Accounting for Innovation

Practice Management in the AI Era: A New Frontier in Accounting Efficiency

• Jody Padar & Matt Tait • Season 4 • Episode 1

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Welcome to episode one of Season 4 of the Accounting for Innovation podcast, hosted by Matt Tait and Jody Padar. In this episode, the dynamic duo explores the impact of AI on practice management, specifically how AI tools are transforming firm operations from task management to billing, internal communications, and client follow-ups. In this episode, you'll hear:

  • Applications of AI for practice management
  • Transitioning from legacy practice management systems to AI-first solutions
  • The efficiency of tools like Keeper, Carbon, and Canopy
  • The significance of AI-native vs. legacy tools
  • Taking timekeeping to the next level

Sponsored by SysCloud

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This episode is brought to you by Decimal and the Radical CPA.

Welcome to the Accounting for Innovation podcast, where we explore cutting edge strategies and insights into the world of accounting and finance. Presented by Decimal and the Radical CPA, each episode dives deep into industry trends. Whether you're a seasoned professional or a budding entrepreneur, join us as we unpack key concepts and share practical tips to drive success.

Matt Tait:

All right. Welcome to today's episode of Accounting for Innovation. I'm your co-host, Matt Tate. I am here with my other co-host, Jody Padar, and I am excited as we kick off episode one of this new season in which we are gonna talk about ai. Which I think is sort of a hot topic in accounting. So today we are gonna dive into how accounting is transforming firm operations from, uh, task management to billing internal communications, client follow ups. AI tools are becoming not only essential to streamlining workflows, but just I would say essential to the practice of accounting. So Jody, what do you think?

Jody Padar:

Yeah, totally Matt, and I think, you know, you like to say managing a practice and I think most CPAs call it practice management, right? But really that's what we're gonna be talking about today, is how the tools are changing from what we would call a traditional practice management system to truly an AI driven practice management. And how there are already tools today that like. Are embodying it, right? Yeah. It's not even like it's in the future. It, it's today whether you're in maybe more of a future focus, I don't wanna even say future focused, right? But more of a, progressive practice management software versus, something that's a little bit more old school and it's just kind of adding AI on top.

Matt Tait:

And I think just in general, what we're seeing more and more is that people are starting to explore and then starting to use AI in various capabilities and ways. And in general, the way I look at it is you're starting to see various places where you can use AI to take some of the tasks that you like the least, or they're the most manual or kind of data entry heavy, and you can use them to just make life easier.

Jody Padar:

Well, right. And those are things we've always automated, right? So it's not really anything new, right? It's, it's like next level automation. So when you think about, well, and, and, and maybe I should back up here because I say it's not anything new, but do you know that the majority of firms still don't use workflow software? So maybe it is new for some people.

Matt Tait:

I would agree. I mean, it is crazy to me how many firms either don't do anything or use Excel to manage workflow, and that's just a huge miss. I mean, the reality is you should figure out ways to work easier. To make work easier and AI is just the newest tool with the bigger help and whether it was the cloud first and then kind of integrations and automations to now having AI that can actually do things. You just need to kind of take a step forward and think, how do I make my life easier?

Jody Padar:

Right. So, so I think we, we kind of set the stage here with regular workflow software. So let's say you're not in Excel anymore, or you're looking to get out of Excel, and whether it means managing a tax return process or mag managing a bookkeeping process or something like that, right? So let's say now you're going to, you're looking for some sort of, practice management solution is what you would like to Google on, on, on the web and. All that did was really automate. Kind of the docket, which, um, the docket was, uh, for those of you who've never worked in a paper firm, it was a sheet that got put on top of a file and it moved through the file from desk to desk to desk for cube to cube to cube, right. And then you would sign off on that docket that you did your step and it would go to the next person. Right? So that's, that's the old, old school way of doing it. And then workflow software came along. And now it would automate those tasks. So it would put, you know, your list of 10 tasks together and it would automate them from person or desktop to desktop. Right? And, and now what's happening with AI is it's automa, it's automagically kind of built in there, right? And it's doing things, it's helping you automate it. Things, um, easier. So what it could be doing is it could just be closing the task itself, right? Or what it could also be doing is it could be, helping you within the step that you're doing, right, where it's kind of giving you additional information. It's serving up some sort of, I call it a chat bot or something that's giving you some sort of information in that workflow software and moving it to the next step. So this is really just the next level of workflow automation and there's some good tools out there that have it. So I don't know, Matt, what, what product does your firm use?

