The Accounting Podcast

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David Leary: [00:00:04] This is an entrepreneur. And he tweeted, my accountant, I pay a lot of money to every month just to reply to a question I sent him with 100% AI reply explaining something. The answer was helpful though I could have just asked AI myself. Of course, you know what I'm thinking now if I can just ask AI everything since he's forwarding everything to AI anyways, why not replace him with AI? I guess he should be doing the opposite of AI sell premium service for a high price. He already does, and keep answering with humans as accounting is something I prefer to actually get a human in the loop. Anyways, it's interesting coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:44] Hey everyone and welcome back to the show. This is your weekly roundup of news in the profession. The Accounting Podcast. And I am your cohost, Blake Oliver.

David Leary: [00:00:53] And I'm David Leary.

Blake Oliver: [00:00:55] David, where are you at? You're in a hotel room somewhere.

David Leary: [00:00:57] I am in Miami, Florida. I am here to attend. Actually not. Not really attend. I'm helping facilitate. I'm a table facilitator for, uh, Hector Garcia and his brother put on a conference. His brother Carlos, they put on a conference called reframe, which I think maybe we've talked about on the show before. Hector's talked about on the show before, and it's, I think the way I describe it, it's it's like for sales, it's going to help accountants sell better. And it's based off of a book called Exactly What to Say. And it's almost like a reframing. Are you familiar with the yes train in sales?

Blake Oliver: [00:01:32] No.

David Leary: [00:01:32] Okay. Blake. So you work hard for your money, right? Blake.

Blake Oliver: [00:01:35] Uh, I, I mean, theoretically, yes, yes, I work hard for my money.

David Leary: [00:01:39] And you like nice things, right, Blake?

Blake Oliver: [00:01:41] Yeah. Podcasting is hard. I need to buy nice things to make myself feel better.

David Leary: [00:01:45] You deserve this new car, right, Blake?

Blake Oliver: [00:01:47] Exactly.

David Leary: [00:01:47] So you keep saying yes. You keep saying yes. This almost feels like it's a spin on that, where you're basically saying something that you're they're not really saying no to you, but they will. It's putting pressure on them to come up with an answer or to do the action you need them to do. So for example, uh, Blake, I'm sure you reviewed that that proposal I sent you. So now you have to come up with a real answer. You just can't. I'll review it tomorrow. Right. I'm basically, I'm giving, like, a yes, but I'm not an expert on this. This is so this would be good about attending this thing. But but it's it's, it's, uh, it's, I think for the attendees here and it's big. I feel like he's got 350, 400 people attending this event. Now it's fairly big, but if you use it for one client, it will pay for itself, right? If it helps you close one, one client.

Blake Oliver: [00:02:36] One deal.

David Leary: [00:02:36] Right? Yeah.

Blake Oliver: [00:02:37] That's the beauty of like going to these things. And that's why that's why that it makes sense to spend on that. Like you said, a few thousand dollars to go to a conference. You learn one skill that gives you a new client. It makes sense. That's great. David. Well, uh, say hi to Hector for me. Say hi to everyone there. Yeah, let's go ahead and thank our sponsors. We're going to Before we do that, though, I just want to talk about what we're going to talk about today, which is the election, the historic Republican defeat. Uh, I have to say, I wasn't surprised. I knew this was going to happen. I could have called it for you years ago. I mean, hopefully I said it on the podcast at some point so I can prove it, but it all comes down to costs. Uh, tariffs, the cost of goods, gas, everything all adds up. But before we talk about that, David, let's go ahead and make our sponsors and our sponsors this week are Kanopy on pay pilot and cloud account and staffing.

David Leary: [00:03:33] Let me ask you something. How much of your day is actually spent doing accounting? If you're like most firm owners, 30 to 40% of your time is being eaten alive by work around the work. We're talking about chasing client documents, drafting the exact same emails over and over again, manual filing, and trying to remember what a client said on a call last Tuesday. It's administrative tax and it's killing your profitability. That's where canopy comes in. Canopy actually delivers on the all in one practice management promise. It handles everything from proposal to payment and all the steps in between. Smart client intake, tax workflows, month and month end. Close automation and billing are all in one unified platform. No more duct taping ten different apps together. Plus, they have Canopy Coworker. It's a secure AI assistant that lives right inside the platform and actually does real work. It drafts context aware emails, summarizes client histories, takes meeting notes, and turns them into tasks automatically. Early access firms are already seeing what's possible when AI works inside your workflow instead of alongside it. To see what a truly modern automated practice looks like, head over to The Accounting Podcast dot io slash canopy. That is Accounting Today dot io forward slash CANOPY.

Blake Oliver: [00:04:45] Thank you canopy. Please use those promo links when you go visit our sponsors websites. It lets them know that you found them through The Accounting Podcast helps them track the ROI of their ad spend with us, and we really appreciate that as well because it gets them coming back. All right, David, let's talk about the election results. Brief 62nd overview for anyone who, like me, was actually under a rock because I don't pay attention to the election anymore live because we never know the results, usually until the very end. But but this time I should have paid attention because I finally opened the news this morning to prepare for the show. And I was like, what? What happened? So here's the update. Ap Associated Press is saying that Democrats have won 247 seats, well over half Republicans 153. At this time, U.S. Senate Democrats, they won 20 seats, so they're up to 54. There's two Senate seats that are still in play. Alaska and Mississippi. But that's not going to make a difference. Democrats have the Senate. There's a bunch of House seats available still or open still, but that's also not going to make a difference.

Blake Oliver: [00:06:03] The Republicans lost both houses. Democrats control it. Um, Trump's reaction, Trump said, if I was on the ballot, we would have won, which was the case last time, right? And this is the problem, of course, with having a party that can only win when one guy is on the ballot. And he also called it largely true that energy prices from the Iran war cost Republicans. Speaker Johnson isn't going to run for minority leader. It's still a divided government. So Trump still has the veto. So nothing big is going to pass without a bipartisan deal. And that takes us into the tax policy discussion, and it takes us into our coverage of what the election means for tax. There were a bunch of tax bills in this election across all the states. And David, you've got some coverage of that starting with the California billionaire tax. We'll talk about Washington. Something going on in Colorado as well. And then after that, I want to talk about what the change in the balance of power in our government means for tax policy. So David, let's get into the results.

David Leary: [00:07:18] Yeah. So I mean, these are two follow up stories for us, I think. But we've been talking about and following the California billionaire tax. Well the California voters said no we're not going to tax the billionaires. That's out. But Washington state. So that's just what you know, just up the coast a little bit. There's just organs in between. So the you know, what's that one over, you know, skip a state away. The Washington voters said yes to keep there. So they had a bill that passed. They were going to tax higher income individuals in Washington state, and that went in the ballot. And the voters chose to keep that. So this is the tax that basically made Jeff Bezos move to Florida, right? Because he didn't want to be taxed with all his his, uh, Amazon money and living in Seattle. So two different when it comes to tax the rich two different results, right in these two different states. But those are, those are big ones that I think we saw. And then the other thing is, I think I don't know if you have any more state news, but then we probably should talk about the impact on the IRS.

