Ep. 218: Graham Stanton and Edgar Thomas - The State of Accounting Technology

March 27, 2023 | 22 Minutes

Graham Stanton and Edgar Thomas co-founders of Advise  join Count Me In to talk about the current state of the market for accounting technology and the status of the industry today, which is constantly evolving. They discuss the lack of innovation in the accounting technology market and the pain points that practitioners face when using traditional tools. They share their vision for changing the status quo and making the accountant's job easier by reducing manual processes and reporting financial data more accurately and timely. The podcast also highlights the challenges of getting practitioners to adopt new technologies and the need for reimagining tasks to automate and reduce time spent on them.

Connect with our speakers:
Graham Stanton: https://www.linkedin.com/in/grahamstanton/
Edgar Thomas: https://www.linkedin.com/in/edgart1/

Full Episode Transcript:
Adam:            Welcome back to Count Me In. In today's episode, we have Graham Stanton and Edgar Thomas, the co-founders of Avise. A company that provides accounting technology solutions. Both my guests have seen many pain points that accountants face daily, and have worked hard to build solutions that address those pain points. 
Despite the available innovation, practitioners still use the same tools from 15 to 20 years ago because of the lack of penetration by newer tools. Both Graham and Edgar share their vision of making an accountant's job easier and reducing manual processes. Join us as we discuss how technology can help accountants and the challenges they face, adopting new technology.
Adam:            Graham, Edgar, I just want to thank you both for coming on the podcast, today. We're really excited to have the co-founders of Avise on the podcast with us, today. And today we're going to talk about accounting technology. And I figure we could start off by discussing what is the current state of the market for accounting technology, and the status of the industry, today? Because it's constantly moving and evolving.
Edgar:            Yes, thank you, Adam, really appreciate you having us both on, today. And, yes, it's a topic that we both feel very passionately about. For me, as an inactive CPA, but a practitioner that has worked with a lot of accounting tools, I've seen it from both sides. 
So, right now, as an entrepreneur, building a solution that solves a lot of the pain points that I saw in the marketplace. But also the pain points that we're getting feedback from our current clients and prospects of our own. It is an exciting time to be looking at it because there is a lot of innovation going on today. But quite, frankly, practitioners, today, are doing a lot of the same thing and using a lot of the same tools they were using 15, 20 years ago. Because there's been such little penetration by the tools out there, today, available. 
So when I was practicing as an in-house accountant, a lot of the tools I found lacked the vision or the understanding of what a practitioner needed to do. So they were focused more on FP&A and other finance functions. But didn't really focus on improving the lives of the core accounting suite. That the accountants had to do their jobs in on a day-in and a day-out basis. 
So if you go and talk to an in-house accountant, at a company, and they talk about their close. And they say that it's five days, it's 10 days, it's 15 days, or maybe even 30 days long. And when you, actually, dissect the things that they're doing, you immediately see opportunities for improvement based on the tools that are available today, but are not available to the accountants, yet. 
So that's one of the things that I feel very passionate about. Changing that and making it so that the accountants benefit from a lot of the tools and a lot of the innovation that we see elsewhere in the finance tech stack. 
So when it comes to tools like the ones we're building at Avise it's really focused on how do we make the accountant's job easier. To close the books, report out the information, the financial data more accurately and in a timely fashion, and reduce a lot of the manual processes.
Graham:        I'll add to that a little bit. Obviously, Edgar and I share this vision here, and when we were getting started there's a lot of real pain coming through in our discussions. I previously worked somewhat cross-functionally and had a lot of experience with the tools that the marketers get, and that data engineers get. Ultimately, FP&A was starting to get, and, for whatever reason, the accountants have been at the end of the line.
And there's been a lot of attitude of, "Well, accountants are paid to do this busy work, so what's the problem here?" And it's unfortunate, and, thankfully, accountants are starting to wake up and saying, "Well, it's the year 2022, almost 2023, we don't need to put up with this anymore."
Adam:            And I think sometimes the biggest thing is that if it's not broke, they don't want to try to fix it. We've been doing the same thing and using the same technology for 15, 20 years, as Edgar was saying. But why change things up and mess it up? What do you guys think is the biggest problem with the current technology, the state of the technology as it is today?
