Graham Stanton and Edgar Thomas — the founders of Avise, a provider of cloud-based accounting and finance software aimed at startups — look at how the information business leaders need from their accountants changes as a business grows — and why accountants and management aren't always speaking the same language.
Dan Hood (
Welcome to On the Air with Accounting Today, I'm editor-in-chief Dan Hood. As businesses grow, their accounting needs change, and we know that because they often follow the natural progression from shoe boxes and paper to entry level accounting systems to mid-level accounting systems right on up to ERP systems. But those changes in information needs don't just reflect the changing size and complexity of the business. They also reflect the way their information needs are changing and both their systems and their outside accountants aren't always giving them what they need. So here to talk about how businesses accounting information needs change as they grow and change in size and complexity, are the co-founders of Avise. It's a provider of cloud based accounting and finance software, specifically aimed at startup companies. And we have with us the two co-founders, including president Graham Stanton. Graham, thanks for joining us.
Graham Stanton (
Thank you, Dan. Thanks so much for having us.
Dan Hood (
And we've also got the COO, Edgar Thomas. Edgar, thank you for joining us.
Graham Stanton (
Thank you, Dan. Great to be on the show.
Dan Hood (
Excellent. So now you both have long experience in building businesses through a range of stages and in dealing with their changing information needs around accounting. I should mention that Graham was a co-founder of Peloton along with growing a number of other businesses, and Edgars been a CPA, a controller, an accounting leader at a range of different businesses. So you bring a sort of great range of experience on this topic. So that's why I'm excited to have you with us to go through this. And I wanna start by asking Graham, maybe you talk about in general, do you think businesses are getting the information they need from their accountants and their accounting systems?
Graham Stanton (
Well, yeah, I will say pretty much universally, no. If the people we speak to are to be believed and that's for various reasons. I mean, for one, businesses are maybe more complex today than they used to be particularly growing startups but really at all stages. And it's also because of the speed of business and the speed that things change and the speed at which people want ready information. And what we've seen is that a lot of the time particularly in smaller growing businesses, accounting is viewed as an afterthought, as a check the box. We have to get this done. And that means that business decisions are being made on information coming from areas outside of the accounting function from other sources of information, then the work the accountants do. And certainly not from the general letter, which often doesn't produce usable financials until after the monthly close is done, if the company is even on a monthly close cadence. And that means that information can be minimum four weeks at a date, often eight weeks out of date by the time anyone's looking at it. And we view that Edgar and I both view that as a shame <laugh>, because the origin of accounting as a practice is supposed to be drive business and actually inform these decisions. And we are excited to hopefully be part of the solution there.
Dan Hood (
Gotcha. Edgar, I don't know if you wanna speak up for accountants and why they're defend their honor or anything on
Edgar Thomas (
Yeah, no, unfortunately I couldn't agree more. And as a young accountant going, I first started as a public accountant, so I was an auditor, so I couldn't understand why it took so long for accountants to get information to us. The auditors, when we're kind of going through the audit. And then when I became a in-house accountant, I kind of understood more of the frustrations and the challenges of the tools that accountants had at their disposable in order to do their jobs effectively. But yes, I was in that position too, where I would see that the VP of finance or the CFO were making decisions not on the data that I was providing as a staff accountant or as the controller. And for me it was frustrating because here I was, got a master's in accounting a certified public accountant in theory, having the skills necessary to provide the information that the VP of finance and the CFO need, but yet not being able to provide it in a timely manner or in the format that they need in order to do their job most effectively.
(
So that has been a passion of mine as I've transitioned from an accountant to a controller to an entrepreneur. Right now, Graham and I are co-founders of a small startup and we ourselves are building accounting software, but we ourselves have accounting information that we're interpreting in order to do our drug most effectively. So it's really not the fault of the accountants. We have very, very capable accountants and a really great educational training both academically as well as I personally believe public accounting is a great way to learn a lot of the skills necessary. But what has been lacking and is kind of changing over the last few years is the tools provided for the accountants to do their job most effectively which we're really excited about both Graham and I as co-founders of the account self work platform that we're building, but also really excited to see all the other tools that are being built in the ecosystem.
Dan Hood (
Right. Well, cause there's a lot of different ways, I'm starting from the premise that business leaders aren't getting the information they need for a couple of different reasons. