367 The Future of Workpaper Management for Accountants

I'll tell you what type of software sucks for accounting firms right now. Just it's a, it's not good work. Paper management. How you mark up your, your little docs and you do the jump arounds and the references and there's just not an elegant way to do this right now. But I think. But look upon the horizon. I see where we might be headed also because you better believe it's a Q and A Friday. How many leads should you expect to get on your firm's accounting firm website? Like what's good, what's bad? Why do we keep seeing so many awards for accounting firms and for accountants just springing up everywhere. And should firms be using DocuSign like standalone E signature tools? No. N o no. And I'll tell you why. Come on in. Scoot your little chair up. That was demeaning. You don't have a little chair. Scoot your big powerful chair up and let's talk about it. Work paper tools. We've got all sorts of really good progress that the profession has made on the ways that we gather information, the way that we collect it from clients, letting machines do the requesting and letting the humans do all the other stuff. We also have cool tech around how to automate delivery of things like with tax returns. You have solutions like Safe Send, like Sorband that'll automate delivery. And you have tax advisory tools to find saving strategies and generate reports and all these tools built around the ledger. Various. But what about when daddy's gotta put together some work papers and prove the work that we did? Where do I put all that stuff? Does it just go into like the file system of my practice management system? I gotta mark up my stuff, my goods. I am from the CCH engagement era of accountant where I need my links to link. I need to be able to right click an annotation and open the other file so that I can see where it's pointing to. Is that too much to ask? I don't think so. I don't think it is. So where's all the good work paper management solutions? Well, the hard thing is cloud document editing man just sucks. Like think, really think. When have you ever had a good document editing experience in a web browser? I don't know that I ever have. And so it's a really hard thing to build online. Uh, and still admittedly not something that I people even agree ought to be an online thing because I would argue the best file management solutions for practice management systems today are just like local drive syncs, like just Give me a network drive on my computer that basically makes it so that I can work with all the files in my practice management system as if they are local files. Like, that's my preferred way of doing that right now. Same way like you had back in the day with, you know, Dropbox, all of your files can be in the cloud, but you can have this like mapped network drive on your local machine so that you can work with those files as if they're local. But with that you lose some of the niceties of say, a CCH engagement where it has its own approach to annotating things within a file and being able to link things to other things within an engagement binder. And we just haven't seemingly been able to progress from that paradigm. And if you really want that paradigm, honestly, it's really sad to say, but CCH engagement is kind of your only option. And I think they have a cloud version, but I think I've heard from folks that the cloud version is just brutal. And they're not like most of these legacy platforms. They're not putting a ton of investment into the cloud platform because they're just, they're not as good as the legacy ones are. But the legacy ones require a server that like, has all of the files and that's how you access them. If you know more about this than me, or if like the cloud version of CCH is fine for, feel free to pop some notes in the comments here. If you listen to the audio feed, your player will have a link to the YouTube video. Pop in here and just drop a wee comment on the YouTube side. But to peer ahead down the road at where I think we're heading here, unfortunately, because this space is kind of controlled by legacy systems, you know, CCH engagement being an example, I see no future timeline where all of the things that are possible with AI today across documents comes to bear in a platform like CCH Engagement. Like, I think that's just not going to happen. If anything, I'm a little bit surprised that Adobe has not done more around Acrobat and Native ability to like make associations between files. Like, think about other tools that we have online, like Notebook LM or Claude, where you can upload a file and do all sorts of interesting things with it and chat with it and it can understand pictures and tables and all these different things. And Adobe Acrobat today just still feels like an authoring tool, almost like for creating static documents basically, not for like annotating scans and stuff like that. But I'll tell you What I'm really excited about. So if we go to the full other end of the spectrum of what is a killer version of this look like today, it is a cloud based system where you manage all of your documents. But when we have some like AI agentic functions that can work across the top of them, what does that actually mean? Well, recently Claude. Claude AI, it's one of the most popular large language model platforms out there. Basically like an alternative to ChatGPT. Recently they released the ability for it to comprehend like visuals and images inside of PDF files. So for a long time we've been able to upload PDFs to Cloud or Chat GPT or whatever you want and it will just pull the text out of those documents and you can chat with it and kind of get some insights from it. But not being able to understand images or tables or anything like that was a huge blocker. Because if you think of the way many documents are authored, like an IRS publication, it'll have like worksheets where you have to like go through a certain flow to get to an outcome or even just something as simple as tax tables. The text in a tax table out of context doesn't mean anything. And so it's literally just like unstructured numbers visually spaced out in different ways. And if all you're doing is pulling the text out of it, a language model doesn't know how to make sense of that. So this upgrade now of being able to visually understand anything in a PDF, it's a big deal. Like think about just. And if you haven't messed around with like just how powerful AI vision models are now, like just to sort of level set, AI vision models can read human handwriting better than most humans. Like if you think about that one person you always have in