The Future Of QuickBooks With Hector Garcia

With QuickBooks Desktop slowly phasing out, what is the future of QuickBooks Enterprise? Enter QuickBooks Online Advanced, the future of QuickBooks in the mid-market. Join Hector Garcia, CPA, a top QuickBooks expert, and ProAdvisor, to learn about what he believes is the future of QuickBooks and the biggest opportunities for accountants and consultants.

Blake Oliver: You're already recommending QuickBooks to your clients. But are you getting paid for it? Get paid to recommend and implement QuickBooks. Join Hector Garcia and the largest network of QuickBooks Solution Providers. Email hector@garciacpa for more information. That's hector at G-A-R-C-I-A-C-P-A dot com. Now, let's talk to Hector about the future of QuickBooks.

Hector Garcia: If I – if I was the CEO of Intuit or the CPO or whatever, I would just have unlimited users. Why have a number there? And I would change the name from QuickBooks Online Advanced to QuickBooks Online Unlimited. Because I think that's the magic word. Unlimited. Unlimited potential, unlimited things. Right? So, I think, more than 25 users, it's the first thing that is going to come in the – is going to come in.

[00:00:52] How are you doing, Hector?

Blake Oliver: Hey, Hector. How are you doing?

Hector Garcia: Hey, Blake. How are you?

Blake Oliver: I'm really excited to talk to you, Hector, because, I mean, you're famous in the accounting space. You put out videos on accounting on YouTube and you get, like, millions of – millions and millions of people watching these videos. And I've always been in the Xero world since I started with cloud accounting. And you are in the QuickBooks world. And so, we have not really crossed paths all that much. And now, here we are.

Hector Garcia: Right. It's—. It was bound to happen, I guess.

[00:01:26] The Future Of QuickBooks

Blake Oliver: And we're talking about QuickBooks today. The future of QuickBooks.

Hector Garcia: Sure. Let's do it.

Blake Oliver: Well, tell me how we got here. Why are we talking about the future of QuickBooks? I mean, QuickBooks is the dominant small business accounting system in the United States by far. Everybody knows—. Everybody seems to use it. You know, what is there to talk about?

Hector Garcia: So, I'll be perfectly clear that this is a hundred percent going to be my speculation, my observation of my 13 years working with QuickBooks and about a nine-year direct relationship with a QuickBooks reseller channel, selling QuickBooks and that sort of thing. So, I'm not speaking in any official form, but I – I would love to just express my thoughts about where I think everything is heading. Maybe we could talk a little bit about the journey for the people that might not be QuickBooks nerds, kind of understand where QuickBooks has been and where they are now and where they're going to. But I think that we could probably do this every couple of years, right? The future of QuickBooks. And that story might change a little bit. But I think that with a new CEO, a new strategic framework, Intuit might be moving a deeper into the mid-market direction.

[00:02:34] QB looking to move into mid-market businesses

Hector Garcia: And that's probably what we want to expand on. What exactly—. What does that mean? You know, it does not mean anything. But like you said, QuickBooks has control over the small business market. I believe their market share is somewhere in the eighties. 80%.

Now, that is for – for companies that are under a certain dollar amount in sales or number of employees. And that's what – what we call, or most people call small business. There is a sort of a sandwich between the small business and the large corporations, which is called the mid-market. And Intuit has not successfully been able to penetrate that market. As a matter of fact, they do have some products today that are selling and catering to that market. But most of their competitors use the – the concept of outgrow QuickBooks, move to NetSuite, move to Microsoft Dynamics, move to Acumatica, moved to Sage Intacct.

And, you know, these are the competitors in the mid-market. And they do a really good job at homing in the message that you have "outgrown" QuickBooks. So, when you actually see their marketing use the word "outgrown, they are indicating to you that Quick – that QuickBooks is for that company that is growing but hasn't fully grown. And at some point, when you're grown and that's this concept of mid-market, you're going to go somewhere else.

Intuit has been watching this, observing this, and losing customers to competitors in the mid-market. And this is where I think they're going to be investing a whole lot of money for the next year and for the future to come.

Blake Oliver: I'm really excited to talk about that with you because I love the mid-market. I think it's such a fascinating area of business. It's known as the engine of growth in our economy. These companies that are—.

[00:04:24] How do you define mid-market?

Blake Oliver: Well, how do you define mid-market? Like, I know a lot of times, we do it by employee count. There are different definitions from the government. I think one common definition of small business is under 500 employees. But I feel like a lot of businesses that have, you know, a hundred, 200, 300 employees would be considered mid-market.

Hector Garcia: So, I want them—. I'm going to go with a soft approach. Okay. Because the government will use a hard approach. For example, for SBA loans of under a hundred or under 500, when they're trying to process a particular type of loan. Maybe, you know, if you remember back in the pandemic long time ago, back in the pandemic days, you know, when they were giving us the credits and their forgivable loans and their government backed loans, they also had number of employees as the hard number.

However, when you get into tax regulation, tax regulation uses $25 million as the separation between a certain tax form or a requirement in a tax form, especially with corporate – corporations, 1120 filers, and having to disclose a difference between tax – tax basis, balance sheet or a – or a – or a true gap basis balance sheet in the reconciliation page. And we're not getting wonky into that. Just—.

Blake Oliver: Mmhmm.

Hector Garcia: It's important to know that certain government entities and certain official institutions will use their own hard measurements to make it easy. Like, for example, I used to work in a bank before I became an accountant and I used to be in charge of small business. I was outside the branch. I was procuring new clients to the bank. And small business, to Wells Fargo, from 2004, 2007 used to be the one million to 10 million range. So, that gives you a general idea. Everyone can have its own way of labeling it.

[00:06:16] 3 markers Hector looks for to label as mid-market

Hector Garcia: The way I labeled it, and I used the softest measurement, the way I label it is, number one, the owners no longer manage the business. So, there's C-suite members that are non-owners or at least no significant owners. You know, they may have stock from special stock programs and things like that, but it's no longer the owner is the CEO. So, that's a huge distinction. And, again, that's a soft measurement that could be in a small company or a big company. But at that point, I started calling them mid-market.

The second one is every single employee touches ERP system. Every single employee touches ERP system, whether it's just to clock in, just to check their PTO days, just to check their – their paychecks, just to go in there and – and – and select what – what retirement plan they're going to use for their 401k. So, every employee touches the ERP system in one way, shape, or form.

And – and the third measurement in here it would be that there's more than one person in the accounting department. Those are the three soft measurements I use for mid-market. And the reason why – why I do that is because there could be a company that only sells $2 million a year, but they're set up like a mid-market business, right? Ten employees, really well set up to log into the ERP systems, using all sorts of cloud integration apps. So, everyone touches it in one way, shape, or form. And they are spending a thousand, $2,000 a month in software systems. And they're only $2 million in – in revenue.

So, I don't think that that revenue number really plays close attention to those soft measurements that I think drive the consultants strategy in how they're going to put together their ERP, accounting, and IT infrastructure to work together.

And myself as a – as an accounting technology consultant, I want to drive more and more of my work not towards picking a client based on the revenue size, but picking a client based on how much they want to spend in my services, and where my services lower their costs because we're integrating systems. That's—. To me, that's really the goal that I want to hit.

[00:08:24] Hector's Target Client

Hector Garcia: So, from that perspective, my target client mid-market.

Now, I don't have any clients that have more than $50 million in sales. Why? Well, because I use QuickBooks. It naturally drives towards companies that – that cannot outgrow QuickBooks. Let's call it that. So, that's why I have a keen interest on understanding where the software is going. The software that I love, and support resale have a keen interest in where it's going, and it's why I think this conversation could be interesting as we go deeper and deeper.

[00:08:53] Recap of Hector's mid-market identification strategy

Blake Oliver: So, I just want to recap what you're saying here to make sure I've got it right. So, you're saying that the common definitions of a mid-market business, which is based on, usually, revenue, secondarily employee count are not as useful as these qualities that you have defined that are based on how the business operates. And you're saying the owners no longer manage the business. Every employee touches the ERP system. Could I replace ERP with just business system or—?

Hector Garcia: Accounting / IT system. Yes.

Blake Oliver: Okay. So – so, it's – it's, you know—. Whatever we call it, it's the system that manages the business. And then, lastly, more than one person in the accounting department. That's interesting. I never thought of it that way. But I feel like all the businesses that I think of as being mid-market would qualify under those criteria. So—. And of course—.

Hector Garcia: I think you're a hundred percent right. I took traits from what every mid-market business would have, which are those three big traits, but without paying attention to the revenue, because they could be non-mid-market small businesses that behave like that, or a consultant could be so good that they can help them behave like that.

[00:10:03] How Hector thinks when he's consulting

Hector Garcia: And – and that's why I try to think of myself as a consultant, not one that's stuck within the – the – the hard guidelines of "This company is this big. They need to use this software." I try to think, "You know, what if this mom – mom, and pop were to pretend they were a Best Buy? What apps would they go get, you know, so they can manage the company like that? What if this small e-commerce business were to pretend they were Amazon? What would they have to go out and procure in terms of apps and automations to – to get there?"
So, we always—. I always look at this large company bureaucracy and behavior and systems in place as – as the north to where the small companies could start picking away sort of the most important pieces. The pieces that the customers really identify as the reasons why they go to a big company instead of a small company 'cause they have these systems in place. And then, I help them procure similar systems that can – that can at least make them feel that they're going in that direction.

So, I don't want to get stuck having to label a small business as "You're stuck using QuickBooks, and that's it. You're never going to be a big company until you make $20 million a year in sales or $50 million." Whatever that is. So, that's why—.

Blake Oliver: That's an arbitrary threshold. It's—.

Hector Garcia: Correct. I think that's arbitrary. Exactly.

[00:11:18] QB & Mid-Market Cont'd

Blake Oliver: Okay. And the reason we're talking about the definition of mid-market, to bring it back to the QuickBooks discussion, is that, well, historically, QuickBooks, which began as a desktop product, still is used a lot as a desktop product, served businesses from anywhere from brand new company, one person, all the way up to a portion of this mid-market. Not – not all of it though, right? Would you say lower mid-market. Now, we're getting—. We're breaking it down even farther. But – but, basically, QuickBooks spanned the customers that served all the way from brand new business, one person, up to somewhere in the mid-market. And then, at that—. Somewhere in that band of mid-market is when companies start switching to other systems. An ERP system in the past. These days, NetSuite, Intacct, Microsoft Dynamics. Does that fit with, you know, your understanding?

Hector Garcia: That fits. Yes. That fits.

[00:12:14] Small businesses usually have multiple systems all tied together in 1 program

Hector Garcia: This – this is the thing. Small businesses will typically have their accounting system, their inventory management system, their project management system all be one system. And that is QuickBooks. That's the space that QuickBooks has – has – has taken in a small business for a very long time. For the most part, like, I would say, I probably have talked to 2, 000 businesses in – in – in my lifestyle – in my lifetime that I've actually literally been in their books, whether I'm doing their accounting or consulting them or training them. And I can tell you a very small percentage use a CRM system, for example. So, their QuickBooks is their CRM system, right? Their – their customer list, their contact list, the history of the – of – of the invoices, the notes on the invoices that explain what was sold to that customer is what business owners or small businesses use to kind of determine what's their relationship with – with our customer. So, that's just one example.

CRM is a typical thing that every mid-market business will have. That's the world that Salesforce lives in, right? So, when you think of Salesforce, you think of mid-market immediately. I mean, it's, like, automatic. And in many cases, enterprise at this point. But—. So, that's just an example is there are—. QuickBooks has become too much. You know, too much of – of – of what a full ERP setup or a full business operating system should be. And then, people are limited to whatever that system can do in regard to whatever that function is, whether it's CRM or whatever it happens to be.

With – with respect with your question about what QuickBooks serves now—. And we'll talk about QuickBooks Enterprise, which I still sell and sell a lot of. And I—. For the most part, I sell a lot more than QuickBooks Online. Like, if a customer comes to me and all things being the same and they asked me for an entire feature set, the probabilities are that if we're going to stay within one system and one system only and we're going to trick out QuickBooks to do – to be like a CRM and be like an inventory management system and be like an order manager for e-commerce.
Like, if I wanted to pretend QuickBooks could do all that, then I would go with QuickBooks Enterprise. I would go with QuickBooks Desktop, because it's just much more robust, more features. Et cetera. Et cetera. However – however, most people, just because cloud is a thing, and there's so many details that we can go into in terms of why it's such an important revolution in the accounting system …

[00:14:46] QuickBooks Online isn't robust enough to be a full ERP

Hector Garcia: … people are moving to QuickBooks Online without even looking at whether QuickBooks Online can or can do what they want. And then, they get into QuickBooks Online. And then, they try to hope that QuickBooks Online does the same thing that QuickBooks Desktop does and pretends to be a CRM, pretends to be an inventory management system. And it can't, right? Because – because QuickBooks Online is – is an incredible general ledger system. But the minute you want QuickBooks Online your entire ERP, it can't. And, again, not that QuickBooks Enterprise can, but QuickBooks Enterprise can pretend to be long enough until you "outgrow" QuickBooks.

[00:15:22] Intuit Crossroads

Hector Garcia: And this is the exact crossroads that Intuit is in, which is they continue to develop QuickBooks Enterprise, continue to push, and expand what QuickBooks Enterprise can do, or they completely transformed the way they look at QuickBooks Online, and they start offering either stronger partnerships with other systems that can solve these issues and continue to be best in class, just in the GL department. And QuickBooks Online becomes the standard for both small business and mid-market and GL with strong partnerships, with other app developers, or they develop within their own internal ecosystem, which is what I think they're doing.

And this is what I think the future of QuickBooks is. The future of QuickBooks is QB Commerce. The future of QuickBooks is MailChimp and figuring out how to get just two pieces that have been acquired in the past 12 months, QB Commerce and MailChimp—two big ones, by the way.

Blake Oliver: Yes.

Hector Garcia: We're talking about CRM. We're talking about e-commerce. So, we took two huge pieces. Now, how are they going to mix them and make them into one system with QuickBooks Online Advanced? That's what's to come. But I think that's – that's—. The future is being told right now in that little, tiny story. We've got MailChimp and QB Commerce.

Blake Oliver: Yes. Yes.

Hector Garcia: And something's about to come.

[00:16:34] History of QuickBooks

Blake Oliver: I want to come back to that, 'cause that's really exciting, really interesting. But first, I want to review the history of QuickBooks with our listeners, because it's changed so much in 10 years. And you mentioned QuickBooks Enterprise. Maybe you could explain what the desktop solutions used to be 10, 15 years ago that you, you know, built your practice on. I guess – I guess we could say it used to be a lot simpler be a pro adviser.

Hector Garcia: That's right.

Blake Oliver: So – so, we had just desktop at one point. When did online come around? Online—. Quick – QuickBooks Online was—.

[00:17:15] QuickBooks Online

Hector Garcia: Yes. So, Quick – QuickBooks Online was released around the year 2000.

Blake Oliver: Okay.

Hector Garcia: But it was really sort of experimental. Yes. It was like a—.

Blake Oliver: it was garbage, in my opinion.

Hector Garcia: Yes. Totally garbage. I mean, it was garbage for a very long time. QuickBooks Online the way you know it today came about what they call the harmony design or the harmony redesign, which was released officially in 2013. This is where I used to go to a lot of – I still go to a lot of conferences. This is where you see the CEO, VPs of Intuit come in and start pushing hard just the concept of cloud, because the – the transition from QuickBooks Desktop to QuickBooks Online was a two-part process. One was to convince people the cloud is good, the cloud is your friend cloud is the future. So, that was the first barrier, was, you're accounting online, you're accounting on the Internet. Your client information, your vendor information, your historical information on the Internet, not just in the – on the Internet, seemingly accessible to a big company that can use your data or your metadata or whatever you might fear from having your accounting in the hands of somewhere – of someone else.

So, the first thing was just breaking down the barrier just like it was when the Internet came out, getting people to do their banking online. The same thing. You know, people were afraid of paying things online, because their identity would get stolen or their bank accounts where we get stolen, which happens, but there's enough security systems in place to [INAUDIBLE] that and to fix that.

So, first barrier, I would say between 2013 to 2016, it was three years of full marketing the cloud. So, Intuit was trying just, you know, know cloud and Intuit as a good thing. Not so much go to QuickBooks Online. Just the cloud, cloud, cloud, cloud.

And then, around 2016, 2017, that's when you start seeing the number of users QuickBooks Online in terms of new sales start matching QuickBooks Desktop. And the minute you see QuickBooks Online and QuickBooks Desktop start matching, that's what you see Intuit trying to switch. This is 2016, 2017. And you virtually saw no marketing dollars towards a QuickBooks Desktop product. Like, zero. And every single marketing dollar was going to the QuickBooks Online product.

Their development to – towards certification programs accountants was a hundred percent QuickBooks Online. Like, if you wanted to get free CPE from Intuit in a webinar or in a self-paced course, it would really mostly be in the QuickBooks Online part. They paid people like me and Michelle Long and all their big QuickBooks people that do webinars tons of money to the tons of webinars and tons of travel to go to different cities to help people get certified in QuickBooks Online.

So, you see that 2015, 2016. That's when the – they flipped the switch, and everything went all in with QuickBooks Online. And today, you're going to the QuickBooks Desktop—I mean, the QuickBooks website —into a website and finding the desktop product. It's a – it's a – it's a wild goose chase. [INAUDIBLE]. And it's a – it's a – it's a needle in a haystack because it's – it's hidden deep in the – in—. You're going to have to learn …

Blake Oliver: Yes.

Hector Garcia: … how to navigate the website. 'Cause everything is QuickBooks Online. And I would say the biggest challenge, as you said, it used to be easier before, right now, the word QuickBooks without a last name. We've got the first name, right? QuickBooks. Without the last name. Whether it's online or desktop. Creates a lot of—. Creates a lot of confusion.

Blake Oliver: They dropped the—. Yes. They dropped the—. Yes.

Hector Garcia: Yes. They—. They—.

Blake Oliver: They dropped QuickBooks Online from QuickBooks Online.

Hector Garcia: Correct. Exactly.

Blake Oliver: They're just calling it QuickBooks now, which, I mean, is a good thing in the long run …

Hector Garcia: It's smart.

Blake Oliver: … because it's reducing confusion. They do want to transition away from desktop eventually, clearly. And—. Well, we can get into that.

[00:20:56] Intuit started in 1983

Blake Oliver: So – so, just to put a timeline on this for our listeners who are not as familiar. And I was actually surprised when I first learned this. How – how long QuickBooks has been around. It started in 1983. So, that's my – that's my birth year. QuickBooks—. I don't know about you, Hector, but QuickBooks is, you know, the same age as me and it was around for, you know, 20 years in – in Desktop forms and Enterprise, which you mentioned was the top tier version of QuickBooks. The one that—. You know, how much—?

Hector Garcia: Enterprise came later. Maybe we want to discuss that.

Blake Oliver: Yes. Sure.

Hector Garcia: 'Cause Enterprise was—. Well, okay. So, in 1983, Intuit was born, but it was mostly towards what we know or used to know as a Quick – Quick – Quicken product. Okay? And then—.

Blake Oliver: Quicken, the personal finance product.

Hector Garcia: Personal finance product.

Blake Oliver: Okay.

Hector Garcia: And then, they realized at last more business owners were using Quicken to balance their business checkbooks, because the software looked a lot like a check. You know, it—. The – the—. You know, balancing a checkbook, whether it's a personal account or a business account, is essentially the same thing. It's not debits and credits, but it's plus and minuses. Right? And we – we arrive to a balance, you know, minus outstanding checks.

There was no other software out there that was inexpensive, that was—. You know, for – for a PC in the – in the late eighties and early nineties. So, that's when, you know, QuickBooks realized, "Let's make a version of Quicken for a small business. We'll call it QuickBooks." And that's kind of where QuickBooks was born. And this was—. I think it was 1990 to be too exact and precise.

Blake Oliver: Okay.

Hector Garcia: And I actually did a video in my YouTube channel where I compare—. I think it was QuickBooks for DOS, 1992, versus a QuickBooks Online 2017 or something like that. So, you kind of get an idea for what it used to look like, what it looks like now. And they're not that much different. At least the check module is not that much different. The check module is actually the legacy look and feel of QuickBooks is a check on my screen …

Blake Oliver: Yes.

Hector Garcia: … that has been—. That's it's signature thing. So, QuickBooks Desktop, that started with DOS, and it went to Windows 3 or 3.1, whatever. Then, Windows 95 and so forth. Just, you know, kept—. They kept building upon sort of the same architecture. Adding new features, adding new features. And QuickBooks was always small business, small business.

Enterprise came out in 2001. Okay. Version one of QuickBooks Enterprise, which is great, 'cause it matched up the – the last of the year. So, today, QuickBooks Enterprise 22 matches QuickBooks Desktop 2022. So, there's parody on the – on the years and the last two numbers there, which is great. So, QuickBooks Enterprise came out in 2001 with the theme that it's going to be for the – the larger echelon of small business. I don't think they ever called it mid-market. They just call it the top end of the small basis, which handles more customers, more items, bigger file size, and a little bit more additional features, especially on the inventory side.

That still exists today. QuickBooks Enterprise is still, you know, Intuit's premier premium, product, highest product. It's actually the highest ticket product. You buy QuickBooks Enterprise today, a 30 to 40 user version of it costs you $10,000 a year. So, it's not – it's not cheap. And you can still buy. And – and they have over 120,000 active subscribers in QuickBooks Enterprise. So, there's still a big, significant number.

But, you know, QuickBooks Online today, it's over 5 million users. So, obviously, it's a whole – it's a whole another ball game when you compare and online. But that's kind of like where – where the systems are converging. And I'll give you a little dotted line.

QuickBooks Mac was born about nine years ago. And – and for Mac users that can use QuickBooks that works just like the Windows version. But it has—. Some features are different, and they don't really talk to each other. And that's created a whole nother level of confusion. And because of that, most accountants, most consultants just kind of stay away from QuickBooks for Mac. And that's just a very niche product that has under a hundred thousand users. And as long as Mac users are loud enough, they're – they're going to keep creating it.

But in my – in my world, QuickBooks Mac, you know, Mac users, for a lack of better term, I try to move them to QuickBooks Online quickly just because I don't want to have to remember what desktop and Mac and online do and don't do. So, as a consultant, it's hard to – to maintain all of them, to know what all of them do and don't do.

[00:25:15] 2 Main Products – QB Online and QB Enterprise

Hector Garcia: But right now, these are the two big ones. It's QuickBooks Online and QuickBooks Enterprise. And QuickBooks will continue to invest in the two. But I – I'm pretty certain that even though you're still going to be able to sell QuickBooks Enterprise like I do, but the entire push is going to be to Advanced.

And I can tell you, and I'll let you comment on that first. I can tell you based on how they compensate the resellers, you can really see the canary in the coal mine on where – where they're going. So, we can talk about that too, as well if you want to.

Blake Oliver: Yes. I would love to talk about that. So, so let—. Remind me. When did – when did enterprise come out? What year was that?

Hector Garcia: 2001. 2001

Blake Oliver: 2001. Okay. So, QuickBooks Desktop, the first version, 1990. 2001, we had enterprise come out. And then, shortly—. Actually, a year before Enterprise is when Online started, but it really wasn't any good until 2013 to '16, is when …

Hector Garcia: Correct.

Blake Oliver: … the real growth started happening. When—?

Hector Garcia: Yes. They had less than 50,000 users by 2013. So, it was a—. It's – it's pretty, a small thing.

Blake Oliver: Pretty small.

Hector Garcia: It was mostly experimental.

Blake Oliver: And then, when did—? So, Online started as really just an alternative to QuickBooks Pro,

Hector Garcia: Not – not even. Not – not even.

Blake Oliver: It's not even that?

Hector Garcia: Even today – even today, QuickBooks Online doesn't match QuickBooks Pro.

Blake Oliver: Okay. So—. But it was – it was that segment of the market, the smaller end of Intuit's QuickBooks customers …

Hector Garcia: [CROSSTALK].

Blake Oliver: … would use online.

Hector Garcia: Yes. The first [CROSSTALK].

Blake Oliver: And – and for a long time, that's the way it was. Like, a lot of the features in QuickBooks Enterprise were just not in QuickBooks Online. And so, it was very clear which to choose. If you were a small service-based business, you could go Online. If you had any sort of inventory, if you had anything complex like construction accounting, you had to go with Enterprise. I'm sure there's many, many other use cases where you could just not use online, but that is starting to change.

[00:27:09] QuickBooks Online Advanced

Blake Oliver: When did QuickBooks come out with this QuickBooks Online Advanced?

Hector Garcia: So, QuickBooks Online Advanced came out in 2018. It might be in '19, but I'm pretty sure it's 2018. And it was designed to be about double the price of QuickBooks Online Plus. So, you think of a Quick—. You think about a standard QuickBooks Online for small business offering. You get good, better, best, which is simple essentials. Plus, we're talking about—. And again, depending on when you're listening to this podcast or watch this video, whichever format you're watching it on, it might be different pricing, but we're talking about $25, $50, $80. Good, better, best. Right?

Blake Oliver: Mmhmm.

Hector Garcia: Advanced is its fourth option, which you know, many other software providers have the sort of enterprise option that's "call us for pricing" type of thing. This is their version of that. This is their – there, "Hey", you know, "If you—. If you—. If your business is big enough to you – for you to want to pay top dollar and get more stuff, that's what QuickBooks Online Advanced occupies." And – and essentially if you use QuickBooks Online, any of the three core versions, QuickBooks Online Advanced is the same. Everything looks identical. Just like the transition from QuickBooks Pro Premier to enterprise, everything is identical. You just get more functionality. Better reports, more users. And now, coming on the pipeline, connectivity with some of the internal systems like MailChimp and QB Commerce and, you know, partnership with Salesforce and e-document signing system.

So, the – the QuickBooks Advanced will become the platform sort of expanding businesses where QuickBooks Online Core, the – the first three versions, will still connected third-party apps but through, let's say, let's call it regular APIs where Advanced is going to start developing. Again, this – this – this has not been told to me. This is something I can between the lines. They will have this expanded API deeper partnerships with ERP-like systems that talk to QuickBooks Online Advanced. So, QuickBooks Online Advanced is the gateway to full ERP system.

Blake Oliver: Mmhmm. Yes. And – and the way I kind of see the difference in how they're approaching these integrations, or these partnerships is Intuit is picking a partner for this QuickBooks Online Advanced integration and they are not just giving access to them, which is what happens in the QuickBooks Online marketplace. They are actually working with that developer to build a much better integration than you might get otherwise. So, it's—.

Hector Garcia: That's – that's absolute—. That's absolutely right. Yes.

[00:29:36] Product Integration in QB

Blake Oliver: So, it could in the future, I don't know if it's this way now, but feel like a single product. Like, that – that level of integration.

Hector Garcia: So, that's an interesting way of looking at it. There has been two large attempts to do this seamless single product integration. And you – you might be familiar with this, 'cause this is contemporary with The Cloud Accounting Podcast. But the bill.com integration …

Blake Oliver: Mmhmm.

Hector Garcia: … the Melio integration – the Melio integration, those were attempts to make everything feel built in. Like, right now, as we speak, Melio, Melio, I'm not sure what the right way to pronounce it, is – which is an accounts payable or payments platform, can integrate with QuickBooks Online. And there's a inte- – super integrated version of Melio that runs within the QuickBooks Online login and all the screens and the UI fuse like QuickBooks Online even though all the backend and all the platform and the transactions are happening in the Melio site. And you can choose whether to log into Melio directly and do all your AP management from there or manage some AP directly from QuickBooks Online using their platform.

They – they did this first with bill.com. I don't know what happened. I don't know why that went away. But bill.com is no longer doing this integrated system with QBO. It switched and strapped over to Melio or to Melio. Now, could this be an indicator that Intuit wants to buy Melio? I don't know. That would be great. That would be awesome. But – but the way it integrates, it feels like they're in the same family. So, I would say that's probably the best indication.

Blake Oliver: And the app—. Melio is literally inside of QuickBooks Online. Now, is – is it not the case that bill.com is still inside of QuickBooks Online Advanced or has that shifted as well?

Hector Garcia: So, there are some legacy accounts that were connected with bill.com that still—. It's not inside QuickBooks Online Advanced. No, it's not like that.

Blake Oliver: Okay.

Hector Garcia: But there – there's—. There could be some legacy connectors to bill.com that still have an interface that looks similar than the Melio one, but it's no longer being further developed or improved. So, no new accounts.

Blake Oliver: Okay.

Hector Garcia: No new accounts in QuickBooks Online Advanced or otherwise had that level of integration with bill.com where all the QBO or the QuickBooks Online accounts potentially had a Melio integration with that piece of the – the – the- the workflow that could be inside the product.

And the second parallel attempt to that would be QuickBooks Time, which used to be TSheets, one of the most or the most popular app in the QuickBooks Online app store. Intuit acquired TSheets in 2018, I believe. And in the last couple of years, they've been, as well—. It's actually an Intuit product, but they've been trying to make it look …

Hector Garcia: Yes.

Blake Oliver: … like a QuickBooks product. And they've been doing facelifts and facelifts and bring in some of the time sheets screens inside QuickBooks Online. So, you can at least create a time sheet and approve it through QuickBooks Online. But everything else, the – the GPS, geo-fencing, and all that stuff, still gets driven through QB Time, formerly known as TSheets.

So, it – it's—. We've seen in the last couple of years an attempt to make the apps sort of converge inside a particular workflow in QuickBooks Online. But it's not fully yet flushed out. I mean, there's still work to do in QB time, for example, which is a true Intuit product at this point.

Blake Oliver: So, we've got QuickBooks Online Advanced. That has been around. A lot of development resources are being put Intuit. A lot of these special partnerships are being made to enhance it. You mentioned the acquisitions of a few different companies. We'll touch on that again. Talk about that a lot, actually. Do you think that the goal is to replace QuickBooks Enterprise with QuickBooks Advanced?

Hector Garcia: There's no doubt in my mind that that's the strategic intent.

Blake Oliver: So, let's talk about that. What does that mean for accountants who have built businesses, like you have, Hector, on QuickBooks Enterprise?

Hector Garcia: You know, before QuickBooks existed, I'm sure something else existed. Somebody else built a business around something else. QuickBooks came, and people adapted. I think we just adapt. I don't – I don't – I don't see an issue. Right? I mean, If you are in business as an accountant or consultant, whatever you want to call yourself, and your goal is to improve your client's lives, it doesn't matter what's convenient or not for you. You are in service of your customer.

If QuickBooks Enterprise no longer support it or is no longer adequate or is no longer connecting to the banks or payroll systems or other third-party systems, it can no longer serve, you know, the – the – the small business or it can no longer give the business a strategic advantage like a different software can. Then, it behooves you to adapt. Learn a new system and go that route.

You know, you think about this, okay. Before QuickBooks can be able to send invoices through, or let's say estimates, through email, with a traditional system, would have to type up your email, convert it into a PDF, fax it to someone manually, email it to someone. It would take you an extra 10 minutes, 15 minutes, whatever it is to do this.

Think about in today's world where speed is of the essence and you want to be sending quotes and getting them approved and jumping on – on a – on a job right away, because the company down the street hired younger, more techie people that automated half these processes. How are you even going to have a competitive advantage? So, as an accountant, as a consultant, I'm in service of helping my client thrive. And they may—. They can only thrive if they can do things as fast as everyone else look.

Every retailer competes with Amazon Prime next-day delivery. If your accounting system is holding you back on your delivery process of your product or your service, your accounting system is holding you back. Your accounting system is the one. So, people can complain, "Oh, Amazon is killing me. Well, your lack of systems is killing you." Right? So, sometimes, we need to just, you know, swallow the pill and – and move to where the market is going and serve our clients where we need to serve them.

And there's no doubt in my mind that cloud is that—. There's no replacement, better replacement, for the cloud now. Could blockchain be it? Yes. Possibly. But right now, a cloud enabled system that connects to multiple systems and instantly updates expense information, income information, sales information, order information, inventory availability information, physical location of employees through a time-tracking app or geo-fencing or whatever. All this stuff is crucial.

And we're competing against either computers that I want to take our jobs, or we want to compete against big companies like Amazon. The only thing we can do is speed up our processes. And our systems need to be able to match that speed. And QuickBooks Desktop, no matter how much they improve it, will nev- – will never get there. Cloud will always supersede, especially when you're interacting outside your organization than a desktop product can. Period.

Blake Oliver: So, this would be easy if there was feature parity between QuickBooks Advanced and QuickBooks Enterprise. But there is not.

[00:36:53] How does Hector decide what product to put a customer on?

Blake Oliver: So, how do you decide when you are working with a customer? How do you decide what to put them on?

Hector Garcia: Yes. So, look, without getting wonky into the details here. Okay. One of the good things is that you're decision you make, it's not going to permanently hold you down. You can make the transition to Intuit, even though they didn't pay much attention to this during the early years of QuickBooks Desktop versus QuickBooks Online. They've reinvested in the conversion process. Converting from online down to desktop, desktop to online. You're not going to be doing this back and forth.

But these could be stages in your business. The stage in which I go from QuickBooks Pro to QuickBooks Online. And, today, you could be in the stage where you're going to downgrade or upgrade, whatever you want to call it, from QuickBooks Online to Enterprise. And then, five years later, there will be the point where you can go to QuickBooks Enterprise to QuickBooks Advanced or whatever the "mid-market" version of QuickBooks will be then. So, as long as Intuit continues to support and invest in the transition from one system to the other, it's not really an extremely difficult decision to make.

Today, I have clients that should be cloud-enabled, but the feature set in QuickBooks Enterprise is better. And I put them in Enterprise and then I try to train people in the team to use all the tools correctly. We create monitoring systems. We try to bring some apps that can automate a little bit of the processes with other systems, bring data in or get data out.

But at the end of the day, we know that a cloud-based system will be the ultimate goal for that business. So, QuickBooks Enterprise could still be a great patch for the next three, four, five years until QuickBooks Online Advanced has feature parity either through deeper integrations with partners or within the internal feature set by itself.

[00:38:48] 3–5-year roadmap for QB Advanced

Blake Oliver: So, let's talk about that three- to five-year roadmap for QuickBooks Advanced. What do you know? What can you tell us? What can you speculate on in terms of the direction of this? Because it's going to impact a lot of businesses. I mean, there's a lot of businesses that are on Desktop QuickBooks that probably would love to switch, but they just don't feel like they can yet. So, I'm sure the accountants advising them are in the same boat.

Hector Garcia: So, what I know now, which I think most people know, but what I know now is QuickBooks Online Advanced allows to have up to 25 users. And it's obviously it's for larger client that has, you know, 25 or more employees. 'Cause not every employee touches QuickBooks. However, if there were a mid-market, with my definition, every employee would touch it in one way, shape, or form, right.

Because I think that most small businesses get stuck being a small business because they don't want their employees to touch the accounting system. Therefore, basically bringing the – the entire business down to the bottleneck of the owner and the one bookkeeper that manages the entire process. So, I strongly believe that giving every employee access to the ERP system, to the business operating system in one way, shape, or form is the catalyst for growth.

So, that being said, having more users, it gives you a good indication that that's where they're going. Systematically speaking, I've speaking – I've spoken to many of the QuickBooks developers, adding more users doesn't restrict or slow down the way QuickBooks Online will work. So, I think the first thing that's going to come, it's just more than 25 users.

If I – if I was a CEO of Intuit or the CPO or whatever, I would just have unlimited users. Why have a number there? And I would change the name from QuickBooks Online Advanced to QuickBooks Online Unlimited. Because I think that's the magic word. Unlimited. Unlimited potential. Unlimited things. Right?

Blake Oliver: Mmhmm.

Hector Garcia: So, I think, more than 25 users is the first thing that is going to come in to the – is going to come in. Now, right now, QuickBooks Online, as of the day were recording this, QuickBooks Online has a very limited user permission structure. So, you can have a lot of users accessing it, but you cannot really say, "Well, this user can look at time sheets and invoices for this subset of customers."

You can do that. So, unfortunately, it's adding a user to QuickBooks Online Advanced is still a big commitment. It's committing access to a lot of information. Even if they can't change it, just access to the information could be very delicate. So—.

Blake Oliver: And – and is that a level of permissions that you can achieve now in Enterprise?

Hector Garcia: You can achieve it not – not in an unlimited fashion, right, but there's, like, 112 different permission structure levels …

Blake Oliver: Okay.

Hector Garcia: … that you can go in there and tweak what they can where QuickBooks Online advanced has, like, seven. So, seven things you can choose what they can see versus 115. Right?

Blake Oliver: Got you.

Hector Garcia: So, so, Yes. QuickBooks Online Advanced is not—. I mean, QuickBooks Desktop Enterprise is not perfect with permission structures, but it's way ahead of the game compared to QuickBooks Online Advanced. So, I think these are the two things that need to be developed as fast as possible, which is ability to have more users and really, really, deep down, ability to pick what they can choose and what they can access, because that is the platform. That unlimited users and user permissions, to me, is the platform to build on top of.

So, I think that if Intuit is listening to my advice, and I have given this advice quite a bit and I will give the advice again in the council.

[00:42:19] Intuit created an accountants council to get feedback from top sellers and users

Hector Garcia: So, I like to just mention. QuickBooks Intuit created a council. It's an accountant's council and a partnership council, where they're going to fly us to California two times a year and they're going to present to us their – what they call VOC (voice of the customer) feedback. They're going to ask for feedback and they're going to pretty much going to ask us field-end users, experience users, of Enterprise and QuickBooks Advanced, asking what's top priority. And, hopefully, they take that feedback, and they work on that feedback immediately.

So, that investment is, again, an indication that this is where their development money is going into. 'Cause why – why else would you fly, you know, eight people to California to pick their brain about where QuickBooks Online Advanced is going to go and spend five-digit, you know, the number of investments in there to not do something about it, right? So, I – I – I really do believe that that is a good indication that where it's going. So, I think it's the first kind of step.

The second step is what you can already start seeing. So, you already see QuickBooks Online Advance has a – a pivot table style custom reporting module. That's actually more powerful than the QuickBooks Desktop Enterprise basic reporting tools. Okay. Like, the built-in reporting tools. You can do more things and QuickBooks Online Advanced when it comes to reporting than you can do with a QuickBooks Desktop. There's some arguments around not having the fields to pivot from, but that's – that's all part of development. But QuickBooks Online Advanced already has better reporting tools.

So—. And I directly talked to the product manager that does that. And he takes my feedback directly. And, surprisingly, a lot of the things I tell him—"Change this. Change, this. Change that."—gets changed pretty fairly quick. So, definitely on the reporting side, they're investing quite a bit of money. And like I said, they haven't done it in the user permissions. But I think that, for 2022, that's going to be the big thing.

[00:44:12] Mailchimp, QB Commerce and data deer

Hector Garcia: The next one coming in the pipeline is MailChimp, QB Commerce and Data company – a company called Data Dear. So, Data Dear is an app—used to be an app—that was a third-party app that connected to QuickBooks and allow you to import and export data in whichever way – way, shape, or form you want. Basically, utilizing the entire capability of the API, but putting it in a way that the end user can easily push data in and out.

Blake Oliver: It – it was an Excel plugin, right? The—.

Hector Garcia: It's an Excel plugin. Right. Right.

Blake Oliver: So, you could actually pull your data from QuickBooks into an Excel sheet and multiple tabs, right, for different types of transactions or items, and then change the data and then push it back to the API.

Hector Garcia: Correct. So—. But—. So – so, it still works. It—.

Blake Oliver: Yes.

Hector Garcia: It's exists. It's not available to the public, right, because they acquired it for the purposes of integrating it with QuickBooks Online Advanced. They have not discussed how this is going to work if they're going to charge. But what I think is Data Dear idea will not become a free app or a free add-on they use as a regular API for now to QuickBooks Online Advanced just like ChronoBooks is now, which is something Intuit acquired to – to do backups of QuickBooks Online, is now all sort of built in. It's still a third-party app from a mechanism standpoint, but it's all to the user.

So, partially seamless or just like FathomHQ, a reporting app – is – which is, again, still a third-party app, but seamless to the QuickBooks Online Advanced user. So, that idea will start like a third-party app and was added for free. And, eventually, it would, like Melio, it would start to get integrated. So, it all looks within the same interface.