Blake Oliver: [00:08:17] Yeah. So a few more, um, state bills. Florida ratified amendment three, which provides a $250,000 homestead exemption for non-school property taxes. So that means the first $250,000 of your primary residence is exempt from any property taxes other than those for schools. And The implication of this is that local governments are going to have to raise taxes on other types of taxable property in order to generate revenue, which means most likely more taxes on businesses, business, property, not, uh, personal. Um, or what does I say non-business. So, uh, Colorado is not decided yet. Amendment 87 is like right at the 50% mark. And, uh, that would replace the 4.4% single rate income tax with a graduated set of rates that get to 8.4%. So a 4% bump, right? Additional 4% on the top earners in Colorado, that would be a lot. I mean, we're talking, you know, getting up to like California kind of rates there, right. Uh, so it would amend the Constitution's flax tax requirement and implement an initiated statute establishing new rates. Other property tax votes. North Carolina approved limits, so the legislature must limit annual growth in aggregate property tax collections from all existing property. That's a revenue limit, not an individual assessment cap. Oklahoma rejected tighter assessment limits. Wyoming rejected a home value exemption. Iowa approved a two thirds legislative supermajority requirement for income tax increases. So now in Iowa, you want to increase income taxes. You've got to get a two thirds legislative supermajority. So that'll probably freeze taxes there for I mean, how long? Yeah. Who can get a supermajority these days, right. Um, North Carolina also capped the income tax rate at 3.5%. And Utah and California rejected measures that would make it harder for voters themselves to approve tax increases through future ballot questions. All right. What was it you wanted to talk about next, David?

David Leary: [00:10:46] Oh. So the I don't know if you know this, the IRS, I didn't see a story on this, but apparently the IRS has been delaying the report on the tax gap. Yeah. Kind of sitting there sitting on it a little bit. They haven't been it's been delayed. And Elizabeth Warren thinks and is accusing the agency of hiding the scale of tax evasion because obviously enforcement got pulled way back by the IRS. But now that the Democrats won, they're pushing to get this report out the door. They want it right after the midterms. So they want this report here in the next 2 or 3 weeks. So this is going to be interesting. The IRS just got gutted gutted gutted. They've been beat up. Now the Democrats in theory have control where it's going to like be interesting to see what else what other impacts we see with the IRS. But I mean right away just hey, we need this report now. And that's the transparency of what's happening at the IRS needs to happen.

Blake Oliver: [00:11:42] So we have a split government in the sense that Democrats control Congress. But Trump's in the white House. He can veto anything they do. So big changes in terms of tax policy. Unlikely. The one to watch the bill that could still pass is the Taxpayer Assistance and Service Act. The Tax Act. We've talked about that on the show before. It contains 65 provisions aimed at improving our service and regulating the tax preparation market. The Senate passage was unanimous at the end of September, but the House Ways and Means Committee has not yet taken it up. So hopefully tax pro groups that support it are lobbying to get it passed before the end of the year during the lame duck session. Hopefully that can happen and it won't be opposed. You know, now that there's been a change in the balance of power. As a reminder, the proposed changes. They include online dashboards, a callback system, regulation of non-credentialed preparers, and continuing education and background checks for all paid preparers. Um, the challenge is that the changes are unfunded because it provides no funding amount or implementation budget. So the IRS would have to do all this without any additional funding. So I mean, I guess that's pretty much it, right? It's like broad changes, unlikely. Maybe small ones that you can get bipartisan support on. Possibly. Let's talk about like why this happened if it's not obvious to everybody, right? Uh, and let's just talk about tariffs. We spent a lot of time.

David Leary: [00:13:26] That like, like step way back. Um, it reminds me of the, it was Clinton and Bush, right? Bush, Bush senior. And it was the what was the famous line? It's the economy, stupid. Yeah, right. At the end of the day, it's the economy.

Blake Oliver: [00:13:38] Yeah. And here is a stat that I spotted that just explains it all. Half of American spending goes to housing and food. That's the most in 15 years. Half half of U.S. households spending housing and food. Rising rents, homeowner costs and beef prices contributed to the pressure. Families spent an average of nearly $2,000 $1,988 more on food and housing combined than in 2024, according to the Bureau of Labor Statistics. Oh, by the way, this article appeared in CPA Practice Advisor. It's called Half of American Spending Goes to Housing and Food, most in 15 years. Average pretax income rose 6.4% in 2025, which outpaced both inflation and expenditures. Um, so we had income gains, but there's still a lot of anxiety. And I think it's because what did we see during the Covid era? During all those years, it was like massive amounts of inflation because of all the money pumped into the economy. And you add up all of that. And it was like substantial, right? People really felt it. And we still see it in the prices. And it's like hard to get used to that. And even though incomes rose, they didn't rise as fast as inflation. And then you had tariffs adding 1,020% to the prices of many goods. And then we had the Iran war adding, uh, significant increase to the price of gasoline and fuel.

David Leary: [00:15:14] Yeah. So it's like the perfect storm gas increased in price plus inflation plus tariffs was just, it's just too much, it's too much too fast. And people's budgets did not keep up.

Blake Oliver: [00:15:24] They didn't. And in the end, right. If the cost of goods outpaces people's income. They're going to be unhappy and they vote with their wallets. And so the people who are really excited about Trump and his vision to revitalize American manufacturing and raise middle class wages were disappointed because that didn't happen. Tariffs did not bring manufacturing back to the United States. It raised prices. Uh.

David Leary: [00:16:01] And which is exactly what we said was going to happen. You know, 50 episodes ago or whatever it was, 100 episodes. Yeah. Yeah.

Blake Oliver: [00:16:09] Well, I mean, anyone who looks at it logically and understands the incentives that businesses have to. Any, any accountant who looks at it logically could tell you what's going to happen. And it was it's like. And the crazy thing is that to actually, you could actually use tariffs to bring back manufacturing, but the tariffs would have to be so high that it would destroy more than it creates. Yeah. And that's a problem because we're such an interconnected economy now. And it was just it's sort of like all of these price increases, even though they individually wouldn't cause people to notice that much, added up to a lot to a feeling, along with all the inflation, which is caused by the inability of the Republican Party to rein in spending and to just give out massive amounts of cash during Covid. You do those two things, and people feel their incomes decrease in value, and they feel the cost of prices of everything go up. And it's that simple.

David Leary: [00:17:14] We're not going to get our $5,000. Now, if we were each supposed to get $5,000 right after the midterms, I don't think.

Blake Oliver: [00:17:21] Yeah. Well, you know, that would be crazy because let's see. Oh, here's another story. Uh, what's the deficit at now? The deficit? I lost that story in my. Q but, uh. Budget deficit. Oh, yeah. It's $2 trillion almost. Uh, we closed out the fiscal year with a $1.993 trillion deficit. It's 12% higher than last year. It's the biggest since 2021.

David Leary: [00:17:50] Apparently those Dodge cuts didn't actually make an impact.

Blake Oliver: [00:17:53] So what's amazing about all this too, is like, we are in this situation where the middle class feels squeezed, and yet the stock market is booming and we're in the we're in a new Gilded Age, essentially. Right. The promise of AI to just completely change the economy and, and turbocharge productivity is there, but it's not hitting yet. We're not seeing the results yet. And so then it always makes me think about what happens if investors lose confidence in these AI companies if the results do not materialize. And for many, they will not. And what is that going to do to the stock market?

