How to Automate Accruals in 60 seconds, with Tom Zehentner, CPA

Let's get started. Today here we have Tom from FinOptimal, Director of Growth over there, a previous CPA. And for context, let me just tell quickly, audience, what attracted me about you guys and why I decided to reach out and have you.

Yeah.

I think of all of these software companies, out there, most of them at least, they are saying, hey, we built this shiny thing, come test it. And I think what's different about you guys is that you actually have a different approach because you've used what you're selling.

Oh yeah.

Right? So you have that credibility of saying, hey, this is not a shiny thing we built for the sake of it to sell it. We actually did it to use it internally for efficiency purposes, and now we are releasing to the public. So with that context, I just want you to walk me through, you know, who's Tom and how did you, you know, Got it. Made it to PinOptimal.

Yeah, no, that's a great way to kick it off too. Like, we built something not because we had an idea. We didn't say, oh, I have an idea. I want to get rich. We said, we hate doing this manually. It is the bane of our existence. We're going to automate it for ourselves. So if we don't build it, I mean, if we don't use it, we don't sell it, right? We build what we need. We use it, we use it, we use it, then we sell it. So I love that you started with that. Who am I? I went to school for accounting. I really don't know why. Coming out of high school, it was like I wanted to be— I wanted to be a sound engineer. I wanted to literally be a musical sound engineer. And it was like coming out of the recession. I went to Binghamton University in upstate New York. They have a fantastic business school, like 99% job placement rate if you graduate with an accounting degree. So at that time, there were so many kids that, you know, I went to high school with who were older than me graduating from college. Can't get a job. Can't get a job. Can't get a job. So my mom was like, make sure you get a job when you graduate from college. I went to Binghamton. I was an accounting and finance major, and it was like, hey, this is the path that I'm on just because you know I want to make sure that if I'm going to go to a four-year school, I'm going to graduate with a job. I was always good at math. Like I was good. I took accounting classes in high school. I always wanted to do something more creative though, for sure. And started my career at a company called Protivity. It was a mid-sized consulting firm, really doing internal audit consulting type work. Learned so much internal audit. You know, a lot of people that aren't in the audit game don't understand. Like internal audit is far more process-oriented than external audit. External audit. Is much more aligned with accounting in terms of like tying out the financial statements, right? And actually thinking about the financial statements themselves, where internal audit is, what is the process of compiling the financial statement data and all of those financial operations decisions that lead into it? The reason I say that is I think that kind of kicked off this path of me being a very process-oriented person, especially in the accounting and finance and business world. They did a hackathon at Protivity. Someone said, I think you should do it. It was basically like, hey, pick up an automation tool and build something. I did something with UiPath. It was the first place for UiPath. And I was like, okay, I have something here. Like, this is more fun to me. And I had always liked coding stuff. Were you on MySpace back in the day, Isaac?

Yeah, back then, definitely.

So like when you used to, like, you used to be able to do custom layouts and like that was all HTML. And that's how I was probably in 7th grade learning HTML just so I could have a cool MySpace layout so I could autoplay a song from YouTube because the song wasn't available. Like all of those things, that was what got me into coding. And I was like, it's not this big foreign scary monster. It's something that's very tangible. You can do it. You can iterate, iterate, iterate, get your result. And it's so rewarding when you make a computer look and do what you want it to. So I always had that in the back of my mind. But yeah, I was really, really interested in automation and analytics, just working smarter. Right. I, like I said, I, I didn't—

Absolutely.

Never loved accounting. So I was like, hey, at least I can do something cool with accounting, which is automating it, automating the parts of it that are not as fun so that you can do stuff that's impactful to really like review the financials and say, oh, this is the reason this is happening is X, Y, and Z, or we should make this business decision because of X, Y, and Z. And if you're doing data entry all the time, you lose the forest from the trees, right? You lose sight of that's what we're really here to do.

Definitely.

So I took that to WeWork. I worked at WeWork for a little over 3 years. 2 months before—

Were you—

Go ahead.

Were you in their accounting department?

I was in their internal audit and risk department. So I had my work cut out for me for sure. But it was, it was a good experience. You know, they were a hypergrowth company. When companies grow at that speed and at that scale, you know, the processes are changing so fast. So there was a lot of good work to do there in terms of like, okay, how do we actually put some controls in place and how do we build the architecture? A lot of really smart, cool people there. I worked there for 3 years. My college roommate approached me one day and asked me to lunch. I had no idea that he was trying to convince me to come work at FinOptimal. So we went to lunch and he was like, you know, would you ever consider a job in sales? And I was like, I don't know, maybe. And he said, well, what do you like about your job? I said, I like the automation analytics parts that I get to do. And he said, well, that's exactly what we do. Uh, the next day he demoed FinOptimal for me, some of their really early tech. And I was like, okay, I'm interested. I talked with Jesse Rubenfeld, their founder, the next Friday. 3 weeks later, I had a signed offer letter. So it fell very much into my lap, um, kind of stumbled backwards into it. But that's how I got— it was really my love for automation and analytics and just happening to having that accounting and financial operations background is really what got me here.

Got it. So you moved very quickly with that offer.

Yeah, I mean, it was like a— it a once in a lifetime— in my mind, it was a once in a lifetime opportunity, like, to join a startup. I loved Jesse when I met him and talked with him. He was the CFO of LimeWire, so I was hooked, right? I told you I wanted to be a sound engineer. I was on LimeWire when I was probably 7 years old, right? Downloading music. So I was immediately interested in what they were doing. But the ability to bring automation not to just one company like WeWork, right? Or, you know, a handful of clients like I could have at Productivity. It was the ability to touch all of these startups that are really, really in need of efficiency. It was an No-brainer. Uh, I moved very quickly.

Got it. Fair enough. Um, I also heard about in a podcast you said you haven't really touched a journal entry in a while. Um, how long has it been?

I, I never booked a journal entry until I got here. I don't know if you know this, all, all auditors do is look at your stuff and tell you what you did wrong. So I had never booked a journal entry until I got here, ever, in any system whatsoever. I had tested journal entries, I had reviewed the inputs to journal entries, I've reviewed journal entries to see if they were correct. Never booked one until I got here. Now I only book them in demo environments, so I still really haven't booked a real journal entry in my life despite being a CPA.

Awesome. Awesome. Yeah. Well, I think that's a good segue into what have you guys built? Because I know me, myself as a, you know, outsider, I look at your website, I see a variety of tools. Yeah. I know Accruer is the one I'm a little bit more familiar with because you discuss about it a little more publicly, but could you walk us through what's your product like at the moment and what the roadmap looks like?

For sure. We're in this very interesting transition period from you know, accounting firm that had tech to a company that is generally eliminating manual journal entries and really trying to be the, you know, the market leader in financial operations automation. That's what we're— we're in the middle of that transition, right? Because we're much more than just an accounting firm. So like what you'll see on our website now is software and services, 2 buckets, right? Where we're really going with it and how it's, it's working in practice is we have our QuickBooks apps that are in the App Store, right? The Accruer is that app. We have a bunch of other apps that are available via our early access program. So if you are an Accruer user and you would like to have access to some of our other tools, which I'll touch on in a sec, you can do that, right? You get to use them earlier, right? There's a bunch of different incentives there. And then there are services. So we are doing the accounting for, you know, certain businesses, and that's how we iterate and develop all of these tools and these use cases and these features is we have a client come to us and say, I want to, I want to allocate by this, right? Based on this input, I want to allocate things to these classes, departments, Locations on multiple levels. Can you do that? And we said, yeah, we can. Let's go iterate a little bit of some of our allocation tools and string this up. And then boom, we had a basically a use case brought to us by a client who's paying us to do their books, and we're able to build our tool to accommodate them. Now we turn around, an accounting firm wants to do the same thing for their client. Well, we already built it for you, so here you go, you can have it. So yeah, you asked what what else do we have, right? Accruer—that is our flagship product. Deferred revenue, prepaid fixed assets, and accrued payroll directly in QuickBooks. We'll demo it here in a little. Why is it different? You do it based on the description in QuickBooks. We are not making you go to another place to configure a schedule. What else outside of that? Well, Booker is the next tool that we're releasing. It is a spreadsheet-based tool, Google Sheet to QuickBooks. So all you have to do is type some data into a Google Sheet and it will be in QuickBooks momentarily. No import, no sync buttons, just streamline QuickBooks to— sorry, Accruer, all these tools. Google Sheets to QuickBooks. Google Sheets to QuickBooks, right? Again, the goal is to eliminate manual journal entries, right? So the Booker will do that. As kind of a catch-all. Following that, we have a lot of other products and, you know, I'll rattle some off. Allocator, an allocation tool for QuickBooks. Wrangler, a tool that can pull data from QuickBooks and really any other system in a very, very granular way. Gopher, which is our way of creating transactions in bulk. Editor, you can make bulk edits to QuickBooks data, right? All of these tools are things that we're using and that we'll be releasing. Payroller is another one. So a lot of the payroll platforms today don't sync to QuickBooks, and if they do, they don't pass data in the way that an accountant really wants to see it. Maybe it's too detailed, or maybe it's too rolled up and too summary level. We can allow you to kind of dial it to the exact level of granularity that you want so you can tag it to the right department, class, location, however your client is thinking about it or however you're thinking about it. So yes, what's the roadmap, right? Booker is next. What's coming after that is really dependent on our user feedback. We are—

