Brian Tankersley, CPA, and Randy Johnston, discuss new innovations in small business accounting, and how both clients and firms can benefit from them. Watch the video, listen to the audio, or read the transcript.
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Transcript (Note: There may be typos due to automated transcription errors.)
SPEAKERS
Randy Johnston, Brian F. Tankersley, CPA.CITP, CGMA
Brian F. Tankersley, CPA.CITP, CGMA 00:00
Welcome to the accounting Technology Lab sponsored by CPA practice advisor. With your hosts, Randy Johnston and Brian Tankersley,
Randy Johnston 00:11
welcome to the accounting Technology Lab. I’m your host. Randy Johnston with co host Brian Tankersley and we thought it was time to talk small business accounting systems again, because many of you are looking at the impact of client accounting systems and with the announcements on June 26 of Intuit, with their agentic AI and some of the implications of that, plus the inability to opt out of AI in the QuickBooks Online platform that’s given a number of practitioners pause for the moment. Now, because of that, we know that many of your client accounting services practices are focusing on smaller businesses. Now you can use larger tools like say, gent or soft ledger or dual entry to get that work done, but many of you will and are looking for replacement systems, and you’ve got mainstream players like Xero and Zoho books or IRIS accountants, world Accounting Power, which have all been competitors, but we thought it was worth in making sure you knew of many new competitors. So I’m going to name them quickly, and then Brian, let you react on some of these. But for example, in deployed in my clients today and I have basis AI digits. Ai accounting is in full release. Of course, light by atomic CO is out. You’ve got puzzle.io which Brian spent quite a bit of time with, those folks at scaling new heights. You’ve got really and, you know, I’m sure we are missing some that could be used for client accounting services. But when we taught the this concept in 2024 we only named four probable systems that could be used for cas. One of those was the not for profit specialty tool of Aplos. But the list now is quite long. And in fact, just to give you a flavor, I’ve got 14 products in front of Brian and I right now. And if you’re listening, you can, you know, see the transcript, and you’ll hear about these different products as well. But if you’re on the video version of this, you can actually see the product names, and it’s like, you know, what’s a really, what’s a what’s a dual entry, those would be kind of foreign. Now, there are some desktop hosted products you can use for cas, accountage, CYMA, QuickBooks, enterprise, which has a relatively short life left sage, 50, inspire systems, those would be a little stronger options. But, oh my so much change. So Brian, what do you think our listeners need to know about some of these systems? And you know, I’ve got a couple that I’ll pick on, but you can pick on the ones you’d like to to mention. You
Brian F. Tankersley, CPA.CITP, CGMA 03:15
know, digits seem to be the belle of the ball at at scaling new heights, and they had, you know, they’re and they seem to have quite a bit of, quite a bit of interesting things going on there with them. I would just generally say that these ones that you’re hearing of the first time, you know, I think you’ve got to be very careful with them and not bet the entire farm on them. Okay? Because the, you know, there are a lot of, you know, my experience with looking at new accounting softwares is that I’ve, I’ve reviewed most of them when they were new, and then I’ve gone back and reviewed them a few years later. And the there is a concept in startups called a minimum viable product, where, where somebody releases something that is the bare bones, and then they iterate and make it better. You know, the classic example I would think of would be, you know, if you go back 15 years, FreshBooks, okay, FreshBooks came out. It was a single entry system at the time. It’s now a full double entry system. It’s strong. It’s got everything, you know, but it took a number of years for it to grow into adulthood and be ready for, ready for multi, multiple clients in multiple industries, in an accounting practice where you can get things done quickly. I think there are a lot of interesting things here. I think you need to be trying at least one of these new ones out at some level, maybe one client, maybe two clients, I think you need to or maybe just try the firm, the firm’s account, with it, I don’t know, but I think it’s, I think, I think we need to start dabbling here, because I feel like we’re on the precipice of some innovation in productivity, especially surrounding. Bill entry, Bill classification and and again, account reconciliation in some of these applications.
Randy Johnston 05:08
So to that point, Brian, you’re, I think you’re spot on. And you know, if we look at what has evolved with Jeff Siebert digits product, you know, he has taken that from he and his team have taken it from a reporting tool to a full AI accounting tool, and that’s kind of a big deal, and the classifications in there are amazingly accurate. Now, just to give you pricing again, we try not to give pricing for companies, but the the charge is $100 per month per company, and that includes all of the Auto Classification pieces. And when I consider labor, if you think about all of the transactions that would arrive for a client or your own business or firm. How much labor can you buy for $100 and you know, pick your cost basis, whether it’s $50 or $33 an hour, whatever. So it’s two or three hours ish. But the capability and accuracy of the platform seems quite good, so playing with the platform makes good sense. Another development on digits is former CTO of zero, Craig Walker joined digits here in the past 30 days or so. Now let’s
Brian F. Tankersley, CPA.CITP, CGMA 06:36
storming. Craig Walker back into space. He’s he’s a he’s a giant and and having him there gives them a huge amount of credibility, as does their their strategic advisor, Casey Johnson, that’s our friend of ours.