And not just Excel. Because it's an Excel add-on. I get it. But once they figure out that Excel also has reporting limitations and people want to get data into SQL or into a Crystal Reports or something like that, they already have the platform. All they have to do is create the interface, so the data could also be manipulated outside Excel. So, that's what I – I start envisioning for the next year or two, is Data Dear being the catalyst for total data freedom. Data in and data out.

Blake Oliver: So, you mentioned also MailChimp and TradeGecko was acquired. So, Pick one to start with. Talk about where you …

Hector Garcia: So—.

Blake Oliver: … where do you those factoring. [CROSSTALK].

[00:46:26] Trade Gecko

Hector Garcia: Let's start with – let's start with TradeGecko, 'cause that's already been a year since the acquisition. So – so, TradeGecko is an e-commerce app that will serve as both your inventory management and your order management system.

There's distinction between the two. I don't want to get deep into e-commerce, but order management means I got orders coming from multiple platforms and I get – and I have to figure out what to fulfill. That's order management, right? Based on location.

Blake Oliver: Mmhmm.

Hector Garcia: Based on their physical warehouse. Based on third-party warehouses that you have. Based on specific instructions of the orders. Based on orders having – being conditional. You need order management system to know what needs to be fulfilled today, what needs to be fulfilled tomorrow. That's order management.

Inventory management is what do I have in stock, why do I need to order, how much more do I need to have next year, forecasting, and what's my cost of goods sold of the things that were moved? That's inventory management.

Right now, TradeGecko or QB Commerce is order management and inventory management is not – is not GL. It can't reconcile banks. It can produce P&Ls with transactions that are outside of the inventory system. So, TradeGecko consolidates this data and then pushes a journal entry into QuickBooks Online with the results. Okay.

So, that's a really important piece, because TradeGecko still behaves like a third-party software that pushes data through – through a journal entry. At some point, and I will speculate that once they – they figure out how to get TradeGecko to be better, 'cause TradeGecko needs improvement in many things, as an inventory expert myself, I could tell you, TradeGecko is missing some things, once they figure out that TradeGecko part while still integrating with QuickBooks via a journal entry, you might start seeing non -journal en- – entry integration, where you see the order in QuickBooks Online driven by the TradeGecko or by QB Commerce engine. So, it's in QuickBooks Online. But the inventory really is being managed by – by TradeGecko. So, that's kind of like …

Blake Oliver: Mmhmm.

Hector Garcia: … [CROSSTALK] or – or QB Commerce. That's what we're – what we're going to be seeing. And in this council that we're going to, QB Commerce will be – will be on the table for discussion.

Funny enough, I'm a QuickBooks reseller. I sell every type of QuickBooks product. QB Commerce is currently not in the QB reseller pricing tables. So, I cannot resell QB Commerce …

Blake Oliver: Interesting.

Hector Garcia: … right now. A year after the acquisition, they told us that this year we'll be able to. But they're probably trying to figure out what's the exact price point. I mean, even QB comers, they don't even have the right price point yet. They've been experimenting with the price point. They started with $20 a month. Now, they're in $200 a month. Now, they're probably going to experiment as a bundle with QuickBooks Online Advanced, where you have maybe a preferred pricing when you already have QuickBooks Online Advanced. So, that's where I see a TradeGecko or QB Commerce going.

Blake Oliver: And just to be clear. You keep going back and forth between TradeGecko and QB Commerce because?

Hector Garcia: They're – they're the same thing. Yes. Sorry.

Blake Oliver: Yes. There's the same.

Hector Garcia: Yes.

Blake Oliver: Intuit rebranded TradeGecko as QuickBooks Commerce.

Hector Garcia: Right.

Blake Oliver: Got it.

Hector Garcia: And it's still Trade—. Like, if you were a TradeGecko user for the past five years, it's still TradeGecko with a different logo. That's why – that's why I call it TradeGecko, is 'cause I'm so used to looking at TradeGecko. Yes. But that's QB Commerce.

Blake Oliver: Well, it makes so much sense that Intuit made this acquisition. I don't know if they decided to do it before the pandemic or during. But it's genius because so many businesses now, as a result of us all being at home, are multi-channel, omni-channel. Online, in-person. I'll drive it to your house. You know, I'll—. Whatever it is, right? They have to get the orders in from all sorts of different places. And—.

[00:49:59] Biggest opportunity as an accounting consultant

Hector Garcia: I think – I think, as a consultant, as an accountant, the biggest opportunity, biggest—. I mean, by far, there's no other comparison – opportunity for you to become the known expert in the niche, is e-commerce. Period. I don't have any reason to believe that any other industry will overtake that one.

Also because e-commerce, as we know it, is Amazon, eBay, Shopify. That's how we know e-commerce. Okay. E-commerce is also due for disruption. There's going to be a transformation of what e-commerce is like.

Blake Oliver: Mmhmm.

Hector Garcia: E-commerce might be something that gets run from a phone, right? E-commerce might be a hundred percent white label business. E-commerce might be the platform in which services gets sold through.
Blake Oliver: Yes. So, you start thinking about—. E-commerce will be transformed. I know that a lot of businesses these days are starting out as an Instagram account, and they're just selling everything on an Instagram. Like, that's – that's how they take orders with direct messages. I mean, there's a huge opportunity there for somebody to come in and create a product that can solve that, so it's not done manually.

Hector Garcia: I agree. Great example.

Blake Oliver: Yes.

Hector Garcia: I mean, it wouldn't surprise me that Shopify would buy TikTok, right?

Blake Oliver: Yep.

Hector Garcia: That – that would—. That's—. That wouldn't be strange at all, right. Because, you know – you know, TikToker is—.I mean, as a social media person myself and as a person that derives income from YouTube, I can tell you that TikTok doesn't drive the revenue that YouTube can.

Blake Oliver: Yep.

Hector Garcia: But TikTok is driving the numbers and number of views, number of users. So, there is enough advertisers pumping enough money in to TikTok for people to make a living as TikTokers. But a TikToker can make a living by cross-selling their information products, by cross-selling the merch. Et cetera. Et cetera. So, TikTok doesn't have a platform for selling merchandise.

So, if Shopify were to acquire TikTok and fully integrate TikTok and Shopify together, I mean, that's – that would be a – a synergy made in heaven. So, Yes. E-commerce is a huge opportunity. Intuit needs to get this right. If they screw up QB Commerce, they're going to be going back to the drawing board and they're going to be a couple of steps behind.

So, Quick – Intuit really needs to get this right, get it fully integrated, and get the—. I think the feature parity to Enterprise should be driven through QB Commerce, through TradeGecko, not through QuickBooks Online, because it will be a lot easier to get this app that doesn't have that many users and drive massive exchange through it rather than using QuickBooks Online that has 5 million plus users and drive massive change through it.

Blake Oliver: Ah, Yes. So, create the inventory that we've always wanted in QuickBooks Online inside of QuickBooks Commerce as the advanced inventory?

Hector Garcia: And i—. And isolate it …

Blake Oliver: Isolate it. Yes.

Hector Garcia: … from the potential mess and confusion that it could be to non-inventory users.

Blake Oliver: Mmhmm.

Hector Garcia: Exactly.

[00:52:46] MailChimp Acquisition

Blake Oliver: So, the last acquisition we have to talk about is the most recent and, I believe, the biggest ever for Intuit, which is MailChimp. And I have something to offer on this, because, you know, when we were talking about this news on The Cloud Accounting Podcast, David and I were thinking out loud, "This is interesting. Why would Intuit go and acquire an email marketing company?"

And then, I checked out MailChimp, which I hadn't looked at in a while, and I realized there's way more than an email marketing company now. You can build entire e-commerce website on MailChimp. Do you think that's what Intuit's going after here? The CRM?

[00:53:21] Intuit CRM

Hector Garcia: I think it's two things. I think it's two things. I think it's a CRM. So, Intuit has attempted to do CRM partnerships in the past. I don't know if you were familiar with Method:CRM …

Blake Oliver: Yes.

Hector Garcia: … but that was the first quasi partnership that they did, where they did some training together, bring it to market together. Method was built upon, I mean, on top of QuickBooks Desktop. So, method was the attempt to create a CRM / customizable ERP for QuickBooks Desktop.

