Intuit announced today that it will start testing a new service in Australia called QuickBooks Live that includes file setup and basic bookkeeping. The service will be provided by independent bookkeepers who are certified as QuickBooks Pro Advisors and who will receive an hourly wage for providing the bookkeeping service.
The setup and basic bookkeeping are sold as "Done with you" rather than the conventional "Done for you" approach by self-employed bookkeepers. Intuit released a video support service today called SmartLook that opens a video chat window on the page of the accounting program. The bookkeeper can move a pointer over the page to explain how to use the software or reconcile a transaction.
The service has been tested successfully in the US market where Intuit has committed to a full rollout. It is based on TurboTax Live, an accounting service that helps employees fill out simple tax returns for a fixed fee of $80. Over 3,000 accountants participate in the TurboTax Live service and Intuit forecasts that thousands of bookkeepers will eventually join QuickBooks Live (in the US), says Rich Preece, global accountant segment leader at Intuit.
Software companies in other industries were increasingly adding complementary services, says Ariege Misherghi, director for accountant business at Intuit. She gave the example of US medical service MDLive which provided a directory and software to speak to doctors. “It’s a technology trend,” Misherghi says.
Intuit is not the first company in the US to offer a combined package of accounting software and bookkeeping services. Startups Bench and In Dinero (see below) have already demonstrated the business model. However, Intuit is the first accounting software company to add bookkeeping as a service, a move which will likely ruffle feathers among their accounting partners.
Intuit says the target audience for its bookkeeping service are the 40 percent of QuickBooks users globally who don’t have a bookkeeper or accountant. Intuit didn’t intend to compete with the 60 percent of QuickBooks users that already have an accounting professional, says Preece.
Once a QuickBooks user requires more advanced bookkeeping services such as payroll Intuit will recommend the business to an accounting or bookkeeping firm, Preece says.
“We're basically saying to Pro Advisors, if you want to participate on this platform, it's an opportunity to earn more revenue. You obviously don't have to,” Preece says. “We don't think it's competitive. We actually think that we're helping you connect with people that weren't looking for you in the first place.”
Intuit wants to introduce the 40 percent of QuickBooks users to bookkeeping so they can then progress to become customers of accounting firms directly, Misherghi says.
“Our objective for QuickBooks Live is to dramatically increase the number of people who get the benefit of working with an accounting professional. There's more demand than there is supply. And so what we need to do is look for a way for the industry to scale,” Misherghi says.
Read on for commentary. COMING SOON: A full interview with Rich Preece on QuickBooks Live.
What is it?
- Intuit is selling QuickBooks setup and basic bookkeeping directly to small businesses.
- The price is yet to be determined but could be in the range of $200 to $400 a month.
- The service will be supplied by bookkeepers who have certified as QuickBooks Pro Advisors. They will apply and sit for a certification in addition to the Pro Advisor exam. Once accepted, the bookkeeper will receive six weeks of training from Intuit on its bookkeeping processes.
- Intuit is still working out what is included in the bookkeeping services it provides. Bank reconciliation is a pretty strong candidate but payroll is not.
Why is Intuit moving into bookkeeping?
There are a range of possible reasons for Intuit moving in this direction that may have influenced the company’s decision. The official line is that software plus service is a cross-industry trend that is better for the user. Here are five reasons that may have encouraged Intuit to move into services.
1. A growing threat
Intuit is not the first company to offer combined accounting software and bookkeeping. Bench has raised US$33m to date – small fry next to a billion-dollar behemoth like Intuit but more than Xero had when Intuit first spotted it. Bench bills itself as “America’s largest bookkeeping business for small businesses”, and that’s a concern for the territorial Intuit.
Bench is not the only example of software plus bookkeeping. In Dinero started out earlier but hasn’t managed to keep up with Bench after it added accounting and tax services.
Is Intuit genuinely worried about Bench and others? Does it need to join them to beat them?
2. Increasing subscription sales
When you’re selling online software (AKA software-as-a-service) the prime directive for converting prospects to customers is to get them using the software as quickly as possible. The biggest obstacle is always uploading your own data and setting your preferences so you can test the benefits in a meaningful way. Intuit’s bookkeeping service will handhold prospects through the process which should definitely increase the conversion rate to customers.