Randy Johnston 06:51
Yeah. And it turns out that Craig had been kind of out of the accounting profession since he really enjoyed his exit from zero, which was good, but you know, the capabilities of Craig against this platform, I think will, you know? I’ll say, have an adult in the room. Now, the the other one, Brian, that, besides digits, that you got exposure to, was puzzle. Now, what? What would you like the listeners to know about puzzle?
Brian F. Tankersley, CPA.CITP, CGMA 07:27
I think generally, we’ve got to just kind of consider, consider these things, new products. Okay? I think that there are, you know, they are new products, and I think they’re worth exploring. You know, I haven’t run any transactions through puzzles, so I’m not, I’m not really ready to make any conclusions as of yet, but I would say generally that with these things, you know, that everybody’s got a good dog and pony that I’ve seen that we put on this list, okay? Everybody’s got a good show. They’ve got a good PowerPoint, okay, but in my mind, especially in small business accounting, especially in CAS, the rubber meets the road when you start putting your own transactions into it, and then you have to put in a payroll, okay? Because I think most of these are not doing payroll. They’re using outside services for payroll. So payroll is going to be an interface or an upload. And so this, I think generally, I’m going to stick with, you know, rather than, rather than take, give my first impressions right now, I’m going to stick with the Missouri approach that they’re going to have to show me before I before I really opine much, but I will say that I am, I am intrigued by what I’ve seen, and I think it’s going to be interesting when I get some time to run transactions through to see what those observations are, because I’m expecting good results based on what I’ve seen.
Randy Johnston 08:52
Understood well, one more that I want to call out, and again, you may want to join the wait list on this is basis. Now Matthew harp and Mitch trenovsky have built a very interesting system that I have deployed in some clients, and the results so far are quite good. Now the concept of basis is to optimize the processing of transactions. It’s far beyond rapid close, but there’s classification and wrapping around QuickBooks Online and sage Intacct and doing fancy reporting and lots of other things that platform shows magnificent promise for optimizing CAS practices, just like many of you, have been looking for workflow control tools, and many of you have landed on keeper as an example. You know, when we look at the workflow options, which typically include aero workflow or jetpack workflow or carbon or keeper, you know, those tools are getting the job done, but you’re looking for something. More basis might be your something more So Brian, if you could show the next slide, I think you’ve got them down right now. But if you could show the small business products next,
Brian F. Tankersley, CPA.CITP, CGMA 10:18
okay, and and so again, we’ve got, we’ve listed out here quite a few, quite a few items in there, but there are new ones on this list that we haven’t had before. You know, momentio one up. Zip books are three in the SAS area that show up. We also have, with more sophistication, you know, the custom books product that we’re big fans of, you know, COVID account edge is still around, believe it or not, a soft ledger is another one that’s interesting. That seems like a good one for people that are graduating from QuickBooks, or maybe graduating from QuickBooks Enterprise because they’re tired of, tired of paying more more for not much innovation spires. And you know,
Randy Johnston 11:00
before you leave soft ledger, I think Ben Taylor and Jeff Australia have done a beautiful job there. And if you have multi entity needs, typically, I am referring soft ledger and X ledger very, very frequently and dual entry, those three seem to be the up and comers that could displace QuickBooks Enterprise. And I know a lot of you have got a fairly large installed base on QuickBooks Desktop or QuickBooks Enterprise, and you’ve looked at the capabilities inside QBO and said, I can’t take these clients there. I gotta find a new landing zone,
Brian F. Tankersley, CPA.CITP, CGMA 11:43
but, but I don’t want to, I don’t want to to have omitted from that list. So okay, I think Zoho books is a, is a very viable, very viable competitor there. They’re not doing multi company as of yet, but it is on their roadmap in the in the short term, I think there’s, I think the thing that’s so interesting with Zoho is the whole finance suite. You know, they have 50 state payroll now. They have, they have the expense tool. They have a tool for managing subscriptions, which is a con, which is a common way that people are doing recurring revenue businesses today, you’ve got a lot of things like that going for Zoho, plus all the automation, plus the Zoho analytics tool, plus the integration platform as a service there in the term, in with Zoho flow. And I think, you know, I think in addition to those, you know, I think Zoho is, I think I’d be, we’d be derelict if we didn’t call Zoho out very specifically, because of its because of the platform’s flexibility and the ability to use the platform for literally everything. Yeah, and
Randy Johnston 12:59