David Leary: [00:18:38] Well, I think some people are saying that ultimately with the wave that happened and, you know, because like some states like Texas now have a Democratic governor, like others, this is going to impact the data center or the AI data center construction boom, because they're going to a lot of these Democratic governors that won are pushing back. Right?

Blake Oliver: [00:18:59] Right. But here's why that's not going to happen, David, because a smart governor is going to realize that the way that they stay in power is when their people are economically thriving. Yeah.

David Leary: [00:19:11] It's kind of free money.

Blake Oliver: [00:19:13] Yeah. Well, it's not free money. It's jobs, right?

David Leary: [00:19:15] It's jobs. That's what I mean. Like, like it's, it's an investment in your city or community or county or state.

Blake Oliver: [00:19:21] Yeah. And so that's why they're going to welcome these projects even while they, you know, uh, cry about the economic or not the economic, the environmental impact of it. And so the, the, the AI investment is going to just keep on going. But the question is, how long can it go without delivering real ROI for businesses? And so far, we've seen that AI costs are skyrocketing for many companies and accounting firms. But they're still not seeing big results, correspondingly big results. I saw a story in accounting today, David, about the surging AI costs of firms. And I want to talk about that. But first let's go ahead and thank our next sponsor. And that is who is it on? Are you tired of the payroll headaches that your firm suffers, getting in the way of the client experience that you want to deliver. Do you have manual workflows creating bottlenecks, compliance, nightmares, and endless support calls that go nowhere? There's a better way for your team and your clients on pay. It's the payroll partner that accountants and bookkeepers actually love. Why? Because it's easy to use, packed with value, and backed by support that actually supports you.

Blake Oliver: [00:20:38] Their team gets rave reviews for being fast, expert, and actually reachable when you need them. On pay handles the heavy lifting. You get a dedicated onboarding coordinator who sets up worker profiles and transfers your to date data from previous providers, all at no extra cost. There's seamless QuickBooks and Xero integrations. Eliminate manual journal entries, and they support any type of business. You serve farms, restaurants, nonprofits, you name it. On pay can handle unique requirements without adding complexity. And on pay keeps pricing simple to everything your clients expect, from multi-state filing to off cycle pay runs. It's included no hidden fees and no surprises. To book a demo, head over to The Accounting Podcast dot promo slash pay. That's The accounting podcast dot promo forward slash OPAY. Oh, and David, before we talk about these surging AI costs, one other thing, one other policy of the Trump administration that led to increased prices. I don't know if you can prove it, but how could it not? The whole immigration thing, right? You limit immigration into the country. Illegal immigration, like.

David Leary: [00:21:38] Arguably.

Blake Oliver: [00:21:39] Cheaper to tamp down on it and legal immigration. Right. Both. And the cost of labor is going to go up for businesses. So there you go. That's another cost that got passed on through to consumers. All right. This is a story I spotted in Accounting Today called Tokenomics. Firms see surging AI costs. The story is about the spending surge at firms accounting firms. Ai costs are climbing, driven primarily by a shift from monthly subscriptions to consumption based pricing. Deloitte in January of this year said that cloud bills are rising nearly 20% year over year. Gartner has forecast that worldwide AI spending will reach 2.7 trillion in 2026. That's up nearly 50% year over year. Inside Public Accounting says that 70% of firms increased AI budgets over the past year. And Wolters Kluwer said that 87% of firms plan to increase investment in AI enabled technology. And there's a few examples of firms in this article that have seen their cost rise. Lbm see, uh, Charlie, uh, pigeon a pigeon. Apologies, Charlie. Charlie a pigeon, if I said that right. Uh, if I said that wrong, I apologize. He's an AI practice leader at top 50 firm LBM SI and attributes substantial increases partly from there moving from standard to enterprise anthropic cloud. So standard is $20 a month. With token charges added, but heavy users could reach $500 or more monthly. So going from $20 to $500 represents a 25 times increase in cost, not a it's not a firm wide average, but that's what they're power users are doing, which doesn't surprise me, considering that I blew $2,500 on tokens last month by accident.

Blake Oliver: [00:23:34] Now I've got it under control pretty well. I think I'm good. But it's so easy to do it because of this new consumption based pricing. So I mean that's basically the issue right? Is that the more you use cloud and that's what everyone seems to be really focusing on. Now, if they're using a general tool, the more you use it, the it's it becomes very difficult to stay under the cap. And so then your people are spending over it. And controlling that cost as a firm is really difficult because depending on how you use it, especially if you're using scheduled tasks, running prompts all the time. It can be wildly expensive. And I have found actually just by like changing how my scheduled tasks work and converting them into skills that I run on demand and trimming them down and, and just reworking my whole system. I am now able this week to stay under the usage limit, right in November. So like, think about that. I spent $2,500 extra last month on tokens, but if I use it smart, if I'm smart about how I use it, I might only spend $100. That's a huge variance.

David Leary: [00:24:48] And that's what we might be seeing. So ramp had a article. Um, they're noticing that the top 1% of AI spenders across ramp. So data ramp has data from 85,000 US businesses now, right? The top 1% of AI spenders, they are spending less now on AI than they did in July, which was the peak. So it's probably a getting more. Some of it could just be like, hey, we're going to spend less. There's budget cuts. Some of it could be more efficient usage, like you're saying. And then what I think it probably really is if you're spending millions, it's not worth you spinning up your own in-house model, in-house servers, your in-house things. And so you're seeing the, what's what's really concerning about this is, uh, the top 1% of AI spenders are driving 80% of the revenue for OpenAI and anthropic. So it peaked in July of about. And July's peak was about $9,800 per employee. And now in September, it was $9,568 per employee.

Blake Oliver: [00:25:49] Wait, give me those numbers again.

David Leary: [00:25:51] In July, the peak was $9,873 per employee. And now it's it's down 3% to $9,568 per employee.

Blake Oliver: [00:26:01] So that is the top 1%.

David Leary: [00:26:02] The top 1% spent.

Blake Oliver: [00:26:04] So so basically the, the people using these tools. Is this clot or is this.

David Leary: [00:26:09] This is a OpenAI or anthropic? Yeah.

Blake Oliver: [00:26:11] Okay. So the top 1% of users are spending close to $10,000 a month in tokens.

David Leary: [00:26:17] Per employee at their company.

Blake Oliver: [00:26:19] Per employee at their company. Wow. Okay, that makes me feel better. Uh, but and it's gone down. So that means let's think about this. And you're saying that drives how much of the revenue.

David Leary: [00:26:31] That drives 80% of the revenue for OpenAI and anthropic. So anthropic, David, they they had in Q2 6.8 billion in revenue. And now that, you know, these companies are going public, they're trying to go public, they're S1's are revealing these other numbers. So in Q2, they had $6.8 billion in revenue in Q3 5.4 billion. So a over a billion, 1.2 billion less revenue quarter to quarter. The the anthropic has.