On a global scale, Intuit is racing against Xero and other local competitors to win businesses before they settle on their cloud accounting software. The differences aren’t so great between softwares so once a business has made a choice then it will be very hard to get them off.
If this bookkeeping service is rolled out globally, Intuit could have a dramatic impact on the rate at which it acquires new customers in new markets. The number of total customers globally has a material impact on Intuit’s share price which is driven by recurring revenue.
It’s a pretty strong argument to a software company.
3. Faster automation
Intuit advertises its connection with customers through Follow Me Homes, an exercise where an Intuit employee watches a business owner at work and watches how they use Intuit’s accounting and tax software.
Now Intuit doesn’t need to do follow-me-homes. It gives the bookkeepers a locked down laptop running special software to provide the bookkeeping service. It gives those bookkeepers six weeks of training. That’s a very solid baseline from which Intuit can monitor the actions of bookkeepers and work out how to automate the next steps. It could record every single action of a bookkeeper doing payroll into a database and then feed that into an algorithm to, in the short term, move the mouse pointer and click on buttons automatically (robotic process automation). In the longer term Intuit could rewrite the software to automate that action and reduce the number of tasks to file payroll.
The jury is still out on how much bookkeeping and accounting will eventually be automated by AI. Even making estimates at five years is impossible. But if you believed that a significant chunk of that work could be automated, it makes sense to start collecting as much data about that process as possible.
Will the ability to monitor a control group of bookkeepers increase the pace of automation?
4. Direct by nature
Intuit is a direct brand. It advertises during the SuperBowl. It has enormous brand recognition across the US where it holds a commanding 80%+ market share. Its customers are small businesses. Or as Cassie Devine, the head of the QuickBooks platform told the Australian audience, “We work for you” (i.e. business owners).
I guess that’s no different to the dominant brand recognition that MYOB enjoyed 10 years ago when it sold shrinkwrapped copies of its desktop software at OfficeWorks.
It’s a different strategy to how accounting software is sold in Australia. Here a very high percentage of accounting software sales are sold through accountants.
The big question – will Xero follow suit?
5. Because it could
TurboTax Live already employs more than 3,000 accountants to deliver that service. It has the knowhow, the technical infrastructure and support teams to run an accounting-focused service. Why not duplicate it for a different area of the business?
It means extra revenue, a tighter relationship with customers, and the potential to expand into other services.
A broader arc
Accountants used to be the sole guardians of a business’ tax affairs. Business owners would send in their accounting file on a CD or USB, the accountant would add journals to fix up the file – and often not bother to fix the business owner’s file. The accountant had the source of truth, the one that the tax office reviewed. It was an asset under the accountant’s control.
That changed with cloud accounting, where both accountant and business owner worked on the same file. Adding bank feeds meant the file could be updated more frequently which made it easier to use it as a reporting tool to guide the business.
It also meant that the accountant no longer controlled the asset. The software company did. And the software company reaped the rewards associated with it – benchmarking huge amounts of data to see trends such as what apps businesses use, the banks they patronise, even gross expenditure with large utilities. But at least the accountant/bookkeeper could consider themselves to be the sole holder of tax knowledge. Just like a doctor, years of professional training and experience made them an essential part of a business owner’s life.
This is the next step. A software company providing bookkeeping services, including categorisation of expenses. Even though Intuit is stressing that the service will only provide basic bookkeeping services, the boundaries between software company and bookkeeper are blurring. Basic bookkeeping is now a value-add to the accounting software.
The question a lot of accountants will ask is – where will this end? If you’re starting on basic bookkeeping, why not advanced bookkeeping like payroll? What about basic tax?
It is a legitimate question given In Dinero’s arc and one that Intuit won’t have an answer for longer timeframes. Maybe it will make sense to Intuit’s shareholders one day that the company move further in this direction.
It fits with a prophetic article “Software is eating the world” written by Marc Andreessen, billionaire founder of the NetScape browser and Silicon Valley venture capitalist, in 2011. His central point was that many services will become software.
Not every part of every service – human judgement is too valuable and human interaction impossible to replicate.
But how much can and will be automated? A question for our times that software companies will continually ask.