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QuickBooks Online Tests Credit Karma Financing: What Accountants Need to Know

Earmark Team · September 3, 2024 ·

In a recent Unofficial QuickBooks Accountants Podcast episode, hosts Hector Garcia and Alicia Katz Pollock discussed a significant new development in QuickBooks Online: the integration of Credit Karma financing options. This feature allows QuickBooks users to offer personal loan options to their customers directly through estimates, marking a potential shift in how small business tools operate.

This Feature Is In Testing

Note that this new feature has not yet been released generally. It is currently in beta testing and may not be available to all users. A ProAdvisor discovered it in her client’s file when the client sent an estimate to a customer. In addition to the expected messaging, the customer was invited to take out a loan to pay the invoice.

How It Works

When the QuickBooks user sent an estimate to a customer, they noticed financing offers powered by Credit Karma. In the fine print, the interest rates varied widely, from 8.49% to 35.99% APR with autopay. The loans are provided through a company called Upgrade, potentially allowing Intuit to monetize its $7 billion acquisition of Credit Karma.

Importantly, this feature will be optional for QuickBooks users. It can be toggled on or off in the account settings, giving businesses control over whether to offer financing to their customers. When enabled, the financing option appears alongside the estimated details when customers view them.

Potential Benefits and Concerns

This integration could help businesses convert more estimates into paid work by offering customers flexible payment options. As Alicia noted, “If you are somebody who gives high estimates and you know you struggle to have all of your bids accepted, this may be a way of actually getting them paid where you’re getting paid in full right up front.”

However, the hosts also raised some potential concerns:

Privacy: There are questions about how QuickBooks customers’ information might be used to market these loans.
High interest rates: The upper end of the APR range (35.99%) raised eyebrows among the hosts.
Ethical considerations: Accountants may need to consider the implications of facilitating high-interest loans to their clients’ customers.
Customer relationships: Businesses must decide whether offering financing aligns with their customer service approach.

Intuit’s Strategy

This integration is part of Intuit’s broader strategy to leverage its Credit Karma acquisition. By offering financing options within QuickBooks, Intuit aims to create a more comprehensive financial ecosystem for small businesses and their customers.

However, it’s important to note that Intuit does not directly provide the loans. Instead, they likely receive a commission for approved loans, similar to Credit Karma’s existing business model.

What Accountants Should Do

If you or your clients use QuickBooks Online, it’s essential to be aware of this new feature:

Check the settings: Look for the “customer financing” toggle in the Discounts and Fees section of the new invoice experience.
Discuss with clients: If the feature is available, discuss whether offering financing aligns with their business goals and customer relationships.
Understand the terms: Familiarize yourself with the financing options and terms to advise clients appropriately.
Monitor developments: As this feature is still being tested, watch for any changes or broader rollout.

The integration of Credit Karma financing into QuickBooks Online represents a significant shift in accounting software capabilities. While it offers potential benefits for businesses looking to close more sales, it also raises essential considerations about privacy, ethics, and customer relationships. As this feature develops, accountants will be crucial in helping clients navigate this new landscape of embedded financial services. Listen to the full Unofficial QuickBooks Accountants Podcast episode for the latest information.

Alicia Katz Pollock’s Royalwise OWLS (On-Demand Web-based Learning Solutions) is the industry’s premier portal for top-notch QuickBooks Online training with CPE for accounting firms, bookkeepers, and small business owners. Visit Royalwise OWLS, where learning QBO is a HOOT!

California’s Bold Move to Solve the CPA Crisis: A Blueprint for Public Protection

Blake Oliver · August 30, 2024 ·

Is your financial security at risk due to a shortage of accountants? It might be. The CPA profession faces a talent crisis that threatens both balance sheets and public safety. With fewer than 1% of accounting firms saying they can find enough staff, we’re seeing the fallout in the form of financial misstatements and eroded public trust.

But there’s hope on the horizon. The California Board of Accountancy is taking bold steps to address this crisis, authorizing the staff to draft potentially groundbreaking legislation to streamline licensure requirements and grant automatic mobility for CPAs.

In a recent episode of The Accounting Podcast, we discussed this development with Amber Setter, Chief Enlightenment Officer for Conscious Public Accountants.

The CPA Shortage: A Looming Threat to Public Safety

The CPA shortage isn’t just an industry problem—it’s a public safety crisis. Amber argues that this talent drought directly threatens the core mission of the accounting profession: protecting the public interest.

“We are living in an era where it’s not like this pipeline issue is going to happen. We’re living it,” Setter emphasizes. The consequences are already visible and alarming. With insufficient staff, firms struggle to maintain adequate levels of review, a crucial safeguard against errors and fraud. This shortage compromises the very foundation of financial integrity that the public relies on.

State boards of accountancy, tasked with protecting the public, find themselves in a difficult position. How can they fulfill their mandate when there aren’t enough qualified professionals to do the work? As Setter points out, “Right now, the public’s not being protected without an adequate amount of people to do the work.”

California Leads the Charge: A Blueprint for Reform

The California Board of Accountancy (CBA) is taking bold steps that could revolutionize CPA licensure. Their order to draft legislation addresses the shortage head-on while maintaining the profession’s high standards and prioritizing public protection.

The CBA’s proposal includes several potentially groundbreaking changes:

Eliminating the 150-hour education requirement
Streamlining the initial licensure process
Granting automatic mobility for CPAs from other states

These changes represent a significant shift from the status quo. By removing barriers to entry while maintaining rigorous standards, the CBA aims to expand the pool of qualified CPAs without compromising quality.

The action has garnered overwhelming support. A recent CBA survey with over 7,000 responses found that 89% of respondents agreed that a bachelor’s degree in accounting should fully meet the educational requirements for licensure. This level of consensus is rare and speaks to the situation’s urgency.

Commenting on the significance of this move, Amber said, “This is a huge domino. I would hope other states are already calling California up saying, ‘Hey, what are you doing? We want to do this too.'” Her enthusiasm underscores the potential for California’s actions to catalyze nationwide change.

The automatic mobility provision is particularly crucial for public protection. By allowing qualified CPAs from other states to practice in California without additional hurdles, it ensures that businesses and individuals have access to a larger pool of professionals.

Has the AICPA Lost Sight of Public Interest?

While states like California take decisive action, national organizations are dragging their feet. The contrast is stark and concerning, raising questions about whether the profession’s leadership has lost sight of its primary duty: protecting the public interest.

The AICPA’s National Pipeline Advisory Group recently issued a report on addressing the CPA pipeline problem. However, the report lacks specific, immediate recommendations for change, which is troubling. While research and stakeholder input are valuable, the urgency of the current crisis demands immediate, substantive steps.

The consequences of this inaction could be severe. As the shortage persists, the risk of financial misstatements, undetected fraud, and erosion of public trust in financial reporting increases.

The inaction at the national level underscores the importance of state-led initiatives like California’s. State boards of accountancy, being closer to the ground and more directly accountable to the public, seem better positioned to address the crisis effectively.

Rethinking Accounting Education: A Call for Radical Reform

The CPA shortage crisis isn’t just about licensure requirements—it’s also an indictment of our current approach to accounting education. The disconnect between education and practical skills is a major contributor to the current crisis. Many accounting graduates struggle with basic tasks despite excelling in theoretical coursework. This gap between academic success and practical competence directly impacts public protection as new CPAs enter the field ill-equipped to catch errors or identify potential fraud.

We need a radical overhaul of accounting education to address the shortage while maintaining high standards. One bold proposal is to require only a bachelor’s degree in any subject to sit for the CPA exam rather than mandating specific accounting courses or degrees. This approach would force accounting programs to compete for students by offering valuable, practical education that prepares them for the CPA exam and real-world challenges.

Critics may argue this would lower standards, but the opposite could be true. By exposing accounting programs to market forces, we could drive innovation and improvement in curricula, ultimately producing more qualified and practically skilled CPAs.

Implementing such changes would face challenges, particularly from entrenched interests in academia. Many states would need to change legislation to enable these reforms. However, as California’s example shows, bold action is possible when public protection is prioritized.

The CPA profession stands at a critical juncture. The shortage of qualified accountants isn’t just an industry problem—it’s a clear and present danger to public safety and financial integrity. This crisis demands urgent, bold action to fulfill our profession’s core mission: protecting the public interest.

To gain a deeper understanding of these critical issues shaping the future of accounting, listen to the full episode of The Accounting Podcast, then reach out to your state board of accountancy. Express your urgent concern about the CPA shortage and its implications for public protection. Urge them to consider bold reforms like those proposed in California. Let’s act now to ensure a robust, capable, and trusted accounting profession for generations.

Why Tax Incentives Hurt More Than Help

Blake Oliver · August 29, 2024 ·

What if that mortgage interest deduction you’ve been counting on is actually making your dream home more expensive? Or if the tax credit for your child’s college tuition is secretly inflating their education costs? Welcome to the paradoxical world of well-intentioned tax policies, where good ideas often lead to unintended—and costly—consequences.

In a recent episode of The Earmark Podcast, I explored this issue with Scott Hodge, President Emeritus and Senior Policy Advisor at the Tax Foundation, a leading independent tax policy think tank.

Our conversation revealed how tax policy has a huge impact on everyone – both as professionals and as taxpayers. As Scott put it, “In so many ways our daily lives are ruled by taxes, whether it’s how we get our health care to the kind of house or car we buy, so many elements of our daily lives are wrapped up in taxes, whether we know it or not.”

As accounting and tax professionals, we must be aware of the hidden costs of well-intentioned tax policies in healthcare, housing, and education, where tax incentives can paradoxically drive up prices, ultimately harming the consumers they aim to help. This isn’t just an academic exercise—it’s a call to action for our profession.

The Paradox of Well-Intentioned Tax Policies

Let’s look at three areas where well-meaning tax incentives have led to unexpected and often counterproductive outcomes.

Consider the healthcare system. The way it operates today, with the majority of Americans receiving health insurance through their employers, stems from tax policies dating back to World War II. During this time, individual income taxes were very high. Employers found offering health benefits, which were not taxed, to be a more competitive way to compensate their employees. This paved the way for what is known as a “third-party payer system,” where healthcare providers are more answerable to insurance companies and employers rather than patients. The outcome? A disconnect between consumers and the actual cost of healthcare leads to a rise in medical expenses.

We see a similar paradox in the housing market with the mortgage interest deduction. Designed to make homeownership more accessible, it often has the opposite effect. Scott noted, “A lot of economic research shows that the mortgage interest deduction is built into the price of homes.” In competitive markets like Washington, New York, and California, this can make housing less affordable—the exact opposite of its intended purpose.

Perhaps most surprising is how tax incentives affect higher education. Those tuition tax credits we often recommend to clients? They might be padding university coffers more than easing student debt. Scott used a vivid analogy to illustrate.

“Imagine going to Best Buy to buy a television set,” Scott says. “And the sales clerk knows everything about your finances—how much your parents make, how much your house is worth, etc. They can price that television based on your finances, and you wouldn’t have a whole lot of negotiating power, would you?” This is essentially what happens when students apply to universities with tax credits in hand.

The Economic Theory Behind Tax Effects

Scott laid out a fundamental principle that explains why many tax incentives fall short: “If government’s trying to subsidize something or incentivize it, it’s the sellers of the good that tend to capture the value of that credit or deduction.”

Consider the electric vehicle tax credit, a hot topic in many client conversations. As Scott pointed out, “Obviously the automakers know what the value of that $7,500 credit is. And so they’re going to bake that into the price.” When advising clients on the potential savings of purchasing an electric vehicle, we need to consider that the sticker price may already reflect much of the tax credit’s value.