Edgar mentioned some of those things, people are trying to cut down the close, and those are some of the big problems that they're dealing with. But what's the problem with the actual technology that you think is causing them to not adopt it as fastly as possible?
Edgar:            Yes, I can take this, I like the way your insight there is that, for a lot of folks they accept this status quo as, like "This is the way things are and should be, or will continue to be." One of the things I really enjoy about my job today is that as we show our tool to folks, the response is very common one. Where it's just like, "Oh, I didn't even know that that was possible, or I didn't even think about how much time it took for me to do that task."
So a simple thing like a reconciliation month in and month out, may take an accountant 30 minutes, an hour, 2 hours, and it's just an accepted part of the job, "My job is to reconcile an account."
But then when you reimagine what a reconciliation is, and you automate a lot of the components of that reconciliation, and reduce that from 30 minutes down to five minutes, a light bulb goes off. It's just like, "Okay, these are minutes, hours, of my life that I can get back, and I can do more value added things for the business besides a lot of these things, which are, quite frankly, busy work."
So one of the things that we've come across is that there's a lack of knowledge. I've never seen this before among my accounting friends. I've never seen something like this before. And then it's like maybe a hesitation, like you said, "If it isn't broke don't fix it." If I know the system has been around since 1970 and, literally, my predecessors have been doing this, I know it works, and I will continue to do it. 
So it is a really exciting journey that we've been on at Avise. It's showing people you can do things in a different way, and seeing that light bulb go off. And literally seeing people saying, like, "This has changed my life. This has given me back time that I didn't know was possible."
Graham:        Absolutely, we view technology as an enabler, really. We say we're looking to unlock the potential of the accounting team, of the accountants, and that's what we're seeking to do. But really any good software made should be automating the busy work. As we both said, it should be making things more efficient. But it's not doing the accountant's job, and I think that's exactly what that light bulb moment is. 
It's the realization that the job isn't to do the busy work. The job is to use your brain because accountants tend to be pretty smart people. Who know the businesses they work in really well and have a lot to add. And, unfortunately, so many of them are just stuck manually entering data into the system. 
Often the same data multiple times, entering it into the GL, entering it into Excel, comparing the two to see if they match, that whole flow could be automated just with some human review. But, yes, the point is to free up the accountants to use their brain, use their insight, use their creativity, and do what accountants have historically always done, help the business.
Adam:            Mh-hmm, and they can become a stronger, strategic business partner as opposed to just a number cruncher.
Edgar:            Exactly.
Adam:            So when we think about the accounting team and how they are evolving. As they start to apply these different solutions that you guys have been describing. The accountants, what we just said, stops being the number cruncher, they become the business advisor. And as we look at these solutions, we've talked about some of the problems. You guys have discussed the current state of the industry. Maybe we can give some examples of some success stories that you guys have seen, as teams have applied these principles, and become successful by applying these solutions for their accounting team.
Graham:        Yes, I also had a few here. We try to follow our own principles and look for the best tools out there, and to make our own lives easier. And as Edgar mentioned earlier, there is innovation in and around the space. So our payroll system and HRIS is Rippling. I haven't used all the solutions out there, but I have, in the past, used some of the more established software providers in the payroll space, and I can say they have a lot of busy work built into them. So we've been happy with Rippling, them taking a modern approach, cutting that out. 
And then on the AP side and corporate cards we've been using both Glean and Ramp. And both, in different ways, have cut out the manual process of reading receipts and transcribing them into the general ledger. Which is something a computer is very well suited to.
Edgar:            Yes, and I would add there is that with our solution, and with other solutions that focus on helping the accountants do their job more effectively. 
We've seen people reduce their close time from 30, 20 days down to under five days and using tools that allow them to collaborate a little bit better. Put their close into a state of perpetual closing where the system is alerting them to things that maybe may look fishy. Like the variance analysis it's spitting out versus an accountant poring over all of the data, all the time. Or like Graham was talking about, essentially, entering and reentering the same data. 
