Over 6 million small businesses using cloud accounting: QuickBooks and Xero numbers compared

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We dig into the latest Intuit and Xero earnings reports to figure out who is winning the battle to conquer the world of small business cloud accounting. Also, one controller used the IRS to steal $2.8M, TurboTax uses a “military discount” to trick troops into filing their taxes, Senator Warren is on the attack against Intuit, QuickBooks Live plans to scale rapidly to 500 ProAdvisors, Baltimore is held hostage by ransomware, and why blockchain is all talk in accounting (at this point, anyway).

Thank you to this week’s sponsor!

This episode of the Cloud Accounting Podcast is sponsored by Xero. Did you miss the Xero Roadshow when it came to your city? You can still attend a Xero Roadshow Online! You’ll learn how your practice can benefit from the full power of the Xero Platform and earn CPE credit. Register here.

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We also have some “conference special” sponsorship opportunities available, for example, the week of June 16 we’ll be doing 4 daily “conference crossover” episodes covering Scaling New Heights and Xerocon.

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Episode notes

(3:06) High schoolers get certified in QuickBooks... Desktop? Noooo! | Twitter

(4:24) Glendale man admits to embezzling $2.8-million and filing fake tax returns | CPA Practice Advisor

(8:17) TurboTax Uses A “Military Discount” to Trick Troops Into Paying to File Their Taxes | ProPublica

(9:56) Senator Warren Leads Colleagues Questioning Intuit's Deceptive Practices That Led Low- and Middle-Income Taxpayers to Pay Unnecessary Fees | Elizabeth Warren

(11:53) Intuit Corp (INTU) Q3 2019 Earnings Call Transcript | The Motley Fool

(17:32) Update on QuickBooks Live with Intuit's Rich Preece | QBO Show

(24:32) Investor Briefing: Full year results to 31 March 2019 | Xero

(26:53) Quarterly Report | Intuit

(28:32) Xero's CEO says it still has a cautious future in the US | Scoop News

(32:56) Public Statement - Network and Service Interruptions | Wolters Kluwer

(34:54) Hackers have been holding the city of Baltimore’s computers hostage for 2 weeks | Vox

(36:13) Atlanta Spent $2.6M to recover from a $52,000 ransomware scare | WIRED

(38:49) SURVEY: 59% Deliver Invoices on Paper | CPA Trendlines

(40:22) Making Change | Payments, Perspectives and Politics | Square

(42:27) Zero percent of respondents to an online survey are actively researching or currently implementing blockchain in controllership | Deloitte Controllership Digest

(44:58) $461,646 in Pay for One Worker: M.T.A. Overtime Scrutinized by Prosecutors | NYTimes

(49:45) Bill.com launches AI platform for automated payments processing | Venture Beat

(52:18) Introducing Plaid Direct | Plaid

(53:23) TransferWise: Europe's Most Valuable FinTech | PYMNTS

(53:42) Shopify quietly acquired Handshake, an e-commerce platform for B2B wholesale purchasing | TechCrunch

Thanks for listening! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, do us a favor and write a review on iTunes.

Transcript

Cloud Accounting Podcast E75: Over 6 million small businesses using cloud accounting: QuickBooks and Xero numbers compared | Convert audio-to-text with Sonix

David Leary:
This episode of The Cloud Accounting Podcast is sponsored by Xero. Did you miss the Xero Roadshow when it came to your city? What if I told you you could still attend a Xero Roadshow event?

David Leary:
On June 4th, 5th, or 6th, you can attend the Xero Roadshow Online. That's right, you can attend a Roadshow event via your web browser. At the Xero Roadshow Online, you'll learn how your practice can benefit from the full power of the Xero platform, and even earn CPE credit.

David Leary:
To register for free, head over to CloudAccountingPodcast.com/XeroRoadshow. That is Cloud Accounting Podcast dot com forward slash X-E-R-O-R-O-A-D-S-H-O-W, and don't forget to register for Xerocon!

Blake Oliver:
Welcome to The Cloud Accounting Podcast. I'm Blake Oliver-.

David Leary:
-and I'm David Leary. Blake, we have to toast.

Blake Oliver:
Cheers, David.

David Leary:
And cheers to all our listeners. We've hit 50,000 downloads, which is pretty amazing, because I think if I looked back at early shows, they had 78 downloads.

Blake Oliver:
Yes.

David Leary:
Not 78,000 ... 78 downloads.

Blake Oliver:
Yep.

David Leary:
Three of those were probably me, on every device we have, and stuff like that. It is a pretty amazing milestone. I think a lot of podcasts don't ever make it that far. I met somebody last night who, he literally has three downloads of his podcast, ever, and he's on episode 54. He just keeps chipping away at it, so-

Blake Oliver:
Wow, that is some dedication there.

David Leary:
It is. It does take dedication, you know?

Blake Oliver:
Yeah.

David Leary:
This was almost 50 episodes in before we got a little traction. It just takes time.

Blake Oliver:
It did take time, yeah, but thank you everyone for sticking with us. I think we found a format that people like. Well, let's read some reviews first, and then we'll get to the news.

David Leary:
Yes, we got one new review. Do you wanna go ahead, and read that one?

Blake Oliver:
Here it is. "Great podcast. Informative and entertaining. Five stars. This podcast is great. Super-informative. Blake, and David do a great job covering the latest news in the accounting industry. Highly recommend for accounting professionals looking to keep up with the evolving profession. Nick Pasquarosa - Bookkeeper360." Thanks, Nick!

David Leary:
I just realized this is a really good hack for people. If you want us to read your bookkeeping firm on air, write a review, and type in your bookkeeping firm in the review, and then we say it out loud.

Blake Oliver:
Yeah, we have no choice. We're required to do so. It's part of the rules.

David Leary:
Yes, yes, yes. Should we jump in the news?

Blake Oliver:
Yeah, there's a lot ... Of course, we've always got our recurring stories that we keep talking about. There's a Free File; there's a little update on Wolters Kluwer, and the CCH outage. What else do we got?

David Leary:
Well, there's updates on QuickBooks Live I got, and then we have the Intuit earnings yesterday, so, now we can look back at those, along with last week's Xero earnings. It's kinda fun to compare and contrast.

Blake Oliver:
You've done a little digging, because they aren't comparable. We don't have breakdowns of different numbers for different regions, but you've kind of reverse-engineered these numbers to try and figure out how Xero is doing in different areas, versus Intuit, and likewise. Lots of interesting news. I've got a fun fraud story, a Timesheets story. Yeah, let's do it. Where do you wanna start?

David Leary:
Why don't we start out with something very light?

Blake Oliver:
Okay, let's do that, considering it's Friday before Memorial Day.

David Leary:
On Twitter, there's a tweet from- basically, it's a high school newspaper. High school newspapers probably don't create newspapers anymore; they tweet about their students. They put a tweet out with three of their accounting students who are now QuickBooks-Online-certified. I would call them cloud accountants.

Blake Oliver:
Wow!

David Leary:
It's super-exciting that this is recognized by their high school newspaper - their accomplishment. Congratulations to those three gentlemen, and we give you a free subscription to the Cloud Accounting Podcast as a congratulations!

Blake Oliver:
I suppose now they're qualified to work for QuickBooks Live, right, David?

David Leary:
Yes.

Blake Oliver:
Because you have to be QuickBooks-certified to do that.

