Maximizing Automation in Accounting Industry

The Modern CPA Success Show: Episode 94

[00:00:15] Tom: Welcome to our podcast, the Modern CPA Success Show. Today is a topic that we talk about a fair amount, but I think we can really dig in as we talk about automation. And I think we have a really unique company that we're talking to today. So Jesse Rubenfeld, the founder of Finn, optimal, is with us. Jesse, welcome. 

[00:00:33] Jesse: Thank you so much for having me. Yeah, 

[00:00:34] Tom: I'm really excited about this.

[00:00:36] So one thing that I think is unique I'll let you tell more about your company. Can you tell a little bit about yourself and then I'd love to hear about thin optimal and what it. 

[00:00:44] Jesse: Absolutely. I am an accountant first and a programmer second. I started my career at Limewire and began automating my own job first with Pearl, then with Python, and over the span of 15 or 20 years, developed a bunch of tools that helped me as A C F O, as a controller in various roles.

[00:01:04] Step out of the booking of entries and the shuttling of data back and forth, and focus on the strategic, on how to advise management, and ultimately how to help our clients get what they want out of their accounting systems. And I took that capability and founded Fin Optimal to help bring that to our clients and the clients of our partners.

[00:01:26] Okay. 

[00:01:26] Tom: Excellent. And one thing that I think is really unique from what I have seen is as we talk about FinTech companies, most stop at, we provide this service and if you wanna buy it, we've got this software that can do that. And what I understand about your company that's really unique is you do have clients where you do the service and then you use your tools with those clients.

[00:01:43] Is that a good description? 

[00:01:45] Jesse: Yeah, that's correct. We are trying to, so I sometimes I think of the Steve Jobs model of you have to build the hardware and the software to get the results. , they're a coupling there. I think a lot of times the accountants, the service providers [00:02:00] themselves are gated by the tools they have access to.

[00:02:03] And this is one of the things that I learned when I was at De Shaw is that when you really want to get the job done at a granular, precise level, frequently, you have to build your own tools. . We're not reinventing QuickBooks or build.com or Expensify or Shopify or some of the other popular products that we use, but we're integrating with their APIs in ways that really let us do our job better, and we call those integrations and other software that we've built our own tools and we think that helps us a lot.

[00:02:33] Tom: Okay, cool. So if an accounting firm wants to work with you we, I think many of our listeners are offering advisory kind of services, maybe offering CFO servicers. When you get into that, I think often it's small firms and one of the challenges that I think they have is I'm trying to do everything.

[00:02:49] So I've got, the bookkeeping takes me a lot of time. I want to do the advisory, but it's hard to find the time to do that. And so the option seems to be either I hire someone to do that or maybe there are. Absolutely. So is this one where someone can turn to you and say, can you help us? Or do you only work with your.

[00:03:05] Jesse: Absolutely. We definitely partner with c F services firms, occasionally other C P A firms that wanna focus on the advisory angle. Yeah. We don't necessarily want to provide the advisory services, but we want to give our partners a strong foundation of bookkeeping and accounting. We're focused. . in using automation to improve the accounting system, and that helps our partners, the CFO services, the outsource CPAs that are really, outsource CPAs are really advisors to their clients.

[00:03:35] They're looking for the advisory more, but you have to have the bookkeeping and the accounting there in order to do it. We wanna be the wind beneath their wings. Okay, cool. 

[00:03:44] Tom: Okay, so I did hear in that you're not trying to compete with them, right? You're not gonna come in and steal people's clients?

[00:03:48] Jesse: Of course not. No. We don't do any taxes or. And we refer that out to our partners and they frequently refer to us cuz they wanna spend their time on that advisory rather than figuring out how to optimally book [00:04:00] their client specific workflows. And that's what we're really good at.

[00:04:03] Okay. 

[00:04:04] Tom: So do you wanna talk a little bit about the main areas of automation? Where do people see the biggest benefit when they want to engage you? . 

[00:04:11] Jesse: Yeah. I think there's a lot of people touting automation. And a lot of times it's more like automating the accounting firm, like practice management.

[00:04:19] , maybe some light scheduling of entries. We're trying to automate the accounting work. Think the controllers team, the people who are booking those entries. It's very tactic focused. It's a strategic choice to have a good accounting system. . But getting that right is a very tactical, precision profession, right?

[00:04:40] Yeah. So we wanna distinguish between automation and automation assisted, right? Like we think there's a lot of people out there doing automated sorry, automation assisted accounting work, where there will be like a recurring journal entry scheduled. Yep. , we call that automation assisted. Let's distinguish that from automation where, for example, if you're selling software and your HubSpot, you, you get a deal to closed one in HubSpot.