I remember when I first left public accounting, and one of my jobs was to export from QuickBooks, the variance analysis tool, and do a variance analysis. And whenever an entry was booked in QuickBooks and the numbers would change, I would have to go back and re-export that data and redo everything, and that was a waste of time. I should not have been doing that. But, unfortunately, a lot of folks are still doing those types of exercises that are not really best utilizing their skill set. 
I have a master's in Accounting and I'm a CPA. Those skills that a CPA learns, both academically as well as in the workforce, allows them to be a huge asset to any organization alone. And if that skill set has been utilized to re-export again and again, every day, the same thing, I think, that's a waste of human capital.
Adam:            For sure, you sit for a CPA exam, or IMA has the CMA exam, you sit for these exams. And you put the time in, you put the work in, and for your job title to be to sit there exporting something and looking at it. It can be too much after a while.
Graham:        So what you're saying is that this isn't the content of the CMA exam?
Adam:            No, it's not the content. There's maybe one, little, page of the CMA exam. Edgar, you brought up something like QuickBooks, and it makes me think of small to medium-sized businesses. These are the ones that that's the tool a lot of them use for keeping their records. 
Now, how can these solutions help small to medium-sized businesses? Maybe connect to things like QuickBooks and connect to those smaller tools. So that they can help their accounting because if you're a small business, you don't have a big accounting team. It may just be one person doing the CFO work, all the way down to staff accountant work, all in one person.
Edgar:            Yes, definitely, and there are a lot of tools out there. I think it does become a point, now, where people have to make decisions like the accountant or any other person that make decisions, "What do I want my tech stack to look at? What are the pain points? Let me kind of tackle the pain points and get solutions that integrate with QuickBooks."
I think QuickBooks is a great tool, at a great price point, for a lot of businesses, and that's why people use it. But I think as your business grows, inevitably, your business is going to outgrow a lot of the capabilities of QuickBooks. 
So when you look at the progression of just QuickBooks alone, going from QuickBooks Desktop to QuickBooks Online. To, now, you have a QuickBooks Marketplace, and you can literally go to the QuickBooks Marketplace by pain point, and look at this point solutions to help augment what you're doing. 
I think it's awesome, and that really helps the accountant, the entrepreneur, get a handle over their books, and over their close process, and over their reporting, in ways that you couldn't do ten or 15 years ago. 
For our tool, that we're building, we integrate with QuickBooks, so it's very easy. There's no long implementation period to adopt our tool. A lot of these other tools which take time. So, I've been through an ERP migration that took several months. It was several months beyond the original deadline, which is a waste of time. 
So it's really exciting that technology now is at a point where you have open APIs that, essentially, you can do these integrations much faster, and you can get people up and running much faster. And then you can tackle depending on your pain points. 
So if a business is a small business, but it's acquiring another small business, all of a sudden, you have to think about, "How do I consolidate those two entities?" And right now you would not be able to do that in QuickBooks Online. But there are tools out there that will help you consolidate those two entities, and report on them as the combined entity. One of those tools happens to be Avise.
Graham:        And to pick up on that, we joke that ERP migration that was a few months behind. It might be the most seamless ERP migration I've ever heard of. I went through one that was, probably, two years behind and just involved countless people and consultants. People we had to hire, in house, just to help manage the consultants, help manage the migration, and then the system. And in, particular, for small and medium-sized businesses, growing ones, where the business is getting more complex, but the team is not that large, yet. 
The old model of software really designed for bigger businesses, where you need more people to operate the software. It's the exact opposite of what you want, if you're trying to be lean, and nimble, like a small and medium-sized business. 
You want software that frees up your time. That enables you and your existing team to get more done as the complexity goes up. And rather than making it so that actually you need to hire more people just to operate the software. Which is an antiquated way to look at software, and it's a very big company thing where the assumption is you're hiring so many people, anyway, of course, you're going to operate it. 
So as Edgar mentioned there, we’ve built Avise largely based on our own frustrations. Aimed at smart accountants to leverage their own abilities. A few shouts-outs there to some of the software we use, and it's a modern software across the board, largely, outside the accounting function today, has had that attitude, where it should be increasing efficiency and unlocking the ability of the people using it.