For whatever reason, it didn't pan out the way that I thought it was going to pan out. And CRM for QuickBooks is still a huge opportunity. There isn't great apps, CRN apps, for QuickBooks. I mean, most of them talk to QuickBooks, but no one's even sat down to think about "What do I need to integrate CRM with QuickBooks?" And they integrate the wrong things, right? Or they don't really realize the power of getting, you know, inventory statistics into CRM.

No CRM systems can pull inventory data from QuickBooks. That makes no sense. If you're going to sell something strictly through a CRM system, you want to know what's in stock and when. But CRM system only talks to AR history or something like that.

So, I think that the opportunity to build a CRM system, which, to me, is sort of the second step in an ERP integration. First step is, to me, is business management, which in – in my world, it's inventory management.

Blake Oliver: Mmhmm.

Hector Garcia: Right? In the construction companies, it would be project management or job costing management. But your – your GL is your first step. Everybody needs a GL. The second one is business management. What's going on when, what work needs to be when. For people that don't have QuickBooks that gets done through a calendar or through some other task management systems.

And the third level is going to be either inventory or it's going to be CRM. So, that part is missing. And I think that – that MailChimp, although it's not a CRM program, is the one that could most easily be turned into a CRM program, because it already has the foundation for it.

[00:55:16] What is CRM

Blake Oliver: And to unpack CRM for our listeners who may not be familiar with the term, what are we talking about? We're talking about contact records, purchase histories, all the communications we've had with our customer. It's the centralized place where we, as a company, track everything that's going on with our customers. Is that—?

Hector Garcia: Yeah. I mean, no.

Blake Oliver: Customer relationship management is – is what it means, right?

Hector Garcia: Right. I mean, from a – from a technical level, it's a database of customer data and what you know about the customer. Right?

Blake Oliver: Got you.

Hector Garcia: But I think it goes beyond that. Because when businesses are small, they know all their customers. They go to the birthday parties. You know, they send them birthday cards. That sort of thing.

When companies get bigger—again, talking about mid-market—and you have now 5,000 customers across 40 different states or whatever, you don't have a really deep—. You cannot have a deep relationship with a customer as a business. Maybe the – your specific sales rep can. But as we know, sales reps can move. And you'll lose that, right?

So, what a – what a company really wants or what should have, they should have intimate information about the customer, so they can design communication systems around that. Like. for example, if a business – if your customer moves, they change an address. That's a simple database change, right? We go from address A to address B. You know, what if you were to send someone a gift for the new office or the new house, right?

People—. Companies don't do that. They don't use a CRM system the way they should. So, if you have a CRM system that when you automate and say, "Hey. When there's an address change, trigger it to go into this list where we're going to call our clients to confirm the address change and figure out why they moved. And if their move is something like, "Oh, we went on to a bigger house or we moved to a bigger office, a bigger warehouse," great opportunity to send somebody a $10, $20 gift saying …

Blake Oliver: Oh, yeah.

Hector Garcia: … you know, "Congratulations on your move." Right? Or something like that.

Blake Oliver: That's – that's a great example of the relationship component of CRM. It's – it's helping to improve that relationship by having better data.

Hector Garcia: Right. Right.

Blake Oliver: Yes.

Hector Garcia: And an individual sales rep could remember those things, but a company can't.

Blake Oliver: Cannot. Yes.

Hector Garcia: Like, a – a brand can't, right?

Blake Oliver: Yes.

Hector Garcia: Unless—. Again, we have AI. We have databases on. Unless we create trigger points and automation around changes of data point around the customer that helps us hone down or whatever our communication strategy is.

[00:57:33] Summarize QB recent Acquisitions

Blake Oliver: So, to summarize these acquisitions and what we think this means for the future of Online Advanced, you know, the acquisition of MailChimp indicates that Intuit is going hard at improving CRM capabilities. TradeGecko indicates or QuickBooks Commerce, as it's now called, indicates they're going hard at e-commerce. And Data Dear indicates that they are going hard at reporting and getting our data in and out of the QuickBooks database in a way where we can really use it to its full potential.

Hector Garcia: That's right.

Blake Oliver: So, I just—.

[00:58:06] Hector's Speculation on future of Intuit

Hector Garcia: I can speculate on what I think is coming next.

Blake Oliver: Yes.

Hector Garcia: But this would be complete speculation. And I have to disclose I'll have no inside baseball information on this. But Intuit is missing a construction job, management job costing type of acquisition or deep development. So, I think that if I were to speculate what Intuit is going to buy next, it would be some – something like a construction management app. Something like Knowify or CoConstruct, or BuilderTrend.

And I'm not sponsoring or endorsing anyone in particular. But I think that if – if they want to quickly develop that niche, they might have to acquire. I mean, they have the money for it, right? And – and probably not the staff to be able to build it internally. So, I think construction management might be the next big acquisition.

And then, there might be a lot of acquisitions of things you and I don't know that have to do with data conversion, data sync. That sort of thing. Like, you know – you know, apps that could speed up the banking API.

Like, right now, QuickBooks has a wonderful banking API where some banks, you can download the PDF statements, for example. Okay. But it cannot download check images yet or it cannot OCR check images with handwriting, or it cannot OCR certain aspects like check deposits and stuff like that.

So, I think that some backend apps that can maybe do some of this work might be what—. I mean, I think like the Xero Hubdoc acquisition was a perfect indication of that, right. So, Xero tried to buy an app that could automate these things. It just didn't work out the way they want it to. But that was the idea.

So, another app developer that creates backend automation systems that are seamless to the end user. PDF conversions and stuff like that. I think that's going to be the next step.

Just like Data Dear is one of those things that don't have really a lot of sexiness. Like – like MailChimp is sexy. Like, it's big app with those email. We know the brand. That idea, we don't know too much about. Some other backend apps, we don't know too much about. When they start acquiring these things, they're going to make a lot of these automations seamless to the customers. The customers won't even know, you know, that's something changed. All they know that somehow things got faster, better, and more efficient.

[01:00:20] How is Intuit incentivizing accountants to sell their newer products

Blake Oliver: So, turning back to the impact on accountants. For those who resell Enterprise or are interested in becoming a reseller of Enterprise or Advanced, how is Intuit incentivizing us to make this change? It's a lot of work for us to change our processes, to go from selling Enterprise to doing Advanced. It's – it's very different. There's a lot we have to learn. Is it worth it? I mean, are you—?

Hector Garcia: I'll give you—.

Blake Oliver: You – you said you're still selling Enterprise. Are you switching to Advanced?

Hector Garcia: I'll give some num—. I'll give you some num- – numbers and then I'll help you …

Blake Oliver: Yeah.

Hector Garcia: … determine that. So, right now, if I were to sell, let's say, a 10-user or QuickBooks Enterprise, it's about a $5,000-a-year sale. Okay. I make about 30% of that upfront first year and then 20% every year for the renewal. Okay. That's actually really good money if you actually …

Blake Oliver: Yeah.

Hector Garcia: … put – put that in. QuickBooks Online Advanced pays me a bounty or $750 once, and that's it. We talked about doing residuals. That's not there yet.

However, there is a current first quarter of 2022, for certain—. I'm not sure it was all resellers, but maybe the top tier resellers, we're getting an extra incentive to convert people from QuickBooks Desktop to QuickBooks Online. So, if we convert someone from Desktop to Online, and – and it's Advanced, we get the $750 one-time bounty plus a $500 conversion bounty.

So, all of a sudden, you know, we're – we're making four digits on a single sale one time. Again, not the same residual as Enterprise if I were count the number of QuickBooks Online customers I sold to and that were Enterprise, I would be a very, very rich man.

But it's not the case, right? QuickBooks Online, it's a smaller upfront cost. Pay $100 a month, $50 bucks a month, $200 a month, whatever it is, there's no big upfront cost. With enterprise, you got to get servers. You got to get it systems. You got to get multiple users. You have to pay extra for – for the cloudification of QuickBooks Desktop. Like, Right Networks or SwissNet …

Blake Oliver: Mmhmm.

Hector Garcia: … or gotmyerp. Just a cloud app. So – so, getting up and running with, it's, like, a four-day process of full hands-on deck of IT people, QuickBooks people, business owners, bookkeepers, accounting team, right? Where QuickBooks Online is, like, 10 minutes, you're logged in. You con—. You got your bank connected. And it just feels like I'm up and running much faster.