Conversely, when it comes to tax increases or tariffs, the burden typically falls on consumers. Scott explained, “Let’s say we were going to try to disincentivize imports so we increase tariffs by 10% across the board. Well, that’s going to get passed on to consumers through a 10% increase in prices across the board.” The takeaway? We need to be careful about using the tax code to incentivize and discourage behaviors because either way, we can see some unintended consequences.

Challenges of Tax Reform and the Role of Education

Given the paradoxes and economic principles we discussed, it’s clear that our current tax system often falls short of its intended goals. However, as Scott emphasized, “In order to get to tax reform, we’re going to have to do a lot of educating on the unintended consequences of these things.”

Scott outlined three key attitude changes needed for successful tax reform:

Taxpayers must be willing to give up credits and deductions for a simpler, more effective system.
Corporations should stop viewing tax departments as profit centers.
Lawmakers need to find better ways to deliver benefits than through the tax code.

These mindset shifts are challenging because they often go against ingrained habits and perceptions. Many struggle to understand the trade-off between higher tax rates with more deductions versus lower tax rates with fewer deductions. As Scott explained using the mortgage interest deduction example, “That mortgage interest deduction is a great thing for me. But I understand that it actually makes housing less affordable and less available for everyone. So maybe if we phased it out, we’d all be better off.”

This is where our role as educators becomes crucial. When a client comes to us excited about a new tax credit, we need to help them see the bigger picture. By consistently providing this kind of nuanced advice, we’re not just helping our clients make better decisions; we’re contributing to a more informed public discourse on tax policy.

By explaining how a seemingly beneficial tax credit might be “baked into the price” of goods or services, we can help shift the conversation toward more effective policy solutions.

The challenges of tax reform are significant, but so is our potential impact. We need to arm ourselves with in-depth knowledge and fresh perspectives to lead in this arena. That’s why I encourage you to listen to the full episode of the Earmark Podcast featuring Scott Hodge. You’ll gain valuable insights into the economic principles driving tax effects and practical strategies for advising clients on these complex issues.

Transforming Your CPA Firm: A Strategic Approach to Client Acquisition

Earmark Team · August 21, 2024 ·

A recent episode of the “Who’s Really the Boss” podcast offers a roadmap for strategic client acquisition that could revolutionize your accounting practice. Hosts Rachel and Marcus Dillon, drawing from their experience running DBA Accounting, posit a compelling thesis: CPA firm owners can turbo-charge business growth by implementing a comprehensive client acquisition strategy that encompasses ideal client profiling, service package development, and streamlined inquiry management.

Identifying Your Ideal Client: The Foundation of Strategic Growth

At the heart of the Dillons’ approach is a laser focus on identifying the ideal client. This isn’t about targeting any business owner who needs accounting services; it’s about pinpointing the specific type of client who will benefit most from your expertise and align with your firm’s values and goals.

Rachel and Marcus share their experience: “Our ideal client is a doctor owner. They own their own practice, and their annual revenues are anywhere from $1.5 to $3 million. They’ve got a team of 20 employees or less, and typically it’s a family practice.”

This level of specificity didn’t come out of thin air. The Dillons arrived at this profile by analyzing their existing client base, identifying patterns in the types of clients they served best, and recognizing opportunities where they could add the most value.

By focusing on a specific ideal client profile, you’re not just narrowing your focus—you’re setting the stage for more targeted marketing, more efficient operations, and, ultimately, more satisfying client relationships.

Streamlining Inquiry Management: Converting Prospects into Ideal Clients

The Dillons emphasize the importance of a dedicated person handling new client inquiries. Rachel manages this process for their firm, ensuring consistent messaging and efficient screening of potential clients.

“The thing that has helped the most with that is knowing who our ideal client is, and knowing who our ideal client isn’t, so that within just a few minutes after talking, I can decide whether or not to continue asking questions to see if they are a good fit?” Rachel explains.

Their system includes:

Quick response time (typically within 24 hours)
Use of technology (HubSpot as their CRM and website platform)
Automated calendar booking for prospects

Marcus adds, “Our website has to be just as good a front door as a brick-and-mortar office could be. So we’ve invested in our website, and many people ask us questions about our website.”

