Rise of the "Uber for Accountants"

Welcome to the Accounting for Innovation podcast, where we explore cutting edge strategies and insights into the world of accounting and finance. Presented by Decimal and the Radical cba, each episode dives deep into industry trends. Whether you're a seasoned professional or a budding entrepreneur, join us as we unpack key concepts and share practical tips to drive success. Welcome to the Accounting for Innovation podcast. I'm Jody Padar, the Radical cpa, and I've been at the forefront of innovation and accounting in the accounting industry for over 15 years. I have with me my co host, Matt Tate, the CEO of Decimal, which is one of the fastest growing accounting companies in the country, and truly an accounting innovator.

Oh, thank you, Jody. I'm excited. Today we get to talk about Uber and On Demand for Accounting. In this episode, we're going to dive into the phenomenon of on demand accounting services and Uber for Accountants. Join us as we explore how these services are disrupting the traditional accounting landscape and the implications they hold for accountants. So, Jody, talk about a lot of different things, but tell me, when you think of On Demand accounting and Uber for Accountants, what does that mean to you?

Well, I think there's two different things when I think about on demand accounting or the Uber for accounting. So we'll go with the simple one of Uber for accounting. So that is kind of these new platforms who have popped up who basically hire contract professionals to do work for you. So it's kind of like the Fiverr, right? But they're, they're only selling accounting and tax. Right. Tax file is one of them. And there's a picnic. There's a couple of them out there. But why it makes a difference is because your employees can go get a job pretty easily. So they don't even have to think about building a book of business, which used to be kind of the big fear for CPAs to go work out on their own is they were afraid to get clients because many CPAs aren't necessarily salespeople. So they could just hook up with one of these platforms and basically have worked, given to them. They do it and they send it back up. So that's, that's a disruption as a whole for the industry. And I would argue that entrepreneurial accountants who have always had side gigs are the employees you want because it means they learn how to sell. Right? But this other thing of on demand accounting to me is the idea that you're going to go online and find services and be connected to those services right away in a digital manner. Right? So when you log on, it's not just when a customer logs on. It's not just them logging on and sending a price or like a question to say, hey, I heard about you and now I need a new accountant. Can you help me? Right. Which is the traditional way of doing business. They go online, they fill out some sort of digital intake form. Within a few minutes somebody gets back to them, has a sales call, they go through this kind of onboarding process, collecting all their documents, their, their price for services, they're quoted, all of that stuff. And they could be completely onboarded within, I would say a couple hours if they had all their stuff together. Usually there's a little bit of time in between, but it's really a seamless digital experience to getting real time answers and a new setup for a new accountant versus in a traditional firm. You know, you get a call and then three days later the partner calls you back and says, oh, I heard you called, can I help you? And there's no intake, there's no onboarding, there's nothing. Right. And that's where the technology companies are killing it. And they've adjusted their way of doing business to the way the consumer wants to work today. And it's kind of the Amazon likeness of working with an accounting company. And I, I imagine you have very similar services like that, Matt. Right?

Well, I think absolutely. And Michael o', Connor, our COO at Decimal, said it really well yesterday. He said those of us that come from the technology industry intuitively know that client experience is the starting point for every everything and setting clear expectations. SLAs, all of the wrapping that comes with a good experience around the output of what we're doing just intuitively is where we start versus professional services. Accounting folks, focus on I need to do this, I'm going to do that. Let me hop on the phone, figure out what you need and how I can do it. And I think that's where these you talk about on demand or Uber. For accountants, what they're trying not to sacrifice is experience. What they're trying to do is provide a good experience for the output of this work. Now, I don't know about you, but I hear a lot of accounting folks and accountants CPAs saying I'm worried technology is going to take my job, AI, automation, whatever is going to take my job. I don't think that's true. I think what's happening and it's happened in other professional services and it's really kicking into high gear with accounting is technology and outsourcing starts to eat from the bottom up, they take the lower level tasks and they start to automate and accomplish those, which doesn't take jobs. But what it does is it allows for the accountants to move into higher level work to do the things that they truly do enjoy. Because they think about your days running your own firm. You can't tell me, Jody, you ever enjoyed getting a box of receipts and putting those into a spreadsheet to figure out how you were going to file taxes. Like, you can't tell me that wasn't a really good thing, that OCR and Receipt bank and Dext and all of those other companies came out and made that easier for you.

Right, right. That was, that was the idea to get rid of that grunt work, the work that we didn't want to do or that our employees didn't want to do, and to automate it so that we could do the work that we want to do, the advisory work, the conversation, so that we could have those, we could have time. And my big thing is, is I want to go home on time at the end of the day. I don't want to work a bazillion hours a week. And until you start standardizing and automating these things, you will always be there till 9 o' clock at night. And that's unfortunate because a lot of that is just process driven. And how do you. It is, how do you, how do you create those processes within your firm so that you're serving people the same way?