David Leary:
That is correct. That is correct [cross talk]

Blake Oliver:
Although, actually, if you look at the picture David, uh-oh, we have a problem ... The certificate says QuickBooks Pro/Premier 2015.

David Leary:
Oh, man! Oh, no, this is heartbreaking now-

Blake Oliver:
Yeah, they're Desktop-certified, David.

David Leary:
I didn't even notice that.

Blake Oliver:
Sorry. Sorry, buddy.

David Leary:
All right. Well, I guess it's still news, and it's still kind of amazing. They have a goal now to go get QuickBooks-Online-certified this summer; summer school.

Blake Oliver:
Let's see. That was kind of a downer.

David Leary:
I didn't expect that. I did not even notice that detail.

Blake Oliver:
Well, hey, let's keep on this theme, right?

David Leary:
Okay.

Blake Oliver:
Let's talk about embezzling money, and getting caught for it. I spotted a story in CPA Practice Advisor this past week. The headline is "California Man Admits to Embezzling $2.8-million and Filing Fake Tax Returns."

Blake Oliver:
Caught my attention, particularly because this guy, Sean Edin Talaee, he's 62, and he worked in a company in Burbank, which is not far from where I am in Los Angeles. Fraud is not new. This is the number-one thing they like to cover on Going Concern. What struck me about this one, in particular, is the way he did it.

Blake Oliver:
He was the controller for a company called Printograph Inc., a commercial printing company. He was able to steal $2.8 million over the course of about three years. It looks like less than three years, which is kind of incredible, right?

Blake Oliver:
How did he do this? Well, it wasn't that he was- like the typical thing, where he was cutting checks to himself, and just the business owners weren't paying attention-.

David Leary:
In the normal way a bookkeeper would steal money from a company.

Blake Oliver:
Yeah, the normal way is they use the company credit card improperly for their own personal expenses, or they're writing checks to themselves, and then manipulating the bank reconciliation to the records to hide that, which is not very sophisticated; easy to get caught eventually.

Blake Oliver:
Well, so, Talaee, he was a little more innovative. He would get tax-payment checks signed off by the company's president. These were checks written out to the IRS. Nothing wrong with that. right? That's proper. He would mail in the checks to the IRS, but he would include his own taxpayer information on the IRS voucher forms.

Blake Oliver:
The checks are coming from the company, Printograph; going to the IRS. The IRS is receiving them, and crediting his personal Social Security number. Then, the IRS, because they're total idiots, sees that he has a credit on his account because he made an over-payment of his taxes. Then they cut him a check to refund him. He was basically using the IRS as a way to launder the money.

David Leary:
This is pure genius.

Blake Oliver:
This really reminded me of that other guy we talked about a while ago, who got a million bucks from the IRS by basically just claiming prepayments that he never made.

David Leary:
Yeah.

Blake Oliver:
They sent him the check without checking anything, without doing an audit, because their internal controls are so lax that they only check- they only manually check refund payments over $2 million, or something. Well, there must be no internal control at the IRS around this.

David Leary:
Yeah, so these checks that get cut from the IRS don't actually ever reconcile back to ... "Here's the average amount of taxes X Social-Security number paid for last five years - rolling average," or anything like that. It's just, once it comes through the system, they just cut checks.

Blake Oliver:
I don't think there's any controls in place - artificial intelligence, human intelligence. It just seems to be an automated process. I mean that's what it must be; I'm just making assumptions, because how else could this have happened, right? Of course, we don't know, but that's what it seems to be. Wouldn't surprise me.

Blake Oliver:
Here's the crazy part. This isn't the first time this guy has served time for an embezzlement scheme. In 2014, he was accused by the California Franchise Tax Board of embezzling about half-a-million dollars from a Covina-based aerospace subcontractor, where he was employed as a controller, and he served three years in prison.

Blake Oliver:
Somehow, he got out of prison, and then got another job as a controller, and then managed to up his game. I don't know, I thought the details of that were funny, and well, you know ... At least interesting, if not funny.

David Leary:
Well, to use the IRS to accomplish that is-

Blake Oliver:
Yeah, the way he did it was clever.

David Leary:
The thing is that somebody probably did it for smaller amounts, and hasn't been caught.

Blake Oliver:
Oh, yeah, probably.

David Leary:
That's the way these things usually work. He probably got too greedy, and that's what always happens with these types of things.

Blake Oliver:
Hopefully, the IRS modernization project that they now have funding for will put some sort of computer-assisted controls in place so that this stuff gets reviewed, right?

David Leary:
This is the same IRS that ... This will transition right into the next group of stories. The same IRS that some people are arguing should offer its own online tax-filing service for people, and just tell people how much they should pay.

Blake Oliver:
Yes.

David Leary:
This is the same IRS we're talking about, right?

Blake Oliver:
Yes, the same IRS that has the Free File deal with Intuit, and H&R Block, that had deficient oversight of the program. The latest news in the Free File fiasco, as I like to call it, is another article in ProPublica. They just keep 'em coming. This one was published on May 23, so, yesterday.

Blake Oliver:
It is headline: "TurboTax Uses A “Military Discount” to Trick Troops Into Paying to File Their Taxes." It's not anything new in that we already knew that the marketing folks at Intuit were using some questionable tactics to suppress the true Free File program that Intuit has partnered with the IRS to create, and steer people into potentially paid products.

Blake Oliver:
This article focuses on how they did that with military folks, military service members, by creating a TurboTax military landing page. Of course, there's lots of service members that make under the $66,000 annually that are supposed to be able to file for free, but, if they went to this TurboTax military program, that wasn't associated with the Free File- official Free File program with the IRS, and Intuit wasn't telling them that they qualified, if they did. They would get up-charged for different services. Just another way they did it.

David Leary:
It just keeps stacking up. I think ProPublica has now written, in the last three weeks, four weeks, 10-15 articles, and they keep ... Every time they peel back the onion, they find something else - another example, another example. [This is what I'm saying], they're kind of beating a dead horse. I think it completely tipped, because yesterday, Senator Warren, who is running for president, Democratic ... Are they nominees at this time, or just a Democratic contender?

Blake Oliver:
There's like 40 of them, right? It's just a self-appointed, anointed candidate.

David Leary:
Yes. She wrote a letter to ... I think it's addressed to Sasan. I'm actually trying to relocate the PDF here in my box.

Blake Oliver:
Yeah, it's a letter to Intuit, and to Chief Executive Officer Sasan Goodarzi, asking him to respond to these reports, and listing out a bunch of questions, which are actually pretty well-written. Whoever put this together did a good job with the research, although they did rely extensively on the ProPublica reporting, which doesn't help- doesn't help ProPublica in the argument that Intuit is putting forth, which is that ProPublica is being political.

David Leary:
That was my take, when I looked at this, because she has footnotes throughout the letter. I think, other than one reference to the IRS, all the other footnotes reference ProPublica articles. You're right.

David Leary:
Then, she has an agenda. She has been pushing for tax reform, so, she has an agenda. Plus, she has that side agenda which is the, "Hey, break up all the tech companies."

Blake Oliver:
Yeah.

David Leary:
I feel like her letter really plays right into Intuit's argument.

Blake Oliver:
It does, yeah. It's co-signed, we should say. It's not just Elizabeth Warren; it's co-signed by Brad Sherman, who is my- I think he's my Congressman. Richard Blumenthal, Tim Ryan, Edward Markey, Donald Beyer, and Cory A. Booker all co-signed this letter to Intuit.