[00:05:06] Great. You signed a deal, right? We see others doing it where somehow the accounting team gets an email and then it's their job to go in and calculate some entries and schedule them from booking, right? Yep. We do it, we try to fully automate that workflow, right? We connect our Wrangler data wrangling tool that grabs data from HubSpot.

[00:05:29] We apply some logic that's set up front, right? We send the invoice and we calculate and book the automated entries for deferred revenue recognition. Okay. That's full automation. Does that make sense? 

[00:05:41] Tom: Yeah, that's cool. So then often you probably are then working with the clients around the importance of their, in this example, their HubSpot data, right?

[00:05:48] You're also saying, okay, then this workflow has to work in a certain way, that when you close one, this is what's gonna happen. Absolutely. That as a big change on the client side, that you walk in and they're lackadaisical around [00:06:00] how they deal with HubSpot when you first walk. . 

[00:06:02] Jesse: It's interesting.

[00:06:03] Certainly around field creation, I think different teams are accustomed to being really meticulous about setting up HubSpot. , I think that the accounting touchpoints are often afterthoughts and the clients that we've worked with to optimize, it's sometimes it's a matter of adding a new field or a few fields, and it's also a matter of teaching the people who are using HubSpot, Hey, this information's gonna flow directly into the system.

[00:06:27] So yeah, there's definitely a learning process that we go through with our clients cuz they initially, they don't necessarily know what to expect. Why are you talking to my c r M? You're on the accounting team. Yes. Because historically people have said don't double entry data. They're thinking like, don't enter it into QuickBooks twice, or don't enter it into your AP system and then again into QuickBooks.

[00:06:46] But really we're looking for an integration that thinks through the accounting workflow at a power user level. And talks about how it propagates from the other non-accounting tools. 

[00:06:59] Tom: Okay. And the one thing I like about your example is once, so if the client now is, has what they consider really good data and HubSpot as an advisor, I can use that to then work with them.

[00:07:10] So one of the things that we do is we do, we call it our pipeline review. So once a month with my clients, we're looking at their CRM system and saying, look, here's what you show on the horizon, your qualified deals, what you've won, all those kinds of. A very common thing when we first start is they don't do a very good job keeping their CR R M system up to date.

[00:07:27] So made initial conversations are, so you got all these deals, but a bunch of 'em are saying they're gonna close. In the past on the call, you're saying, we lost that one. This one's a different amount. All that stuff. So I can see the value if you're coming in and they're making the data better because it has to be used operationally.

[00:07:41] I can turn, now that I can trust the data and say, does it look good or bad? And let's have that conversation about this deal's been out here a long time, all sitting in this closed status. What are you doing around that? Pushing on that side. I can see the advisory side being able to sit on top of what you've done 

[00:07:54] Jesse: 100%.

[00:07:55] I like to think of CRMs, CRMs like HubSpot or Salesforce, [00:08:00] hopefully to some extent being built by salespeople. For salespeople. Yep. We're trying to we use our own tools for our service clients and that's why they're battle tested. I like to think of our software. As buy accountants for accountants, most software companies don't use their own tech as much as we do.

[00:08:18] We eat our own dog food. Sure. And it's, that's really important because I've worked in some organizations that have really strong accountants and really strong technologists, but when you talk about building or optimizing an accounting system, the accountants never know quite what to ask. and the coders don't necessarily know what to offer.

[00:08:39] So you have this language, this accrual accounting language that represents a gap between the tech and the accounting. And by doing both by being thought partners with our clients and our partners, CFO services, accountants, that are advisors, we're bridging that gap. . 

[00:08:57] Tom: Yeah, I can definitely see that.

[00:08:58] What about automation on the review side? So you get to month in and start reviewing to see if you believe that what's in the accounting system is accurate. What kind of automation are you doing around that to make that a better process. 

[00:09:09] Jesse: Great question. It spans from the very, very tactical, Hey, I see that the bank statement has this balance.

[00:09:16] And in qbo it's this the register balance on your last reconciliation was this, and I can see that the, it's changed in Q B O looks like somebody may have broken the bank rack. Very tactical or zoom out and think highly strategic budget versus actuals. We thought we were gonna do this.

[00:09:32] Where are things tracking? We try to get our clients to look at those things regularly, and this is why CFO services and accounting advisors are such valuable partners to us cuz they know the client's business much better. , then a third party provider like us really can sure they understand what number, where the numbers should be moving.

[00:09:51] They know what kind of dimensionality their accounting system needs, and we help them. We help get them that, and it shows in the budget versus [00:10:00] actual or financial model or whatever each client calls it. They like to have. , we like to let them use their model. You bring us your Google spreadsheet, your Excel spreadsheet, we will pipe the actuals in however you wanna see.

