Bills 2.0

Ask Lacerte: Where does data go to die?

Now that I have your attention, let me explain my rhetorical question. One of the topics covered in this issue is about accounting products and how to select the one that works best for you and your clients. While there are many things to consider, I would add the following: Does the accounting package allow your data to stay alive or does it just sit there like a wet noodle, dead on arrival?

Accounting, by nature, is historical and data driven. The recognized “Father of Accounting” was an Italian monk, Luca Pacioli. Pacioli taught accounting to the merchants of Venice, but he was more at home with and interested in math. In fact, one of his students was Leonardo da Vinci. Most of our accounting principles came from one chapter in a treatise on mathematics from 1494. Clearly, our roots in accounting are a bit more scientific than we may have realized and are prone to be numbers focused. Unfortunately, as we have all probably learned by now, “lying with numbers” is a possibility that happens all too often.

When you just look at the numbers, you are missing the bigger picture. As an entrepreneur, I feel that the transaction view is not complete unless you have an “end-to-end” view of what makes up the transaction — the story behind the numbers. For example, knowing that you paid ABC Incorporated last month is interesting, but what about the contract for ABC Incorporated, all the bills/invoices you have ever received from them, all the cleared check images from them and the notes of yellow stickies with comments and directives attached to those bills. All of that information is part of the transaction — the notes, documents, payments and history. Just looking at the numbers is like not seeing the forest for the trees.

Speaking of trees, try this analogy on for size. We have a family tree on my dad’s side that goes back to 1500. When I first looked at the tree, I saw lots of names that didn’t mean that much to me. But when I started to read the story along with the tree, it became far more interesting. And when I got to the last 100 years and had pictures, letters and videos, I got a much better sense of what the tree means. The tree in and of itself is like the data in a typical GL package — interesting but not complete or “alive.” But if you add the stories, the pictures and the videos you get a much more complete picture of the data and the corresponding transaction.

The last 10 years of my career have pointed out to me that the processes behind the accounting transactions are as important as the record of the transaction. To date, accounting software has been focused more on the record and not the process. All of that is changing with the growing adoption of web-based services. As you evaluate your accounting software solutions, you might want to consider the following:

• Does the accounting product seamlessly incorporate the supporting documents? I can’t tell you how many times I have drilled down on a P&L only to be stumped when I got to the original transaction and wasn’t able to see the actual invoice or supporting contract. Ideally, you should get the documents into your solution with an email, fax or scan from you or your vendors/customers.
  
• How connected is the accounting software to your bank? More and more information is getting to the point of being just a click away from your bank. When a vendor calls and asks if you have paid them, it is handy to know the date that the check cleared. Or if a customer says they paid, it’s pretty useful to know the date the deposit hit your account. Given the fast moving pace of online banking, this should be a given in any application considered.
  
• How well does the product allow collaboration between you and your clients? Accounting and the processes surrounding the books are an iterative and collaborative process. All the comments, approvals, denials and questions should be attached to your transaction forever. You never know when you’ll be curious about the details and not have the same folks on the job to ask.
  
• Does the product leverage dashboards that you can customize? We all know that there are basic dashboard items such as cash flow that every business needs, but we also know that every business has its own buttons. The advent of dashboards enables you to customize what your clients and businesses need to run their business. These simple tools give the business owner what they need at a glance and will make them thank you over and over.
  
• Finally, in the age of going mobile, how web-centric is the application? Increasingly, the web is extending the boundaries of work. As many in the valley say, “The noose is looser, but the leash is longer.” I know that today I enjoy more flexibility in where I work than my father or grandfather ever imagined. But I also have the ability to (and do) work all the time from wherever I am. Being able to access my accounting processes from my mobile phone empowers me to chase down that partner or watch the kids perform in a school performance without missing a beat. Combine this flexibility with the power of collaboration for which the web is known, and you have a must-have feature for accounting software.