the office that takes the yellow legal pad into the meetings and they do all those scribbles and they're the only ones that can read that, or maybe there's like one admin that can interpret these things. It's like written in another language, that sort of thing. Generally today, AI can read better than most humans, which is overcoming a major limitation of OCR technology historically, right where it was like it was really good on machine readable text, but once it veered too far off the beaten path there, it was never going to read like the handwritten text on say a personal check or something like that. Imagine now, you know, work papers which can be, you know, scanned government forms, whatever they are annotated by like, you know, an accountant or something like that. Imagine now AI being able to see and visually comprehend everything that's happening in a work paper. What are all the different things that you can do with that then? And that's where we're getting into what I'm, what I'm calling kind of agentic workflows. And this isn't my terminology like agentic meaning like AI agents kind of self guided going through different processes. That's usually what people call kind of agentic activities across our work paper files. So what are the different ways that you could do that? Well, let's say that you have sort of an internal organizer or, or a, a big workbook or something like that that you complete for every tax return that you do. Well, an agentic workflow could be as simple as going through all the documents that you have, like pulling all the details off W2s and real estate tax statements and all that stuff. It could help with the actual preparation of say a month end close work paper file. You do a big export of, you know, all the general ledger detail or something like that and you can prompt it to do basically whatever you want it to do. Like if we think about the Zero1 preview model, which is the current state of the art language model we have with ChatGPT right now, we've done some testing on the podcast about a month ago where we had it review like a balance sheet at a very high level. Well, imagine being able to queue up a hundred different prompts that you use every single time you're going to review a month end close or put together the work paper files or whatever it is that you need to be done. If all those documents are in one place that is intelligent and accessible to AI and you kick off those sort of AI LED workflows where every single time they go and do that test, they come back with the result or they come back with a work paper that they prepare prepared. That is a fundamentally different version of doing work paper prep, but one that is only going to be possible on a modernized platform for managing documents. CCH engagement. Good luck. Not going to happen right now. Who are the front runners to potentially deliver this exciting future for us? Because a huge percentage of the time that goes into doing accounting work is building documentation, is proving what the right answer is like. Ultimately that's what we're doing at the end of the day is putting together defensible truth for here is what it is. This solution might come from someone outside the accounting vertical. Be a bummer if it did because the ceiling is always lower when that's the case because they're not integrating into the ledger and kind of all the different accountant specific opportunities there. I wouldn't be surprised if there's a version of Acrobat that became a more compelling way of managing documents. I also wouldn't be surprised if Google's Notebook LM which if you haven't played with it yet, we've talked about it several times on the podcast. It's super, super cool in let's link Notebook LM in the show notes. That was the tool that we used to generate like the AI generated podcast sort of thing, which is just kind of a feature of it. But the way Notebook works, basically you can upload any number of documents to it and then summarize data from it in any format that you want and chat with those documents and ask it to, to give you specific insights. And it's almost like a new user interface for working with documents because on the left hand side you have an index of all the different documents. In the middle you can scroll through them, but then you have all these interactive AI elements on the screen of interesting things AI can then do with those documents. And honestly at this stage like I could see a general solution like that coming along and being really compelling for, you know, attorneys even for basically anybody that has to chuck like big old complex documents into a single place and then automate tasks around them. Very possible that a third party solutions provider could ship this before anybody inside the accounting space. But if I had to bet on, on anyone, I would probably look at the workflow providers like so who are the deepest core workflow providers in our space right now? On the tax side, that's probably the folks that are taking automated intake further than ever before. So my three recommended tools for that right now, Stanford Tax, Safe Send and Sorban. They are doing a really good job of automating the intake of all the information that you need to complete a tax return. And the logical progression from there then is a cloud based work paper management platform. And we had a version of this in the past with SP Binder. I'm not a big fan of it now because it kind of takes a couple of years to get up to speed with it. And since the Thompson Reuters acquisition, I don't really see that product developing at all. But the logical progression of these, these AI like driven tax intake tools is to then kind of go the next step and, and begin offering work paper management as well. If you think about the only other group within the tax base that could do this are practice management systems going to do it? Honestly, I don't think so. I the core and I've been talking about this like last week's newsletter was about this. The core workflow tools have gotten so good that they're doing things beyond what any of the practice management systems do. And the practice management system want to sell you on all on all in one because we all want all in one. We really do. And a perf world you would only have one tool that could do all the things for you. But the reality is in three cases right now proposals how you re engage clients has been done vastly better by Ignition and Anchor are my two recommendations for that and that that matters because optimizing your renewals is truly money in your pocket. It is renewals that define how profitable your firm will be next year. So it