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How to Use Excel to Automate Processes in Xero and QBO: ABE19

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Plenty of accountants consider themselves wizards of Excel. But can your local Master of Macros use a Microsoft spreadsheet to post journals in Xero or Intuit QuickBooks Online?

A long list of apps and tools have promised to replace or “kill” Excel. Google Sheets has picked up many fans since its launch eight years ago because it was the first to offer simultaneous editing by users in multiple locations.  

But Excel is proving that it’s not just a tool, it’s a platform, and one with a lot of life left in it yet. Lance Rubin, CEO of Model Citizn and CFO of Sequel CFO, is a passionate advocate for Excel in this era of cloud accounting software – though he is quick to point out that he doesn’t see it as competition.

“Everyone says, ‘I could build an accounting software with Excel’, and I’ve been guilty of that as well. But that’s not to say that you should,” Rubin says.

“Excel is not accounting software. You’ve really got to look at what Excel offers that is different to everything else.”

Lance Rubin, Model Citzn

Rubin was looking for a way to automate adding journals to Xero while working as CFO for Banjo Loans. He looked at different ideas for automation but realised that he was already doing the calculations in Excel then manually typing them into Xero. Why not push them directly into Xero from Excel?

Rubin found apps that turned Excel into an automation engine for Xero – and not just for automatically adding journal entries.

“If you take on a new client, you have an opening balance sheet, right? You then have to post each of the opening journals. And guess where most of that information is sitting? It’s still back in Excel. It’s probably from a MYOB CSV extractor or some other accounting system,” Rubin says.

Rubin also found it easier to create a new chart of accounts for existing businesses. Instead of logging into Xero and clicking in and out of each account he can change account names in a list of Excel cells and push a button to update all of them.  

Rubin can also assign tracking codes and tracking information to accounts much faster through Excel than through Xero’s native screens.

“It’s literally a click refresh,” Rubin says. “You can actually have a live feed out of Xero into Excel. So someone can be sitting in the Philippines posting information and you can see that information on a live dashboard.”

Lance Rubin will be sharing more details about these Excel plugins at the Accounting Business Expo. Session details below:

Using Excel to Automate Processes in Xero and QBO? Yes You Can
Wednesday 20 March 4.25 – 4:55pm
Business & Finance Conference
Register for your free ticket today!

Image credit: Quick Win Developments

Accountants Need to Manage Apps for Clients, Says Intuit

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An unstoppable trend is pushing accountants into the job of setting up and managing apps that connect to cloud accounting software. Rich Preece, VP and leader of Intuit’s accountant segment, made the call at Australia’s QuickBooks Connect, which swept into Sydney last week.

Here’s the rationale: To automate the legwork in accounting, accountants need businesses to use apps to collect and categorise their data more efficiently. The most obvious category is expense management (think Receipt Bank, Concur, Expensify, etc.) but also for time sheets, rostering and so on.

Businesses will baulk at setting up and paying for these apps if they have to do it themselves. They are more likely to give it a go if the accountant does it all for them, for an increased monthly fee.

The implications are enormous. Few traditional firms would want to look at any software that wasn’t accounting. Even cloud-minded firms limit the number of apps they deal with out of necessity; the ecosystems for Xero and Intuit contain several hundred programs.

It will likely mean firms will need to hire an in-house app expert to do set up and train staff in how to manage the apps. The longer term upside is that jobs should be more profitable, as these ecosystem apps will contain source data that accountants usually waste many hours a year chasing. It also opens the door to advisory services such as business process automation and workflow management.

Intuit is adding more tools to its practice software that will help accountants recommend apps. Accountants can also use QuickBooks Online Accountant to provide unified billing for QuickBooks and ecosystem apps. Accountants who sign up clients through QBOA get a sizeable discount on the sticker price for those apps which they can choose to pass onto the client.

Other interesting tidbits: Intuit’s direct-to-consumer model works in Australia and other countries just as well as in the US, where it built an 80%+ market share; Intuit will more than likely make business and personal loans to self-employed as well as businesses through QuickBooks Capital; and the business case for accountants to take on QuickBooks Online Self Employed clients is, well, still a little shaky, despite a swelling market.

 

Digital First: Why do you want to incentivise accountants to do the billing for the clients’ apps in the ecosystem, as opposed to the client paying for the apps separately?