The last 20 years of accounting software has focused on reporting and easy access to the data. I think the next few years will focus on creating the “end-to-end” transaction view while helping you and your businesses with the processes surrounding the data. In the end, this is where the data lives. In the end, you’ll be surprised that with the right tools your creation will take form and you can claim, “It’s alive!”

Rene

(Originally printed in the April/May 2010 Issue of CPA Technology Advisor)

Ask Lacerte: What the ’70s and SaaS Have in Common

The following article previously appeared in the December 2009 issue of CPA Technology Advisor.

Disco, John Travolta and bearish markets. The 1970s. Lots of trends began in the ’70s that are still going strong. In fact, one of the most fundamental changes in our day-to-day financial lives took hold then — the ATM. The ATM is an indispensible tool for our busy lives today. It’s way more efficient than going to the teller and way more convenient. But how many of us used ATMs in the ’70s?

I didn’t start using them until the late ’80s. My parents preferred visiting a teller until recently and still do most of their banking at the local branch. While it may have taken a while, we can all see the benefits of ATMs today: convenient, fast and always available. It makes me ask the question, “What is the next big technology advancement in the accounting profession?”

I was recently asked a related question by Sequoia Capital, the financial backers of YouTube, Google, Apple, Atari and others. They asked if I thought the time had come for businesses to do their accounting online. My answer was an emphatic yes. I believe that sometime in the next five to 10 years, the default medium for accountants and small businesses will move from desktop accounting to online accounting. Why? Because online accounting applications like ATMs are convenient, fast and always available. As such, the time to invest and learn is now. Solutions exist today, and more and more are being built every day. And as with most technology, there are rewards for the early adopters: customer acquisition opportunities, increased cost efficiencies that increase your margins, and more flexibility to do your work where, when and how you please.

At the core of my belief in the SaaS revolution is the strong benefit for customers and software providers. SaaS is a complete shift in both the development model and the usage model of software. In many ways, it harkens back to the year I was born when processing was centralized using mainframe computers but with a faster and better user experience. The cornerstone of a SaaS application is that all the data is stored and accessed from one location on the web.

Centralized data is the key to better and more efficient collaboration. Having the ability for both you and your customer to look at the same accounting records from any web-enabled device means both of you are free to travel and conduct your business from anywhere. It means that everyone is on the same page when it comes to an issue, whether you are supporting your clients or the software provider is. Something as simple as, “Did the client record the bill as a payable or a payment?” is now a short conversation, if that. The other obvious benefit of centralized data is that you can leave the dirty work of backing up your files to the SaaS provider. No more trying to remember if it’s time to backup and no more driving the backup offsite far enough away from any natural disasters that might occur. Backups just happen automatically in real time.

Centralized data and the web interface in particular enable software providers to respond more quickly to customer needs. Software providers are able to fix bugs and update the user experience without any involvement from the customer. Customers no longer have to wait for the annual update. Instead, applications are often updated every eight to 12 weeks. It’s a win-win for both the customer and the software provider, which translates into faster learning, more frequent upgrades and simplified customer support. The funny thing is that once you make the technology leap, it’s hard to imagine it any differently.

Sometimes when I talk with accountants about the benefits outlined above, the response is “Yeah, but it’s too early.” It’s really not. SaaS has been around for more than a decade. If you equate that to Internet time, given the frequency of new products and/or versions of products, my guess is that the last 10+ years in SaaS development is equal to 20 to 30 years in the old model of software development. Large companies run their entire business using SaaS with applications from SalesForce, Oracle, NetSuite, Intacct and many others. Smaller companies have even more options from Freshbooks (invoicing), PayCycle/Intuit (payroll and accounting), Constant Contact (marketing), and a host of new services.

I run my business entirely online. We have no filing cabinets. I can pay bills, process payroll, review financials, examine contracts, and manage the 401K all from my iPhone. The collaboration with my accountant is great. She can work on things from her office on her schedule. The convenience, ease and flexibility help us both focus on more important things.