Well, you create the. It's the Henry Ford create the assembly line so that you can make it easier for you to do the other things. We. It was a story I was hearing from one of our employees and her name's Katie. And Katie was telling me at her last firm, she had three kids at home and it was in the middle of tax season and she woke up one day and the kitchen was full of dirty dishes and she realized she would have no time to do them. So she called her mom, put the dishes in a laundry basket, dropped them off at her mom's house, pick them up, clean on the way home. And that's what she remembered about tax season. And it's because there's no standardized process. There's no standardized experience. It's allowing everybody to do things their own way and allowing for the bottlenecks to occur and not pricing for bottlenecking. You know, one of the things that I've heard and that we do is, hey, I will file your taxes, but guess what? If you get me everything on April 1st, to file your Taxes. A. I'm filing an extension. If you don't, if you can't have an extension being filed, you are going to pay me 10x what it would have cost if you would have gotten everything in January. Because at that point, the time value of money exists. And I think as you look at these on demand services too, you're, you're seeing that type of experience where I'm shocked that it's almost like some accountants don't value their time and don't value how important they truly are. And they should, they absolutely should. They do really important things that are crucial. You literally cannot exist as a business. You will get arrested if you don't file your taxes. Like you have to do these things to exist in this society and you undervalue them. And I think that's crucial.

Yeah. And I mean, that's dynamic pricing. And you know, the airline does it. If you book your ticket the day before you want to fly, your ticket is really, really expensive. Right. So it's based on capacity. But I think too many accountants haven't thought through that, right? They, they just take what comes in. They haven't standardized even their client base. You know, they talk about verticals and niches, but even within those verticals or niches, they let their clients do whatever they want. And you have to be a lot more prescriptive in order to have a firm that can do these, this work kind of at scale. And I would argue, even if you don't want to grow to be the biggest, you know, firm in the world or that, you know, the biggest firm in your state, right. Even if you only want 20 clients. But if you have everything standardized for those 20 clients, guess what? You'll be doing all that work in two days instead of in the whole week. Right. So it gives you your time back whether you want to grow to be a big firm or whether you want to stay small. And it's okay to say to stay small. But the other thing is, is we always talk in the accounting world about us and it's like we're having conversations with ourselves, but yet we forget that the customer is the most important person. Well, I would argue your team is the most important. But we forget that the customer and the way they buy and their experience is really key to being a viable business in the future. Because professional service firms unfortunately haven't kept up with what the product or with what the market is demanding. And it was pre Covid they were already talking about it. Right. Like, I would go to conferences, I would Speak at conferences. And I would say, you know, how is real time disrupting your world? And when I say real time meaning working in the cloud, because that's a big thing, right? How many firms still haven't even like morphed to having their whole firm on QuickBooks Online or on 0 or some intact some other cloud software? If you are still transferring files back and forth, you're never going to get to this level of standardization. And it's been really hard to help these firms through the transition because of so many different pieces. But you have to get started and you have to start somewhere.

You absolutely do. And as you think about these firms and we you think about being a firm owner or a partner in a firm, one of the things that you have to think about is how do I do the least amount of work to accomplish the most? You're going to be happiest doing the least amount of work and making the most money. And in order to do that, you have to rethink that. Your, your time and your value can be separated and that's creating leverage. It's one of the things that when I look at firm traditional firms that I think is crazy. I've asked seven or eight top 50 firms to give me the P and L on their cast department. Do you know how many could actually give that?

They don't have it.

They don't have it. Which is nuts. Like what? Like if you need to be able to run your business and understand the incremental revenue that you're making from every single client that you have and every single task, if you're doing taxes, understand your value on tax, you're doing bookkeeping, understand your value on bookkeeping. Same with advisory. You need to be able to under. And it's insane to me that the smartest accountants in the world don't understand doing their own accounting and finance within their firms and within their companies. And I think that's essential. Yeah.

And I think the other thing about it is, is like even if you say it by task, they have the wrong person doing the task. So something that could be automated or something that could be done by a staff level for whatever reason is being done by a senior manager. And it doesn't make sense. And then their profitability doesn't. It's off. Because. So that's the whole fixed pricing thing and all of how pricing has to like align with your deliverables and how you get to delivering them together, and I think that's my personal opinion, is that pricing has been the number One thing to hold firms back. And that's because if you live in this billable hour mindset, if your time is worth an hour and an hour is an hour is an hour and they're all equal, you will never get to standardizing and figuring out the other thing or the other pieces to pricing because billable hours holding you back.