Yeah.

We are— our number one goal is serving our users. Um, I tell people this all the time. If I am on a demo or a sales call and someone calls me for support, I'm hanging up the sales call and taking the support call. Like, that is— I, I say that with, you know, every fiber of my being. We want to serve our clients. So our most heavily requested features are what we've rolled out the following month. The same thing will happen with our product roadmap.

Awesome, good to hear. And is, is there a particular reason you guys have chosen to release them as separate, like, like mini brands essentially?

Yeah.

And do you see the future being more mini brands or potentially kind of like consolidating at some point, selling it as a bundle?

There will absolutely be platform fee in the future. Just say, I want an all-access platform fee to touch all of the tools. That will, that will be available at some point, I believe. Why do we do it from a modular basis? Like, I think there's too many tools out there. I've explored, we've explored some tools. I'm not going to name any in particular. They're all great tools, but it's like, hey, we really want this tool for 7 out of the 10 things that it does. We don't need these other 3 things. And to them, right, those 3 things are what make it worth $1,500 a month. So there's this, this discrepancy between our need and willingness to pay and what they offer and how they offer it, right? Like, hey, we want to use this tool. We really like these 3, these 3 features. We don't need all the other stuff. Well, we only sell it as one all-in piece and this is the lowest we can go. Okay. We've walked away from software like that, right? So at the end of the day, we want to solve pain points and we think this gives our users the ability to say that's relevant for this client. Those 2 things are relevant for this client. Those 3 things are relevant for that client and mix and match. So even if we go to a platform option, which we certainly will, we're still going to make everything available à la carte.

Got it. So they have the flexibility to both go all access or just pick and choose what they want.

Exactly. I don't know if I'm going to be able to do the all access. That's, that's some WeWork branding right there. That's one of their products, but I like where your head's at. I might get a call from somebody over there if I start stealing their names.

I'm sure. I'm, I'm, I don't, I don't think that's trademarked at all.

That's fair. You're probably right. You're probably right.

Got it. Well, I think that's a good segue into, we want to see it. We want to see it work. We want to see it live. I think that's one of the benefits of software, the ability to demo it. And we'd love to see a quick example of how Akua works. So I'll let you take it away.

Yeah, for sure. I mean, let's start maybe with like, what is it? What does it probably look like for somebody today? Right. So I will share my screen here. Let me start with this ugly schedule. All right. Can you see this? I know it's small. I'm going to zoom in here.

Please do.

You can see this stuff?

That worked. Yes, that works.