Rich Preece: Well actually, it’s not so much us as the accountant. The accountant is saying to us:

“I’ve got a relationship with a business owner and I charge him $300 a month (for) QuickBooks and I do his taxes and a number of other things. The problem is, I need him to use Practice Ignition and Expensify. And so now I’ve got to say to my client, ‘Hey, I’m still going to charge you $300 a month but I need you to go buy these two things, and I need you to be the master admin and I need you to provision it, and I’d love to help but I actually can’t do any of that.’”

It just doesn’t work that way. And then the accountant says, what I’d rather do is say, “Look Mr Business Owner, for $400 a month I can actually help you with your expenses and I’m going to plug in a product called Expensify and Practice Ignition which I think you should have. So we’re just going to move to $400 and you don’t have to do anything, by the way. I’m going to set it up and manage the whole thing.”

That’s literally the talk track that accountants have said to us for 18 months and so that’s what we built. And frankly the fact that you get a discount. There’s a reason I don’t start with the discount, it is really the cherry on the cake.

We said to the apps, “Look If we’re going to build this and you want to participate, you’ve got to give the accounting professional a better price than you would give the small business.”

 

Digital First: So, then logically you feel like tech skills of some sort will become essential for accountants? If you’re setting up Practice Ignition or if you’re setting up Expensify, and so on.

Rich Preece: Well, you know I think so. This is the reality of the cloud adviser versus the accountants and bookkeepers. Imagine you and I are both accountants and you provide a service where there’s two or three apps that I need and you’ll take care of it for the small business. And I provide a service where I don’t take care of (the apps). If I’m that small business, I’m probably going to work with you versus me. I just think that’s a reality.

The last thing we want is to have an accounting professional feel like now they have to be a technical expert and write lines of code. That’s not where any of this is going. But if we can make it easy we will need to put the control in the hands of accounting professionals. And if an accountant says, “That’s not for me,” I feel like over time they’ll probably become less effective in their own industry.

 

Digital First: I hear Intuit is putting a lot of money into TV advertising, and people are wondering how effective that is. Intuit has a dominant share in the US built on direct sales to SMBs. But in Australia the accounting software companies have sold through accountants. Does the direct model work in Australia, UK, France, Brazil?

Rich Preece: It does. I’ll start by saying yes we’ve increased money on spend and it’s in two areas. One is the “Backing you” campaign which has been really successful for us in the US. It’s because A, it truly is the message we want to send and then B, because it’s been well received. We wouldn’t spend more unless ultimately there’s a business model there. We’ve been increasing our investment, but it’s with a good return.

The second area where we’ve been increasing our investment in terms of marketing is on the Intuit brand itself. There are benefits to having the Intuit brand and one of those is attracting talent. So in the US you’re quite right when you say most of our customers historically – and still – come direct. If we’re friends and I’m opening up a small business, I say to you, “What do you use?” And chances are you use QuickBooks, so before I ever get to my accountant or bookkeeper I’m already going to the website and probably buying. 

Outside the US it’s far more balanced; it’s roughly the same in terms of accountants and bookkeepers and direct. The competitors that you mentioned have always been more so on the accountants and the bookkeepers, and I do think it’s because it’s a channel. I think the definition of a channel is, the more somebody buys, the less they pay. Whereas if you look at us it’s like a wholesale billing with a discount.

Digital First: So, the short answer is selling accounting software direct works globally, full stop.

Rich Preece: It does. And then at the same time obviously I would say accountants and bookkeepers are critically important.

 

Digital First: Why is Intuit making such a big deal about QuickBooks Online Self Employed, given that it must have the lowest ARPU (average revenue per user) of all your products? Where’s the payoff for Intuit, and where’s the payoff for accountants and bookkeepers?

Rich Preece: The first answer is yes, it is a lower ARPU, typically it is $7 to $10 a month. At the moment it doesn’t have an app ecosystem. The reason why we’re so excited is if you look at that gig economy, it’s huge and exploding. And so we believe that we have to build solutions for those people. Now it is obviously a thin slice of the functionality that QBO has. SE allows you to understand what is a personal expense and what is a business expense.

The monetization strategy is that some of those folks will continue to grow (to the point) where they do need a different version of QuickBooks. Like an Uber driver that ends up with two or three cars. They actually grow into a small business from someone that’s self employed. So that’s one strategy.