Their website includes clear messaging about their services, video content explaining their ideal client profile and onboarding process, and self-qualification tools. This helps prospects determine if the firm is a good fit before they even make direct contact, saving time for both the prospect and the firm.

Leveraging Technology for Marketing and Communication

The Dillons use a variety of tools to streamline their marketing and communication efforts:

HubSpot: Serves as their CRM, website platform, social media scheduler and email marketing tool
Ignition: Used for sending engagement letters and receiving payments

Rachel emphasizes that while these specific tools work for their firm, the key is to find solutions that provide automation, analytics, and a seamless experience for clients and prospects.

Key Takeaways for CPA Firms

To transform your CPA firm’s client acquisition strategy:

Get specific when defining your ideal client
Designate a dedicated person to handle new client inquiries
Invest in your website as a key tool for attracting and qualifying prospects
Leverage technology to automate and streamline your marketing and communication efforts

By implementing these strategies, you can create a more focused, efficient, and profitable accounting practice that attracts the right clients and provides more satisfying relationships for you and your clients. Get all the details by listening to the full episode of the “Who’s Really the Boss” podcast.

Rachel and Marcus Dillon, CPA own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, Collective by DBA, is a community for accounting firms to get operational support in strategy, structure, and systems.

Embracing the Future of Accounting with Sage Intacct

Earmark Team · August 20, 2024 ·

“If I gave this same presentation three months from now, it’s probably going to be a different discussion because that’s how fast everything’s changing right now in this industry.” That’s according to Douglas Lewis, a co-host of the new Unofficial Sage Intacct Podcast, which was created to help accountants stay up-to-date on the latest in a rapidly changing technology landscape.

Co-hosts Doug Lewis, Emily Madere, and Matt Lescault will combine their expertise in M&A consulting, Sage Intacct implementation, and global accounting practices to provide a unique perspective on the accounting profession’s transformation. As an unofficial podcast, they aim to offer balanced information about Sage products, including discussing competitors and potential shortcomings.

In Episode 1, Doug, Emily, and Matt discuss how the evolution of accounting technology is transforming the role of accounting professionals from number crunchers to strategic advisors, requiring a shift in skills and mindset.

The Rapid Evolution of Accounting Technology

The accounting industry is experiencing rapid change driven by technological advancements. This breakneck evolution is affecting every aspect of accounting:

Mergers and Acquisitions: The landscape of firm valuations and appealing features for acquisition is constantly changing. One of the most requested items nowadays is a thriving CAS practice. This demonstrates the increasing importance of technology-driven services for firm value, with Sage Intacct often at the core of these valuable practices.
Technological Advancements: New tools and software continually emerge, offering enhanced capabilities and efficiencies. These advancements include cloud-based systems, AI-driven analytics, and automated data entry, all of which are reshaping how accountants work.
Operational Shifts: The way accounting firms and departments operate is being reshaped by these new technologies. Matt Lescault mentions that his firm has been “completely remote” since 2010, a trend that has accelerated across the industry. This shift to remote work is enabled by cloud-based tools like Sage Intacct, which allow for real-time collaboration and data access from anywhere.

This rapid change presents both a challenge and an opportunity for accounting professionals. Emily Madere, who works in Sage Intacct, stresses that “accounting is now technology-focused.” This shift requires professionals to not only understand financial principles but also to be adept at leveraging advanced software tools.

This constant evolution pushes accountants beyond traditional number-crunching roles and into more strategic positions. Today’s accountants are expected to provide data-driven insights, predictive analytics, and strategic financial advice. Tools like Sage Intacct are enabling this transition, automating routine tasks and providing powerful analytics capabilities that allow accountants to focus on higher-value activities.

As the podcast hosts emphasize, embracing these technological changes is not just about staying competitive—it’s about redefining the role of the accountant in the modern business landscape.