All right. So for any accountants or non-accountants on the call, this is what I would imagine is a prepaid schedule that somebody's, that somebody has today, right? So let's just look at one line. Like we'll look at this room space line, right? At some point they got a bill from this company called Room Space for rent and it was a $12,000 bill. Right? What most accountants are doing is they key that bill into QuickBooks. They do a manual journal entry to move it from expenses to prepaid, or maybe they book it directly to prepaid. And then they're keeping like an inventory here of all the things that they need to remember to book, right? And they have all these different columns and they had to make sure the calculation's correct every month. And they keep like this rolling basis and collapse those columns, right? So as you know, going into October, here's how much I had left and here's how much I have to book. And they go into QuickBooks and they'll say, all right, I got— I have to book my October expenses now, right? Let me share my full screen. I'm going to show you literally what accountants are doing, um, today. All right, so they'd probably do something like this, which is to take this, this schedule right here and type everything into QuickBooks. So Right. Something along the lines of, all right, I'm going to go do a journal entry and this is going to be my October accruals. And they'd go, okay, the first one's for rent and it's for $1,000. Right. And the second one is for insurance. Right. Can you imagine how monotonous this process is and how error-prone this process is? Literally going line by line by line by line. And typing everything in, right? Picking the same person every month, remembering to do this, remembering to add stuff. So this is what most accountants are doing today for prepaids, for fixed assets, for deferrals, for all of that stuff, right?

Got it.

Maintaining this, doing this, it's just so convoluted and there's so much back and forth. So what do we do? We say forget that altogether, right? Let's say we did get a bill, in January, just like in that example, and it was for room space, and it was for rent, and it was for $12,000, right? So this is just an expense in QuickBooks. What you do with the accruer is you just write, okay, this rent bill is for the period of 1/1/2023 to 12/31/2023. That's it. You're done. You click save. Accruer is going to book all the entries. That schedule I just showed you, throw it in the garbage. We'll maintain one for you. That process of keying stuff in every single month to keep track of your prepaids, forget it. Literally just putting this plain English in the description on the expense or the bill or the check, the sales receipt if it's revenue, the invoice if it's revenue. If you're reconciling in the bank feed, if you're using bill.com or HubSpot or any other tool, For the period, type the dates. We do everything else for you. So literally your process shrinks to one second as opposed to minutes or hours of maintaining all of that stuff.

That's fantastic. Now let me play devil's advocate here. Go for it. Do I have to say for the period of? What happens if I if there's a typo there?

Yeah, there's, it's a great question. So you, you have to say for the period. You don't have to say of, you don't have to say to, you can put text before and after, right? So room space, you know, big room for the period of this New York office, right? That's perfectly fine. It has to have for the period somewhere in there, right? Got it.

If you did—

go ahead.

Caps matter? No.

No, caps doesn't matter. It's case insensitive.

Got it.

Case insensitive. So as of today, if you didn't write for the period, it wouldn't run. So what you'd see is just this weird $12,000 on your balance sheet. I'm sorry, on your P&L. You'd go, what is that for? Oops, I made a mistake, right? You're going to do your financial review anyway. A feature we'll be releasing soon. It hasn't been requested that much because people can spell for the period.

Right.

It is a soft flag. Hey, you wrote for the period. Did you really mean for the period? Right? So we'll have that as a feature in the coming months. But for now, it's one of two things. Either teach your bookkeeper accountant how to identify a prepaid, enter it into a schedule, make sure that all of the columns calculate correctly, that you're hitting the right balance sheet and P&L accounts every single month. Right? And how to reconcile it or tell them to spell for the period.

Which isn't rocket science, of course.

Which is not rocket science, right? So I'll show you, right? Nothing was booked on the P&L. There you go. $1,000 of rent expense every single month automatically.

Awesome. Awesome.

That's all.

What about, is there a particular format that the date has to be in?

Can be in so many different formats, almost any format you can imagine.

If I say, for example, 01.

Yeah.

Rather than just 1.

Yeah.

Or if I say January 2023.

So if you did January 2023, it would be smart enough to know to use January 1st for the first date. If I wrote to December 2023, It would use 31st of December. So it'll know based on the first and last to use the first and last day of those months relatively. So you won't get tripped up on something like a leap year, right?

Got it.

So let's say though, you wanted this to be actually through November and you wanted it to be $11,000 instead. Maybe you want it to be— let's do this. You want it to be this. Just change the whole thing. And maybe you want to throw another one in here. Advertising and marketing for the period of December. Let's do a curveball here. I can tell you want to see how it works. So 04/09/23 to November 3rd, 2023.

Love it.