Blake Oliver: [00:26:57] This could be the beginning of the bubble popping. Think about this. Right. So if 80% of your revenue is driven by 1% of your customers, and those customers are already spending a lot per employee, like $10,000 a month. Close to it, you know, $9,500 a month per employee. If they can figure out how to rein in their spend, which they are motivated to do, just like me. And there are plenty of ways to increase efficiency, right? They're going to figure out how to do it. And then, you know, let's say they cut their spend in half, which is totally doable, I believe, based on my experience, right? Because it's really easy to spend $10,000 if you're just really inefficient with how you're using AI, but you apply a few learnings and like, I'm back down to, I'm going to be a few hundred dollars a month, maybe. So. So I've cut my costs by ten X just by being more efficient with my prompts and my usage. Okay. So if these companies do the same thing, Then, I mean, what does that do to the profit or the revenue, not profit, because these companies don't have any revenue, right. What does that do to the to the revenue? You said it was like 4 billion, $5 billion.

David Leary: [00:28:16] Yeah. It dropped by 1.2 billion in 1 quarter.

Blake Oliver: [00:28:20] Yeah. So it could drop another billion or 2 billion. And the only way to make it up is if they can figure out how to get the other 99% of companies using it to pay more. So that means they would have to raise prices on other users. But I mean.

David Leary: [00:28:38] That was also a part of this revenue drop they cut because of Claude Opus 5.5, anthropic basically cut costs by $600 million because the Claude Opus 5.5 cost customers 40% less. And you know, how there's that, um, concept of like, as electricity got cheaper and cheaper and cheaper over the last 150 years, people just use more of it. And I think that's the thought with AI, like they'll still spend the same amount because they're just going to use more of it, but they didn't see that happen. So they, they released a more efficient model that was 40% cheaper. But the usage of that model did not go up by 40%.

Blake Oliver: [00:29:17] Well, the here's the problem. I would totally use it more. But in order to like right now I'm using right now I'm using AI to do specific tasks, specific things like, uh, run a payroll or reconcile a bank account or, um, prep for the show, right? Like review research an article or something like that. It's specific tasks. What I've been trying to do over the past month or two is get it to start being an operating system. So like a project manager, I call it my chief of staff. I gave it a name. It's called chief of Staff and it's doing project management for me. But like, as I've described on the show in the past episodes, and I won't go into super detail on it because I don't want to be I don't want to bore our listeners. What has happened is that in order for it to be a good project manager in chief of staff, it has to have massive amounts of context, and I've got it pulling that in itself, right? It reads my email every few hours. It goes through. It has access to all of my docs. It reads all of my meeting transcripts, and it takes all of that information about all the various projects and it ingests it. It saves it in text files, markdown files in a folder tree. And those files grow as it gets more information. And as it gets more information, it gets better and better and better at being a project manager. But it gets incredibly expensive. And even with Cloud Opus 5.5, I was spending thousands of dollars a month and I still couldn't get it to the point where it was good enough to operate without my oversight. So I would totally use it more. I would just let it run, like all the time. But to do that, you know, I'd be spending probably tens of thousands of dollars a month. And at that point, it's, it's getting paid more than I do. Yeah. Right.

David Leary: [00:31:23] So and I think about that all the time. When Hector Garcia was on the podcast five, ten weeks ago or so, and he said, token spend is going to be bigger than payroll on your profit and loss. And I think I've been thinking about that so much all the time.

Blake Oliver: [00:31:36] Well, and that's so that's the thing is they have to somehow for us to use. So here's my point is that right now, AI is great at automating specific tasks. And that can be really useful, but it can't replace headcount. If it only does specific tasks. It needs to take on the collection of tasks and responsibilities that represent a job.

David Leary: [00:32:03] It needs to come in cheaper than payroll or people won't. Nobody's going to spend more.

Blake Oliver: [00:32:08] Exactly.

David Leary: [00:32:09] To get less work done. And that's where it's at right now. You're spending more to get less work done.

Blake Oliver: [00:32:14] Yeah. So for thousands of dollars a month, I got it to the point where I could kind of supervise it, but I have to really supervise it, right? I am like sitting next to it. So like, what is that worth to me? Like that's like an intern, right? Yeah. So and I was basically paying like intern prices. Uh, and yeah, to get it to the point where it could do like a real full job, like autonomously, just let it run. Uh, I would be spending tens of thousands of dollars a month, I'm sure. So they have to get the cost way, way down before it can do that. And if they can do that, see, that's, that's where then the promise gets delivered. That's what everyone's betting on if you're buying all the stock. If you're buying AI stocks, you're betting that it's going to figure out these companies are going to figure out how to get the costs down low enough where we can completely automate jobs.

David Leary: [00:33:06] Yeah.

Blake Oliver: [00:33:06] A good chunk of jobs, like millions of jobs. And it's going to take a while to get, I don't know, I mean, maybe it will, maybe it won't. We've what did that article say? That we've gone down by 3000 times. The cost of tokens have gone down 3000 times.

David Leary: [00:33:23] Yeah. Just the just that one opus 5.5 is 40% cheaper.

Blake Oliver: [00:33:28] Yeah. So I think it would have to basically get ten times. I don't know, ten times cheaper. But I think it would need even more context. So it would have to get I don't know, another we have to go.

David Leary: [00:33:43] It's got to be the point where people stop talking about the costs. Yeah. Right. So you don't notice it like like the cost is.

Blake Oliver: [00:33:50] Just like electricity for most people, right?

David Leary: [00:33:52] You just don't you don't really pay attention to it. So that article you had was about how accounting firms are just spending tons on AI.

Blake Oliver: [00:33:59] Yeah, their costs are expanding and they're not, you know, we're struggling to contain it.

David Leary: [00:34:04] Well, this could come back to bite them. So I have a tweet I'm going to bring up here. Um, if you could add it to the display and I'll read it out here.

Blake Oliver: [00:34:10] Sure.

David Leary: [00:34:13] So this is a tweet. This is an entrepreneur. And he tweeted, I'm going to read it word for word. My accountant, I pay a lot of money to every month just to reply to a question I sent him with 100% AI reply explaining something. The answer was helpful though I could have just asked AI myself. Of course, you know what I'm thinking now if I can just ask AI everything since he's forwarding everything to AI anyways, why not replace him with AI? I guess he should be doing the opposite of AI sell a premium service for a high price he already does, and keep answering with humans is. Accounting is something I prefer to actually get a human in the loop. Anyways, it's interesting. Now, what's important about this tweet is it has a half a million views. So this person is basically throwing out there. What's the point of my account if my account is just regurgitating an AI answer back to me? But at the same time, he's also saying, hey, it might be worth a premium if my accountant, I'm getting a human, you know, to actually give me a human answer. Yeah. Um, now I don't know if that scales. He's saying, though he might be willing to pay for a premium service, but the fact that like a half a million people saw this point of view about accountants giving AI replies and, well, what they charge for premium services, that's the story is the volume of views that this got.

Blake Oliver: [00:35:31] If you're just copying and pasting, like your ChatGPT response or whatever.