If you are still not convinced that the SaaS revolution is upon us, you only have to look at some other applications that you are already using. Many accountants are hosting their QB data file. Clearly there is demand for centralized data from accounts. The most-used web application is email. People really just started using it in the last 15 years, and now it is indispensable. It has become part of the fabric of our everyday life, and I predict that financial applications will do the same. Finally, the recent push by industry players like Intuit (through its recent acquisitions of PayCycle and Mint), CCH, Thomson Reuters and CPA2Biz suggest that the “quickening” is happening.

When you get ready to move all of your applications to the web, what questions should you be asking? Depending on the nature of the application, you should require a SAS 70 audit, make sure the data is backed up and accessible in a different natural disaster zone, and ensure that the application is compatible with any of your existing desktop applications. There are, of course, many more things to ask, but these are specific to SaaS.

In the next 10 years, SaaS applications will surpass desktop applications in usage. You can wait for that to happen or you can help lead the charge. If you are not leading the charge, you will be following the direction of those who are. Which would you rather be doing?

New Transaction Detail Export for Thomson Reuters Write-Up CS

Just in time for end-of-year write up (or getting started with 2010) we have added a detailed transaction data export for Thomson Reuters Write-Up CS users.

To export Bill.com transaction data into Thomson  Reuters Write-up CS simply go to the Reports tab and select the appropriate Thomson Reuters Write up report, either:

• Thomson Reuters Write-up CS Summary Export: This report contains transaction summary data for each GL account
  

• Thomson Reuters Write-up CS Detail Export:  This report creates detailed bill and payment data 

Both reports are created on a cash reporting basis. 

The new Detail Export allows Write-Up CS customers to do more detailed write up and perform bank account reconciliation because it contains every individual transaction and not just a summary of each expense account.

To import the data into Write-Up CS, go to the Accountant's Assistant and upload the exported report. 

Ask Lacerte: Networking... Who Are You?

The following post previously appeared in The CPA Technology Advisor.

“Who are you?” 

Despite this bringing to mind a favorite song from the Who it is a great question for all of us to ask when it comes to business.  When I answer that question, I have to include all the people that have affected and are affecting my life.  In short, I am me plus my network.  What about you?

This issue discusses among other things the network community for accountants.   While you may or may not think of yourself as a networking mogul, you, in no doubt, are where you are due to the network you have surrounded yourself with.  People along the way influence what career you choose, where you settle, whom you work with and the customers you have.  One of the most powerful things about the network is that it is always working for you even when you are busy doing other things. 

When I left Intuit to start PayCycle, I knew the network would be helpful but I didn’t know how helpful.  With the germination of an idea, I started buying coffee, breakfast or lunch with people that I knew. I would explain the idea, get feedback and ask for suggestions with respect to the idea and other folks that might be helpful.  One thing led to another, and soon I had a group of 40 angel investors that were interested in investing, a handful of customers, some awesome co-workers and the beginning of a company.  I continued to nurture the network and good things continued to happen including attracting venture capital and some big companies such as Microsoft and Intuit as partners.  All of this was in the first 30 months of “hanging a shingle”.  And it taught me something very important: don’t underestimate the power and importance of the network.

Malcolm Gladwell’s “The Tipping Point” is a great book that explains the power of the network.  The best reminder of this in the book is in the opening chapter.  We have all heard of Paul Revere but did you know that there was another rider warning of the British invasion.  The problem is that the other rider went to a number of towns and shouted at the top of his lungs while Paul Revere when to a bunch of towns and informed folks in his network to spread the word.  Because of his network, many were prepared to fight and win.  Because of his network, we all know who he is.

In the book, Gladwell identifies three type of people that make a difference in the leveraging of the network: Connectors, Mavens, and Salespeople.  Connectors are people that know everyone.  Mavens are people that know a lot of people but also know a lot of things.  They are the ones that can tell you where to go eat in any city they have visited.  Then there are salespeople, that are constantly promoting things they like to the people they know. 

As you grow your business, it is important and critical to identify those individuals that are Connectors, Mavens or Salespeople.  It is important because these people are the ones that create the tipping point in the business.  And it is important to make sure you take care of them.