So, there's a huge distinction between getting up and running with QuickBooks D versus Online. So, yes. It's possible that the commission is much higher with Desktop, but the sales process is so easy and so clean with Online that I rather sell QuickBooks Online, especially when it comes to volume, right. And because of my YouTube channel, my volume is rather large. And it's mostly QuickBooks Online,

Blake Oliver: Well, I – I assume that there must be other ways than to make money, add value in different ways if you're selling Advanced versus Enterprise.

Hector Garcia: Well, training—. I mean – I mean, the – the—. Look, it doesn't matter what software system you use. You gotta – you gotta help people get beginning balances, right? We got to get bank beginning balances, balance sheet beginning balances. Get your list of customers a clean list of customers.

The difference between getting your list of customers in and a clean list of customers is 10 times the price. Because what does clean list of customers mean?

[01:03:35] Consulting

Hector Garcia: That's consulting. Let's talk about that. Two years, three years. You know, every customer, every job of the car. What data from the customer you want to bring in. Do you want to bring in history? Do you wanna bring in any balances? So, there's tons of consulting soft work that is just talking to the client, figuring out what their needs are to figure out what the customer list is going to look like when you import it into a new QuickBooks Desktop or QuickBooks Online file.

So, the – the—. There's—. The opportunity is on customizing the system or, better, setting it up, so first try feels familiar, right? There's a big difference …

Blake Oliver: Yes.

Hector Garcia: … between training somebody in QuickBooks Online with a blank file versus training somebody with QuickBooks Online with a converted clean conversion of Desktop, where the customers and the address and the phone numbers all look familiar, where the item list looks familiar, where the chartered account looks familiar, where the balance of the payroll account looks familiar. It makes a huge difference on the experience of the user.

So, the – the real value add is not so much in selling the software, although I love selling the software and making money that way. But the real value add is getting the system working correctly from the beginning and giving the client a pleasant experience that would pay top dollar for that.

Blake Oliver: And I imagine that you could make just as much or more even selling Advanced if you clearly offered these setup services, these consulting services, training services. Maybe you used to roll that into the enterprise sale in the past, right? Like, it's just—. It's the—. The same opportunity is there to create value. Just the source of the revenue might be different.

We're not earning it from a commission in an ongoing residual on the software sale anymore. It's an upfront payment, like you said. But then there's the opportunity to still have this relationship with the client.

Hector Garcia: Correct.

Blake Oliver: And—. And—.

Hector Garcia: And I'll—. I agree with that 99%. There's one little, tiny piece, which is where Enterprise, I still love it a lot more. And remember when—. We're going to make full circle about this. The more users are on the system, the bigger opportunity for me as a consultant.

Blake Oliver: Mmhmm.

Hector Garcia: Because more users means more training means more monitoring what users do. And it means more customizing workflows between teams and users. So, one person's doing the optimal thing and the next person is doing the optimal thing. And there's no mixture between or duplication of efforts.

So, while QuickBooks Online Advanced does have the same opportunities, when they don't have the amount of users and the user permission, you're going to have less users using it. And the most of this training and consulting happens at a C level and at the internal accounting level.

So, that's why I think, like, for me, if I want QuickBooks Online to replace QuickBooks Desktop, the number of people touching it need to be able to be increased, not just for my own selfish opportunity to have more training revenue. It's because I know for a fact that the more people I can touch in an organization, assuming I'm a good consultant, the more I can affect change and the faster I can change.

And while the ERP, for lack of a better term, or the accounting is concentrated on the CEO, CFO, and internal bookkeeper or controller, and only three people touch the accounting system, there's a huge bottleneck, and the other members of their organization cannot add value to all the workflows that eventually end up in the source of truth, which is the accounting.

So, with Enterprise, we've have—. Currently, we have the ability to add more users with limited permissions. With QuickBooks Online Advanced, we don't. But that's why if there were to ask me, "Where would I put my money?" it would be a hundred percent or more users and more strict user permissions, so we can welcome more people into the ERP fold.

Blake Oliver: Do you have any idea why there is that limit? It seems, like, artificial. Why would they need to have a limit of 25 users?

Hector Garcia: Yes. Not just 25 years. Like, I'm happy with 25 users from the Enterprise world, because …

Blake Oliver: Yes.

Hector Garcia: … QuickBooks Enterprise has traditionally been most – mostly 30. But I think it's maybe a combination of potential support calls. You know, like, "Do we have—?"

Blake Oliver: Mmhmm.

Hector Garcia: You know? "Do we have enough support people?" I mean, Intuit has been infamous for support issues in the past. And in this past six months or so, they've been investing heavily in US-based support, bringing some of that support back, keeping some of the experts. Because, you know, like every company, they have attrition, too. And if you, have experienced users that leave, I mean, experienced employees that leave, it's harder to support employees.

But I – I have a feeling that it has to do with the statistical significance of having users and support. And – and maybe that's why they've been afraid of it. Possibly not to disappoint. Because if you have a company with a hundred employees, right, and you buy QuickBooks Online because it allows a hundred people to use it, there might be a big disappointment that you have this huge company, you know, trying to use QuickBooks and doesn't have the capability.

So, it's an arbitrary number [INAUDIBLE] to – to limit the amount of customers that get into QuickBooks Online. But that needs to be lifted, as well as the execution of the mid-market strategy that we've been talking about.

Blake Oliver: Hector, I've learned so much from you in the last hour or so. Thank you so much for joining the show and educating me and our listeners about QuickBooks, QuickBooks Advanced Enterprise, the direction that Intuit is taking. Is there anything else you'd like to add before we go?

Hector Garcia: I would love to plug something in if you – if you don't mind.

Blake Oliver: That, too.

Hector Garcia: Yes. So, I'll give you my email address. hector@garciacpa.com. hector@garciacpa.com. if you're an accountant or bookkeeper or a consultant, and you want to get into the world of reselling QuickBooks, whether it's Enterprise, Online, QB Commerce, MailChimp, any of the add-ons per se, Quick – QuickBooks Time, formerly known as TSheets, if you want to sell any of these and add that as part of your repertoire of regular accounting, bookkeeping, and consulting, just email me, and I'll either show you the process, so you can become a reseller on your own. There's a specific threshold, minimum amount of sales, and that sort of thing.

Or you can become a reseller by proxy under me, and I will take you under my wing, show you the ways and you can sell on me, and we split the profits. So, that's – that's my plugin for this – for this podcast. hector@garciacpa.com.

Blake Oliver: Well, and we can't forget to also mention your fantastic YouTube channel. How do people find you on YouTube?

Hector Garcia: So, luckily, with YouTube, you just type my name, Hector Garcia CPA or just Hector Garcia, and you'll find it. And I'd venture to say that if you just search QuickBooks Tutorial, you'll probably just find my YouTube channel, as well.

Blake Oliver: And you have 165,000 subscribers, which is a lot for QuickBooks. I mean, you got to be the number one YouTube around – in the accounting profession, right?

Hector Garcia: I think – I think the one that focuses on QuickBooks, yes. I would say yes.

Blake Oliver: Yes.

Hector Garcia: But there are other CPA/accountant-types that have surpassed the number of subscribers. But I don't think it's about the number of subscribers. It's the quality of subscribers.

Blake Oliver: Yeah.

Hector Garcia: And my subscribers or our subscribers are the best, in my opinion. So, regardless of the number, I'm extremely happy with what my YouTube channel has been able to do …

Blake Oliver: Oh, yes.

Hector Garcia: … and the feedback that I've gotten from the subscribers.

Blake Oliver: So, you got a million – a million views on your QuickBooks Online 2021 complete tutorial and your setup tutorial. Fantastic. That's great. Congratulations.

Hector, thank you so much for joining. We'll see around soon.

[01:10:57] How to earn free CPE for listening to this episode with Earmark CPE

Blake Oliver: Thanks for listening. I hope you enjoyed this episode and that you learned something new. And if you did, wouldn't it be nice to get some CPE credit for it? Well, I've got great news. My new app Earmark CPE offers free NASBA-approved CPE credits for listening to podcasts, including this one. Visit earmarkcpe.com to download the app, take a short quiz, and get your CPE certificate. That's earmark cpe.com.

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