[00:10:11] and then you decide if things are moving in the right direction. Okay? So you understand what I'm saying? From the top level all the way to the very nuanced. reporting angles 

[00:10:20] Tom: were my job. Okay. So rather than the manual comparison that probably many people do, where you're looking back and forth between, like you said, a Google sheet that says, here's what I think I'll do.

[00:10:28] In your accounting system, you're able to present and show, okay, here are your variances. Here's what you wanna dig into to look at those things. Absolutely. Okay. Are you auto also automating things like reviews to see if certain accruals had been made or other kinds of checks? There's usually this kind of invoice.

[00:10:42] Did it occur? Kind 

[00:10:44] Jesse: of thing. That's a, that, that's a great question. I heard y y'all's episode on auto review that I thought was really great. Sure. Uhhuh , we are doing some of that. We try to stay, so accruals is a great example. , we have checks to make sure that total deferred revenue, for example, equals the sum of all of the parts.

[00:11:00] If you're a software company with a hundred different contracts, you're gonna be at various stages of the revenue recognition for those contracts. But we can tell you and we can check the balance sheet to make sure, okay. Your total deferred revenue is 3.654 million. Here's the amount from each of your contracts that's sitting in deferred revenue in prepaid expenses.

[00:11:20] Okay? And unbuild revenue in deferred. Get right in accrued expenses. That's precision. Okay. 

[00:11:25] Tom: Yeah. That also often probably replaces a pretty manual spreadsheet of do you have a subledger that's often maintained in a spreadsheet? Or the scary thing if it's not maintained, someone looks at some point and says 3.6 million.

[00:11:37] I don't think we have that much. And now you're panicking around you're balance sheet cuz you maybe only focused on the part that was easier on the income statement. 

[00:11:44] Jesse: Absolutely. We're talking about our recruiter project. and , it turns that input, that spreadsheet model into an output, right?

[00:11:52] If somebody books an entry to deferred revenue erroneously, that throws off the balance. We're calling that out [00:12:00] automatically. We're sending an email to say, Hey look, the total of deferred revenue doesn't equal the total of all the individual contracts. Here's some entries that look like they don't belong.

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[00:12:48] Tom: So then I, it sounds like one of the biggest things that you can offer if I'm a C F O services, rather than me having to scale by adding a whole bunch of people, putting this automation, and maybe the people stay about the same.

[00:12:59] They can just take on many more clients because they're able to look at the higher level and trust what's happening with the automation. It's not all people processing everything. . 

[00:13:07] Jesse: Totally. Is that right? Yeah. The partners that we work with that do CFO services to really do their job well for companies that are scaling, that have 50, a hundred employees, for example, although this is also true at a smaller level.

[00:13:17] , they wind up getting pulled in to bookkeeping and accounting tasks that are way below their pay grade. Meaning they sh they want to, this is what they're thinking of hiring someone else to do. Cuz they wanna focus on advising the ceo, advising the cfo. But they get pulled into these accounting tasks, which you have to do them if you don't do them right, you can't get the visibility that you want to give your client, right?

[00:13:40] But they are a time suck. We wanna be able, we want you to be able to say yes to more business. and higher, still higher but higher. Less higher for the strategic insight, less for the tactical accounting tasks that you need to get done. 

[00:13:55] Tom: Yeah, I can see the benefit of that. And you're right, when you mentioned the pay grade, I can't tell you [00:14:00] the number of times when our system doesn't work.

[00:14:02] It's, I'm reviewing the final sort of financial statement right before the client meeting, and then you see something where you realize an entry was missed. And usually, I maintain the forecast, someone else may maintain the bookkeeping. And so then when you look there, you're like, oh. , I'm way below forecast, not for good reason.

[00:14:17] I'm way below forecast cuz we missed something and now it's to scramble. And I'm like, why am I doing accounting? And so this 

[00:14:22] Jesse: catching up for that. And those misses are natural. You incorporate new tools into your accounting system. The business changes. You add a business unit, you add an employee, and the tagging system needs to be updated

[00:14:32] And the stakes get made constant. That's why we need someone like your listeners that are doing outside advisory to catch those things and talk to us and say, Hey, this doesn't look right. I can see I'm about to go into this presentation. The numbers don't total, what am I missing? And then you have a thought partner to quickly figure it out.

[00:14:50] Oh yeah, we did start coding this a different way. We didn't necessarily and we fix it quickly. Yeah. . Okay. It's not, the mistakes never happen. It's that it's about having a set of eyes, a strategic set of eyes that partners with us, which is the tactical angle of that to make sure it gets done.

[00:15:08] Yeah. 

[00:15:09] Tom: What about from a technology standpoint? Are you, what are the different accounting systems, different tools, things like that? How tech agnostic are you versus, okay, if you're thinking of clients that this would work, you've gotta be using like these certain tool 

[00:15:21] Jesse: sets. So we are on Q B O, all of our clients are on QBO O.