Matt Tait:

So we're big fans of keeper. And what we found with Keeper is it takes the last evolution to a whole new level, which is integration and automation. So number one, it integrates with QuickBooks and Zero, and so you don't have to'cause, uh, context switching is the killer and bookkeeping because you have to go from one QuickBooks instance to another QuickBooks instance, to whatever your checklist is, to the ledgers themselves, to whatever. By integrating in those tasks, it means that it cuts down the context switching Now, adding a little bit of AI that recognizes this as an older transaction that you can classify this way, that's where you're starting to see AI making decisions, and we found it to be really good. We also evaluated Carbon, which has a really good integration with, uh, email. And, uh, can help use AI to draft email responses or to summarize things a little bit. You're also seeing that kind of. Integration and AI automation in really any major email that you use. I, I do it with Google in front. You also see it in Microsoft. Um, but seeing that in Carbon canopy also is putting a little bit in there. Uh, those are the big three that we looked at and ultimately we thought Keeper was a better fit for us.

Jody Padar:

Right. And I think if you're going even upstream to like bigger firms, they're using products like I win, right? So that's more like billing and other things. But I think it's interesting because, um, really the ones that we just talked about are I. I would say less than 10 years old, you know,

Matt Tait:

for sure.

Jody Padar:

Um, they're on the newer end versus what I would school, kind of like the old school practice management where you're looking at like, uh, practice Cs you're looking at. Um. CH work stream, et cetera. So like you kind of have this next gen of, of workflow tools versus kind of, you know, we'll call'em the legacy tools, but that doesn't mean the legacy tools aren't adding AI in, right? They, they're trying to, and they're, they're figuring it out. But I think that goes to a bigger conversation around what does it mean to be AI first and how you should be thinking about your practice. As you look at AI tools in general, and why do we even wanna be AI first from a data versus, or structured data versus unstructured data perspective. And I think that's important, especially being that this is like our, our first episode of the new season, to even talk about why you want something that is potentially AI first versus a legacy tool that's added AI on top.

Matt Tait:

What's interesting to me from a security standpoint, we have seen more security breaches occurring when people end up using older tools and trying to layer AI on top it's the same thing you see with any other technology. When you start to latch things on top, all of a sudden you've created structural problems that can exist. So from a security standpoint, I always feel more secure in the ones that are natively built to. That is number one. Number two is things are changing really fast. And the way new AI tools work is as they change, they just are able to adapt to it versus the older tools. With the more structured data, that is where you run into issues. Think about it like remodeling your house. If, if you are remodeling your house, you have to keep bolting things on and it can become problematic. The more things you bolt on top of it, if you are expanding a lake. All you're doing is expanding that lake. You're not structurally harming the water, and so the lake is the lake. It just grows or it shrinks, and so. To me, when I look at AI native tools, the capabilities to continue to be beneficial are much greater and easier to accomplish than the ones that are built on top of older school platforms.

Jody Padar:

Yeah, I would agree with that. What do you think? No, I totally agree with that. And the other thing that I think we have to think about is, is so, okay, so now you have this issue or, the opportunity of like, a lot of these newer tools might have newer, like they're, they're less. Established as companies, right? Like they're newer companies or they, they don't have all this history. So, but I think there's positives about that, right? Like, especially you can help shape the tools. You can have, you have a lot more input into how they build things because they're like still mallable versus like, you know, so structured and, and so finite. So I, I think those are two good things. But I also think when you think about. The data and the way the data becomes accessible. Like if you're looking at kind of these old school tools that they're putting AI on top of, you're still kind of caught with, I'll call it a field or how they can actually touch a piece of data sitting on a document, right. Or sitting somewhere versus when you're looking at something new, it's like. Every field on just a, let's just say we're looking at a form. Every field on that form now becomes an easily accessible piece of data that can now be, because it's, it was originally unstructured, now it becomes structured, and then you can go into your system to find it again. Right? And, and so that's a, a bigger understanding of turning unstructured data into structured data. But when you have that as your. Um, as your base, now all of a sudden you have a lot more opportunity to manipulate that data and to do things with it. And especially when you think about practice management and how many, fields there are. On, you know, just something simple as like client name, address, whatever. Now you have a lot more opportunities to pick exactly what you want to do something with that, right? And, and so that's what I think a lot of people don't really understand why AI is so significantly different than just automation or than just cloud technology. It's because you now have so much greater. Detailed access to characters or fields than you did in an old school database.

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Matt Tait:

I agree. And I think what we're gonna see are two distinct phases of ai. And we are right now figuring out phase one and that, uh, that is how does AI help us do work? Phase two is gonna be how does AI help us advise and help companies get better? And what you're talking about here is once you get through this doing side, then people can start asking questions. Hey, what does this business need to improve? How does this business compare to my other clients? How can we help this company? And you can start asking questions of the data using the AI. To give you a much better, clearer way to advise your clients, advise businesses on how they can actually improve. And that next phase is gonna be very quick, but I think it's an important aspect.

Jody Padar:

Well, and I think even just about our own businesses as firms, right? So if you now have a. Practice management that now has more unstructured data that's turned structured right? Like that's becoming AI driven. Now what is the opportunity to pull that information into a dashboard to tell you what's happening in your firm today? So. That. I mean, that's to me again, what's in it for me? How do I run my firm better? Right? So yeah, I love the idea of using AI and all these tools we're gonna talk about as this season goes on. But then if we go back to practice management, how does this help me know how many tax returns are out? Outstanding at any given time, how many tax returns are just missing One piece of information, which before you used to might have, you might have to have to do some crazy reporting or have someone pull it. Oh, yeah. And now you're gonna have a lot easier access to that information in a system, especially if it's AI native.

Matt Tait:

Oh. And start asking questions on which one of my tax preparers is the most efficient. Which one of my tax prepares gets the most done? Those are two different questions, and I think a lot of firms answer it and they say, Hey, the person who completes the most is the best where it could be. There's actually somebody out there that's doing just as much work in a third of the time, in which case, figuring out how to get them to do a. Third more would be great, and that's where I think you're gonna start to see how do I improve my data? For us, we're already using AI to tell us who is our most responsive accounting manager, who is our least responsive, which clients send the most emails that need extra support? Those are the types of things that we're using AI to pull out of our data that help make it so that our company is running better.

Jody Padar:

Well, and I think that's where like practice management comes in as to like, you know, you're talking about that, but take it to the next level. You know, there's tools like Laurel out there that does like AI based timekeeping, right? So it's actually starting and you know, I hate time sheets and I'm not about time sheets at all, but the reason I hate time sheets so much is because you're. You're making decisions on fundamentally flawed data that you know is flawed. And when you know better, you can do better. And if you were to use, uh, AI based timekeeping software, now all of a sudden it becomes one more piece of data that's actually. More, way more accurate, but now you could actually pair it with, like you said, the response times that you're, you're seeing in email or whatever, or you know, you could manage, you can see how those client conversations are being impacted by particular employees. You can make sure that those employees, those conversations aren't just recorded as 30 minutes of time. Now you can see if that 30 minutes of time with a client conversation had an impact to the client and attach a value to that and manage your team better. And to me, that's the exciting stuff that AI is gonna bring to practice management. Even beyond, you know, workflow and all of that stuff. It's like, how do we run our businesses better? What are the tools to help us know our metrics are right? Because I think, again, many firms are still out there kind of using timekeeping as like the be all end all. Even though they intuitively know it's not the right metric. Um, but now we're gonna have data-driven insights to help us manage our people better.