is not something you want to cut corners on. That's one example of where of where dedicated workflow tools are way better than PMs now. Tax intake is another example. None of the practice management systems are doing anything more than templated organizers which is a really really low effort way to collect tax info when collection is a huge part of the process. And then the third case where dedicated workflow tools have gotten way more powerful is in the month end close process and Keeper is the one that's really nailing that. It is really not a practice management system because it stinks at a lot of really core practice management stuff. But it's phenomenal at managing a high volume of month end closes because it pulls every single transaction from the ledger into the platform. And so your task management system actually looks a lot like just cruising through transactions the way that you would in the ledger itself. This episode is sponsored in part by Live Flow. You see the the demo day we did on YouTube, yet live flow dashboards encourage you to check it out. It's all of a I think a seven minute demo showing off Live Flow's new release. Super simplified, easy to use financial dashboards. Gonna feel super familiar for anyone that's that's used that Live Flow product before connects your qbo, your Xero to your Google Sheets or your Excel like immediately have this picker to be able to pull any old data from any of your connected client files. But now you pull them into these like super flexible little widgets like in a in a dashboard view. You literally just share a link with the client. Went through some cool examples in that video of like clients I had that were more like tradespeople that want a mobile updates and I would text them something every morning, man. I can make a little mobile friendly dashboard where they could hop in and as long as the underlying accounting ledger is up to date, they could see some really cool insights there that you customize yourself, templatize, turn that dashboard into a template and then literally just from a dropdown you can connect another company or company consolidation and it populates the same dashboard with that different company data. Super cool stuff. You haven't seen that that demo day yet. Go to YouTube. How would I find it? I'd probably search Jason Live Flow Dashboards Pretty cool release from the folks at Live Flow. Learn more about them. Check out the link down in the Show Notes this episode is sponsored in part by Client Hub. Recently did my practice management system recommendations for 2025. Guess who was on the list? Better believe Client Hub was there. ClientHub they've got a four step framework for picking your next practice management system, the four Cs. But we're not talking about no diamonds. The third C talking about today Clarity. Because there's massive value in how clear and approachable that platform is. Client Hub is nice. It's actually a nice place to be. You know, some software platforms you kind of vibe with, you get in, you're like, I can imagine spending time here. Client Hub is designed to make everything as simple as possible for the firm owner, the clients and their team. Well organized, super clear layout features are powerful, yet simple means you spend less time having to support your team on questions, your clients on questions. Oh, ever had to train a thousand clients on a new client portal? It's not good that Clarity is delivered by Client Hub. If that sounds like something you may be in the market for, check out the link down in the show notes. All three of those things have risen to a level and they're being done so well that none of the other PMs are really touching those workflows at all, as good as those dedicated tools are. And so if we think about what is next for work paper management, I kind of think those core workflow tools, they're the ones in the driver's seat to do that. Well, not practice management systems because they're not coming down to that level of granularity of attention to those core workflows. Which is interesting because the practice management systems today are probably the correct answer for where we should be keeping all of our files and our work papers, but those workflow management apps that I'm, I'm pushing people to invest in and honestly getting a lot of pushback on both from some accountants and from the practice management platforms who don't want me to say that they want me to tell people that your PM will do everything for you and it will do a version of everything for you. But in a few cases, there are core workflows that where, like, there are other tools doing such a compelling job that you need to go explore them because they do them way better than practice management systems. So it'll be interesting to see how that develops. AI unlocks a huge amount of opportunities for how we can better manage documents automatically. Doing annotations and like, there's so many things where quality assurance being largely semantic, being able to prompt it to say every single time, go and check for this every single time, make sure the balance sheet is comparative every single time, make sure it's cash basis. What are the 250 things that you want AI to double check for you every single time? Right now we could do that in ChatGPT one prompt at a time, but we need it to be productized. Like, we need that stuff in a platform where we can run that stuff at scale because it's getting better so, so fast and is already way beyond the threshold of what would be really useful for us to have right now. The problem is there isn't anywhere to do it yet. Like, there is no centralized home for documents yet where you can do a meaningful version of that. And I want to see it, darn it, sooner than later. Okay, few more questions. You ever curious where questions come from? It's a combination of social media, of people emailing me stuff, but also comments under said podcast, buddy, let her rip if you got any questions. Next, somebody asked, what. What's the lead volume that firms ought to be looking for? And this actually stemmed from, I think it was Mike Sylvester posted on Twitter that he gets, you know, 400 leads a month on his website. And somebody asked me, like, should I be targeting that? That seems like a lot. I don't know. I don't know anything about Mike's situation specifically. I can tell you the number of leads that just get to your website is a hell of a vanity metric. And I would actually argue that the cases where I see a really large volume of them, it's actually a signal that there's not enough filtering happening on your website. So who I ultimately want on my site, we've