[00:15:26] That's really the only constraint. Right now, we've taken on clients that have migrated from other GLS to QBO O. If they're already on a much larger monolithic E R P, it's probably not a good fit. Otherwise it's worth a conversation. Okay. We have a lot of software that sits on top of QBO that helps connect to third parties, all different payroll providers, a lot of different AP solutions, expense management solutions, and we have our favorites, but we can work with almost all of them.

[00:15:54] Tom: Okay. Do you wanna describe, if someone wants to work with you, say, call you up and say, okay, I think I've got this opportunity. I'm an [00:16:00] accounting firm doing these kind of things. How does that process tend to work for your accounting firm clients? We would 

[00:16:04] Jesse: start with a discovery call. We take partnership calls very seriously.

[00:16:09] Of course, there's an opportunity to work in a very scalable way. If we make an advisor that's a partner of ours, happy with one client, there's often more clients behind it and we can implement. of that advisor's clients with greater speed because they, the advisor understands what we do. They're already a thought partner, but it starts with a discovery call.

[00:16:32] Okay. We try to listen first. 

[00:16:34] Tom: Sure. So then when you're doing this, I, it sounds like you would be very active in the process. Often when we work with accounting firms, they're saying, we've heard that you work with giraffe or plan Google or reach reporting for your reporting. But if I'm a small business owner, I feel like I have to become an expert in those tools.

[00:16:49] And so that can feel overwhelming. So I'm curious when you come in, to what extent is it, Hey, here's our tool set, and they work and you're off on your, and figuring it out versus fin optimal. , we're gonna be with you and get this set up. How engaged do you stay? 

[00:17:03] Jesse: That is a great question. We are definitely the second thing.

[00:17:07] Okay. We are helping our thought partners, and this is why so many software companies have an accounting channel, right? Because , their accountants that really learn to love their products, act as ambassadors for that software product to their clients. And when they learn how to use it, it saves the software.

[00:17:25] Having to do that kind of training. So absolutely we do a lot of handholding, especially at the beginning, but also throughout as things change. . Okay. For reporting, we do try to stick mostly to Excel and Google spreadsheets just because it's such a natural user interface for that businesses are already using.

[00:17:45] We stay away from other reporting packages because we want to tune the way we interact with spreadsheets so finely that it just represents the least common denominator of financial interfaces and we really. Yeah. 

[00:17:56] Tom: All accounts know how to use Google Sheets and Excel spreadsheets, so That's right.

[00:17:59] A [00:18:00] pretty easy one to work. Lingua franca. Yeah. So if I have a b ABC client and have this discovery call and we decide to go ahead and move forward, how much does that client know that I'm doing this? Are you interacting directly with the client? Very 

[00:18:11] Jesse: much. That's a great question. We've done it a lot of different ways.

[00:18:15] Sometimes with the same CFO services firm, for example, with one client, the client emails us directly and in other cases, . And we'll build a client directly. Okay? And in some cases the CFO F services firm will build a client, and our relationship is more or less opaque, right? It's more of just like a Superman cape that our partner is wearing. So it works different 

[00:18:38] Tom: ways. Okay, so I might be able to describe to you, Hey, here's everything that I'm doing with the client. And you could be saying, then let's work on the automation. And I know that it also may be a case where you're comfortable saying, oh we'll work directly with the client.

[00:18:50] If it's HubSpot as you described, and wanna talk to the client. I'm happy to do that. If you or you're happy to do that, if that's how the firm you're working with wants it to work. 

[00:18:59] Jesse: Absolutely. Very frequently the first client, they may want us to, so one, one model that's worked well will. will be involved directly with the first client alongside the advisor.

[00:19:09] , so that they learn alongside their client and then for subsequent implementations of their other clients, maybe they'll prefer to do it directly, that's one way that works. Okay. But I think there's a lot of different, season to taste. . 

[00:19:22] Tom: Okay. And then if I work you on an ongoing basis, do you contin, how do I see the benefit of continued improvement in processes?

[00:19:29] We get something in place. Are there places you're saying, Hey, there are new features or other things you can take with your existing clients and add onto that? I, is that an ongoing improvement kind of thing? 

[00:19:39] Jesse: It is. Because we're eating our own dog food, often develop new features. and we'll realize, oh, this client or this partner was using this thing that we did three or four years ago.

[00:19:49] We've now added this feature, and we try to keep our partners and our clients in the loop so they can benefit from the new stuff that we built. Okay. Hey, a Accruer, we're adding this feature that it can maybe [00:20:00] talk directly to HubSpot instead of needing to do certain things that need to be set up custom come and partake.

[00:20:06] Yeah, absolutely. We wanna share those new improvements with our client. Okay. We want an ongoing convers. . 