As you might imagine, we’ll look to set up APIs into Self-Employed. That’s absolutely something that will be worked on. We’ll look to take pieces of QBO and add it on, so maybe you’re a self employed person that just needs inventory. And then separately for monetization model it’s sort of like building those pieces around a bit more bespoke.

 

Digital First: But what about things like QuickBooks Capital and lending to self-employed?

Rich Preece: While it’s not going to happen short term, we would absolutely open that up to Self-Employed customers as well.

 

Digital First: For business loans or personal loans or both?

Rich Preece: Well at the moment we would think about it for business because that’s where we specialise and we have no intention right now for personal loans. But QuickBooks Capital continues to be very, very successful and we are very excited and bullish about it.

 

Digital First: Can you give me stats on that?

Rich Preece: What we learnt very quickly was 70 percent of the people that we were approving had already been declined somewhere else. So that was very good. Then banks like Bank of America were offering lower rates based on QuickBooks data than they were to their own customers. In the last 18 months we started to put our own balance sheet on the platform and we tried to lend it to people that were not going to get approved by anybody else. Again, based on QuickBooks data; we’re not just throwing money at people. There’s an algorithm that sits beneath this.

And what you’re looking for is default rates to train the algorithm. And one of the biggest challenges that we’ve had is those low default rates. We keep loosening a little bit to who we lend to based on what we’re looking at. It’s been very successful in getting many, many millions of dollars into the hands of small businesses on a very regular basis.

 

Digital First: What is the default rate?

Rich Preece: Well I doubt we’ve announced the default rate. One of the biggest things the team is always talking about is, you need people to default to help the algorithm get smarter on who not to lend to. And that’s been one of the biggest problems. It’s a very low default. It’s a wonderful problem to have, in a strange way.

 

Digital First: Lend to me, I’ll default for you.

Rich Preece: The second question was the importance of QuickBooks Online Self-Employed (QBO SE) to accountants. That’s a really good question. When we first conceived and launched Self-Employed, the reason why we didn’t integrate with the QuickBooks Online Accountant (QBOA) was because we hypothesised that accountants wouldn’t be hugely interested in QBO SE clients, and that these clients wouldn’t be hugely interested in accountants and bookkeepers. One of the surprises we had was Self-Employed folks were asking us to connect them to accountants and bookkeepers on the matchmaking platform at the same rate as small businesses. So then we knew that on the one side of the equation, they actually did need an accountant and bookkeeper, but obviously they didn’t often have the ability to pay quite as much. And on the other side, accountants often said I’m not sure I want this client because they can’t pay quite as much.

So first of all we decided to start integrating (QBO SE into QBOA) for those who wanted to work together. Then we started to see accountants in the US carve off one or two employees and have them manage Self-Employed clients under a different business model. A number of firms in the US spend a limited amount of money advertising to self-employed, whether it’s Uber drivers, folks who sell things on Etsy, whoever it might be. They attract people to a free webinar, literally 100 people a month, and the accountant says, “For 30, 40, 50 dollars a month I will be your accountant or bookkeeper, I will provide you with a copy of QBOSE, and every month there is a webinar which you will attend in a group and I will share the most important things in terms of tax deductions for Self-Employed, we’ll answer a few questions. And then at the end of the year you’ll have a one hour face to face consultation with a tax professional at my firm.” And what they’ve found is, if you can start to get 100, 200, 300 folks, this thing can start to become a division of your accounting firm. That actually has some healthy margins to it.

And so this is in its early stages and we just have a few of the firms in the US who are ProAdvisors who have started to kind of do this, off their own bat. We haven’t been doing anything to help them particularly. But I personally find it interesting and I would love to see whether it’s Australia or other country’s folks testing that or other business models, because ultimately the short answer to your question is, they have to create a slightly different business model but its scale, I think, is quite interesting, particularly when you think about the growth in a segment.

 

Digital First: It just feels very unlikely to me that many accountants will want to do that. Maybe it’s an H&R Block model or something like that because those numbers, when you look at the margins you’re going to make on that compared to a regular business… Just booking 200 one hour meetings a year for that amount of money net a year, which is maximum $600.