David Leary: [00:35:36] You trained accountants to do at a conference. Once he showed them how to reply to, yeah, I remember you showed him how to reply to a. I think your example was a text you got about some text question you used to use. Chatgpt replied to the text and how they could do that with emails at their firm. Yeah.

Blake Oliver: [00:35:50] Right. But so it's just like with text, right? You can automate the prep. You can totally automate replying to that email question with getting Claude to. Like go out and do the research, figure it all out, draft the email back in your voice and put the reply into your inbox. But sending the email, like reading the email and making sure that it's right and it sounds like you is the review step, which if you're not doing that, then yeah, what's the point of anyone hiring you? They can just go do the research themselves. Yeah. So just if you reply to an email and use AI just don't don't sound like your AI.

David Leary: [00:36:26] Yeah. Pass it through a second AI first. That a widget.

Blake Oliver: [00:36:30] That flags it.

David Leary: [00:36:31] Yeah. Makes it sound like you. Yeah. Does it sound like AI? And if it says yes, don't hit send. Yeah. There's there's, there's ways to avoid this, but it's kind of crazy because if you think about now, accounting firms are spending more money to regurgitate crappy answers. You're spending money to give the client an answer, the client could have got on their own. Which doesn't. That's not a good business model for an accountant.

Blake Oliver: [00:36:54] All right, David, we have one more set of sponsors to thank. And then you've got an interview.

David Leary: [00:37:05] Yeah. I interviewed, uh, Jessica McKellar. She's the founder and CEO of pilot to Understand. They have this new offering for firms called Meridian. But I really wanted to understand like the pilot journey and how what got them to actually launch a product for accountants.

Blake Oliver: [00:37:22] Let's go ahead and thank our next two sponsors. And then we will, uh, you can tee up that interview. Thank you to Cloud Accounting Staffing for sponsoring this episode of the Accounting Podcast. Are you tired of the endless search for qualified accounting talent? You're not alone. Growing accounting firms are struggling to find available and affordable team members when they need them most. Cloud Accountant Staffing has the solution with their revolutionary candidate portal. Unlike traditional staffing agencies that waste your time with sales calls, paperwork, and deposits, the Cloud Accountant Staffing Candidate Portal gives you instant access to highly vetted, qualified accounting professionals. No waiting, no hassle, just top talent right now. What makes this different? Speed and simplicity. While other firms make you wait weeks or months with Cloud Accountant staffing, you could interview someone as soon as tomorrow. Their boutique support ensures you're getting quality talent that's both available and affordable. That's exactly what growing firms need. The candidate portal puts you in control. You can browse live candidates, make selections on your timeline, and build your offshore team without the traditional headaches. To find, review and book interviews with potential team members, all in less than ten minutes. Head over to The Accounting Podcast dot com. That's The Accounting Podcast dot com forward slash CAS. And now our last sponsor of this episode and featured in this interview that you're going to do. David. Its pilot, its pilot.

David Leary: [00:38:46] So if you're running an accounting firm, you know, growth, the growth ceiling, every client that's new means more hours buried in transaction categorization, reconciliations, and financial statement prep. At some point, you either burn your team out or hire more staff just to keep up. That's exactly why pilot built Meridian. Meridian runs the entire month to end close for you. From client onboarding to transaction categorization and reconciliations, it delivers finished financials every month, ready for your team to review. Not a pile of work, but a finished product. What makes Meridian different is it sits on top of QuickBooks online, so your clients don't need to switch platforms and your workflows stay intact. This isn't some experimental tool either. It's the same production system that pilot has run since 2017, with over 187,000 months of books closed across 8000 plus businesses. In fact, pilot CEO Jessica McKellar personally manages a $500,000 book of business on I'm Meridian while she runs her company. When the CEO is a power user, that tells you something to see how firm owners and cast leaders are scaling with Meridian, head over to The Accounting Podcast dot promo slash pilot. That's The Accounting Podcast dot promo forward slash PILOT, and I'll let you tee up that interview. Blake, I was able to meet with her. What? The best part of it, I think for me is it's an engineer who I think fell in love with bookkeeping. And I think that's a cool story to tell.

Blake Oliver: [00:40:05] Yes. Any, any, any, any engineer who learns accounting and actually does it. Yeah. Is going to build great products. It's like accountants who become engineers, right? Those are the people you want, uh, building stuff. All right, here's that interview. David. Go have a great time at actor Garcia's reframe. And, uh, we'll see you around here next week, next week.

David Leary: [00:40:27] Jessica, welcome to the show.

Speaker 3: [00:40:29] Thank you so much for having me.

David Leary: [00:40:31] So Jessica, your CEO and co-founder of pilot, which I think now is older than this podcast. I think we started April, April of 2018 and pilot started 2017.

Speaker 3: [00:40:41] That's right, ten years.

David Leary: [00:40:43] And what was kind of the journey or the goal? Like what I think people know about pilot. They've heard about pilot. Oh, Jeff Bezos invested in pilot. But like I think in general, listeners don't know what pilot is or what you were setting out to build. You know, ten years ago.

Speaker 3: [00:40:56] Yeah. Okay. Well, think back to 2016, 2017. Life was a little bit different back then. This was pre all of this recent LLM stuff. And my co-founders and I had a hypothesis that it was possible to automate the majority of the bookkeeping process and perhaps other accounting processes as well. And that if you could do that, that would be a really powerful foundational layer that you could build interesting things on top of. Like you could use that foundation in a number of different ways. And so that's what we set out to prove for the first several years of pilot. And the way that we were proving this to ourselves. In the early days, there was really no AI. It was good old fashioned software. And then we built out an accounting firm as the test lab for this software, where we felt that the only way to really prove that what we were building was working was to have to use it day in and day out on a wide range of clients. And so we were building this software system, this sort of operating system for accounting firms that we were then using in the kind of pilot direct sales test lab for the first several years of pilot.

David Leary: [00:42:07] So you basically started an accounting firm and you grew it essentially to, I think I saw 8000 clients. Is that correct? Ish.

Speaker 3: [00:42:15] So today we're serving about 4000 clients.

David Leary: [00:42:19] Okay.

Speaker 3: [00:42:20] And then so over the last ten years, it's been like 8 to 10,000 overall clients. Yeah.

David Leary: [00:42:25] And then because of that, you're building all these even more internal processes and getting great things, great things, including the close. And then that's the genesis of Meridian. So now you have the software used internally to do the close. You're now externalized and offering it as a standalone SaaS app for any accountant or accounting firm to use.

Speaker 3: [00:42:43] Exactly.

David Leary: [00:42:45] So what, like I guess, what, how did that jump happen to go from like, hey, we're going to be an accounting firm? Because I would think that's a competitive advantage. Like we have the software that makes us super efficient. We could beat anybody. I think I saw a talk where you had, uh, you said an accountant can handle $1 million in a book of business. One bookkeeper can handle $1 million in book of business. So if you have that secret formula, because I've talked to other people where it's maybe one account, uh, it's about $300,000 an accountant. So, so you're, you know what, three times better than any other accountant I've ever talked to in any accounting firm. Uh, maybe ten times better than a lot of them. So why, why give away your secret sauce as a separate app to help people do the clothes?