[00:20:10] Tom: Yeah, that's what it sounds like. And so then I can continue adding other clients related to that. Tell me a little bit about pricing and how you do from a service standpoint with your 

[00:20:20] Jesse: clients. So we have three different tiers right now.

[00:20:23] I think the two that are gonna be most relevant to your listeners are you. Where we provide a lot of the tools, the software tools in a most we train you on how to use them. We help implement and make sure that you know what you're doing. And then we charge you more or less a licensing fee so that you can use the tools once you master them for all of your clients.

[00:20:45] Okay. And that's gonna be priced lower. It really varies by the solution. We're still figuring out the optimal price points just to sell software. . , but we also do more hands-on things where we're receiving emails from clients, we're receiving emails from the advisors.

[00:21:01] The broad guidance I'll give is that it's a few hundred to a few thousand per month. We're not talking about giant sums of money. Certainly within the context of a larger ERP, like a monolithic ERP implementation. You're definitely saving money by working with us. 

[00:21:17] Tom: and then the bene. I can see lots of benefits.

[00:21:19] One of them is I probably have fewer people that I'm paying. That's maybe the trade off that I'm paying you several hundred dollars a month and maybe saving a resource by doing that. So I could compare the cost in that area 

[00:21:29] Jesse: 100%. I would say even more. You're getting scalability from whatever resources you hire, right?

[00:21:34] When you're doing advisory, there's a linearity to the extent you can scale, right? You, at some point, you need your team to talk to clients. . But if you can get, three or four more clients per team member that you hire, cuz you're using our software. , we like to think it's double or triple your existing capacity.

[00:21:51] If you get that additional dimensionality that you want in your accounting system, then you're just getting more bang for your buck. You can grow a lot [00:22:00] faster. Say yes to a lot more business than you could before. . 

[00:22:04] Tom: What about from a skillset set? So, it sounds like you'd have people who need to up their skills some, right?

[00:22:09] If I do bookkeeping things, maybe I say I don't enjoy it, but I spent a lot of my time just doing journal entries and now they're done for me. I'm in more of a reviewer capacity. Of course. What kind of skills is, you work with a new client to say, okay, you've got this team that's gonna be using it. Are there certain things where.

[00:22:23] Some people are more successful than others. If I think of what's the right, maybe start at the senior accountant level. If I think of a client having a cfo, F O and a senior accountant at the senior accountant level, what are you finding or needed skills to really be 

[00:22:33] Jesse: successful?

[00:22:35] you know that, that's a great question. They don't need to be a coder. They need to be tech savvy, which is to say, have some intuition about how to use computers to speed their workflows. They need to be interested in learning. But I've trained people as a full-time controller that worked using custom tools that I built before I started FIN Optimal, just very custom code.

[00:22:56] , right? Very primitive user interface. And once they begin to understand, oh wow, I can. The software to book this for me, I can expect the spreadsheet to just have this data. , you can train almost anyone. It's just about reworking people's expectations of technology. They're not used to asking for as much as they can get.

[00:23:15] Okay. 

[00:23:16] Tom: Okay. So just being opened to 

[00:23:18] Jesse: that. Yeah. We've worked with people of all ages too. It's not about being young and just outta school. A lot of times people that have more experience are even more relieved to say, oh wow, intercompany transactions. That was something that just was always a bear.

[00:23:31] Yeah. No. We have tools to automate those intercom. Wow. How do you do it? And then they're engaged and wanna learn more. 

[00:23:38] Tom: I'm guessing there are cases where you're teaching even some accountants about accounting when you're saying, I'm automating this right 

[00:23:43] Jesse: here's what the credit, we're not above getting into debits and credits ever.

[00:23:46] Tom: Yeah, exactly. Do, so is someone performing the C F O level services, it sounds like they're also using the tools, at least like in your description of variance analysis, if I'm comparing a budget to an actual kind 

[00:23:58] Jesse: of thing. Absolutely. Absolutely. Okay. I [00:24:00] think the CFO services. Often leads, right?

[00:24:03] What does the business owner wanna see? What strategic views are going to help them? It's nice to have a ton of fields, but don't do that unless it's actually gonna s cuz it creates complexity, right? It makes it harder to book, it makes it even harder to build automation. But if it's worth it's because, wow.

[00:24:18] When I make this decision, when I dial this up in my business, I see it in the results. and my CFO can help me tease the signal from the noise and they're able to do that cuz they understand how it works and they understand what to ask for. when something changes. Hey, I bet fan optimal can probably add a field here.

[00:24:38] I bet they can, make this flow from here to there. I bet they can book entries automatically. I bet they can send these invoices to our clients. I bet they can bundle these four PDFs and send them to the person who's approving those invoices. Bundle these other four PDFs and send 'em to the other partner who's reviewing stuff.