David Leary:
This is officially an election issue.

Blake Oliver:
We're gonna talk about the Intuit earnings. On the Intuit earnings call - I'm reading the transcript now ... I just searched for Free File through the transcript to see how many times is this mentioned in the entire call. It's mentioned once by Sasan Goodarzi up top, and then there was one question from an analyst about Free File. That's it.

Blake Oliver:
The analyst just wanted to know ... It was a question about how many users would have qualified for Free File that ended up paying. Goodarzi didn't really answer that question. There is that open question as to if any of these lawsuits go through, or are successful, which is doubtful, given how ambiguous the Free File program was in the language - let's say there is some sort of liability - I would want to know, as an investor, what Intuit might have to refund the people for.

David Leary:
Yeah, and I think one of the analyst's questions regarding it was ... Because the numbers were kind of interesting. In the PDF results that they released, it kind of added up to 1.1 million who were free. Sasan made a comment, and it's in here, that they're ... About, again, Intuit's commitment to ... I'm gonna read it, "Our commitment to provide a robust free offering resulted in more than 55 million TurboTax customers who have paid nothing to get their TurboTax experience over the last five years.".

Blake Oliver:
Right.

David Leary:
There's some disconnect in the numbers. I mean people are claiming only three percent of the people ever accessed the Free File allowance ... Here, Intuit's claiming 55 million have gotten TurboTax for free. Maybe it's not all through the Free File Alliance, but-

Blake Oliver:
That's what it is.

David Leary:
-they've gotten free TurboTax [cross talk]

Blake Oliver:
You can file your taxes for free, through the non Free File program. That includes both, right? Through the official IRS Free File program, and the just TurboTax Free, which is their own thing.

Blake Oliver:
Well, here's what's interesting about this, because, obviously, they don't talk about it very much, but Free File has one question, and, approximately, is referenced seven times in the transcript; five of those times it was Goodarzi. If you search TurboTax Live, that has 39 references in the call. If you're good with Free File, I don't think there is that much other news to talk about. I really want to talk about TurboTax Live, and what that means, potentially, for QuickBooks Live.

David Leary:
I think I was guessing that TurboTax Live numbers were gonna be huge, and they didn't actually release these outside of the conference call, as far as reporting on the TurboTax Live numbers.

Blake Oliver:
Yeah.

David Leary:
In the conference call, this is what was said, and it's pretty amazing numbers. "After just two years, TurboTax Live is now a meaningful contributor to our business. This product line is among the fastest ever to reach this revenue level.".

David Leary:
Pause, and think about that for a second. TurboTax is now going on, what, 25 years old? Maybe longer?

Blake Oliver:
Mm-hmm.

David Leary:
There's been many iterations of TurboTax they've built and sold over the years. This is the fastest ever. I'll continue this quote here, "The number of customers using TurboTax Live more than tripled year over year. We estimate 70 percent of the customers who were new to Intuit this season, and used TurboTax Live, came from the assisted method the prior year-"

Blake Oliver:
Yeah-

David Leary:
"... higher than TurboTax Online, even."

Blake Oliver:
I wanna stop you there, because this is something we talked about when we first heard the TurboTax Live numbers. Gosh, that was a while ago, right? We went back to the earnings call from last year, and we dug them out.

David Leary:
Yep.

Blake Oliver:
70 percent of customers who are new to Intuit, and use TurboTax Live came from the assisted method. Assisted method is code for CPA firms - enrolled agents - tax-preparer shops.

David Leary:
Yep.

Blake Oliver:
So, they're stealing most of those customers from the human-powered accounting, and tax firms.

David Leary:
Then it goes on to talk about the number, 2,000 pros that are on the platform. They've improved the on-boarding experience for the professionals, the technology, the tools. There's a lower attrition rate of the people providing the service now, and then they've just gained some operating efficiencies.

David Leary:
They really had basically the same amount of people to take on- or the same amount of staff ... If you wanna think about it, call it staff, right?

Blake Oliver:
Yeah, the staff. Yeah, sure.

David Leary:
Or ProAdvisors, staff to do 3X the number of customers got served. Then, it's more revenue, because I think it's almost 3X the price to get TurboTax Live than it is regular TurboTax.

Blake Oliver:
Yeah. Well, it depends on which forms you have. It could be ... I think, for me, if I did TurboTax Live, it was like $200, and if I didn't, it would be like $120. It's a surcharge on top of whatever it would have been, but it's-

David Leary:
I think I paid an extra hundred bucks to get TurboTax Live.

Blake Oliver:
Really, for the value you're getting, which is really peace of mind, it is not that expensive, and that's what they're selling. It's like an insurance policy almost. I can have somebody check over my work, and know that, okay, I didn't miss anything big.

David Leary:
They've always sold that, right? You could buy audit protection; you could buy this ... You could buy a review. They never get the messaging right. TurboTax Live. Hey, I get a video conference with somebody really quickly, I need to. That's what's changed in the game, and that's the demand. They finally figured out what customers want, which is hey, I wanna just get on a video fast, and ask 10 minutes of questions.

Blake Oliver:
It's not just a question about your return. If you pay for it, they are saying that you can ask, year-round, questions. If I have a question, now, after I've filed, about my W-2, or something like that, I can do TurboTax Live. They simply know that only a fraction of people who pay are gonna actually do that, so it works.

David Leary:
This is why QuickBooks Live exists.

Blake Oliver:
Yep, this is exactly ... This is the only reason that QuickBooks Live is happening, and happening so fast. Let's talk about the growth of QuickBooks Live. You've got some intel both from Intuit's blog post about it, and Rich Preece was on a podcast talking about it, right?

David Leary:
Yeah. I think, last week, we talked about the new blog post that came out about QuickBooks Live with some details. Well, this week on the QBO Show, Rich Preece was a guest, and he was- it was fast. He didn't have a lotta time. He was on for like 20 minutes. He just got it, and got out.

David Leary:
He was talking about- basically giving an update on QuickBooks Live, and gave a lot of details about it. I think some things that stood out for me - just to kind of run through them.

David Leary:
This will be marketed as a bookkeeping service. It's not gonna be marketed as a set-up service, or a this service. They will market it as bookkeeping. They're hoping not to do this by like, "Hey, you get so many hours." They really want it to just be like this value prop for businesses, but they have to test into that.

David Leary:
They're figuring that out, because they have those people in Boise doing it. For example, somebody took a four-hour video call with one client. Obviously, Intuit's learning, and they're going through this.

David Leary:
Then, he [inaudible] get into some interesting numbers. Right now, they have nine ProAdvisors doing this, and they have 208 customers-

Blake Oliver:
Oh, interesting. He gave them the customer numbers. I can't ... Wow.

David Leary:
Yeah, so 208 customers, but the bigger news - this is going live on June 3. Again-

Blake Oliver:
Wait, wait, wait. It's about, what, 208 divided by nine.

David Leary:
It's almost 20 to 1. 21, 22-to-1 ratio. He continues on with some more news. It's going live, June 3, which we talked about last week, again, with the promise - they're not gonna market it to your connected clients, and kinda almost give a warning, like, "Hey, if you don't invite your clients to your QBOA, we don't know." People need to make sure they're connected- Their clients are connected.

Blake Oliver:
Right.

David Leary:
That's when the numbers got really interesting. Over the next nine months, approximately, they're gonna take on 500 ProAdvisors. They're going to start by shifting the TurboTax Live talent, and then, they'll eventually ramp up more.