Rich Preece: My personal thought is, particularly as I look at the number of self-employed, accountants and bookkeepers who lean into it are likely going to be rewarded. If you’re an accounting firm today in Sydney who advertises that you specialise for these people, you probably don’t have a huge amount of competition. If you can figure out this model, and maybe it’s 60 bucks a month, you figure out the right price point, because in the future it will be competitive.

Image credit: Intuit

Intuit’s Plans for QuickBooks Online Span ERP, Practice Suites and Loans: QB Connect 2017

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It may have taken a few years to turn the ship around, but Intuit is now steaming ahead towards a mighty vision. A vision that, to be frank, is far grander than I or many others would have guessed. To the point where it’s hard to imagine that one company can do it all.

ERP software, banks and other lenders, practice management software – Intuit plans to tackle all these markets.

At this year’s QuickBooks Connect conference in San Jose, I interviewed the irrepressible Sasan Goodarzi, head of Intuit’s Small Business division, about the various initiatives we had heard about over the past three days.

Each one of those initiatives turned out to be quite monumental. Let’s go through them one by one.

 

  1. Will QuickBooks Online target larger businesses?

    QuickBooks Online dashboard 2017

Intuit has always said QuickBooks was first and foremost designed to help small businesses. The company’s totem is founder Scott Cook’s kitchen table where he first wrote the software for his wife’s business. 

While Xero was the first to announce that it would target “slightly larger” companies and not just small businesses, QuickBooks Online was always in a better position to do so. Xero has a soft limit of 1,000 transactions a month; once you hit 1,200 or 1,500 transactions it takes longer and longer to run reports.

Intuit says that QuickBooks Online doesn’t have a transaction limit. A bold claim that is unlikely to be true at the extremes, but I’ve never heard people complaining about hitting any limits in QBO.

My question to Goodarzi – does Intuit have plans, like Xero, to sell QBO to the lower end of the mid-size business market? In short – absolutely. In fact, Intuit wants to take on cloud ERP NetSuite!

Goodarzi: Remember, today we serve enterprises. Most of our revenue in desktop, which is a US$1.7 billion business, a lot of it is enterprise. We know those customers. We know how to serve those customers. And we have apps for those customers today. And that’s how high up we’re willing to go (with QuickBooks Online).

D1: So you want to take on ERPs?

Goodarzi: Yeah, we’re not going to go compete with Oracle. But we believe that we already are a disruptor for companies like NetSuite. We’re building the capabilities right now (to sell QBO to enterprise).

 

Intuit is working on two areas in QBO before it is ready to take on NetSuite and other mid-market ERPs. Performance (handling high numbers of transactions, and other data), and a roles and permissions module to control which parts of QBO staff can access.

The second question on QBO is whether Intuit plans to charge extra for features such as project costing and expense management. (Xero introduced modules in these areas this year at an additional cost per user.)  

Goodarzi’s response was that Intuit wouldn’t “nickel and dime” small customers and always provide all features under the price of the accounting software. The implication was that Intuit would charge larger businesses more for these features, at some point.

Goodarzi: When it comes to enterprise, our approach is obviously making sure they have the capability that they need. And of course they are far less price-sensitive. What we try to avoid is nickel and diming our customers for everything that they want to use. Because that becomes an aggravating factor for the customers at some point, right? […]

But you never know. We’re all so early in this game that we want to leave ourselves room to deliver the benefit to the customers willing to pay for it.

[activecampaign form=18]

 

2. Will QuickBooks Online Accountant target larger firms?

QuickBooks Online Accountant workflow

QBOA is Intuit’s fledgling practice management software. It is following a similar approach to Xero HQ – a modular, API-driven model, although QBOA has a very neat workflow management tool that filters jobs by customer, type and accountant.

Intuit claims that 15,000 firms are using or have used QBOA, and while it is still under-featured compare to desktop competitors it is maturing quite quickly. It has another killer advantage – it’s free (like Xero HQ).

I asked Rich Preece, Intuit’s global accounting segment leader, what size firm QBOA was made for. Preece said it was only for small and medium firms. “We’re not going to compete with JetPack and Karbon”, two cloud-based practice management apps, Preece said on Tuesday.

His boss sees things a little differently.

Goodarzi: The larger accounting firms that have 200,000 or 300,000 customers, we want to be able to provide that capability to them. We are not going to go as high as the Big Four or five accounting firms because in many cases they have the capability themselves.