[00:24:54] . Okay. Very nitty gritty. . 

[00:24:56] Tom: Okay. What are some of the things you mentioned? bill.com. We're big fans of bill.com. What are some of the automation things that you've done related to bill.com? 

[00:25:06] Jesse: We love bill.com. Their API is very complete. You can, meaning, you can do almost anything with the API that you can do in the user interface.

[00:25:13] We've built, we've done stuff with our approval workflows. . Okay. We have built things that automatically push stuff into push an invoice from our client. Sorry. Our client's vendor will send the client through an email that we monitor a PDF invoice, right? , we'll do a lot of the machine learning to figure out what vendor it's from, how to categorize it.

[00:25:36] Oh. We'll also have someone on our team tag it. Let's say it's a prepaid expense. Something needs to be recognized over a 12 month period. Uhhuh . We will tag that invoice right? with Designators that let our accruer, once it syncs from Bill dot, we will push the bill into bill.com. Yep. They can pay it the way they love to pay it, and then once it syncs to qbo, our Accruer will automatically spread that [00:26:00] revenue across the service period of that bill.

[00:26:01] , that's a huge benefit to clients that are used to having to otherwise set up that amortization themselves. Yeah. , I could go on. We've done a lot with bill.com. I really love the company and we put almost all of our clients on it. Yeah, 

[00:26:13] Tom: no, that is a great example. So in that one specific, you got my interest peak because we spend a fair amount of time managing a prepaid schedule with a whole schedule course.

[00:26:22] And oftentimes you just don't even realize something until you see a big spike and go back and say, Hey, was this insurance bill for more than just. This month. So how do you catch some of those things that this should be a prepaid kind of expense, 

[00:26:33] Jesse: Tom, just imagine it being this simple. You put two dates in a line description in QBO o or in bill.com as the case may be, cuz it'll sync over and then we automatically book the PN l and the balance sheet and everything to make that right.

[00:26:47] Okay. It's that simple. . 

[00:26:49] Tom: Okay, so if I'm gonna review my bills and put in the note that this is from February until January of next year, then 

[00:26:55] Jesse: that's all I have to do. Yep. You wanna write February in words? February 6th. Okay. 2023. Or if you just wanna write 2, 6 23, do it your way and we'll figure 

[00:27:05] Tom: it out.

[00:27:05] We'll find that. Okay. In some cases, from what you're describing, Jesse, it sounds like you're replacing some of what bill.com would claim that they can do well, they can see an invoice and they'll scrape some of the information off and. Use intelligence to say where should it be coded and things like that.

[00:27:20] Jesse: I think that's a really good clarifying question. We definitely do some machine learning there to try to get ahead of that, but it's mostly cuz we wanna manage the invoice workflow. Bill dot com's ai to read the invoices is very good. And we're not really trying to compete with that piece of it.

[00:27:37] Okay. It's just that if the invoice comes into bill.com through us, instead of through the bill.com invoice, we're gonna be able to do more things like attach that invoice to QBO o. Whereas if you go straight to the invoice, it's much harder to programmatically get that attachment out. In fact, you can't do it in bill.com.

[00:27:54] You can't get the attachment out unless you also put it. So those are little [00:28:00] nuances. Bill dot com's great with moving the money, with booking the entries to qbo. Those are not things that we're looking to get into. And it's an example of where we don't use every piece of functionality that bill.com or Expensify or other, our part, like our partners products often extend wider in scope. Than what we actually use them for, but we consider them best in class and we wanna incorporate them into our client's accounting systems for that reason. Okay. . 

[00:28:27] Tom: Okay. Let's talk just a little bit about the workflow, cuz what I have found with small companies is often the workflow of approvals is not very good.

[00:28:35] Maybe nonexistent, maybe just a bookkeeper just paying what they want. Or if they start outsourcing that to us through bill.com, now we've got, okay, you had your bookkeeper who could just walk down the hall and say, should I pay this? And they know the bills versus we see bills. Yes. So I'm curious is we then put in place bill.com and the approved feature.

[00:28:52] sometimes that's hard to get the clients to get used to, and then you're chasing people down. So I'm curious, you had mentioned automating workflow. Sure. How do you make that piece work in a more smooth way? 

[00:29:02] Jesse: It's really, there's so many different ways we do it. The bill.com approval policy functionality is really good because It's a third party.

[00:29:10] Like auditors love it, right? You can't , if you set it up right, you, it's really hard to fraudulently pay something without all of those provers being in the mix. It is fairly complex to set up, but the API allows you to do so many different things. So an example would be sometimes we'll have a client that wants to incorporate approval logic that's more complex than what the bill.com approval policy allow.