Adam:            For sure, yes, and when I think about mergers and acquisitions. You have to have everything in line in order before you can even cross that line. And having the technology, we've been talking about, in place to get your foundation in order seems like a very important thing. 
And it seems like if you're interested in getting into mergers and growing your company through that way, putting these technologies in place would be your first step to getting things in order.
Graham:        Yes, that's a very good call-out. I mean, for sure, if you're merging with other companies, if you're acquiring other companies, that just greatly increases the complexity. But the complexity shouldn't be one plus one equals five. It should be one plus one is something less than two, in terms of the difficulty of managing the two. But, yes, if the systems aren't in order, then, for sure, it could be managing two companies. And then doing the consolidation is a lot harder than doing them individual. 
The right systems make it easier. And, yes, for the flip side, if your company is going to get acquired, that's something we've come across a lot. Where people say, "Yes, I didn't really appreciate..." maybe tech company founders, or whoever it is, say, "I didn't really appreciate the importance of good accounting until I went to sell my company to Salesforce, and they had expectations that things would be totally in order beforehand."
Adam:            So as we wrap up the conversation, as we look at the future of accounting technology. I want you guys to look in your crystal ball of all the experience you've had, throughout the years, and tell us where you think things are going?
Edgar:            Yes, at the end of the day, the accountants, their jobs, to Graham's point, the technology is going to enable accountants to do and empower them to do their jobs more effectively. And then giving them more time to do more value additive things for the business, which is really exciting. 
One of our values, at Avise, is we look to Luca Pacioli, who is the godfather of double entry accounting, and he was a monk. And quote-unquote, "Invented double-entry accounting," which, essentially, allowed merchants, who were trading internationally, be able to maintain their books and really understand, "I sold this amount and I bought this amount." And balance their books."
And that really just allowed businesses to achieve so much more complexity. And we're in a really exciting time that we believe where this technology is really going to be embraced. And in the next 10, 15 years, businesses are going to be able to do a lot more, a lot faster, and feel confident that what they're looking at is accurate, in terms of the numbers.
I've been in places, I worked in a few different companies, where it's just like day 30 is the day that we say "We're comfortable with the numbers from 30 days ago." And then the CFO cannot operate relying on data that's 30 days old because that's so stale in today's world. You need stuff now and you need it accurately. 
So, yes, accountants are going to be empowered by the tools. I think for any young accountant or a prospective accountant who is thinking about it. I think, it's a very exciting time because technology is going to make their lives much better than what mine was, when I first came out, which is really exciting for them. And then it's going to be a challenge to them to be real technologists. 
To really learning the newest technologies that are coming out, understanding the advantages of the new tools. Integrating those tools so that they have a very coherent tech stack. And at the center of it, we believe firmly, is that you need a GL. You need a single source of truth for an organization that can ingest all of that data and that can be relied on. And that's one of the things that we're really excited about, we're building personally, at Avise. But in general, I think that the future is very bright.
Graham:        Yes, I don't think I can add much to that. I mean, I really go into Luca Pacioli to answer the question of what's going on in the future. But, yes, that's exactly it, even just to tweak that last bit a little bit. Because there's been innovation in software outside of the accounting team. 
We're in this weird point in history, where business decisions are being made based on data that doesn't come from the general ledger, that doesn't come from the accounting team. Because it's a lot more up-to-date, it's faster, it's often wrong. And it often has all those same problems that were present in 15th century Italy, before double-entry bookkeeping became widespread. 
And we're excited for the accounting software to catch up and for accountants to retake their places, to actually providing the information that drives the business.
Adam:            And it's all more important for the accountant to have the technology in place. So that they are not sitting there bogged down by doing this menial work. Having the AI take care of those things so that they can be the business partner, be the storyteller, and help drive the strategy with the actual data that's there.
Graham:        Yes, and that's exactly it, the AI can't think for the business, the AI can't think like an accountant. But the software, at least, driven by whatever the latest advances are, can take on the role of busy work.
Adam:            Well, Edgar, Graham, thank you so much for coming on Count Me In podcast. We really appreciate having you on and sharing your expertise with us today.
Edgar:            Thank you, Adam, really appreciate it. It was great being on.
Graham:        Yes, thank you so much, I enjoyed the chat.
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