will turn to you for answers. If it’s in QuickBooks they will assume you have some knowledge.
This could be a new service to add to your portfolio. However, it will probably require a lending licence, depending on country, as accountants will effectively be giving advice on borrowing.
Intuit Pushes Accountants to App Advisory by Solving “Which App?” Question
Intuit is switching gears on its ecosystem of compatible cloud apps. “Historically we wanted to shock and awe customers with how many apps we had. Now we want to show the five apps you have to have, because they’re used by businesses like you,” Dan Wernikoff, head of the QuickBooks division, said in a press conference.
“The fascinating thing is that the general ledger is definitely becoming commoditised. Now it’s about the collaboration with accountants and the integration with apps.”
A large part of the value of cloud accounting is the ability to swap data easily between applications. This is largely unrealised, especially in the US. The bulk of accountants in the US still seem to be adjusting to the concept of online accounting.
Incidentally, this will also help Intuit reduce its greatest threat – customers churning from QuickBooks to Xero or another competitor.
Once a business has created a collection of online apps to run its operations it would be less likely to churn from the online accounting app that connects them all.
How’s it going to do this? Intuit will connect usage statistics to its Apps store so businesses will be able to see which apps are the most popular in their industry or for a specific business need.
In a move that will create waves among third-party apps, Intuit is picking global winners for horizontal applications. It announced “special relationships” with four apps including T-Sheets (from USA), Bill.com (USA), Fathom (Australia) and Receipt Bank (UK).
Fathom and Receipt Bank have been closely associated with the Xero ecosystem. Intuit is making sure that the most successful apps are well inside its tent.
Apps with lots of customers and high net promoter scores (a customer satisfaction metric) will receive additional support such as cash for co-marketing campaigns and exposure to its massive customer base.
Wernikoff cites timesheet app TSheets as a good example of a company that has nailed a customer problem. “We want to publicise them and make them the default standard for accountants, and then it becomes the default standard for our base.”
Key points: Intuit’s decision to play kingmaker in third-party apps is a good outcome for accountants. Once Intuit starts sorting apps in its App Store with analytical filters it will make it easier for accountants to give solid recommendations for third-party apps. Let the data do the talking, rather than the accountant needing to assess each app.
Intuit Upgrades Inventory to Push into Retail
Intuit is chasing small retailers now that QuickBooks Online has completed its integration with Lettuce, an inventory app it bought in May 2014. Inventory was one of the weak links in QuickBooks Online and a reason many businesses stuck with QuickBooks desktop.
Now it has integrated inventory management, Intuit is signalling that it’s time to migrate to the cloud.
QuickBooks Online will do a better job than the desktop software because it can handle data feeds from multiple apps, including banks, credit cards (see above), point-of-sale apps and other apps from the Intuit ecosystem.
Retailers will discover a huge variety of online applications. Not just point-of-sale but e-commerce, loyalty schemes, dropshipping, analytics, rostering and payroll, and so on.
New research from Intuit shows small businesses spend on average 13.7 hours a week managing and tracking their inventory. This is what Intuit is pitching to retailers with QuickBooks Online:
- Better inventory. QuickBooks Online now has product categories, SKU number tracking and in-app stock updates. When you create an invoice QBO tells you how much inventory remains. You then know what you can sell and when to reorder new stock.
- Automated POS feeds. QuickBooks Online automatically imports sales transactions from QuickBooks Point-of-Sale (the rebadged Revel iPad app) and e-commerce apps such as Shopify and BigCommerce. Other apps can connect to QBO for value-added inventory and order management functionality.
- On-demand loans. Intuit’s lending arm, QuickBooks Financing, can add inventory data to its analysis of a business’s financial performance. This will make it easier for businesses to get loans during hard times. It can do short and long-term loans, lines of credit and invoice financing.
Key points: Accountants who explain the potential of retail-related apps in the Intuit ecosystem to retailers will find plenty of work in migration and set-up. QBO is a cost-effective solution that is easier to use than NetSuite, Intacct and other ERP-style online accounting programs.
QuickBooks Self-Employed Adds Health Insurance
Intuit’s accounting program for freelancers and sole traders, QuickBooks Self-Employed, added health insurance management. QB SE users can now pick healthcare insurance plans and manage compliance through an integration with Stride Health.
The self-employed sector is a big, fast-growing market. Intuit says it is already 36 percent of the US labour force and will hit 43 percent by 2020.
One of the drivers is technology companies such as Uber, AirBnB, Fiverr and the like. The number of “on-demand” workers will grow from 3.2 million to 7.6 million by 2020 and nearly a third of them don’t have health plans.
Stride makes tailor-made healthcare recommendations “to maximise tax credits, access tax savings, and assist in complying with the Affordable Care Act”. Intuit indicates that health is “the next step” in expanding QB Self-Employed; looks like a platform play with more steps to follow.
Benefits to users include:
- Personalised tax savings. Helps you take advantage of health care-related tax deductions and tax credits provided by the government to fund their coverage. QB SE tracks healthcare deductions, premiums and contributions to tax-advantaged health savings accounts.
- Year-round dedicated advisors. Provides self-employed workers with year-round support to navigate their health plans and understand how to use their plans to save money on their taxes.
Intuit has created a new category with QuickBooks Self-Employed by broadening out into healthcare management. It covers more bases than invoicing apps such as Freshbooks which usually suit this market.
Key points: This of of less importance to accountants. The software will solve most of the compliance issues so there is little for an accountant to do. An accountant could upsell wealth management and wealth creation advisory for successful sole traders. Those that do really well might end up employing staff and migrating to QuickBooks Online, although right now there is no connection between the two.
Trial Balance Integration with Online Tax
Intuit added a trial balance to its client management tool, QuickBooks Online Accountant. The trial balance feature maps most accounts in QBO Accountant to an Intuit Tax Online form. It also securely stores the work performed on behalf of an accountant’s client – including notes, attachments, and the Trial Balance worksheet itself – all in one place.
Intuit says it will save accountants time by reducing or eliminating manual data import, export and entry work to Intuit Tax Online.
Key points: Obviously a time saver and the next stage in integrating QuickBooks Online with Intuit’s online tax software. ITO doesn’t yet have all the forms required for accountants but Intuit is slowly building out an end-to-end compliance workflow.
Disclosure: Intuit paid for my plane ticket and accommodation to attend QuickBooks Connect.