Blake Oliver:
Last week, it was they were adding 40 more.

David Leary:
Yes.

Blake Oliver:
Total 50, like, in June, it's gonna be 50, right?

David Leary:
Yes.

Blake Oliver:
You're saying that they're gonna 10X that by the end of the year? In nine months, did you say?

David Leary:
Right, right.

Blake Oliver:
Wow, 500. If they're-

David Leary:
The demand on this must be silly through the roof. It must be silly through the roof.

Blake Oliver:
Well, I imagine it is, right, because it's a good deal. If they have 500 ProAdvisors, let's just say each one has, I don't know, 25 customers. That's 12,500 QuickBooks customers that are now on QuickBooks Live.

David Leary:
Paying 400 bucks a month.

Blake Oliver:
Paying 400 bucks a month-.

David Leary:
Which is 10X higher than their $40 subscription. He really talked about, "Hey, we've learned from one month, so far. We're gonna have new learnings in month two, and new learnings in month three, and then, we're gonna start to see patterns of what we can do. We can't just ..." He talked about all the learning that's going on.

David Leary:
Your question keeps coming up - what's the compensation? What's the compensation? What's compensation? He said he can't really comment on that. It's gonna be a few more months before they figure it out, because they have to figure out what the usage, and price point of the offering is.

Blake Oliver:
Well, I'll tell you this, though: if they are bringing people over from TurboTax Live, the compensation can't be that different. I think we know that TurboTax, from an article I spied ... It's just one source, but a guy who applied for it, and wrote about it - Craig Smalley, EA. He checked it out, and it was something like, I don't know, 15 to 20 bucks an hour.

David Leary:
He went on to say that there could be different levels of services. Pretty confident there's probably to be some level of a clean-up service.

Blake Oliver:
They'd have to, yeah.

David Leary:
Some level of just, "All right, I'm gonna pay to get my stuff cleaned up, and then sent on my way." Really, the other shocking numbers that come out of this ... There's 400,000 ProAdvisors in the USA; in the US. Only 44,000 are certified in QBO [cross talk]

Blake Oliver:
Wait, wait, say that again?

David Leary:
Only 44,000 are certified in QBO.

Blake Oliver:
Out of how many total?

David Leary:
400,000,

Blake Oliver:
Wow. I didn't know it was that low.

David Leary:
It was even lower at one time ... Until they kind of forced people to become certified, in order to get listed in the ProAdvisor site, it was-

Blake Oliver:
Yeah.

David Leary:
I think people have good intentions. People sign up for the ProAdvisor program. Especially when they used to have to pay for it.

Blake Oliver:
Right.

David Leary:
They'd sign up for the ProAdvisor program. They'd pay money for it, and they'd never take the test, and just, years go by, and they never become certified. Yeah, super-low number, but those 44,000 are gonna get first dibs at these QuickBooks Live customers.

Blake Oliver:
We've been talking a lot in our circles, in our community of cloud accountants, about the problem of QuickBooks ProAdvisors- QuickBooks Online ProAdvisors losing customers to QuickBooks Live. It is now occurring to me that what is likely going to happen, more than that, is there are going to be QuickBooks Desktop customers that Intuit markets QuickBooks Live to, and they're gonna shift to online with the QuickBooks Live service, and those QuickBooks Desktop bookkeepers, and accountants are gonna be just caught totally flatfooted, because they can't even compete with that.

David Leary:
Well, or you look at the TurboTax Live information, which is, hey-.

Blake Oliver:
70 percent.

David Leary:
-a lot of people buying TurboTax Live are brand new.

Blake Oliver:
Yeah.

David Leary:
Intuit's bringing new opportunities to ProAdvisors that maybe would have never been brought into - and I'm gonna use the word 'family' - but, to the QuickBooks world, the family, for all these ProAdvisors. The world's changing, and there's a lot here.

Blake Oliver:
Yeah, but, I mean, think about this: you're a small business; you don't have any accounting, or you've always done it yourself in Excel, or something like that, or just given your receipts to your accountant. Now, Intuit is coming to you, and saying, "Hey, for 400 bucks, we're gonna sell you accounting software bundled with a bookkeeping service - 400 bucks a month. Oh, and it'll be a piece of cake to get your taxes done with TurboTax Live," because I bet you they will have some sort of discount, right?

David Leary:
Mm-hmm.

Blake Oliver:
Maybe they'll even end up bundling the tax as part of the monthly fee, at some point. That would make a lot of sense, right?

David Leary:
Yeah.

Blake Oliver:
Yeah, then it just grows like crazy.

David Leary:
Then, they just have to, I think, in the long term, have a plan for like eventually some small businesses are gonna outgrow a QuickBooks-Live-level service. Now, how do you route them to a proper QuickBooks ProAdvisor that can offer value-added services, and all the other stuff [cross talk]

Blake Oliver:
Yep.

David Leary:
The other piece of news that was kind of in this, and I think they talked about this before, but technology's in a box. They just ship out a kit. If you'd get on TurboTax Live, you get a box; you get a laptop, headset; you even get a background screen to put behind you, so it's a consistent experience for the end-user.

Blake Oliver:
Yep.

David Leary:
They don't wanna do heavy marketing, yet, so there's no Superbowl ads, et cetera. They're just gonna let it grow organically; except for, I would argue, if they put it on the homepage of QuickBooks. com, on June 3, I think that's pretty heavy marketing-

Blake Oliver:
Yeah, that's lots.

David Leary:
That's a lotta eyeballs that'll probably see that. Huge, huge news on what's happening with QuickBooks Live ... It's amazing how fast it's going.

Blake Oliver:
If anyone can do it, Intuit can. We've been talking a lot about QuickBooks Live, and we'll be talking about Intuit earnings, but Xero also released their earnings. David, you did the heavy lifting, and dug into the numbers. Can you give us some comparison, like, where did the two titans stand?

David Leary:
Yeah. Side by side, and it's not easy to do, because Xero only has to release numbers- it's twice a year, right?

Blake Oliver:
Yeah, because Xero's based in New Zealand, they only have to do bi-annual financial reporting, whereas Intuit has to do quarterly.

David Leary:
Then, unfortunately, this is Intuit's third quarter, not their fourth quarter, so it doesn't line up nicely with Xero's; they're off by a quarter, which would make everybody's life easier, if they just happened to both have the same fiscal year ends, but they don't; but they did release earnings, and, really, subscription numbers. Xero, last week, announced their total subs was 1.82 million [cross talk]

Blake Oliver:
That's globally, for the whole world.

David Leary:
The globally, and it grew, that year, 432,000-

Blake Oliver:
Okay, yeah.

David Leary:
-which is pretty good. QuickBooks Online announced that their total subs now, globally, is 4.247 million, which means they grew by 1.024 million.

Blake Oliver:
Okay, got it.

David Leary:
Which is almost twice the growth. Pretty amazing. Xero then ... It gets into regions, and this is where it's a little hard, because Xero released the region numbers. QuickBooks does, but QuickBooks- the last time they did it was Q4 of 2018.

David Leary:
They didn't release the region numbers this year- or, sorry, this quarter, but, I can tell you what they released, and I can tell you what my guess is to [cross talk] that. US, for Xero, is 195,000. It's basically up 48 percent.

Blake Oliver:
195,000 total US plus Canada, right?