D1: Wow, so everything outside of the Big Four?

Goodarzi: Pretty much. But don’t put a timeline on that. […] We’ll go as high as the platform delivers for customers. That’s why my answer may seem vague. We don’t want to limit ourselves based on what we think the platform could be capable of.

 

This has huge implications for the practice management space. Intuit is building a modern, modular practice management platform that plugs into an ecosystem of apps, for firms of almost any size. And wants to give it away for free (for now, at least).

The incumbents in practice management have largely worked on replicating their desktop suites in the cloud. Genuine innovation is rare (CCH IQ an obvious exception). It is hard to see how conventional PM vendors will match the momentum and funding of Intuit.

Then again, firms don’t change practice management more often than every decade or two, so there is probably a chance for rivals to catch up.

 

3. How far will you take lending in QuickBooks?

QuickBooks Capital

Intuit introduced lending within QuickBooks Online last year in a partnership with one of its ecosystem apps, OnDeck. Intuit supplied $100 million and customer data from QuickBooks Online files, while OnDeck brought the analytics and know-how.

Fast forward 12 months and the partnership with OnDeck appears to have been replaced with QuickBooks Capital (here’s the press release). Now Intuit has the know-how, US$1 billion in cash sitting in the bank – and tonnes of data to make lending decisions.

The last part is crucial. The more data you have the better you can predict the likelihood of a business repaying the loan. That means you can lend to more businesses, and you can lend them more money.

So the company with the most data wins the game. Is there anyone else out there with as much data as Intuit?

Goodarzi: No. No one has the data that we have. And the reason is we know your past income. We know your past expenses. And we know your future. We know the number of invoices you have outstanding. We know who they’re outstanding with. We know the creditworthiness of those customers. We know when they pay. We know when you have to pay your vendors. We have a 360 view of you as a customer, and nobody has that.

Our losses are so low – we don’t publish the number – that we’re actually trying to figure out how we open up the top of the funnel even more. […]

 

And how did the OnDeck partnership go? Well it was a success from Intuit’s perspective. It is running artificial intelligence algorithms over 26 billion data sources – external data such as credit reporting bureaus as well as QBO files. Consequently, Intuit accelerated its lending in the past 12 months and now is trying to work out how it can speed it up even further.

Intuit’s research shows that 70 percent of businesses in their first five years need money to survive. Of that 70 percent, only 20 percent can get a loan from financial institutions. Intuit can rely on the accuracy of its algorithms and depth of data to lend to the 80 percent that miss out.

Goodarzi: No financial institution can actually lend them money because they don’t have the confidence that we have based on the data that we have. […] We think we’re actually expanding the pie for us and our partners (i.e. financial institutions) versus stealing share, because this is money that’s not being lent today.

 

So cloud accounting software companies are really in a winning position on business loans. Intuit can lend money with a far lower rate of default, which means fewer losses and higher profits from lending. It also means Intuit can offer the lowest interest rates, which will again expand its market share.

Goodarzi: We deliberately provide very low rates because we want the customer to be successful, versus we want to make a tonne of money off the customer. And so it will be more competitive versus others. But really, our singular goal is I want to give you a loan, specifically, you can’t get.

D1: So what’s your estimate for Intuit’s market share of the lending market over the next couple of years?

Goodarzi: We think the size of the pie is huge. And even if I had a specific number, I couldn’t give it to you.

 

Intuit’s moves in lending were foreshadowed two years ago. Xero then added bank loans to its accounting software through a partnership with the National Australia Bank. Either directly or indirectly, lending will become a staple in accounting software.

The second most valuable commodity after data is attention. Not only do cloud accounting software companies have all the data, business owners are spending more time in their accounting software.

The software is becoming far easier to use not to mention more attractive than its desktop forebears. Business owners are looking at reports, clicking “ok” to reconcile their bank accounts, and submitting expense receipts with their mobiles.

Each glance is an opportunity to throw up an offer to borrow $25,000, effectively pre-approved. (Intuit won’t show these offers to businesses it won’t lend to.)

Look how easy it is to borrow money in this demo from the media event at QuickBooks Connect 2017 last week.

It’s no wonder that banks are releasing reporting analytics dashboards for bank accounts. They are part of a battle for attention of the customer.