talked about this before, is I want high intent people coming so that I can solve a very specific problem for them. And that's where we use like squeeze funnel pages and stuff like that, where I have my Firm slash beekeeper. And they got there from a social media post where I said, check out this four step framework. You can come swipe. Just give me your email address and it'll solve this really painful pain for you. Those are the people that I want coming to my website. If I say I'll do anything and everything for anybody, my website probably gets a ton of traffic. Mike Sylvester's website, I imagine, gets a bunch of traffic because he's pretty big on Twitter. But I there really, to me, there is not a number of like, leads getting to a website that is ultimately meaningful because it's a product of filtering. What is meaningful is how many like leads do you have coming to the bottom of the funnel and wanting to explore working with you? What percentage of those leads are you converting? That's ultimately what you need to be looking out for because you have people wanting to book calls with you who are like going to be C and D clients for you. There's, there's, it's whatever is driving people to you, whatever that is, you don't want it. You genuinely don't. I only want people coming to my site. Who are those? Honestly, A clients. And so I filter my website really hard just so that we are getting those. That's so like, as far as my firm branding beekeepers, be book. Be book. Book beekeepers. How do I make it super clear who I'm for? I had a little bit of a stroke there, but you know what I mean? So I don't think there's a right answer here. And oftentimes, I'm not saying Mike's doing this, but oftentimes the folks that I see and like, who give talks and all that, who are like putting out the most impressive numbers, they're the most general firms. And those are not generally going to be high quality, high quality leads. I have an idea. Listen in here. How do we feel about this idea? I think that we should do an award show that gives a series of awards to the best awards in the accounting profession. These aren't so, these aren't awards for accountants or for firms. It's awards for awards. Because I don't know about you, every time I fire up LinkedIn, there is some new. Somebody's getting a new badge, a new medal, a new honor. And I'm not saying that this is a bad thing. And people, they're like, a lot of great people are getting these things and I don't want to by no means want to take any of that away from them, but boy, do you See them anywhere and everywhere. Because the power of awards lies in the hands of the award giver. We're talking about people who we would never otherwise be talking about. I'm not talking about the accounts, I'm talking about the people putting together the awards. It is such a solid hack to get people to care and to get people to talk about you who wouldn't otherwise be talking about you. Maybe get a little bit of goodwill with the person who you give that award to. And as. As annoying as it is to me, it's something to genuinely think about. Like, if you're going after a specific vertical, is there an interesting version of that that you could do where you're highlighting, you know, the most innovative people in a space or like some interesting angle on like, you know, ignition does the top 50 women in accounting, which is super cool. I mean, that's an example of like an award sort of thing that is absolutely worth doing and, and highlighting really talented people. And so it's not to suggest that these are all not, you know, not worthwhile or something like that. I do think we've gotten a little overwhelmed that like, all these random groups you've never heard of, like giving awards to accountants and you're like, I don't even know. I don't even know what you do, bro. I got an email from, I believe this was a practice advisor, top firms for women to work for. I got an email letting me know that realize had won the award or had been nominated for the award or something like that, and they gave me all these assets that I could share and all that stuff. Realize, it's. It's an accountant community that I run. It is. It's not an accounting firm, but I won the award. Booyah. So there's wrong ways to do it. Doesn't mean that there aren't right ways to do it. But if you're looking for a way to like, get some attention and people looking your way within a specific space, there's. There are cool ways to do it. Especially if you pair that with like an event and, and like, actually do something of meaning, like, you know, make a donation to a charity of their choice or something like that. It is actually a great hack to get people talking about you who wouldn't otherwise be talking about you. Last question. I've got a couple versions of this insert E signature solution here. DocuSign. Hello, sign whatever it is. Panda Doc. Basically, what is my favorite version of that? And I'll be honest, I don't like any versions of those. Because I can't think right now today of a single scenario where I ought to be using a standalone E signature solution, not in the context of a workflow. So for example, if I'm re engaging a client, they ought to be signing something in the context of my proposal tool that's solving a whole bunch of other issues around just the signing of the document. If they are signing their 8879 before tax return gets filed, that needs to be done within my practice management system or my tax return delivery automation platform as part of a larger workflow that's getting them, you know, their their estimates and automated reminders and reviewing the tax return to ensure they actually did look at it before they signed the 8879. If you find yourself using a standalone E signature platform, and I'm actually curious if you are, what bits of your workflow are you using it for? And drop that down in the comments. Maybe there's exceptions here that I'm not thinking of, but in every case that I can think of of where you need a client to sign something, that actually ought to be an embedded part of a larger workflow, not a standalone process where somebody runs out and like shoots the documents over to the client to sign and then they come back. That's. That seems exceedingly rare to me where you would have to do that as opposed to it being part of a larger repeatable workflow that happens a hundred times every time you do this engagement for a bunch of different clients. Maybe I'm forgetting something. Drop. Drop it in the comments if I am. Gang, thanks for coming and hanging this week. Got any questions? Keep them coming and I'll see you in the next one. Toodaloo.