319 Should Firms Use Mainstream Tech or Accounting Software?

Okay, the age old debate today. Should people be using category tech, I.e. tech made for accountants, or should they be using general tech? When you see a rad new release from Notion or ClickUp or Trello or whatever it is, should we get excited about that and jump on it? And should we even build our entire tech stack besides the ledger, besides the tax software, should we build our entire tech stack on general software? What are the upsides and downsides of that? I'm going to tell you the story of my journey through this because this is just what I used to do. I used to look at the accounting ecosystem and be like why would I pay for something that's three times as much money and has a tenth of the engineering investment and is not as mature of a product? Why would I do that rather than just grabbing something off the shelf that's super powerful like money.com or something like that. I'll walk you through my journey there. Why I've landed on where I'm at today. Situations where one or the other will make sense to hopefully give you a better framework for how to process just the noise you see around general tools, both general tools and category tools, where it's like oh that's sexy. I like the look of that. Should we do it? It's hard. Let's dig into it. Come on in. We're talking tech. This one stemmed from a Tweet from Rex McInvale. Question could you discuss the pros and cons of building your own PM system in a work management app? I chose to build my own on Monday.com and a few zapier automations rather than try to find one I liked. I would love to love to know others experiences doing the same. There are certain people in this earth who you just you will not find a PM or a task management app that will do what you want it to do. I'll just say that right now some of us are just wired that way where we needed to do something very specific or our firm has a different approach that may have different requirements of a task management system to where using something that doesn't do that like it is such an impact on the business that it is worthwhile to go out and do your own thing. If you are wired that way and you need it to, you need it to be just so. And maybe Rex is this way. I can understand that. I will say there was a time in my life where I was that way, where I was super opinionated on here is the right way to do it and I needed to do it just so and it was worthwhile for me to go out and build my own thing and fiddle with it. Downside was I became then the owner of like what it looked like to manage that platform. I built a. I was, I don't know, a decade ago. I built a whole PM from scratch. That was exactly what we needed. Tailor built to the firm's needs at that point in time. And if you're at that stage and you feel that are there downsides to it? Absolutely. But let's also just acknowledge we all have different appetites for whether we're okay with something that's close or whether we need something that is exact. Because as we get into this conversation, one of the big things is the more into category tech you get, the more opinionated that tech becomes, which has some value to say this is what the process ought to be as opposed to something that is a completely blank canvas where it's not opinionated at all. And you kind of try to build your own guardrails and then you plug 10 people into it or 100 people into it. And that lack of opinionation, opinionatedness can create some headaches when it comes to workflows. But to get back to this question, because it actually leads really nicely into my story of how I went through this, a follow up message from Rex here was it might not have been a correct conclusion, but I liked the infinite flexibility of building my own thing. Also, I've set up Thompson Reuters practice for three firms so I wanted to turn the complexity down. I had exposure to Monday in a prior CFO role and liked the contextual comms piece that is being able to like comment on different things like in a task or on a project. I think that's what he's getting at. This is actually not too dissimilar to my experience. So in my accounting firm before I owned the firm, where were they managing work? They were managing work in file cabinets and lead sheets. That was how things moved throughout the office. And then we moved to office tools, which office tools in terms of like an on premise all in one. It kind of slaps like it's pretty outdated now and is not something that I would really recommend investing in going forward. But it did time and billing, it did all that stuff. File management actually pretty darn well. When we went to ultra tax, we went off lister to ultra tax. The Thompson Reuters people were like, well give you practice. Yes, like for free for three years, gang. Let me shout this from a mountaintop. Anybody that's selling you tax software. Their job is to roll other things in and they will tell you, well this, this practice management system, this file cabinet, whatever it is, is the only one that integrates with our tax software. So it's the one you ought to use and they'll give it to you for next to nothing for the short term. Let me just tell you this and I want to get an amen from the people who understand this in the comments. Don't. Just don't. If you're in the U.S. don't buy anything from your tax software provider besides the tax software. Just don't. No amount of integrations Spoiler alert. Not meaningful integrations, but no amount of integrations make a product good. Instead, here's what you do. You find a good product and if I got to pay somebody to sit there all day to put an address update from A to B or something like that, like there are workarounds for those things. The reality is even like their native integrations and that stuff is totally busted, doesn't work very well. But find the best app to do that job. Do integrations matter? Yes they