David Leary:
I'm sorry, Canada ... North America, yep. North America's 195,000. QBO - US only - is 3.19.

Blake Oliver:
Got it.

David Leary:
Then, UK, we don't have a direct number for QBO, but Xero's UK number is 463,000. That's up 48 percent, as well. Then, Australia, they're at 1.08 million. That's up 25 percent, and then, it's up 17 percent in New Zealand - Australia, and New Zealand. Then, the rest of the world is about- it's 83,000.

Blake Oliver:
Okay.

David Leary:
That's how it gets their 1.82 million. QuickBooks reported out that they have 3.1 million in just the US, and then, 1.1 million in the rest of the world.

David Leary:
Working backwards, going back to QBO's numbers from Q4 of 2018, and then kind of projecting those growth rates out to now, and projecting out - kinda using the Xero numbers - my guess is, probably, the numbers, if we side-by-side for the UK, and I think that's the interesting one, because I think that's the closest-

Blake Oliver:
Okay.

David Leary:
-so, like I said before, Xero, in the UK, 463,000. My guess, probably, is that QuickBooks is probably 442,000.

Blake Oliver:
They're almost neck and neck in the UK.

David Leary:
In the UK. In Australia, they're probably at 209,000. Rest of the world, they're probably at 103,000. Then, Canada's probably maybe 286.

Blake Oliver:
Got it.

David Leary:
All of those added up, I'm coming in at like 1.04 ... I'm off by 60,000. You could put those 60,000 in whatever country you think - the other - to get to that 1.1 million. Somebody on Twitter mentioned that it's probably the UK, and that would be my guess, as well.

David Leary:
We're making tax digital, and all the ... There's just a big transition happening, from desktop to cloud, happening in the UK, right now, and that's probably where those other 60,000 are. I asked on Twitter if Intuit had these numbers released, and no responses as of yet.

Blake Oliver:
Xero has had a really tough time in the United States, and Steve Vamos, the CEO of Xero, admitted as much, recently, in an interview. I don't know if you saw this, David.

David Leary:
Did not hear about this.

Blake Oliver:
Let me see if I can pull this up.

David Leary:
While you're doing that, I did think it was interesting that Xero - even though they have dominated Australia - they still grew their subscriptions 25 percent there.

Blake Oliver:
This is an interview that was published, or an article that was published in Scoop Independent News. It's a New Zealand site. Headline is "Xero's CEO says it still has a cautious future in the United States."

Blake Oliver:
I think anybody who is familiar with Xero is rightly frustrated with the growth rate in the United States. If you're a Xero partner, you want more Xero users that you can support. It has been very slow going for the US, even though the numbers increased by almost 50 percent, 195,000 subscribers is just dwarfed by Intuit's, what'd you say it is, 3.1 million?

David Leary:
3.1 million.

Blake Oliver:
Yeah, so I'm really interested to talk to Tony Ward at Xerocon. We've got an interview booked with him, right, David? Very excited to speak to him about what are the plans for the United States? He's the new president of Xero Americas. Are we gonna see a real push here? Looking at those numbers that you shared, Xero has to come after Intuit in its backyard, if they wanna compete.

David Leary:
Well, if you want new customers, it sounds like you're gonna have to launch Xero Live, because that's what brings in new eyeballs.

Blake Oliver:
You have been saying that's inevitable. I don't know if that's inevitable. I hope everybody doesn't do that, because ... I don't know, maybe it is.

David Leary:
How do you not offer a competing service to QuickBooks Live? I don't know how, from a business perspective, how Xero, Sage, AccountingSuite, and all the other players that are out there don't try to do the same thing.

Blake Oliver:
Well, Steve Vamos, head of Xero, was asked about Xero's future in the United States, and he said, "If you combine us with them [meaning Intuit], it's still not anywhere near what you would call a mature market." "Xero is bringing to the US the same capabilities that have worked elsewhere. 'We just have to be patient about it.'" Then, he also said. "There's nothing that leads me to believe that we can't build a good business in the US," but, "I'm absolutely not wanting to set expectations at unrealistic levels."

David Leary:
I've been saying this for four or five years now. If you step back, and take cloud accounting, in general, and before, in the QuickBooks ... Let's just go US, right? The addressable market - let's just do easy math - was like 25-percent addressable market for small businesses. QuickBooks Desktop was trying to convince people to stop using pens, and paper, and all this. At best, Intuit only got 5 million QuickBooks customers, back in the day.

Blake Oliver:
Right.

David Leary:
It was a very hard sell. Well, now, with QuickBooks Online, and Xero, now, cloud accounting is a global sale, and the addressable market is realistically 35 to 40 million, because people are already using cloud stuff. Of course, they're gonna easily adopt a cloud-accounting package, right?

Blake Oliver:
Mm-hmm.

David Leary:
Now, let's step back. Let's say history repeats itself, and Intuit gets 90-percent market share again. Of this bigger pie, Xero, who loses - they lose bad; they get second place. They get 8, or 10 percent of the market.

Blake Oliver:
Right.

David Leary:
They get 10 percent ... They're still bigger than QuickBooks Desktop ever was, by losing this new cloud-accounting race.

Blake Oliver:
Right. They're still a $5 billion company, or whatever.

David Leary:
Exactly.

Blake Oliver:
Well, I guess that's good news. For me, I really hope that it doesn't end up being so lopsided, because the reason that online accounting has gotten so good in the United States is because Xero woke up the sleeping Intuit giant. I love that Intuit is using a giant, a literal robot giant, in its advertising [cross talk] because we've always called them the sleeping giant when it comes to online. Now, QuickBooks Online is really good, after five years of just crazy development.

David Leary:
Yeah, the competition was good.

Blake Oliver:
Now, I know there's Desktop people out there saying, "It's not good! It still doesn't have what it needs to have." Yes, okay, whatever, but for the 90 percent of use cases, it works great.

David Leary:
Yeah, so, you said the magic word 'Desktop." Shall I kind of reference those numbers?

Blake Oliver:
Let's hear the Desktop numbers.

David Leary:
Desktop sold 258,000 units, and then QB Desktop subscriptions are at 406,000. They've grown. QuickBooks Desktop has grown.

Blake Oliver:
It won't die! That's okay.

David Leary:
All right, that's enough on QuickBooks Desktop for this week.

Blake Oliver:
Enough QuickBooks Desktop for this week.

David Leary:
The only other number that was pretty interesting is QuickBooks Capital has now funded $360 million in loans.

Blake Oliver:
That's a lotta money. Didn't Matt Paff call it the Bank of Intuit, on Twitter, I think? Yeah ...

David Leary:
Yeah. What else is going on? No more Intuit news; no more Xero news; no more earnings; no more QuickBooks Live. We're through all that stuff.

Blake Oliver:
We're through all that stuff ... Let's talk a little bit about Wolters Kluwer, because we've gotta follow up on this, right?

David Leary:
Oh, the hack, yeah.

Blake Oliver:
Yeah, the hack; the malware attack/hack that took down CCH for almost a week. It's kind of amazing to me how it just sort of went away. Wolters Kluwer just kept the course. Very little information coming out.

Blake Oliver:
They issued a press release - one press release - saying that it's done. They have cleared up the malware, and all of the apps are up, and working. As far as they can tell, no customer data was stolen. That's it. Nice, short press release there, but not explaining how this happened in the first place, what they plan to do about it, or anything. That's it.