Sage Intacct: Driving the Future of Accounting

At the heart of this technological revolution in accounting is Sage Intacct, Sage’s flagship product that’s reshaping the industry landscape. Matt Lescault, drawing from his global experience as president and CEO of Lescault & Walderman, a Sage partner in both the US and Africa/Middle East, offers a broader perspective: “There will be a major focus on the Intacct product because it is what Sage is launching globally.

Sage’s significant investment in Intacct reflects the software’s potential to transform accounting practices on a global scale. It offers advanced capabilities beyond traditional accounting software, enabling professionals to automate routine tasks, gain deeper insights from financial data, and make more informed strategic decisions.

With her expertise in Sage Intacct, Emily Madere highlights its transformative potential: “Sage has a lot of great, awesome products and functionalities that can help a lot of people.” However, many companies are not fully leveraging Sage Intacct’s capabilities. Madere observes that there’s “an opportunity for firms, businesses, entrepreneurs to get so much more out of their system.” This underutilization often manifests in several ways:

Limited use of automation features, with firms still relying on manual data entry for tasks that could be streamlined.
Underuse of advanced reporting and analytics tools, missing out on deeper financial insights.
Failure to integrate Sage Intacct with other business systems prevents a holistic view of operations.
Neglecting real-time collaboration features that are particularly valuable in today’s remote work environment.

By fully embracing these functionalities, Madere suggests, companies can dramatically improve efficiency, gain more actionable insights from their financial data, and ultimately provide more strategic value to their clients or organizations. This shift from basic bookkeeping to high-level financial strategy is at the core of the evolving role of accounting professionals, which the podcast aims to explore.

Drawing from his extensive M&A consulting experience, Doug Lewis highlights a significant trend in the accounting industry: “In all of the M&A work that I do for accounting firms, one of the most requested items is a thriving CAS (Client Advisory Services) practice. And most firms that we see who have these thriving practices are utilizing Sage Intacct to do so and to build that out.”

Mastery of advanced tools like Sage Intacct not only enhances operational efficiency but can directly contribute to a firm’s market value and long-term success. Proficiency in Sage Intacct is becoming a key differentiator in the M&A landscape, potentially increasing a firm’s attractiveness to potential buyers or investors.

The New Accounting Professional: From Number Cruncher to Strategic Advisor

As accounting technology evolves, so does the accounting professional’s role. The days of simply balancing books and preparing financial statements are giving way to a new era where accountants are expected to be strategic advisors.

Sage Intacct is at the forefront of enabling this shift. Automating routine tasks and providing powerful analytical tools frees accountants to focus on higher-value activities. This requires a new set of skills:

Data analysis: Interpreting complex financial data and deriving actionable insights
Strategic thinking: Using financial information to guide business decisions
Technology proficiency: Mastering advanced tools like Sage Intacct

Emily Madere emphasizes the importance of staying current: “After you listen to an episode, you are going to have a more robust knowledge of the Sage products and how to use them and how to talk to them with your colleagues.”

This evolution demands a proactive mindset. Accountants must actively seek out opportunities to learn and adapt to new technologies. Matt Lescault, with his global accounting experience, notes the rapid change he’s observed: “I started my company in late 2006, and it’s just been an amazingly fast-paced environment of change from a technology approach and focus.”

The Unofficial Sage Intacct Podcast aims to support this journey, providing insights and guidance to help professionals navigate this changing landscape. As Madere puts it, “This is a great opportunity for me to share what I know about Sage and hopefully help people in their day-to-day lives.”

As the podcast hosts emphasize throughout the episode, the accounting profession is transforming profoundly. At the forefront of this revolution is Sage Intacct, offering powerful tools that enable accountants to move beyond traditional number-crunching and into strategic advisory roles.

This shift represents not just a change in tools, but a fundamental reimagining of the accountant’s role in modern business. As accountants become strategic advisors, they can drive more informed decision-making, contribute to business growth, and even influence economic trends.

Don’t get left behind. Join the conversation with the Unofficial Sage Intacct Podcast and equip yourself with the knowledge and insights needed to thrive in the new era of accounting. Your journey from number cruncher to strategic advisor starts here.