Check out CBA’s impressive DailyIQ for a great example. (For international readers, this Australian bank is one of the world’s largest and it is investing heavily in technology platforms.)

 

Where will business owners view that information? Who will they prefer to discuss their finances with – their banker or their accountant and bookkeeper?

It can only be a matter of time before direct bank transfers follow bank feeds into accounting software. It feels like the banks are in a tough position and it’s only getting tougher. 

 

4. How do you plan to make money from QuickBooks Self-Employed?

QuickBooks_Self-Employed_mobile_apps

QBSE is an unusual product. Built for mobile only (and sold only on mobile in Australia), it is designed for the casual contractor who puts all their business and personal expenses through a single bank account.

The so-called “gig economy” of Uber drivers and Fiverr freelancers is enormous – but they don’t require much in the way of accounting software or accounting services. Intuit must surely have plans for this new market. But how exactly will the company make money from QBSE? And, for that matter, how will accountants and bookkeepers?

The short answer is that Intuit can sell QBSE for less than $10 a month and still make a good recurring revenue. The longer answer is again a platform play. QBSE will become a labour-for-hire marketplace modelled on Upwork or Freelancer.com, or closer to LinkedIn.

Goodarzi: Over time, we believe we can go outside of that, even connecting them to work. For 30 to 40 percent of our customers say their biggest inhibitor to growth is that they can’t find great workers. So we can match supply and demand. With that said, if we didn’t do anything else today, our ARPU in the U.S. is about $120 after the promotion period is done.

And you know, there’s 700 million self-employed around the globe. If we don’t do another thing other than $120 a year, we’re actually quite happy with that. This is a huge market.

 

Accounting software companies are turning their products into powerful platforms. If Intuit’s expansive vision is fulfilled, accounting software will broker business loans, power medium-sized businesses, and locate your next employees.

Can Intuit develop and support so many ideas simultaneously? All while pushing into overseas markets such as France, UK, Canada, Singapore, Australia and elsewhere? How will all these competitors respond? The next 12 months will be a strong indicator of whether Intuit can match its vaulting ambitions.

What are the implications for accountants with the rise in power of accounting software? Good questions, worth exploring in a later article.

For those that can keep pace, it spells enormous opportunity.

Sholto Macpherson travelled to QuickBooks Connect in San Jose, USA as a guest of Intuit.

Firm of the Future 2017: All That Counts (AU) – app stack and business model

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Meet the other finalists:

All That Counts is the Australian contender for Intuit’s global Firm of the Future campaign and a passionate advocate for cloud accounting.

Director Lielette Calleja opened the doors 13 years ago in the Northwest Business Park in Baulkham Hills and spends a lot of time investigating new technologies on behalf of her clients.  

What makes the firm stand out?

Calleja: The fact that we aren’t a fly-by-night bookkeeping business – we didn’t set up two years ago. And I have a very strong foundation not just in the bookkeeping and accounting industry; I also understand the psychology of business. You have to know how to read business owners.

 

D1: How did you learn to do that?

Calleja: My passion for small business was seeing my father, he was a carpenter and a small business owner, and how tough he did it.

I went into the corporate world and managed large accounting teams. I worked in the music industry and entertainment industry as a business analyst and I’ve managed warehouses. So I have an operations background, not just a financial background.

If a warehouse is not operating at its maximum efficiency then that’s going to tail into the numbers. My training was to look at those KPIs. If margins are dropping I investigate. I’d love to do more of it. Clients also ask me for a lot of advice.

 

Table 1: Apps used by All That Counts

D1: How many of your clients buy management reports?

Calleja: About 60 percent. I’ve got a guy who just focuses on that. Alex is also a CPA but he hated tax. He’ll run the reports and go through them, identify hotspots and take it to the client.

Our NGO clients have to have the reports by certain dates for their board meetings. That’s an area where we feel we do quite well. I also have medium sized organisations where I do some of those management reports for board meetings too.

 

D1: A lot of accountants have trouble selling. how do you do it?

Calleja: It starts very casually. You have to build the relationship. I don’t sell it, it just evolves. They say, ‘Can we do this more often?’ and that becomes part of our fee structure.

It’s part of the reports that we produce. It’s either in an email and I’ll highlight the key things they need to address. I’ll also highlight the wins and the losses that month.