Speaker 3: [00:43:29] Totally. So I think to truly answer this, I think I do have to speak briefly about why we thought that this was a problem we're solving. And then I'll talk about the evolution of Meridian. So the okay, there's like the head and the heart of this. And I already described this hypothesis that it might be possible to leverage technology to kind of automate the production layer. Why? Why is that potentially desirable? My, the heart of this. My end goal was I want every business in America, in a particular small businesses to have access to high quality finance and accounting support. And that's coming from a place of. Having small business owners in my family, knowing small business owners, it's like everybody is or knows someone who's just like trying to make it out there, right? We have like pictures on the fridge of me and the baby bouncer in the back room of the gelato store that my mom was running in Fremont in the 80s. Right? My dad was a self-employed musician, and it's just like thinking about and caring about how important it is for these, I mean, all businesses, but in particular neighborhood businesses, to have a shot at surviving and thriving in the modern economy. Like I view that as a tremendous economic and societal consequence. And I wanted to apply the unique background that I and my co-founder have towards that problem or that opportunity, because I think, if we're being honest, I think a lot of these folks are underserved. Um, it's like hard to give access to some of these, uh, businesses at like a price point that works for everybody today.

David Leary: [00:45:08] Yeah. It's hard to, yeah, there's, there's way more small businesses than there is people that can provide the services.

Speaker 3: [00:45:13] Yeah. That are at with high quality for sure. Um, okay. So that's the heart of, of why we're, we're in this. So if that's the goal, okay, so we want to build, we want to prove that we are able to build, we want to prove that we've built a system that gives you. I mean, if we're just honestly just like margin leverage on this, it like gives you the option to use your time in different ways. If you are able to automate the majority of the production close, right? And then we can test that internally with the pilot test lab. The goal was always to get this in front of as many businesses as possible. So then it's like, well, what are the best ways to do that? And one option is to try to ever scale a single accounting firm. And then another option is to equip other accounting firms. And the reason why for us, the clear answer is equip other accounting firms with these capabilities is, well, there are a couple reasons, actually. The first is I don't I don't need to. I don't personally need to be. It's hard to run an accounting firm at scale. It is so hard. Like the P it's a it's a there's a real people and organizational. Like the people who do this well have like such expertise. And we have, hey, man, we've been doing this for ten years.

Speaker 3: [00:46:36] I feel like I've put in my reps on this. I don't, I don't need to do it anymore. But then the other really important reason is it's actually the go to market of this is best left to the diversity of firms that are out there that have a diversity of specializations. This could be just like regional, like, like the, a lot of businesses want to work with a firm that's in their, in their city, for example, and is like an expert on them and the dynamics of their city. Or you have, you know, you're like a CPG focused firm. You're like, you're a boutique firm that focuses on scaling e-commerce brands. That's like your thing, right? Like there are so many ways to specialize by vertical, by geography or just like the vibes of the firm. And, and that is the most effective go to market kind of way of way of reaching businesses. I, I don't I'm not going to be like, pilot HQ is not the right way to try to reach the, you know, like the restaurants in Wichita. I don't have any special capabilities there. And so I think for two reasons. One is I'd rather sell software to accounting firms. Two is I'd rather let you all do the go to market, given the expertise that you have on, on client acquisition.

David Leary: [00:47:59] Well, I think you get the multiplication effect much faster because if you want to impact 100,000 small businesses, you'd have to execute perfectly to grow pilot. Maybe it could take another 25 years.

Speaker 3: [00:48:11] Totally.

David Leary: [00:48:12] But now, if you can open this up and let an army of accountants use your technology to service 100,000 businesses, that seems like a a little bit closer time range goal. That makes a lot of sense. So I do understand. Yeah. The heart where you're coming from on this. I totally get that. So tell me specifically, like, what does Meridian do? Like, how are you? How are you using it? How would I use it if I had my own firm? What would I use Meridian for?

Speaker 3: [00:48:35] Totally. And so Meridian is the public. This is like the public, uh, available to accounting firms, uh, branding for this AI operating system that we've built and that we've been stress testing internally for a long time at this point. And maybe two things here. First, what has happened in the last, I would say 18 to 24 months, that has gotten us to the point where it makes sense to sell Meridian externally. What has happened in the last two years is really the LMS have gotten good enough that you can, if you imagine like pre pre recent advances. Advances. What we had built and used internally was like the Iron Man suit for accountants. And so it gets you a ton of leverage with you in the driver's seat, executing the month end close or other activities. What's happened in the last two years is the LMS have gotten good enough that you can actually take the person out of the Iron Man suit, and you can put in the LM, and the LM can then truly autonomously execute that month end close or that recurring process from beginning to end. And then just like deliver the final draft, uh, books and financials to a human reviewer. And so that was important because that lets us provide this abstraction of, hey, Meridian, you know, provide the inputs to the system, Meridian does the production work, and then you just have to do the review as opposed to something that is more like babysitting and doing a bunch of back and forth with a system.

David Leary: [00:50:16] Like a process checklist.

Speaker 3: [00:50:18] Yeah. Which I think is it's both annoying to have to babysit AI doing stuff I miss. I find it annoying and it it, it suits the ability to drive like firm level metrics impact. If you're doing a bunch of babysitting, it's actually like hard to reclaim a lot of that time and use it for other things. Um, so the fact that we can now just have Meridian execute, uh, close or other process end to end autonomously gives a really clean, simple abstraction that makes it sort of ready for prime time with, with other firms. Um, okay, so that's what's changed recently. That's like why we have, that's why we were able to launch Meridian and then what is it? Okay, well, in one sentence, it's an operating system for accounting firms. There is Meridian AI, which is the core purpose built accounting automation system. And it, it has a bunch of deterministic, um, Uh, sort of capability is. And it really understands like the core accounting primitives natively. And by that, I mean, like it understands reconciliation and like maintains recons in Meridian, it understands supporting schedules and the fact that you need to like inherit, add stuff to, and then roll forward supporting schedules. That happens in Meridian. You don't have to maintain external work papers that can get desynchronized from the books. It understands, you know, like assets and the capitalization and depreciation of assets. It understands accruals like it has a native understanding of a bunch of the core accounting primitives, and then has a bunch of deterministic work that it does to do things like roll forward your schedules.

Speaker 3: [00:52:00] Um, you don't need to have AI reason from first principles about that. You can just like execute good old fashioned software that does that deterministically. And that's important because it means you always get the same answer and the right answer every time. And then it allows you to make it really easy to inspect and audit. So you have a reconciliation surface where you can look at the recons. And if recon broke, because I don't know, a client went in and posted a bill payment against the bank feed, you could see that you can see and edit the schedules in like a pane of glass, you know, in the meridian like web UI. Um, so it has this Meridian AI layer. That is what you delegate the work to. And it leverages a bunch of deterministic tools and then has all the ever improving general AI intelligence from the LMS on top of that. And then what sits on top of that is you have checklists for recurring work. So you can articulate a month end close checklist or your, you know, whatever your weekly AR checklist, your tax, the, the process by which you draft annual tax returns, your FP and a checklist. So you have like the ability to articulate arbitrary checklists of recurring work, or you can use one of Meridian's templates, and then you also have access to that same agent with the same shared context on the client for delegation of ad hoc tasks.