[00:29:33] Right? So we will see the bill, understand the fact pattern, and then we will put the bill in bill.com and then make API calls that set the order of approvals that's specific to that bill, given how big it is, what vendor it's from, okay, what class it is, right? But a lot of our clients still don't use the bill.com approval workflows.

[00:29:53] They prefer to handle it by email or have a form that's submitted and we support that too. I wouldn't say there's [00:30:00] one best practice. . 

[00:30:02] Tom: Okay. I'm glad you offer that flexibility cuz I have also had clients who it's just this reaction of I don't want another thing to have to log into. Of course.

[00:30:08] Can you get it to me a different way? And so if there're a client who says, I love email and I will click approve within that, it's really cool that you can offer that if that's gonna be their reaction to that. Totally. Okay. . So how many clients do you work within that are on the, you're providing the service to, as you've mentioned in your term eating your own dog food.

[00:30:26] How many of clients do you have that you're working with? 

[00:30:28] Jesse: About a hundred. 

[00:30:30] Tom: Okay. And the range of service that you offer to those a hundred? 

[00:30:35] Jesse: We'll do a full monthly close, including bank reconciliation, AP data entry. Okay. Booking. anything that needs to be booked one off. We have a lot of power tools to help with that too.

[00:30:46] Organizing your books and records folder. Because some clients are small enough that they really need what feels to them like a customized solution, but for us it's really tweaking dials on tools that we've built and battle tested for those hundred clients. Okay. So they get a customized feel even though it's really mass customization of tools that effectively off the shelf in-house. Okay. 

[00:31:11] Tom: Okay. And then how do you organize your teams around the clients? What is your typical kind of org structure? And if a client's looking at who's my team, 

[00:31:18] Jesse: we'll have at least two accountants, someone that we will call the controller on that account. and then someone who, and they'll be in charge of the relationship.

[00:31:27] You could think of them as the account manager, but they're also a CPA level account that understands debits and credits. . And it's gonna be able to field a client email and meaningfully, thoughtfully respond. Okay. And then they'll have someone on their team working with them who will be doing bank reconciliation data entry for AP if applicable, and.

[00:31:47] Organizing the books and records and handling more tactical things under the guidance of that senior accountant. Okay. We organize ourselves with internal task management tools that create a bank rec ticket each month, and we have [00:32:00] practice management type stuff.

[00:32:01] , we just try to automate it as much as we can. Keep the people in the loop where they belong, automate the 

[00:32:06] Tom: rest. . And for your clients, I assume there's a mix of, they have some internal bookkeeping staff down to you doing everything. Is that Yes. 

[00:32:15] Jesse: Is that true? We've had, yeah, absolutely. We've had, we've got companies that have three, 400 employees, double digit, millions in revenues.

[00:32:22] That'll have, we've had two in-house people. Just a director of finance and one person working with them. We've had smaller companies that want to be more hands on and will have four or five people in. and they just know what optimal does for them. And we stay in our lane and we work very well together.

[00:32:39] And we also have clients that have no one in-house, right? , we're working directly with a COO of an eight or 10 person company and we're booking so many entries, it's saving them time from doing it. This, there's just so many different ways to slice it. The common thread is precision automation that avoids having to make people book stuff and remember stuff and copy and paste stuff.

[00:33:00] The. Built by accountants for accounts. That's the key. It's not just practice automation. 

[00:33:06] Tom: I like the flexibility. Having an internal team is an option. You can work with that and not having an internal team is an option. Absolutely. Because we have coached firms who they don't want to deal with the back office, or they don't have the resource to deal with the back office, so they have to give up business.

[00:33:20] Jesse: Sure. Often there's, yeah, so look, there's Sometimes we'll have an outsource C F O firm. I'm sure some of your listeners, and probably you guys have this experience. There will be in-house people, there'll be in-house bookkeepers or accountants, but then an outsourced cfo. , they wanna outsource the strategic piece.

[00:33:35] We see that all the time too.

[00:33:38] Tom: Yeah. And the business that they might give up on is someone who says, oh, can you do the transactional? And then they're looking for someone else to do that or saying, I can't, and it sounds like I can't, the automation you, they're leaving money on the table.

[00:33:46] Jesse: Leaving money on the table.

[00:33:47] Exactly right. Yeah, absolutely. 

[00:33:49] Tom: Yeah. By doing that, they could dig in and you could help them with that piece of it. Totally. Yeah. Say are there pieces Business, yeah. Are there pieces that you're saying, okay, he, you've mentioned your qbo. What about other sort [00:34:00] of services or anything you're like, okay, we don't really get into that area. 

[00:34:04] Jesse: Certainly no tax and audit. I think I mentioned that before. Uhhuh. . Those are each things that require keeping up with the regs, doing a lot of deep thinking. About the right way that something should be expressed. Preparing schedules and narratives for the financials. And we work closely with those people.