In my experience, there are lots of ways to take care of and feed your network.  The easiest thing to do is to literally “feed” them.  A good friend of mine suggested long ago that I buy every meal of someone in the network.  The reason being that people would always think positively of their meetings with me and would be interested in helping me grow my business.  While I don’t buy every meal, I do buy a lot and use the rule of thumb that if I asked for the meeting, I buy. 

The other way to “feed” the network is to provide information.  The value of your network is based on the value of the information exchanged.  In order to get information you need to share information.  So when you are “working” your network, you must be prepared to share something.  The thing that is interesting to me is that as you have more meetings, you have more information and are more “valuable” to your network.  And more importantly, the opposite is true: your network is more valuable to you.

Much is being said these days, good and bad, about social media such as Twitter, Facebook, LinkedIn, and blogs. While much of the talk focuses on the usefulness (or lack thereof) of some of the discussions that are occurring, I think that is only part of the equation—like focusing on the value of mavens and not the connectors and salepeople.  What I see are people expanding their networks and building relationships like never before possible, and with people they do not even know (yet). And because these networks expand and share information so fast, they can be immensely valuable for keeping informed, getting help, and hearing what others are saying about you and your clients. These days, by just typing the letters “RT” (Retweet, for those of you not yet on Twitter) you too can be a connector to thousands of others for far less than the cost of a lunch! If you haven’t already, I urge you or your firm to get started (shameless networking plug: be sure to “follow” us at @billcom!).

It is probably worth mentioning that the network is all about helping those in it.  As an accountant, your network of businesses and people is vast.  You can help your customers in so many ways.  You can introduce them to potential customers, employees, resources and new ideas.  As part of doing that you can add value in a way that is “priceless”.  Ultimately, the sum of the parts will be worth much more than the services you provide.  Never mind that helping your customers in this way can be one of the most fun things to do. 

So “Who are you?”

Rene

Paying employee expenses electronically with Bill.com

Businesses of all sizes routinely reimburse employee expenses. But small and medium sized businesses typically do it the old fashioned way, by filing paper copies or expense reports and receipts and cutting paper checks. This is is time intensive and results in slower payments, and slower access to funds for employees.

While employee expense reimbursement was not the primary reason for creating Bill.com, it turns out that many of our customers use us for just that. Especially now that our ePayment capability makes it easy to pay employees electronically.

In a nutshell, here is what our customers are doing:

• Filling out expense reports using a company's existing process (typically with Word or Excel files).
• Faxing or emailing those forms to their company's Bill.com account along with images of their receipts
• The finance team can then classify all expenses using the general ledger information synchronized with either QuickBooks or Intacct.
• The expense report is then routed to the employee for the "electronic signature" and then routed to management and the finance team. Every step of the process is recorded in the audit log for future reference and all the documents are stored digitally-- the employee can literally shred the receipts and any paper documents.
• Once the expense report is approved, the finance team (or employer) simply pays the employee via Bill.com. If the employee's bank information is present (and it typically is because the same finance team set them up in payroll) then the employee is paid electronically via ePayments, directly to their bank account. If their bank information is not in the system, they get paid by check (without requiring the finance team to print, sign, or distribute the check).
• As an added bonus, the employee receives an automated email when the payment is sent and when funds are available in their bank account. All without any work on the part of the finance team or whoever processed the payment.
• If an employee has a question about payment status, the finance team can look up payment information with a few clicks.

To learn more and try it 30 days risk free, visit http://www.bill.com/businesses/expense-reimbursement.php

Ask Lacerte: Branding Your CPA Firm

This post previously appeared in the CPA Technology Advisor.

Please join me in a thought experiment.  Think of the name of your favorite restaurant.  Just think of the name.  Try not to think about the food, the service, the ambiance or the desert.  For me it is impossible to keep it just to the name.  As soon as I think of the “Flea Street Café”, I can’t help but think of all the attributes (tasty, organic, caring service, friendly) that make it a great place to eat and my favorite in the bay area. 