you are spot on. On that because Cynthia Rajan, who is the Global Head of Marketing for Zoho books and Zoho practice, you know, we’ve had the pleasure of meeting in the last few weeks, and frankly, she did a beautiful job of a seminar with DEXT the week that we recorded this particular podcast. But you know, the whole capability of Zoho books, plus payroll, plus all the modules, if you do Zoho one, which is the way I’d like to have you do it, is is really exceptionally good. And then call this maybe a bit of an endorsement, but for most small business clients that have come to me were asking for recommendations almost universally. I’ve started them on Zoho one and Zoho books in specific. And Brian, you would have no reason to know this, but I did consulting work this week with a firm that is all Zoho one based, and they’re big firm, and we, I will tell you more about it, you know, when we’re offline. But bottom line was, this firm was producing 15,000 tax returns with 1000 plus cast clients on Zoho. And it’s like, okay, cool for you. So just be aware that it is very capable. And we’re aware of another firm in Tennessee running 1000 plus client accounting services, clients on Zoho. So you’re absolutely correct in calling that out. You know, if you look at our list of recommendations for client accounting services a year ago, if it was SAS, it was QuickBooks Online, it was Zoho, it was zero, it was app plus Fresh Books and Fresh Books, that’s kind of what it was. And now you can hear why we thought it was important to pull these out, because if you’re not seeing the video version of. Of this. You know, in small business products, we’ve got 20, really 21 if you want to count the two sage 50s listed and and on Cas, we had about 20 also. So, you know, we’re talking a marketplace of 40 potential products. Now, not to be distracted, but also remember that upmarket in the mid market are even more products. And again, here we would suggest that there are some new players that are quite stunningly good, a collection of about 20 products that are probably more at the QuickBooks Enterprise and above level. But even players that have been advertising heavily, like Odoo and others that we’ve got a long history with with, like Acumatica or dynamics 365 Business Central or sage Intacct or NetSuite all fall on here. And I think Zoho books is strong enough that it can hold its own even in this area. But you know, another 20. So my old rule of thumb, friends, was there’s roughly 300 products being sold in the US market. Four or five companies own about 50. A piece sage owns, you know about that many? Epicor owns about that many. Infor owns about that many, and so forth. But for our small businesses, the options have just exploded in many of the new general ledgers are AI based general ledgers, and there’s more that we’re aware of, but they’re so juvenile, I don’t even want to have you looking at them yet, because I just don’t think they’re ready for prime time. And
Brian F. Tankersley, CPA.CITP, CGMA 16:42
the interesting thing with some of the new competitors is they are having, they’re adding e commerce integrations, they’re adding integrations into CRM and other line of business management tools. And so it’s, they’re really, we’re really moving very rapidly toward the enterprise architecture world that that the enterprises had been in for 20 years, where everything has some kind of integration. So you enter data once and it goes in, or the data gets harvested through AI, and you never enter it. But the days of entering things more than once into into disparate systems, should be coming to a close, if not over for you at this point. And so that’s a that’s a major trend that we’re seeing with these things. You know, NetSuite has had, I’ll call them out, because they’ve had integrated CRM accounting and E commerce for for decades, you know, for quite a while, but there are more people coming to this integration thing, either through either through tools that integrate directly, or through third party integration tools like Zapier. Zapier, I don’t know how to pronounce that word that that Z, a, p, i, e, r, company that does the integration or power automate or Zoho flow. So I think it’s really more about looking at your business processes and figuring out how you can digitize those for many of our mid market friends. Also don’t forget that with robotic process automation, you can, you can take data out of your legacy systems and work with these. So if you’re stuck with a legacy system like, you know, let’s say a sage 100 that you’ve had forever, one of the things you can still do is you can use Power Query to ingest data that’s stored on your network and then put it into kind of a data mart. You can, you can use, you can use power automate. You can use robotic process automation tools, and there are a zillion of those out there to get the data in and out of these legacy systems. Okay, I think the trend that I’m seeing generally in mid market is more on the business process automation and creating the integration however you have to and again, what we can do once we get these things created with RPA is we can then design the new systems on a new platform when you switch platforms, and keep much of the front end the same for the users, so it requires less training, and You get superior integration. But again, this integration and again, cloud based stuff is is really important, but I want you to, I want to make sure you don’t forget about RPA and the automation, because that’s where you know, that’s where you’re going to, you’re going to make these things make sense.
Randy Johnston 19:36
Well, a year ago, at this time, we were talking about digits as an example is an AI powered reporting tool, and we probably could have produced a whole nother session on AI reporting so things like clockwork.ai. Would have fallen in that, and giraffe has some of that. And again, I could list, you know, many, but our basic conclusion is that. Automation and AI is likely to drive more advisory work if you want to take it. And we probably could have said the same thing in the tax session for you. But with CAS in particular, we note that tools like for impact data, which we’ve recorded a podcast on or aider, which we’ve recorded a podcast on, are definitely you know, candidates in that particular world. But we want to make you also aware of some other advisory tools that have you know, come into being, and while we can automate more with you know, makers hub.ai, or bot keeper of those types of products, we also have some interesting new reporting tools and advisory tools. So here, for example, the old lease crunch company, who bought phenograph, has renamed themselves to crunchify, and they are releasing advisory tools and strategies for you to deliver advisory services the audit site folks, the first week of July, released a product called the management meeting module, and it allows you to offer multiple different types of services for transaction automation. So transaction advisory services, and for example, they can do an automatic cash proof to prove quality of earnings with an automated tool. And you know, if you’ve got a chain of, let’s say, 100 fast food restaurants, are you better off selling all 100 at once? Are you better off, you know, blocking them up in two or three chunks? You know, which are most profitable, and so forth. And with their tool, you can quickly prove that out. And a lot of the private equity people are looking for the same type of, you know, proof of quality of earnings, including a reporting tool Brian, you and I discovered at AICPA engage called Dan Neil with Jonas Drupal, who is the founder there from New York, was a very interesting type of tool. So again, when it comes to reporting and advisory, many, many options, but you’ve got some tools that have AI in them, like for impact data, that you could hook to QuickBooks, online clients and immediately on Discover advisory opportunities in ways that you might not otherwise perceive.
Brian F. Tankersley, CPA.CITP, CGMA 22:48
Now, don’t forget about Zoho. Zoho analytics. Don’t forget about Power BI you know these, these BI tools, have a role in here. However we see when it comes to advisory, we see those BI tools being used more with the operational systems and the operational data on a day to day basis in near real time. And that’s a key piece that we have. And one of the critical challenges for this is that you know you can’t, you can’t do advisory if you don’t know what you’re doing in that industry. And so that means you need to have a significant amount of experience, significant number of clients in that area. You know you can’t be one of these people that takes a that takes a compass and and draws a 30 mile radius around their office and says anybody, that anybody has a business in this area is eligible to be my client. You know, I think it we really for advisory. We really have to become more like a boutique and and that’s a that’s a move that some of you have made, and some of you have not. And so, you know, again, the the longer you put that off, the harder it’s going to be for you to get into doing good advisory in this area.
Randy Johnston 24:03
And you know, when you think about KPIs surfaced by Power BI, that is one of the things I like about for impact data. It is a Power BI tool that does both financial and operational metrics and does them automatically for you, and then helps you understand where you have opportunities with the clients so so what we were trying to accomplish with this session was just to make you aware of how many client accounting services tools are surfacing. And we didn’t even touch on the AI powered workflow tools or any of the management tools around that. It was just the accounting software and a little bit of advisory. So Brian, any other parting thoughts for our listeners today?
Brian F. Tankersley, CPA.CITP, CGMA 24:47
You know, I think we’re living in a period where there’s a huge amount of innovation taking place. And I think if you’re using the same products that you implemented right before, why 2k It’s time. Time to look around and see what’s going on. Okay? Because there’s, there’s a lot of interesting innovation in here. And you know, the world is changing rapidly because of AI. And if you, if you don’t change, you may be left behind the way that people, the way the people that smoked at their desk and swore by their five, seven and 14 column where, when things got computerized, you know, I think AI is going to have big changes. The processes are going to change. The amount of labor it takes is going to change. And again, we’re really switching to being more digital plumbers and less water carriers now. And so we have to, we’re going to have to change skills, and in many cases, we’re going to have to skill up in areas to be effective here. So it’s a you know, you could say it’s the best of times, it’s the worst of times, I guess.
Randy Johnston 25:49
Well, we appreciate you listening in, and we’ll talk to you again soon in another accounting Technology Lab. Good day.
Brian F. Tankersley, CPA.CITP, CGMA 25:58 Thank you for sharing your time with us. We’ll be back next Saturday with a new episode of the technology lab from CPA practice advisor. Have a great week.
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