Right? So A few things is going to happen. This first one, it's going to update all those entries that we booked automatically, right? A lot of other software, you'd have to like go back and delete it, try to resync. You'll get a resync error on half of the platforms out there, or they just feed over adjusting entries, right? So they don't actually just update what they did. They'll be like, oh, well let me book 3 other things so that when you true everything up together, it looks right. We don't do that. We'll automatically update all those entries. You'll see it in the audit log. Right? It's going to completely recalculate and rebook everything for you. Is there any— how long of a delay does it typically—

between the moment you hit save and the moment it shows up?

25 to 60 seconds is what I would say the average is. It depends on how big your GL is and how open the accruer is. So you can lock the accruer just like you can lock QuickBooks. So if you have the accruer looking at You know, 50 months, it'll take a little bit longer than if you're looking at 5 months. But, you know, I said 20 to 60 seconds. We can realistically cut that into 10% of that. Like by the end of the year, that'll be running in 2 to 6 seconds instead. It's just a little backend fix we have to make.

Awesome.

So this one will follow this string. This will follow this completely different period, right? So it's going to prorate April and prorate November just based on this. Make sense? Yes. 2 separate lines done completely differently. So I'll show you, right? So here's that rent amount recalculated, rebooked. We even round that little penny at the end here. And then the same thing, right? This amount booked totally separately, prorated based on all those weird date formats. We can do it.

Yeah, pretty solid. Now let me ask you something. I don't know, you probably can't share the secret sauce behind it, but you've published on LinkedIn that people think that there's an AI or ChatGPT behind all of this. Yeah. And you suggest there's not. So could you tell us anything about the secret sauce behind making this work?

Yeah. So we have like this one person and they're really, really fast at typing in math. So as soon as you click save, that person does every single thing by hand and keys it into QuickBooks. Before you even know what's going on, that that's the secret sauce. It's one guy. His name is Aaron, so it is AI. It's Aaron Intelligence. That's that's literally the entire thing. It's one really smart guy. No, all kidding aside, it's uh I mean how does it work? It's years of Python, regular expressions, all other sorts of code, JSON, all these other types of things that we're doing in the UI and the backend combined with multiple people with careers spanning accounting and finance, being a CFO, a C. CPA, a controller, right? It's that collective knowledge where we've been able to bridge the accounting and the engineering, right? But again, it's Python for the most part. That is the language that we write in, but it's easy to boil it down to it's Python, right? It's a decade's worth of iteration of Python and all these other languages. Does that answer your question or is that too vague?

Yeah.

Or do you want to discuss that and go back to the little guy in a chair doing everything? I think that's a better explanation.

Yeah, I like the guy.

I hope that makes it impressive. Definitely.

Awesome. Well, that said, I do want to allow you to tell the audience where to find more about Accruer, where to find more about you guys, and what to expect from here.

Yeah, for sure. If you're looking for— I'm going to share my screen actually. So if you're looking specifically for the Accruer, super easy, accruer.com. This is our landing page. This is dedicated to the Accruer. Again, it's our flagship product. You want to learn more about us and everything that we do, you can go to finoptimal.com. From here you can easily get to the accruer, right? There's all these different links to the accruer. So finoptimal.com if you want to learn about our company, accruer.com if you just want to jump in and stop booking manual accruals today. I'd also say find us on LinkedIn so you can come on here. Shout out Roman. I love that he's up here.

Shout out to Roman.

Tom Zahettner on LinkedIn, Jesse Rubenfeld on LinkedIn. Also follow our company page, FinOptimal on LinkedIn. I pretty much just post memes and they're pretty good memes. So if you're going to follow anything, follow the meme page. You could also check out Not Another Accounting Podcast. It's our podcast on Spotify, Apple. We've released one episode so far. I don't know when you're going to put this out. We'll have a couple others out by then, but yeah, check us out.

Awesome. Perfect. Cool, man. Thanks for—

Well, I appreciate you inviting me on this and doing this and letting me talk about myself. Everyone in my office is sick of hearing me talk, so it's nice to talk to somebody else. You haven't heard any of this stuff that I'm rambling about yet.

Definitely. That was interesting to, to, to, you know, listen to people that are doing cool stuff around technology and accounting. So more than happy to have you.

Dude, thank you so much. I really appreciate it. Awesome. All right, perfect.

Good one, man. Cool.