do, but not nearly as much as we think they do. And something being free or very low cost is not a reason to buy the thing. When Toyota's pumping Priuses out of a factory and they've got two machines that can do a job, if somebody comes along and they're like, hey, I'll give this machine for next to nothing for three years, you want it? What do they say? They say, does it do the job as good as the other options? They that's the question we should be asking. We shouldn't be saying yes because it was cheap because there is a vast divide in how good these different tools are at different things. Today's episode is sponsored in part by Live Flow who just recently rolled out zero support for the first time. Really exciting. Not familiar with Live Flow. Live Flow syncs your QBO or Xero data into Excel or Google sheets on a one time basis. On an ongoing basis. Build out big old work paper templates and sync a whole bunch of data, your favorite reports from the accounting system out with the click of a button even then reuse those templates across different companies. Cool use case. Actually we're getting more into sort of lead magnets and attracting better clients in the podcast, one of the themes that we're kind of going through and so what's a like quick and easy lead magnet you could deliver to a specific type of potential client. Something that you build out in a spreadsheet that gets them to some sort of conclusion. And all it requires is getting you access to the QuickBooks file. You run that like, template with Live Flow to pull all that data into a workbook that is ultimately a deliverable that can go to that lead to say, look at X, Y and Z. Here's some issues we identified, here's some opportunities, whatever that is. It could literally be as simple as highlighting all the silly things they're doing in their accounting file. But LifeFlow, because with the click of a button, you can sync all of that data out, be it a single sheet or a whole ton of sheets, 30 sheets, into a workbook. You can templatize what that looks like and then use it across as many clients as you want. Now that's like the tip of the iceberg. LifeLow also does consolidations. You can use it to give limited access to accounting data to, like, stakeholders, people within the company. Bunch of ways you can use that One basically just gives you a button you can click on your favorite spreadsheet app to instantly pull in any data that you want from the ledger. Pretty handy, right? That's lifelong. More about that one. Check out the link down in the show notes. Today's episode is sponsored in part by TeamUp, your friends who are gonna help you find talented accountants in the Philippines. And they got a newsletter where you can sign up. Just get a little bit educated every week about what it's like working with offshore team members, a distributed team. The questions you're embarrassed to ask, shop little tidbits to your inbox every week. Whether you've done this yet or not, it's worth just like learning what that looks like. Team up actually just hired two new recruiters in the Philippines. They're up to four total. So they've got recruiters on the ground in the Philippines who will go out and track down folks who are going to be a fit for you. Team up actually only launched last June and now worked with 85 firms. One firm hiring 13 people. How's that for social proof? Honestly, that was my experience. Starting to hire folks in the Philippines. We got one, and then we're like, okay, how quickly can we get a second? And we just kept going because we had such good luck. In fact, as you saw in my podcast episode where I drafted my first 20 people to a firm, like, if I were to start a firm tomorrow, like 50% of my hires were in the Philippines. That's what I was doing in my firm when I left. That's how I do it. Again, we just got really, really good people and Team up helps you do that. Team Up's approach is to help you hire direct. So you're going to work directly with that person. Rather than hiring a company who then employs the person, Team Up's approach is to hire direct. The other approach is called, it's called a bpo. Basically the partnerships on all my content we've paired now to two companies, both who will find you accountants in the Philippines. One is a bpo, one is direct. Team up is direct. I would say pros and cons to each Team Ups doubling down on doing it direct. That's the way they like to do it. And if that's something you want to explore, you don't cut a check until you actually make a hire. So hop on a call with them, tell them what you're looking for, do some interviews and if you're not absolutely blown away by somebody, don't make a hire. Right? Worst thing you can do in this whole process is just learn more about what that looks like. So interested in hiring folks direct in the Philippines? Check out Team up link down in the show notes. And so when our firm went to ultra tax we got, we got swindled. It happened to us. It was a well meaning salesperson and gang like these people don't know any different. In fact it was like a 20 something salesperson from Thompson Reuters DM'd me on LinkedIn the other day and he's like hey man, this practice management report you put together as killer like comparing all the cloud PMs he's like but you forgot to put on VO on the list. And he's bright eyed first year in the whole, in the accounting space, just so full of potential but doesn't know. She swear twice on this episode, doesn't know. So he DMs me forgot to include onvio in this, in this list and I didn't even have the courage to respond. I didn't even have the courage to say I sure didn't. I didn't include that tool because it stinks. Because it is hot hot doo doo. Don't buy software from your tax software provider that isn't tax software. But this is what I did in my firm. We switched to ultra tax and we bought practice cs. Big long process to get it implemented. It's a very