A brand is not about logos and colors; it’s about what people think about when they think of a company name. Marketing professionals try to influence that with colors, logos and other techniques but ultimately the brand is considerably more complex and is built over time.  And in the case of accounting firms, the brand of the company is the brand of you.  So with that in mind, what is your brand?  What would customers say if I asked them what you stood for?  And how would you like them to answer that question?  And finally, what is the best way to go about building the brand of you?

You may not be asking or know the answers to these questions but you should.  In the absence of you directing and influencing your customers and prospects they will determine your brand attributes.  You cannot afford this.  In the age of technology and outsourcing, your biggest advantage is you.

Every interaction with a customer informs and affects your brand image.  When the customer visits your office, they soak in all the details of your office without even knowing it.  For example, a messy desk full of papers may make them wonder about your organization skills.  An empty office, may make them wonder why you aren’t more busy.  Your degrees and certifications on the wall may help them get comfortable with your credentials.  The list is endless and my guess is that you don’t want your customers wondering about such attributes. Without purpose or context you are giving away your brand.

Accounting firms today are at a cross roads... Not about their image, but how they are perceived in the minds of their clients and market.  Are they a place for businesses to drop off their shoebox of receipts and papers and get back reports/forms, or are they relevant to their clients day-to-day finances/operations?  Ultimately, this is your choice.  Whatever your choice, though, you must communicate your brand consistently to ensure your customers think of you as just taxes and forms or all of that coupled with sage advice, or something else all together.  Whatever image you pick, you probably want it to do what all brands do – create customer loyalty and as a result greater revenue.   And we all would like more revenue and less attrition.  As someone who uses accountants for personal and business here are the things that matter most to me:

Responsiveness -  We are in the information age and for better or worse, information moves much faster now.  We all expect more sooner.  If I can get an answer on Google in 1 sec that would have taken me several hours 20 years ago, why shouldn’t my accountant respond to my question in less than a few business hours?  It may not be fair, but we all are being trained to expect this.  My advice, if you can’t respond quickly, tell your customer when you will respond.  That only takes a few seconds and will reset the expectations.

Communication- Communication is an essential tool in business.  While most firms communicate the positive, one of my pet peeves is communicating the negatives/mistakes. Failure is a unique opportunity to say something about who you are and what you stand for.  If you make a mistake, acknowledging and fixing it can and will enhance your brand.  We all know that we all make mistakes.  Yet it is rare for someone to acknowledge and to proactively make it better.  These are the people we trust and ultimately that is one of the most important brand attributes an accountant can have!

Completeness – Let’s face it, your job is all about completeness.  You have to know all the tax and accounting laws that may affect your clients.  That’s a huge burden but if you don’t then your clients will look elsewhere.  Maybe not today but when they learn that something was not done completely, they’ll move.  So if you are a small firm that may not be familiar with ISO’s and AMT or Family partnerships or some other arcane law, refer the client to someone who does or better yet consult that person and let your client know that you consulted with an expert.  

Efficient Technology– As a technology entrepreneur, it should come as no surprise that this is an important brand attribute for me.  It is the way I manage my life and given what it has enabled me to do, I wonder when someone I work with is not leveraging technology.  Technology can act like a wrapper around your product and services.  You can use it to track important client details and communications, do your work more efficiently, and become more proactive (more on that later).  For me, someone who leverages technology to the fullest has probably done it to get more time and better perspective. 

Proactive advice – Finally, all of the above attributes come together in this attribute.  Going above and beyond the call of duty is the holy grail in servicing clients in any business.  Combining technology and the complete knowledge of your client will allow you to reach the ultimate responsiveness – proactive advice.  Understanding the big picture for your client, timing on retirement, portfolio and investments,  shifts in jobs, business financings, etc is an opportunity for real value add.  After all, as my mentor at Price Waterhouse told me, “the language of business is accounting”.  Make sure you read between the lines. 

Accountants are in a unique position to be consigliore for their clients.  If you can position/brand yourself as such the rewards are strong.  Good luck and happy branding.

Rene