Speaker 3: [00:53:24] So, you know, maybe with a client, you do a couple of things. You have the month end close, you have some monthly fee and A, but then you also have ad hoc projects. There's some ad hoc cleanup during onboarding, you know, they're doing some financing and they want a bunch of custom reporting. There's like a chat entry point to, to Meridian AI where you can just delegate, honestly, pretty complex ad hoc tasks as well. And so that's really important because you get the autonomous execution of the recurring work. And then you can also benefit from delegating the ad hoc work. And it all is sharing the same underlying context, the same access to the ledger, the same work papers and schedules, etc.. Um, and then on top of that, it can plug into your client management. And your practice management also has facilities for that as well. So if you want the if you want Meridian to be client facing, and you want to be able to push questions to the client that they then, you know, answer and then let Meridian action their feedback, you can like have the closed loop with the client via the client management aspects of Meridian. And then you can also do some practice management on Meridian as well, or it can plug into your existing systems.

David Leary: [00:54:33] Okay. That makes a lot of sense. So obviously you ate the dog food. So what, what was the big learning, I guess, as you were building this and obviously building pilot because you didn't just decide to build Meridian one day, it kind of evolved naturally as AI came and you're dealing with clients, but what was the big learning and maybe what was the big learning, the bad way of like, oh, we tried to do this and that was a bad idea. No firm should ever try to do this.

Speaker 3: [00:54:57] Yeah. So I've learned a lot. I've learned a lot. I've learned so much. David, over the past ten years, I've, I've done, I've done so much bookkeeping too. So I'm a software engineer by training, but I, I have managed a a bookkeeping portfolio basically continuously for the past ten years. Like even today, I manage a 500 K portfolio.

David Leary: [00:55:15] You have to do the you have to dog food. You have you gotta.

Speaker 3: [00:55:18] Stay to stay close to the tech. And so I feel like I've put in my reps here. I have learned a lot. And then just, just experiencing, you know, I would say for the first eight years of pilot, we would experience the same thing that every firm, almost every firm experiences, which is like, it's the, it's the major mid month close deadline. And oh my gosh, some people are out sick unexpectedly. And so now we're behind on some clients and some are going to ship late. And it's just like the unrelenting nature of the recurring work and the difficulty of the capacity management and like the variance on the clothes and trying to manage that. And, and I will say that after really getting to the kind of final state that Meridian is in now, we did that and it's like client carryover went to zero. Like nothing's ever laid anymore. We have infinite onboarding capacity. It's like the the team's life improved so dramatically. The stress went way down because it's just much easier to do the capacity planning and management if the production work is delegated to Meridian, both because it drives down the total amount of work necessary and because it reduces the variance. And the variance is what kills us. But okay, so against that backdrop, things that I've learned many things, a couple of things that I've learned.

Speaker 3: [00:56:48] Number one, what are we all, why are we even trying to adopt AI to do anything? We it's because I talk to a lot of firm owners who are like, we're here to try some AI. And I'm like, great, tell me why again? What are your goals? It starts with having some clear goals for. And this could be goals around improving margin or improving scalability, or improving the client experience, or improving the day to day experience of your team. But there's some set of goals that you need to be able to clearly articulate, and then you need to align the incentives with your clients. And then you need to align the incentives with your team in the service of those goals. And I think a lot of the, like the most hard fought, the hard, most hard won lessons, hard fought and hard won lessons from for me from the last ten years is when we didn't get that alignment right. We would try to make changes. We would try to ship changes to the software and like they wouldn't work. We like invest in a bunch of automation and it's like, why are the close times not going down? What have we spent all of our time doing? And so it's like, now I feel like I have clarity in my head that I'm very happy to share with other firm owners when they want to talk with me about this, which is like, first off, like the tech stack evolution and the AI adoption is honestly the last step in the process.

Speaker 3: [00:58:15] Step one is you have to have incentives aligned with your clients. And so if you're still doing like hourly billing. Any kind of investments that are trying to drive down the time that you spend on the client work, you're going to have misaligned incentives because all that's going to do is drive down your revenue, right? And it's like, and I experienced that viscerally with our CFO advisory arm, where it's like we were basically doing our hourly billing, and then it was like pulling teeth to try to get folks to be more efficient. So step one is, and this is really a comment about value based pricing. It's like, yeah, you have to have value based pricing for everything is what I would say, everything other than like literally ad hoc, a human being on a phone call, which you maybe you have to bill hourly for.

David Leary: [00:59:00] Value based or fixed fixed fixed pricing.

Speaker 3: [00:59:04] So I would describe this as subtly different. And I do mean value based pricing in that fee can be a veneer on top of hourly billing where you're like, cool, I have like done the math that it's going to be eight hours of CFO time every month. And so I'm going to do eight times our hourly rate. And that's going to be the fixed fee that still produces a misalignment on like, it still doesn't make sense to invest in streamlining the work or automating the work in that in that case. So I do mean value based pricing. And then and a lot of firms have done that, which is great. But then the second piece, again, a ton of hard, hard won lessons here, hard fought lessons here. And this is the second one is where I think a lot of firms are still figuring things out, is when I say aligning incentives with the internal team on outcomes. This is like a compensation statement. This is if you have a team where you you have a goal for the firm. It's like a strategic priority for the firm to do whatever to drive up margin to, uh, be able to scale more readily, take on more clients have be able to do more onboardings of more clients in a given month, whatever the goal is. Um, well, if you're an employee who feels like you have a good way of working already, why would I want to take on more clients? Right? Like, why would I want to? Why would I want to do more onboardings in a month? Well, the answer has to be because some of the benefit to the firm in terms of improved margin or other economics has to accrue back to me. The employee, like my comp has to go up. And so we had a lot of iterations on what that like, what that should look like to effectively align the incentives of the firm and the employees.

David Leary: [01:01:01] If I'm a firm, I'm thinking about Meridian and I'm. You want to I want to make my firm more tech y. What does my firm look like in a month? I'm not in a month. But, you know, I've implemented everything. I'm I'm. My firm is the equivalent of pilot. What is your month? You said you're managing half $1 million in a client's books. Like, what is your month look like? What do you do?

Speaker 3: [01:01:20] Yeah, totally. So, so first a couple of things. One, there, there's a lot of standardization and I mean standardization in a good way. Not like cookie cutter in a way that is bad for clients, but there's a lot of you can clearly see what work needs to be done for a client every month, because it's all encoded in these checklists that are like self-updating as, as the business needs evolve. It's, it's explicit what the inputs are. No one's wasting a bunch of time like figuring out what data needs to be acquired for the clothes. So it's like what work to be done, what data we have, what data we're missing, what's outstanding with clients is all very explicit. And then we have this closed loop with clients where once they give us the data, meridian can actually, you can configure this in Meridian. So you can, you can do it yourself if you want. Or we like the way that pilot HQ is configured. It just does it automatically. Once the data dependencies have been satisfied, the clothes just kicks off. And so my experience with a month of month end closes is I wake up on probably usually the second of the month, usually on the first. A bunch of statements are still like transactions are settling and the statements are posting. But probably by the second I wake up and a bunch of my clients are in review and I just, they're like, ready for me to review. And so I, I mean, I have a day job as the CEO, but I like, I basically, I basically do bookkeeping while I'm watching TV after my kids have gone to bed.