complex system. It's basically made for more for like mid market firms but they sell it all the way down to itty bitty tiny firms. And like Rex shared here, he set up Thompson Reuters Practice for three firms. After you do that, it leaves you in a certain headspace to where other things are going to look appealing based on how they, like, present themselves relative to what you're used to. And this is like, it's the same thing we do with our parents who are one way and like, we swing all the way back the other way. We do the same thing with software. So just know that what's going to look appealing is probably the thing that's on the opposite end of the spectrum of what you already have. But the best solution might. Might be something in the middle. And so this is what I did next. Our tax practice, all the project management stuff was happening in Thomson Reuters practice. But when I launched our CAST practice the first time we started doing accounting services for clients, I rolled that all in ClickUp. And let me tell you, ClickUp was like, oh, the freewheeling, modern, cheap canvas where you could do absolutely anything. And ClickUp's unbelievable. ClickUp's like every feature any task management system has ever had under the sun rolled up into one tool. And this was maybe five or six years ago where honestly, the cloud, like tech ecosystem for accountants was in no way where it is today. It's so much more mature today than it was back then. You had very few options even for practice management. Like, you had carbon, you had canopy. Like, there were not very many players there yet, and they were still very early days, not super mature products. But Click up, on the other hand, man, that was like, you look at practice cs, you look at this old timey legacy system that was very limited, and then you look at something like ClickUp, which was like kind of Trello 2.0 that just looked like the absolute bee's knees. And so for the CAST practice, we went all in on that because you could build anything that you wanted on it. The problem was I traded no flexibility with Practice CS for, in my opinion, too much flexibility. While you could do anything with ClickUp, what I ultimately needed was like a way to put repeatable processes on Rails. And it didn't really work that great for me to do that, like, because it was just so flexible. And where I, like where I am today is in my early days, I wanted to, like, reinvent the entire profession and do all these different things. And it was like you have this kind of naive notion that you know everything and that you know how to do it better than everybody. And then the more people you talk to, you're like, oh, you. They've actually already tried all these things. And this Part of it works and this part of it doesn't. And you learn that the path to growth is actually just having the right people to ask the right questions. More so than I'm going to try this thing for the next year and see if it works. Like you are always better trying to find the right person to ask that question of. And I learned that there's actually value in a tool being somewhat opinionated, even if it isn't exactly what I want, I can work with that. And actually an imperfect system that I can put on Rails and plug my team into and they can understand is better than a system that I, that I can't lock down. And normally when we're, when we're talking about technology here, we're talking about practice management systems, task management, that's the big one. But there's a ton of other examples of this where you could go category specific, you could go general. So let's talk about like proposals. Ignition, big player here. Go Proposal, another one. They're big in the uk, We've got anchor, we've got nula, but common complaint with Ignition, past sponsor of this podcast. And my content, they're more expensive than all the other options. And you can go out and you can find general, not category vertical proposal and payment solutions that are way, way cheaper. Now, in my case, Ignition was the one that turned me on to a totally different approach to pricing our services. Like, they taught me how to get my firm off of hourly billing, hourly pricing in a very practical way. We moved over 2000 projects a year from a partner sitting in a chair and billing based on a whip registered to giving them a price upfront and then automatically pulling payment when the project was complete. That was a lot more than a software platform for me. And so the reason that we use them, honestly, the platform was fine, but it was the fact that they took us on that journey and took our firm from A to B and they had our loyalty until the end of time as a result. But it's a good example of a tool as it gets more mature, it gets more expensive, and then you have other entrants come in that are going to be cheaper. And we've seen a number of, of other proposal tools looking to come in and do a version of what Ignition does. But at the same time you can go out and roll your own thing. That's general. And there will be situations where that makes sense, particularly I think as you get further away from the core, like core of your business, like the pm, the further removed you get from that I think the more sense that general tools or the better argument there is for general tools over category tool tools. So I got a short list of arguments for both arguments for general tools. Oftentimes they will be ahead on like raw tech capabilities. The coolest of the cool new stuff. I've been talking a lot lately about wordware wordware AI. We'll put a link to it in the show notes it is a amazing tool for doing wild AI things. Basically prompt chaining. So rather than just putting a single prompt in chat GPT, you can have a whole bunch of prompts in sequence. You can run code on the output, you can loop sequences of prompts to have subsequent prompts improve upon previous prompts, give a later