I completely agree. I mean you, you have to look at, it's one of the things that we do as a company is we look at what is the appropriate resource for the appropriate work, right? And then what you also do is you break apart the experience from the output. You need to make sure that you build in cost. It's in your fixed fee model, in your value based pricing, build in cost for client experience, build in the fact that you're going to want to hop on the phone with them once a month or twice a month or whatever it ends up and schedule it like you do that. And you build in the cost of the experience and then you do everything humanly possible to minimize the cost of the output. And the output being taxes, bookkeeping, audits, advisory, whatever that stuff is. You need to figure out how do you lower your costs and increase your revenue and you need to do it all over the place. Because going back to the On Demand and Uber for accountants, what these companies are figuring out is how to create incremental good revenue from every single client or customer they bring in. And being able to scale the value of an experience and the value of an output through 600 customers. We run Decimal Decimal started four years ago. In four years we've gone from 0 to 600 plus clients. Being able to do that requires you to look at your incremental costs and your incremental revenue. And how do you build and scale in a way that makes that profitable and it makes it so that you can reinvest profit and further quality and growth.

And I think that's really important to think about because if you're not investing in it and you're not accounting for it, it doesn't happen. I just think that's huge that we have to step back and really change how we look at the work we do. Because we're not billing for an hour, we're billing for an experience and we're billing for an outcome. And we have to separate the two. And as we look at automation and outsourcing, it's only going to increase what happens.

Oh yeah, it's going to keep going.

And if we don't have the human, like I think the best Thing a professional service firm offers today is the humanness. Right. If we don't have the humanness, what are we selling and where's the value prop to the customer? If they have to, I'll say fight with us to get, like, they send in the documents 10 times and then they, you know, they get lost. Or, you know, they fight with a portal because they don't know how to upload it, or like they have bad touch points because we as firm owners haven't figured out our own stuff. And now, like, they go to an alternative who has figured out the client experience and make it seamless to do business. And I think that's the piece that accounting professionals forget is that there are alternatives besides other CPAs or other firms that they can go to and those, those companies such as yours or any number, because there's a bunch of them. You're not the, you're not the only accounting company.

We hear a lot about a talent shortage in the industry. And you, you've seen that not only in accounting publications, but the Wall Street Journal, the New York Times. One of the things that stands out to me and decoupling time from value and money is essential to this is I think about being in an accounting firm and seeing these college kids that came in to help with tax season. And quite frankly, that's a miserable, miserable thing. They are getting overworked. They don't know what they're doing. They're really bad at it because they're college kids. But you just need the bodies to do that work. To me, kids these days, they're going to go in and do that and they're going to say, I'm going to do anything but this. And you have to decouple that from. You have to create an environment that people want to join. And in order to want to join something, you have to be able to see that you're creating value. And that's really hard to do when you're doing really terrible work for a really long time, for a lot of hours. The only place I've ever seen time measured, not in years, is an accounting firm. People measure time by tax seasons.

Right.

Which everybody will laugh at that. And it's true. But, like, that doesn't exist anywhere else. And I think that's an essential component of how the industry needs to evolve is by understanding how to decouple. It's not just client experience. You have to create an amazing employee team experience, and you have to create value around that, too.

Yeah. And you have to be like, set Limits. Right. Again, when you think about capacity planning, like, you have to say, look, my team is not going to work more than X hours per week. And maybe it's 50 hours during tax season, but that's it. Like, it, like. And it's 40 hours the rest of the week or whatever with vacations. I don't know however you're going to. But you can't let all this extra work come in and be like, oh, just squished it in. Because, like, now they have capacity. No, that, like, the answer is no. We have no more capacity. We either have to hire a person, we have to automate something, we have to do something else, because we have to protect our team so that they can give our clients the best experience as well. Because if your team is unhappy, you could be sure that they're not the best when. When they're talking to your clients. And, like, you really have to protect your team. And. And I think that's the piece that it is hard because it's like, we've always done it this way in the past. And so, like, how do we change? How do we get started? And when private equity and all these outside forces are pushing us to move, we really gotta figure out how we're gonna move and how we're gonna adapt.

And how we're gonna change, oh, 100%. And that leads me to my last question for you really quickly, Jody. How do you see the profession in the year 2030?

So I believe that CPAs will still be relevant, but they will not be working for firms. I believe they will be working for technology companies. They will be working for private equity that are probably public at that point. Right. Because by then they'll have switched over. They'll be public companies at that point, and they will be working in this like the Ubers of the world. Right? Or I'll say the Uber for accountants of the world. Let's say the tax file. There's a few of them out there. Maybe they'll be working for Intuit or some other technology company, but I do not believe that the partnership model as we know it will exist and they will not be working in firms. And I know it's a bold statement, but I. I think we have to talk about the reality of, you know, where the profession is headed if things don't change very quickly.

Well, I think to me, we are going to have advisory and consulting firms staffed by CPAs. The other work is going to be done by somebody else or something else. So with that, thank you for tuning in. To the Accounting for Innovation podcast, brought to you by Decimal and the Radical cpa. You can find more insightful episodes of Accounting for Innovation wherever you listen to your podcasts. And don't forget to pick up Jody's new book, Radical how to Optimize Profits, Delight Clients, and Build a Top Value Firm or Company. Interested in joining the conversation? Connect with Matt and Jody on LinkedIn. Thank you.