David Leary:
Well, are these malware attacks really about trying to get people's data, and information, or are these malware attacks really about like, "Hey, I've just locked down all your systems, and you can pay to get them unlocked." That's kinda the game. They're not really in it ... They're just in it to become a big headache, and hold you hostage, so you just pay to get-

Blake Oliver:
That's what's really interesting ... Was this one of those hacks, where, yeah ... What do they call them?

David Leary:
Ransomware.

Blake Oliver:
Ransomware. Was it a ransomware attack, or was it the malware attack where they try to steal information, like Social Security numbers, and tax-account numbers, all that stuff? Just speculating here, I wonder if it went away so quickly because they- it was a ransomware attack, and they paid the ransom? Is that possible? Or maybe they were just exercising an abundance of caution, and it actually wasn't all that bad.

David Leary:
They're a public company. Won't they have to, when they release their earnings, say, "We had this hit on our ...".

Blake Oliver:
I don't know. I think there are rules about, like, if customer data is stolen, you have to notify people. I guess that would happen, if it was, in fact, stolen .

David Leary:
They're in-

Blake Oliver:
In the EU.

David Leary:
-based in Europe, so GDPR, right?

Blake Oliver:
Oh, GDPR, yeah, yeah. I don't know. Maybe it wasn't that bad. I do have a related story that shows just how lucky Wolters Kluwer was.

David Leary:
All right.

Blake Oliver:
Have you heard about the City of Baltimore recently, and their hacking woes? The City of Baltimore was the victim of a ransomware attack, a little over two weeks ago. 10,000 computers at the City of Baltimore were locked up, due to ransomware. It's a malware that infects your computer, and encrypts all your files with unbreakable encryption. Then, the hackers demand that you pay them in cryptocurrency, which is untraceable, in order to unlock your systems, and decrypt your files.

Blake Oliver:
The City of Baltimore had old systems that were not secured properly. The ransomware got in; locked down something like 13 different systems in the City of Baltimore. Crazy disruption.

Blake Oliver:
An example is it seized up their property records, so you couldn't- you haven't been able to buy, or sell a house for two weeks. If you were an escrow, or trying to purchase, or sell a home, you couldn't do anything. They just, after two weeks, put in a paper-based system to deal with it.

Blake Oliver:
The big thing is that Baltimore, the City of Baltimore is refusing to pay the ransom. They are going to basically have to dump those computers, restore the data, and completely rebuild their systems.

David Leary:
Yeah, and I think we, in April, maybe had mentioned this: Atlanta had a ransomware attack [cross talk]

Blake Oliver:
Yeah, a bunch of cities have had these, and hospitals have been the victims.

David Leary:
In Atlanta ... I just found an article that's somewhat newer. Atlanta spent $2.6 million dollars to recover from a $52,000 ransomware scare. Somebody demanded 50 grand, and they had to spend $2.6 million to recover from this.

Blake Oliver:
Yeah, and the ransom, for context, that is being demanded, or was being demanded from the City of Baltimore is equivalent is 13 bitcoins, which is equivalent to about $100,000 US dollars. They're refusing to pay the ransom, by principle, but it's gonna cost them millions of dollars as a result.

Blake Oliver:
What's crazy about this is this is Baltimore's second ransomware attack in 15 months. Last year, a different attack shut down their 911 system for an entire day, and they didn't learn from that, apparently.

Blake Oliver:
I bring this up, because this is a problem that affects cities right now; that has been affecting municipalities. There's no reason why your accounting firm, if you're using desktop systems that are not secured properly, couldn't also be the victim of a ransomware attack.

Blake Oliver:
There have been some accounting firms that have had terrible things happen as a result. I think, a lot of times, we don't even hear about it, because the firms don't want to publicize it, and they just pay the ransom.

David Leary:
Yeah. Knock on wood, I haven't had a ransom attack on my computer, but, I guess, for me, in the back of my head, it's like, okay, what if I pay it, and then they don't unlock it? [cross talk]

Blake Oliver:
-it's happened, yeah. This is the argument for using more cloud applications is that, if you're using cloud tools, then theoretically, you are less likely to be the victim of a ransomware attack, because it's much harder to secure your own network, than for a large company to secure its network. Although, the whole Wolters Kluwer thing now makes me doubt that argument, in some respect.

David Leary:
That was a hybrid hosting kind of-

Blake Oliver:
Yeah, we don't know exactly, but the idea is that Wolters Kluwer was using hosted applications, which can also be hacked in the way that ransomware can affect you on your local computer, too. What you really want is you want true SaaS web applications that can't get ransomed in that way. I mean, they could, but it'd be very difficult.

David Leary:
It would be one app you use in your tax tech stack, not every single- your whole computer system [cross talk]

Blake Oliver:
Exactly.

David Leary:
I guess I would probably ... I think I'm fully cloud now. I have no desktop anything anymore. I guess I just format my computer, reinstall windows, and log in, and put Firefox back on, and be up and going.

Blake Oliver:
I have a feeling that we're gonna be hearing about a lot more ransomware attacks in the future, especially on accounting firms. Even if we don't hear about them, it's pretty much a guarantee that it will happen. You know how I know that? Because-

David Leary:
A survey?

Blake Oliver:
A survey that says that 59 percent of accounting firms are still delivering client invoices on paper. You heard me correctly. 59 percent are delivering invoices to their customers by paper; only 41 percent send electronic invoices.

David Leary:
This goes back to, I think, what we talked two weeks ago, where like 30 percent of the accountants, and bookkeepers that are out there are crushing it, compared to the other 70 percent.

Blake Oliver:
Yep.

David Leary:
This is a perfect example of that, if basically 60-70 percent are still mailing paper invoices to their clients, they're not doing EFT payments. They're not doing pay-ahead billing. They're not doing anything. They're sending old- they're doing it the old way. Then, of course, they're not using cloud accounting, or any other technology.

David Leary:
It explains why that other survey they did, last week, where people were like, "I'm not happy with my job, because I don't have any ... There's no technology advantages. That's why I'm just a number-cruncher still." It all reconciles out. This all makes sense. 70 percent of all firms are not great.

Blake Oliver:
Yeah, I would say a quarter to 30 percent of firms are really innovating, and moving to modern tech; re-evaluating processes, and ways of doing business. The other ones are just kinda business as usual.

David Leary:
I feel safe saying that, because none of those 70 percent are listening, so, I don't have anything to worry about.

Blake Oliver:
We can trash them all we want.

David Leary:
Speaking of election issues, obviously, Free File Alliance ... Remember, we've been talking- there's been a trend here in this whole cashless argument.

Blake Oliver:
Yes.

David Leary:
Cashless stores - is it okay? Is it not okay? Well, Square, launched- they spun up their whole ... They have a whole blog/marketing page called "Making Change - Payments, Perspectives, and Politics.".

David Leary:
This is definitely a PR play all about them presenting both sides of the story. "Some places will never go 100-percent cashless. Here's reasons other people are going to go cashless ..." They're preparing themselves for a political stance on this.

David Leary:
It's worth checking out. It's hard to read, though, from a ... They highlight a bunch of things in orange, so you only focus on those; you don't read the rest of the words. It's kind of weird, their website, but it's worth checking out because, they are stacking- they're making a political play here, because they know this is coming in the election, for sure.