Matt Tait:

Yeah. So I think, you know, one of the things that I think is gonna be really cool. I manage a lot of people and one of these days, probably by the end of the summer for us, and I think shortly for anybody else that wants to set up the processes, you can get a report every day on which client sent me an email or sent our company an email that might be worrisome. That may lead to they're unhappy or they didn't get something they needed, and all of a sudden you get a top 10 list of emails that came in today and you're able to see, hey, maybe I ought to hop in on this client or this one's okay. Or you know, you're able to actually proactively manage.'cause one of the biggest problems that we all run into is we're firefighters. We don't know something's a big issue until a client sends something out. We're like, oh, gotta go fight that fire. We're gotta go fight this one. If we can start really getting things sooner, and that's where AI can do sentiment analysis, can understand how people communicate, can get the difference between who's communicating where. Uh, it can be a really helpful thing to just managing relationships.

Jody Padar:

Well, and again, you know, that I think is key because otherwise you're doing it by expecting your team to tell you that they got a hot email. And I'm not saying that they wouldn't tell you, but it's delayed. You don't have insight. You don't have that visibility across your firm because you're relying on humans. And humans are amazing. But if all that information is just served up to you, you can. Now, you're not firefighting. You can proactively manage those relationships, which again, I think is better than a net promoter score after the fact, right? Because now at least you see that you have a hot client. And I would argue intuition probably, or. Like if you're really managing your practice, you know who these hot clients are or who the hot clients are that are under you.'cause like depending on the size of your firm, that you kind of already got that feeling, but now you have real data to substantiate it and it's not just a feeling.

Matt Tait:

No, I think you're exactly right. And I think being able to, number one, have the data. By the way, we're gonna have to teach and train people on how to pull the data and how to look at the data and how to take actions off the data. That's a whole topic that we could get into, but people are now going to be able to have the opportunity to manage and act better in ways that improve client experiences, employee experiences, profitability, all of those different things.

Jody Padar:

And if we're all sharing the data. And now it's kind of like, it's that transparency amongst your whole team. It's not just you making that decision. It's like they see it, right? It's not like, yeah, big time. It's like everybody just gets it as opposed to like one person who kind of gets it and the other people don't. So I think that's really important to think about.

Matt Tait:

I think you're exactly right. I, I think it's a really cool time for, I mean, you and I both think it's a cool time for ai. It's a cool time for accounting. Getting practice management is one of the foundational elements to running a firm well because it helps tell people what to do and helps tell you how they're doing it. And the more tools that we continue to see layering AI in are just gonna make it easier and better. And it'll be fun as this season progresses to continue to talk through more and more opportunities to leverage and use AI in in everyday work.

Jody Padar:

For sure. And I think the other thing that is interesting about it is as we talk about pe, not that we're that was last season, but as we talk about money coming into the space, these are tools that can help you run your firm better. Whether you want to be involved with PE or are involved with pe or you just wanna run your firm better because now we're gonna have a lot more metrics to kind of upskill us all. To run our firms better and absolutely the cool thing is, is they all don't have to be industry specific because a lot of this stuff is coming across everywhere. So you don't, you're not, I, if you wanna stay in the financial services space and like go to accounting specific tools, great. But a lot of these tools are just regular, I'll say small business kind of tools and they, you could use them as well. So it's, it's not, you're, you're, you're limited to only tools that are in the accounting space.

Matt Tait:

I think that's a really good point, is you can pick the best tool for you and it may not be an accounting tool. Two of our three major operational technologies that we use at Decimal are non accounting tools.

Jody Padar:

Yeah. So, and, and then the cool thing is, is when you do that, you can also learn how to implement them across your client base, which that's a whole nother opportunity. Oh, that's for consulting.

Matt Tait:

That's, oh, big time. So, well, I think, uh, Jody, it's been a great first episode and it's gonna be super fun to dive into more ways that we can use AI and accounting over the next few years and decades. And, uh, it just starts with workflow. So, uh, thanks for joining me today.

Jody Padar:

Awesome.