prompt different information and say this is my tone of voice now modify this to be in my tone of voice now improve it. Like just the fact that you can put up these entire workflows. Super, super cool. The app grew to like 3 million users in the first two or three days. A very novel approach to building AI that started in a general context. Now should WriteWorks go out and with Spark, their kind of chatgpt for accounting, should they go out and build a version of this? They absolutely should, but they haven't yet because this is still kind of a novel approach to AI workflows. So general tools will almost always on like the raw tech curve be ahead. And they will almost always be, with some exceptions, cheaper because they are general for the same reason that me standing up an accounting firm that does general services will probably be cheaper than the one that's for the very specific person. Those software platforms, they are a bigger scale, they're running bigger numbers and on average they will be cheaper. That being said, even this is getting whittled away by folks in an our vertical. In fact, I just saw the other day Financial Sense, the practice management system, they've got like a $9 per month option now. I don't know what's stripped off of that, like how limited it is. Client Hub even for a while had like a free version of their uncategorized expense tool. I don't think they do that anymore. And like looking for the cheapest one is not the way to approach this stuff. Like tech is still such a small line item, but such a huge driver of productivity. This episode is brought to you in part by Makers Hub. If you've been around the channel long, we've done a number of demo days with Makers Hub showing off how they're using AI Vision models to automate Your accounts payable services, your bill pay services that you offer to clients. Super smart handles some really gnarly stuff. Well, they've been busy. They keep shipping updates. Couple things they've shipped recently, they got a W9 module now to take the headache out of 1099 season. Just in time, man. That's coming up. You got W9s for all those vendors. Oh, do it now. Don't kick yourself in January again. And then they also shipped sequential approvals. So by default, approvals in Makers Hub have historically been like approvals in pictures parallel. If three people need to approve something, they can all do it at a time. Now optionally you can make those approvals sequential where they have to be step by step. They don't go to person two until they go to person one, that sort of thing. Some cool improvements they've shipped recently and got a bunch more cool stuff on the way. So if you're looking for a more profitable way to run your bill pay practice, check out the link to Maker's Hub down in the show notes. This episode is sponsored in part by Stanford Tax. If you run a U.S. tax firm, you know just how crazy crotchety the information gathering process has been for tax prep for eons sending out these nasty organizers asking boilerplate questions that you frankly already know the answers to. So the client's like why are you making me do this work? Stanford Tax, they're gonna give you a super intelligent way to gather that information. Step one, connect your tax software. Whatever you roll Assert Pro Series, drake ultra tax, CCH access import, thousands of clients in under 10 minutes. Step two, get personalized questionnaires personalized to each client. Includes prior year numbers, detailed document checklists like based on the actual data from last year. Fast and easy for your clients to fill out. Do this for 1040s, but also 1120s, 1120s, 1065s. And then step three, you get a PDF work paper of that client's submission. So you get a nice tidied up, organized bookmark. It's got all the documents they uploaded, all the ways they answered the questions, all that stuff in a single place. So that that prep process is already halfway down the road. I don't know a ways down the road. And the client had a clean, straightforward, modern experience getting you that stuff. Stanford is one of a few companies using AI to innovate in how we approach our tax workflows. Learn more about that one. Check out the link to Stanford Tax down in the show notes. Now arguments for sticking with category tools is when there is New stuff. When there are new innovations, it's integrated more contextually for the ways that we work. It wasn't that long ago, but in many ways it was. It was over 18 months ago now that Microsoft announced their vision for the future of work with. And it wasn't even called Copilot at that, was it? Copilot. I don't remember what it was called. Their AI vision for the future of work and how this AI assistant basically ChatGPT built into everything was going to change your life and it's still garbage. That was over 18 months ago and a lot of us saw that and we're like, boy, that sure seems compelling. Should we put our entire accounting practice on the Microsoft suite? Because they're going to be first to this, first to doing this really, really well. And that absolutely hasn't panned out. But the reason why I didn't think that was the right answer even at the time is the big argument for category specific tools is general solutions will only go ever go so deep into the accounting specific workflow things that we have. So if you need an entire suite of tools that has some sort of AI component right now, Microsoft's okay. Google Workspace might actually be better and that's probably the best entire suite of tools that has some sort of AI support. But it's never going to go as far as you look at the things that practice management systems are starting to do now where it can, you know, look into the projects and look into files and stuff like that to help draft a response on your email. We do have, you know, Microsoft talking about doing stuff like this, but Microsoft's never going to connect to the accounting