Speaker 3: [01:03:01] So I like, you know, it's like, great. The kids finally fell asleep. I'm, you know, I pull up my laptop and I'm like, great, you know, for I have four clients where the statements all posted. So everything was imported, reconciled, the clothes was executed. It's like ready, there's a review service that gives me a tidy summary of like Meridian has in it a like a tidy review surface. That's a summary of what what work was done, any noteworthy decisions that were made. Um, interesting underlying business activity. Like if something has happened in the business that I would want to be aware of, because that would equip me for client calls. Um, and then if there are any flags on things that I might want to double check from an accounting perspective, like maybe they did a financing event, I want to double check the way that that was booked, the safes converted. And I want to double check that or whatever. Um, so I have a tidy review surface and then I just, I, you know, it's like very efficient to do my reviews and I ship the books and I am mostly pretty stoked that I didn't have to do anything besides the review. And then, you know, it's like the client sort of roll in as the data as the data settles and, and the, the inputs to the clothes have been satisfied. And then, you know, probably in the back half of the month, we're doing a bunch of onboardings mostly. And I mean onboarding, it's like taking on a new client sometimes can be a real problem and source of stress for firms because you potentially are, are taking on a client with books of an unknown, arbitrarily bad quality.

Speaker 3: [01:04:45] And then what can happen is Like Prime Meridian. We. There'd be a client who wants to work with us. And it's like, great, we've looked at your books and we mean this respectfully, but your books are garbage. So what do you want to like? Do you want us to clean them up for you? And, and there would be a, it would be hard to align with the client on what work they wanted done and what they were willing to pay for it to get into a good spot for the go forward bookkeeping. And one of the most wonderful things for me about Meridian is it basically makes those problems go away because the onboarding is so much easier. Like I just, you know, I inherited some, some set of some QuickBooks or Xero file. It's like, great Meridian do like the hygiene review. Give me a summary of the state of the books as of the theoretical, you know, they want September to be the first month of books. Give me a hygiene review up to that point. And then, you know, depending on what it says, if it's like, wow, there are a bunch of prior period issues, the bank balances are all wrong. They would need huge true ups. Now I can go back to the client and say, hey, we found these things. Do you want us to fix them? Because we can.

Speaker 3: [01:06:00] And I can just say, yes, I can just say yes. The client says, yes, I do want you to fix those things. Great. I'm happy to. I'm just going to feed it to Meridian. It doesn't take any of my time. And so it's like easier to say yes to clients. It's easier to be more responsive. The client sends back their 65 bulleted items that they clearly got out of ChatGPT with these really gnarly questions on the books. And I'm like, I would love nothing more than to answer these questions. And by me answer the questions. I mean, I'm feeding these into Meridian, and Meridian is going to answer your questions like the client is a well attended to. They're getting responsive support. We can say yes to their ad hoc requests. We can say yes to the onboarding experience and timeline. And I love that because because I want to do a good job for businesses, I want to do a good job for clients, and I think Meridian helps that. It just makes it much easier. Um, and so yeah, I think the month is like, yeah, a bunch of like kind of the reviews pop out of the month end close process that's executed autonomously as mostly as the statements settle and then the data gets processed. You know, sometimes we're blocked on clients for things and we have to ping the clients, but, um, the reviews pop out. I do the reviews. It's all pretty copacetic. Do some onboardings and then, you know, your reward for a month, well executed, is that it happens again next month.

David Leary: [01:07:20] Next month.

Speaker 3: [01:07:21] Yeah.

David Leary: [01:07:23] Jessica, this has been great. It's, um, you know, I know lots of tech founders in this space accounting founders, but it feels like you fell in love with bookkeeping. So many tech founders fall in love with their tech. And like, you fell in love with bookkeeping and accounting and, and client service. If you want to think about it that way, it's, I could just tell like you love bookkeeping. Deep down, you really love it.

Speaker 3: [01:07:44] I think I definitely have a deep appreciation for the discipline and the fascinating mix of what has historically been potentially really painful and mind numbingly boring work that has to be done to get to the stuff that's fun. The interesting forensics and the client problem solving and helping clients achieve their goals. And the fact that it has had these two very different kinds of work rolled into a single human being, and the fact that now all of the boring stuff can be delegated, I find super fascinating and really fun. I think that bookkeeping and accounting has never been more fun, because I can delegate the boring stuff to a very capable AI agent. And yeah, I mean, it makes it fun. I do, I enjoy my clothes every month.

David Leary: [01:08:41] That's great. And on that, we'll we'll wrap things up. So if I want to get Meridian, I think I'll put a display, a link that makes it easier for everybody to start seeing podcast links we always use. So just The Accounting Podcast dot promo slash pilot. That'll get you the Meridian page. You can book a, they call it a working session. What are they going to get if I go to that link? The working.

Speaker 3: [01:09:01] Yeah, I think it ends up maybe it depends on your situation, but I think we could show a demo. This is like you're talking to the the sales team and the implementation team, but there's like, there's like a demo or, you know, sometimes what firms want to do is they want to kind of take a test run on their clients. And so we can get set up for that. Maybe we can do some historical cleanup for you get, get a feel for it. Um, but I think, yeah, just go talk to them and they'll whatever you're trying to get out of the session, we'll make sure that we do.

David Leary: [01:09:28] So if I want to test this out with a client, is this a three week process, two week process? Is it a hey, just connect the connect it in and go like how, what's the process for that?

Speaker 3: [01:09:38] Yeah, it's we guide the process, but it is, uh, it's a, I think folks find it to be a surprisingly low lift. And, um, usually the hard part is just getting everyone's schedules aligned like we could I, this Sunday I was working with to, I was, I was helping to onboard three separate firms that all had some urgent client deadlines that they were hoping Meridian would help meet. And I, I got three of these set up on a Sunday afternoon. So I think it speaks to how easy it can be to get set up.

David Leary: [01:10:10] Amazing. Thank you. Jessica. We'll chat in 2027.

Blake Oliver: [01:10:14] What a great interview. Thanks, David for doing that. Hey everyone. Don't forget that you can earn free continuing professional education credit for listening to this episode and our back catalog, plus many other fine accounting, tax and fraud and audit podcasts. All sorts of things on the earmark app. Go to earmark.app in your web browser, or download the free app from the App Store. It's called earmark CPE. Create a free account and earn one free CPE per week. And if you want to support the work we do and earn unlimited CPE and get access to subscriber only premium content, it's just $200 a year for unlimited, the best deal in CPE. Thanks everyone who joined us live today. Boring. Accountant Tee Dunn. Melissa Dray, MMT. Uh, we got Ruben here. I think that's everyone who commented. Thank you so much. Oh, Dustin, we got Dustin as well. Thanks for joining us. Uh, if you want to check us out live on YouTube, go to YouTube and subscribe to the accounting podcast. Hit that notification bell icon. We will see you around here next week. Bye, everyone.