But every client we bring on as a bookkeeping client gets a management set of books.

 

D1: What’s included?

Calleja: Depends on the business but standard would be a P&L, balance sheet, cashflow. P&L is accrual, cashflow is the movement. Some of my clients need consolidation reports. They may have several entities, job costing, actuals to budget, actuals to last year, KPIs. Each client is different.

 

D1: What do you mean by that?

Calleja: In our industry bookkeepers don’t sell advisory very well. We do it but we don’t sell it. It’s not a separate item. I have clients on $30,000 retainers a year. Then you’ll get a full set of reports. If you’re a client on $6,000 a year then you will get basic reports.

Sometimes clients don’t want the insights. They just want to know how much money they make.

I have been talking to a lot of people about trying to understand why small business don’t want this stuff. There’s a lot of noise about advisory but do small businesses really want it? do they see the value in it?

I don’t see people knocking on my door wanting advisory. And I’ll tell you why – it’s because a bookkeeper is offering it. That’s one of the changes I’m making in the business. If I go out there as a CFO on call then of course they will see the value.

 

D1: What percentage of your clients use cloud accounting software?

Calleja: We have moved our business 100 percent to the cloud. But we know that not every client is for us. There is a bookkeeper somewhere else that suits those who just want to use desktop software. We are in a position where we can say no to those businesses.

In the long run it’s better for them and for us. We can’t work effectively if we aren’t using cloud services. We believe the client has just as much to gain as we do. But a lot of the time it’s the mindset. It can take a couple of months.

 

TABLE 2: Business Model

D1: What changes in that time? 

Calleja: They will call us back and say, ‘I can’t find anyone who wants to come out on site or wants to work with desktop software.’ They come to that conclusion on their own, we can’t force people. With our own clients we already have their trust.

 

D1: Do you outsource work?

Calleja: Not right now. We realised we had to offshore or hire trainees. I took the latter approach – I personally manage people better face to face. That’s not to say I wouldn’t look at offshoring but for now I felt the more experienced people needed someone to offload work to. The next wave (of hires) will be remote.

The Firm of the Future competition closes soon. Cast your vote now

 

 

 

Automating bookkeeping with Receipt Bank’s Practice Platform: Q&A

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Bookkeeping is swinging from a community of sole traders serving a handful of SMEs each to highly organised bookkeeping businesses with hundreds of clients.

For both groups, it’s clear that cloud accounting and online automation are critical to providing accurate bookkeeping at scale and at a reasonable price.

Everyone in the industry knows Receipt Bank, a bookkeeping tool which automatically adds supplier invoices and receipts to cloud accounting programs. The company launched a dashboard for bookkeeping businesses last year called Practice Platform.

The dashboard tracks metrics for a team of bookkeepers. It shows how many unreconciled transactions are sitting in a client file, the length of time since the last reconciliation, and the percentage of transactions that have been automated.

It also includes stats on the clients. For example, it shows the average time elapsed between the creation of a receipt and when it was entered in Receipt Bank. Clients who take too long to enter their receipts may need a little help with their processes. (Upsell to training on accounts payable management?)

I was curious about how well this dashboard worked for a bookkeeping business. So I met up with Tim Hoopmann, CEO of Cornerstone Bookkeeping , a Gold Xero partner and QuickBooks Online bookkeeping company.

 

Sholto: What’s been the impact of Practice Platform in your business?

Tim: We got involved right at the beginning of its launch. Like any other dashboard it pulled all of our clients’ information into one environment, and gave complete visibility and accountability back to the team.

 

Sholto: How often do you use it?

Tim: I use it on a regular basis. In five minutes I can see the status for all the clients’ receipt processing and Xero bank education. It allows me to sit in the staff meeting quite well educated. I know the status of each job and whether we are waiting on clients to provide information or my team to complete processing. It helps you predict issues before they happen.

 

Sholto: How does it help?

Tim: We can’t really do anything in our business when it comes to BAS, compliance reporting and financial reporting without having all the information in the system and reconciled. We can predict that we’re not going to hit a BAS deadline if there are 350 unreconciled lines.

I can see that staff will be complaining because they are behind and will need to scramble to get things done.

 

Sholto: What do the staff think of it?