ledger to pull even more information to make that email smarter. They're not going to be able to read tax returns because tax returns are like this complicated visual thing. It's not structured data you can get information of or get information off of. But like Canopy, who holds himself out as like a PM that is really built for tax pros or taxdome for them to build an email assistant that can see tax returns in the file system and actually pull data points off of it. We've seen examples of this tech from True Prep where you, you upload your client tax returns and then you can chat with an assistant that can be like, give me all my clients who have Schedule Cs with over 100 grand in net income last year. There are ways to process tax returns and get like useful structured information off of it. You take a company like Canopy, say they build something like that into their email assistant. So when a client asks a question, they can go back and look at the prior year tax return and be like, oh yeah, here's a screenshot on the return. They had this and that and they draft an email for you like that as a result. Is Microsoft ever going to do that? No. Now, will it take time to get there? Yes. But the ceiling for category specific tools is higher than that of non category tools. And again, this, this is most relevant at the core of our work, at the core of our workflows, the tasks, the client communications. The further removed from that, I think the easier it is to make an argument for general tools. Like I'm not holding my breath for a zapier for accounting, like does that even need to exist? Maybe down the road. But the more removed you get from our core work, the better the argument is for general tools and proposals and payments. Like that's one of those things that's kind of like a couple bands out from that core work where I still see a lot of benefits to the verticals. But you're getting closer to where there's a stronger argument for the general tools. Right now you see people like Brandon hall, big advocate of they use Front, which is a general tool for the email inbox management. They use ClickUp for their project management. And you look at something like ClickUp AI, for example. ClickUp AI is very good and probably the best implementation of a task management system, wide AI assistance, where you can ask it to generate stuff based on other contexts. You can talk with it about the status of projects and all that stuff. I think we're also grappling with is that actually useful? And then the bigger thing long term, in what specific context is that sort of thing useful? And actually the email assistant getting into a tax return or getting into the ledger connection to help answer a question. I think to me that is a great example of where the ceiling for our industry tools being much higher is going to make me invest in that category tool because I have greater belief in where it can go long term rather than the general tool. Now. When I put my cast practice five or six years ago on ClickUp, it was a very different software landscape where the category tools were nowhere near as mature as they are today. There weren't as many of them. There are so many practice management systems now and they're all pushing each other to get better. We're driving the AI conversation on this podcast. We're continuing to push them to do more because there's more that can be done with Today's tech that folks in our vertical are still not doing. And we need to keep kind of pushing that that narrative and put pressure on them because we don't want everybody to go out and use the Microsoft suite because if that's the best tool that we ever have to run our accounting firms, it kind of be a bummer because it would never get into the accounting firm specific stuff. Right? But that's why today in most cases I'm going to be investing in category specific software because long term it can go deeper to support the specific things about my business that the general solutions won't. Very contextual. There's going to be situations where the general tool will be better. AI assistance is a good example. Right. Rightworks has got Spark, their chat assistant. They want to be like the Chat GPT for the accounting profession, but then most people are rolling, you know, Chat GPT or Claude. Honestly the smartest thing they're doing with Spark right now. I had this in my newsletter last week. It's 17 bucks per month to use Spark if you buy it for the year, compared to 30 bucks a month for ChatGPT and 30 bucks per month per clot for Claude. And with Spark you get access to all those models you can pick from a dropdown. The OpenAI models, the Cloud models, 17 bucks per month. Now you lose some functionality. You got cool stuff like cloud artifacts that's specific to Claude. ChatGPT is coming with this cool like voice support, which is amazing and only going to work presumably in the open AI like Chat GPT apps, at least in the beginning. So you lose some functionality. But it's also dirt cheap to roll Spark and get access to those models. And that's an example of something that's like further enough, far enough removed from the middle where it's like you can see the arguments going either way. But that the, the thing that I think is getting harder and harder to argue is your core work, task management, client communications. The tools in our space that are doing that really well are now so good that it's pretty hard to make an argument against those things. That's where I stand on all that today. There's going to be situations and contexts where that's probably wrong. I'd love to get your thoughts or even specific scenarios and maybe we'd cover that in a future Q and A. Specific scenarios that are maybe a little more nuanced there where there's a greater argument for going with the general tool. Pop that thing down in the comments. Thanks for coming. Hanging today I'll see you in the next one.