Blake Oliver:
Some of the stats are really interesting in this data. "Between 2015, and 2019, the percentage of consumers who used cash on transactions under $20 dropped from 46 percent to 37 percent." That's a pretty significant shift. "Research found, though, that 83 percent of retail merchants said they will always accept cash."

Blake Oliver:
Maybe this is overblown, this whole trend toward cashless. Although, when I was in San Francisco a couple weeks ago, I did see more than one cashless store, as I was walking around Russian Hill. Again, that is a very bubble-like environment.

David Leary:
We were in New Orleans for the Accounting Salon, last week, or 10 days ago; two weeks ago, 14 days ago now, right? Café Du Monde - that's how you say it?

Blake Oliver:
I think so.

David Leary:
Cash only. If you wanna get your beignets, and your coffee, cash only. That place has been open for a hundred years - cash only.

Blake Oliver:
And they will be open for another hundred years, because they are an institution.

David Leary:
If they're not using credit, or e-payments now, they'll probably still be cash-only forever. If you haven't gone to cash, by now- or credit cards, by now, why would you switch?

Blake Oliver:
Right. Hey, I've got a time sheets story, and I've got a blockchain story. Which one do you wanna hear?

David Leary:
Time sheets versus blockchain ... Do you have a story that's like how blockchain's gonna solve time sheets?

Blake Oliver:
I'll go to the blockchain one first, then, because-.

David Leary:
Okay, okay, okay.

Blake Oliver:
-I subscribe to an e-mail called the Deloitte Controllership Digest. It is a really riveting email that comes out at Deloitte every month. They do one really cool thing, which is they do a monthly survey. The questions go out in the email. and then, in the next email, you get to see the results.

Blake Oliver:
Last month, they asked the readers, "Has your organization explored practical applications for blockchain within the controllership function?" The result? Zero percent are actively researching blockchain, or currently implementing it in controllership. Nobody is doing blockchain.

Blake Oliver:
It made me feel really good to see that stat, because I have been saying for a little while now that I think that blockchain in accounting is total crap. Right now, there are no good applications for it, and it's not going to eliminate our jobs. Why are we talking about it so much?

David Leary:
These are just general firms that Deloitte surveyed, or is this Deloitte's ...?

Blake Oliver:
It's all the readers. It's all the readers-

David Leary:
Oh, the readers [cross talk]

Blake Oliver:
Yes, the readers of their Controllership Digest. Of course, we don't know who the readers are, but we can probably assume it's mostly accountants, and controllers.

David Leary:
Just odds would be one person might raise their hand, and say, "I'm using blockchain," but zero-

Blake Oliver:
Well, it's not all negative. Let's see, four percent of the readers, or respondents, I should say, have identified use cases for blockchain, but they haven't started any projects ... Four percent identified use cases. Another four percent did explore it, but don't think there are any viable use cases within controllership. Controllership, we mean the oversight of the financial close, and reporting process.

Blake Oliver:
I think that makes sense. All the applications for blockchain that I have seen, so far, have to do with money transfers, at this point, or potentially tracking property records, or whatnot. This is not, "Oh, we're gonna have our general ledger on the blockchain." I don't think that's going to happen.

David Leary:
Not anytime soon. Maybe internal things, possibly, but, you're right [cross talk]

Blake Oliver:
All you blockchain skeptics, you are correct. Do you want me to move on to time sheets? I got a time sheets story, here.

David Leary:
Time sheets, why not? It's just writing.

Blake Oliver:
I wanna hit this before we go. This is a good one. I talked about Baltimore being dumb, and we talked about the IRS being dumb. Well now, let's talk about the M.T.A being dumb.

Blake Oliver:
This is a story in The New York Times. Headline says it all: "$$461,646 in Pay for One Worker: M.T.A. Overtime Scrutinized by Prosecutors." that did not surprise me, because we see cases of fraud, and all sorts of abuse in government, all the time. No big surprise there, especially when it comes to transit authorities.

Blake Oliver:
How this happened has something to do with accounting technology. Apparently, handwritten bookkeeping is still in use at the Long Island Railroad. Because workers are allowed to submit paper time sheets with, apparently, little or no verification of the hours worked, employees have been claiming ridiculous amounts of overtime.

Blake Oliver:
One worker at the Long Island Railroad said that he logged 74 hours of overtime every week, atop his regular duty, and that's how he made $460,000 in one year - more than the combined salaries of Governor Andrew Cuomo, and Mayor Bill de Blasio.

David Leary:
Every week he did this.

Blake Oliver:
40 hours a week, plus 74 hours of overtime. He's claiming 114 hours of work a week? Is that even possible?

David Leary:
Do they just have like an automated payroll system that just takes this data, and pumps out paychecks, or is some manual person getting this time sheet, and then putting it in a payroll system, and being like, "That doesn't seem weird." Then, somebody else next week, "That doesn't seem weird." It's crazy. That's crazy, crazy numbers. Actually, I'm more amazed by this guy, than the IRS guy [cross talk]

Blake Oliver:
Well, it gets better, David.

David Leary:
You always say that - It gets better. Here we go ...

Blake Oliver:
Yeah. Modern Machines, a modern timekeeping system that actually uses biometrics - I think it says thumbprints - was installed. Five years ago, the Long Island Railroad installed about 120 biometric clocks which would require employees to sign in with their thumbprints at the start, and end of shifts. Hey, that sounds modern, right? That sounds like something like TSheets, or whatever, right?

David Leary:
Somebody made an attempt to implement that to prevent fraudulent time sheets, probably.

Blake Oliver:
No, they did implement it, but the union workers were allowed to be exempt from having to use this new system, and were allowed to continue using the paper time-keeping system. According to the article, "Management feared that insisting on the use of the automated clocks would 'have an adverse impact on employee productivity,' according to an internal memo by the transit agency's inspector general which was described to The Times."

David Leary:
I've seen some other articles bubbling about this, and maybe this is gonna be a theme we're gonna see more of is there's this battle happening between these time-sheet apps, because they're optimizing, and squeezing employees, and you're getting squeezed for the exact amount of time.

David Leary:
Now, the unions, and other people are pushing back on these systems, saying that it's exploiting the employees, and all this other stuff. This could actually start bubbling up, as well, as the year goes on.

Blake Oliver:
This is obviously ... I mean, there is a balance to be struck. I remember this story ... We talked about a story a while back. It had to do with hospital workers, I think, where the time-keeping system was programmed in such a way that it was stealing time from them, because it was rounding down to the quarter-hour.

David Leary:
Yes. Yeah, that was it.

Blake Oliver:
They were claiming that they were losing time; that they weren't getting paid for. There is a balancing act that has to be struck between the technology, and the employees, but this is one of those edge cases, where it's completely, completely ridiculous.

Blake Oliver:
To install biometric clocks that would verify that people were there, and working, and to stick with your handwritten time-keeping system just to keep the union employees happy, something is really, really wrong with management in that organization. It doesn't surprise me given that it's M.T.A. I don't live there, but I know how ridiculous the California High Speed Rail Project has been, and wasteful, so if it's anything like that, then this is par for the course.

David Leary:
If it was me, and I wanted to commit some crimes, doing ransomware at 50 grand apiece is not the way to go. You just need to get a job somewhere, and you can turn in fake time sheets, and pull down a half-a-million bucks. That's the way to do it.

Blake Oliver:
Get a union job with a place with lax internal controls ... What was the other takeaway? Oh, yeah, utilize the IRS's lack of internal control to help them launder money from your employer. That's the takeaway for this week, apparently.