Tim: There are tools that make lots of things visible to the business owner. Some people love that, some people are afraid of it.

I couldn’t understand years ago why one employee acted and behaved like he did. He didn’t really like Xero – he said, “It makes me too visible.” With desktop software there is no visibility, you could catch up when clients asked for it.

 

Sholto: How do you use Practice Platform?

Tim: The way I look at it is different to my team. How are we tracking with reconciliation? Do we have the bills and receipts that we need? How is the client using it? You can compare them. If there are unreconciled lines in Xero then assume that 50 percent are expenses, so there should be roughly that number in Receipt Bank. Others would be sales invoices and transactions from bank feeds.

 

Sholto: And if there aren’t 50 percent of those bills and receipts in Receipt Bank?

Tim: If they’re not in Receipt Bank then the client hasn’t done what they’re meant to do. We have expectations that the client needs to meet for us to do our work. The customer service team has the responsibility for obtaining the information from the client. It then becomes an education process as well. We talk about the benefits and time saving for all parties including the clients.

 

Sholto: How frequently do you have to contact them?

Tim: We would give them a week and after that we would contact them and say we haven’t reconciled. We reconcile fortnightly for the bulk of our clients. But we still want the documents daily. Receipt Bank is compulsory.

 

Sholto: Why do you make it compulsory?

Tim: There are several reasons for making Receipt Bank compulsory. One is that we talk about using a filing cabinet. We move them from document storage on a server to an online filing system that’s easily searchable.

Another is to save time and hassle. If they can remove paper from their business they will save lots of time and lots of headaches. How many times have any of us searched for copies of bills or documents?

Finally by provided the bills and receipts they reduce the number of queries and questions back from the bookkeepers. Less interruptions and more time for focus on real business matters like sales.

We have to sell the benefit for them not just us. If they don’t like answering queries and use Receipt Bank efficiently we will waste less of their time and ultimately their bookkeeping will be cheaper.

 

Sholto: How do you get clients to commit?

Tim: We’re really clear upfront when we have our initial discussion. We quote what we’re going to do for them and when and what they need to do in return. If you provide a “what’s in it for me” that has a time and cost benefit you will often get them on board.

Once they have committed there are many ways to see the real benefits of going paperless. For example, they can contact all their suppliers including any who invoices are only available online, like Telstra, and have all bills sent direct to Receipt Bank. This cuts out double handling and is a real time saver.

There’s a cost and time benefit for you and your team. Some people take to it really quickly, from day one. Some have to be taken on more of a journey.

 

Sholto: How do you take people on that journey? Do you have to create training for your clients?

Tim: Receipt Bank has standard training documents we can send to clients showing how to use the system.

 

Sholto: What about emailed receipts? We’re seeing a lot of them now.

Tim: Emailed receipts are great. Its about immediate forward to receipt bank and problem solved. Even better is to go online and have the receipt directly sent to receipt bank. Sometimes you can also cc yourself. Uber, Paypal and even some hotels offer electronic receipts that you can set up to go directly to receipt bank. It’s bypassing the need to touch any of that paper.

 

Sholto: How many of your clients’ receipts are automatically entered in Xero?

Tim: In the Practice Platform dashboard there’s the “no-hands” column. It shows how much is automated. It is 60% to 70% on most of our clients – that equates to the percentage of receipts or invoices that are not touched in Receipt Bank. We have rules set up for the supplier so it goes straight through Receipt Bank and is posted in Xero. For example, Telstra always goes to telephone expenses and is always paid from the same bank account. We know that the information has been entered correctly and is sitting in Xero.

 

Sholto: Why create automation rules in Receipt Bank rather than Xero?

Tim: To automate any documents coming into Receipt Bank. If you don’t make the information correct in Receipt Bank then you will need to fix it in Xero.

We have small accounts where a lot of stuff is coded in Xero.

But there’s a limit to how much you can automate. If you automate 100% you will lose accuracy. My main example is Coles. Coles could be Coles Express (petrol) or Coles supermarket (office supplies).

 

Sholto: So if not 100 percent, what is your target for automating bank rec?

Tim: We have a target for 80 percent auto-syncing in Receipt Bank to Xero. if you set a target you can generally get there and it’s good for improvement in the business. One of the things we do really well is test the technology and see how far it can go and deliver a return to the customer.

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