[00:34:21] Very frequently, the tax accountant or the auditor will talk directly to us. , instead of talking to the client, but we're not writing accounting policy. We're maybe helping them decide, we're giving them our thoughts. Yeah. But our agreements say we're not doing, you can't sue us for a wrong opinion there.

[00:34:35] Yes. But that's not what we're providing for you. 

[00:34:37] Tom: Is there a certain time duration that this, okay, so post discovery call, someone says, yes, let's work together. Is there a typical onboarding time that you have or is that not, are things too different to say, here's what it takes to get up and going?

[00:34:50] Jesse: I think we can generalize that it's small months, right? Two to four months. Hopefully you get most of the way up the learning curve in a situation where there's a lot of complexity or there's a lot of mess to clean up, which I'm sure is something you know that Yeah. That you guys and your listeners.

[00:35:04] deal with, it can take a little bit longer, but it's iterative which is what makes it better than having to have consultants come in, implement a system that you're still figuring out, and then go away and you're stuck with what you got, or you have to rehire them. . Yeah, it's intentionally iterative.

[00:35:17] It's a monthly service. 

[00:35:19] Tom: Okay. Okay. Yeah, it sounds like a great way to engage with a new client, maybe even existing client that you have. As we come in, we do process reviews with them and often it is recommending, okay, you haven't heard of bill.com? Let me explain what that can do, and maybe an expensify and things like that.

[00:35:35] If you can, then at the same time, add the automation like you're talking about, I can see a client saying, wow, this is an impressive improvement in my internal processes, and I'm, as an accountant, I'm getting the benefit of the automation and the efficiency in the back end. 

[00:35:49] Jesse: 100%. The accountants and the outsource CFOs.

[00:35:52] These advisors are so important to software companies because there's just to communicate. The client again, doesn't know what to, they're not even [00:36:00] accountants, right? They're managers. Frequently they don't know. Accountants don't know what to ask for. Yes. The senior managers of the company are gonna know what to ask for from accounting tools.

[00:36:09] No, they're not. So there's this big barrier of explaining the value and explaining in broad strokes how you deliver that value. And partners are so much they already know the client. They understand the pain point, and they can say the thing that the client wants to hear to understand the value and make them want to go on this adventure, which is a great adventure.

[00:36:28] Tom: Yeah. Yeah. It sounds really like a cool set of tools and processes and things that you've developed over time. Is there a particular kind of client, so if I, you've got me. Okay. I'm convinced, Jesse, that automation works and it sounds really good. Any particular client? If I'm gonna call and say I'm already working with 10 different clients, how should I be thinking through who are the best fit for this kind of thing, or who's the best fit?

[00:36:49] Jesse: Sure. Really low hanging fruit's gonna be software companies that. , that have a lot of deferred revenue because they charge a 12 month fee or a multi-month fee. Okay? Then we could do the deferred revenue recognition. People that handle invoicing professional services, right? If they're tracking time and they wanna see the time cost, which you need to integrate payroll data with. So PR firms, lobbying firms. We have a sports agency client. . 

[00:37:14] Tom: Oh, lots of service-based firms, right? Fit that kind of a model. 

[00:37:17] Jesse: Totally. Companies on Shopify, we have a really tight Shopify integration that lets us get a lot more out of revenue recognition, including the deferred revenue piece if you don't ship right away.

[00:37:25] We really span a lot of different industries. We have language translation companies. Anybody with repetitive transactions where you find yourself, if you're using the qbo, matching tool and just clicking Match match. Yep. where you want nuanced rules for that transaction handling.

[00:37:42] We're handling that repetitive stuff that you think typically, oh, I should hire a junior person to do this stuff for me, right? Just before you hire that person, talk to us, we're gonna try to convince you to hire more of a director of finance type of person that's gonna help you with that strategic angle, rather than someone who's just gonna book entries.[00:38:00]

[00:38:00] Tom: Sounds great. So the discovery call sounds like that first good step. Do you wanna tell people how to find you and get that initially scheduled if they're, if you peak their interest here? 

[00:38:08] Jesse: Sure. Thank you Tom. They should check out thin optimal.com. . We're offering tech and team to help firms and advisors save time and take on more business.

[00:38:18] Follow me on LinkedIn. My name is Jesse Rubenfeld and I'm talking about these things a lot, as you might imagine, and would love to talk to your listen. 

[00:38:27] Tom: It sounds very much like a conversation people should be happening or should be having with you. I think it sounds great. Jesse, this has been really helpful.

[00:38:34] I really appreciate your time today taking us through this and hope that lots of people will take advantage of what Fen Optimal can add for them. 

[00:38:41] Jesse: Great, thanks. Hope you have a great day. Take care. 

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Episode 94 - Maximizing Automation in Accounting Industry with Jesse Rubenfeld 👉

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