David Leary:
Wow. These are fun times. I have some quick app updates we can plow through, quickly, if you want.

Blake Oliver:
Yeah, sure. What's new with apps?

David Leary:
Bill.com launched, they're calling it their intelligent virtual assistant. It's a fancy word for essentially OCR. What Bill.com is doing now, they've learned from - I wanna quote the article - "52 million bills, and invoices" that they've handled over the past year.

David Leary:
What they're doing is they're automatically doing data capture. It's simple. They're capturing the vendor name, the date, the amount; they're not doing line items; they're not doing any of the fancy stuff products like AutoEntry can do. There's no rules. They don't even separate pages. If you send a bill that's two pages long, Bill.com can't handle it, at this point.

Blake Oliver:
Okay.

David Leary:
What they're doing is they're able to apply the Bill.com feature, and functionality more intelligently. You might be able to upload 20 bills, and maybe all the bills that are under a hundred dollars, you want Bill.com to automatically pay.

Blake Oliver:
Oh ...

David Leary:
All bills between this other range, you want to route to this special VP who's gonna sign those bills, or approve those bills. They're adding, really, end logic on top of their OCR service.

Blake Oliver:
That's really cool.

David Leary:
The OCR service is not the- I don't think is the wow, here.

Blake Oliver:
Right.

David Leary:
Actually, a little bit of wow, because I think, in a way, you never got free OCR service part of Bill.com-

Blake Oliver:
No.

David Leary:
That's kind of in there for free, now, but the wow is the routing that's gonna take place once it reads it. It'll detect things, which it should, by default, like this has already been paid, or it's a duplicate, things like that.

David Leary:
The routing's gonna be interesting, because you'll be able to set up rules, and it'll start routing these things accordingly, as they come in through your ... I don't know if Bill.com calls it an inbox, but an inbox of bills coming in.

Blake Oliver:
Yeah, they have an inbox. One of the points in the article is that the machine learning is going to try, and predict how to route, so you won't have to create ... You can currently do that. You can create rules that invoices over a particular amount have to be approved by this person. The idea is you don't have to create all those rules; it will figure it out, right?

David Leary:
Some sort of risk assessment, et cetera. Obviously, this is the first iteration. It'll grow, and then, continue on from there, but as far as ... If you need a bunch of extra details-

Blake Oliver:
Yeah.

David Leary:
Their concern is getting that bill paid properly, and not paid more than once, and approved properly. If you need other information from that bill back into your accounting system for job-costing classes, et cetera, you're gonna have to use a different product to move that in.

David Leary:
AutoEntry is a good example. You could do all the AutoEntry, then AutoEntry will send it to Bill.com, and then, that'll trigger all the bill processes in Bill.com. You could use another thing.

David Leary:
Another quick announcement - Plaid. Plaid, we've talked about before. Plaid essentially ... Almost everybody's probably used Plaid, but doesn't know they're using Plaid. Many times, when you're connecting a bank account, or a bank feed in a product, outside of QuickBooks, a lot of apps now are using Plaid to do that.

David Leary:
Plaid has now created a product called Plaid Direct, and it's to make it easier for banks, and fin-tech companies to become a data source in the Plaid network. There was a little piece of that blog post, which I found was interesting. Essentially, it slightly indicates that if I have an app, and the customer has now connected three bank accounts through Plaid, in my app, that I can actually use some sort of service now, so customers can transfer money from one bank account to the other, and it goes in through Plaid.

David Leary:
It's just another connectivity way for instance payments, and instant moving in money; like, I don't have enough my payroll account. Great, I can quickly transfer that in. I don't have to leave, go to the bank website, go to a similar service to transfer that money. I can do it right from inside the payroll app, if I have both accounts connected.

Blake Oliver:
Got it.

David Leary:
That's interesting. TransferWise, which is for transferring international money transfers, they just took another $292 million round, giving it a valuation of $3.5 billion. They are now the biggest fin-tech play in Europe. They're a big, big, huge play there.

David Leary:
Then, an acquisition which I thought was interesting - Shopify acquired Handshake. Handshake, have you ever heard of them?

Blake Oliver:
No, that's new to me.

David Leary:
It's kind of an inventory play, but what they really were was a place for wholesalers. If I have inventory, and I need to sell that to other brands, like Mason jars, or something that I wanna sell the Williams-Sonoma, or some brand, a lotta times, in the past, you'd have to go through these other services, and these brokers to get those to those vendors.

David Leary:
Now, with Handshake, they would basically make that handshake for you, and you track your inventory as a SaaS app, and you track it through there.

David Leary:
Shopify, which, essentially, used to just be e-commerce shopping carts, has now acquired Handshake, and they're really looking to become- Shopify's looking to become that full end-to-end business e-commerce solution; really going after that space Amazon's in, and eBay is in, and some of these other bigger companies. They just quietly acquired a company ... They didn't say the amount, but the source says it was less than $100 million, that acquisition.

Blake Oliver:
Cool.

David Leary:
Yeah, I think that's it for app news this week.

Blake Oliver:
Well, this was a big episode. If we've got any listeners still with us, David, where would they go to contact us, and tell us what they think?

David Leary:
The easiest way is to get a hold of us on Twitter.

Blake Oliver:
I'm @BlakeTOliver-.

David Leary:
And I'm David Leary, so, it's just @DavidLeary on Twitter. We also have all our socials. We got the Facebooks, and the LinkedIns, and on Twitter. You can find Cloud Accounting Podcast on any of those, and contact us that way.

David Leary:
For any of you listening, and you're interested in sponsoring The Cloud Accounting Podcast, starting June 21 until October 4, those weeks are available, and then, starting again January 10 of 2020.

David Leary:
We also have ... With the conference season coming up, we have some "conference special" sponsorship opportunities, if anybody's interested. For example, the week of June 16, we'll be doing four crossover conference episodes, covering Scaling New Heights, and Xerocon at the same time, because those events overlap. If anybody's interested in that, hit the show notes, and there's a link to it for more information on that.

Blake Oliver:
David, you will be at Scaling New Heights. I will be at Xerocon. You will be joining me at Xerocon. Any other conferences you're gonna be at?

David Leary:
I'm kicking around the idea of doing Accountex USA.

Blake Oliver:
Cool.

David Leary:
Kicking that around a little bit. Obviously, I'll be at QuickBooks Connect.

Blake Oliver:
I'll be at AICPA Engage in June, in Las Vegas.

David Leary:
That's coming up. I've always liked the Midwest one, in Chicago, the Illinois CPA one. I've always liked doing that conference. I don't know if I'll be attending that one, or not, but, for sure, right now, though, blocked in, and plane tickets are bought, is, for sure, Scaling New Heights, and Xerocon that week. That should be a fun week.

Blake Oliver:
If you're a listener, and you're gonna be at any of those conferences, do be sure to tweet at us, or connect on LinkedIn; send us a message, because I always love to meet listeners in person. It's great.

David Leary:
Well, it makes it real, right, because, sometimes I feel like we're just talking to each other, so, when somebody comes up, and says, "Oh, I like listening," or, "I listened to this," it just feels good. It's cool to know people are listening.

Blake Oliver:
Come get a Cloud Accounting Podcast sticker for your laptop, or your bag, or wherever you wanna stick it. That's all I've got, David. Until next week, have a good one.

David Leary:
You, too. Everybody enjoy their weekend. Bye, everybody.

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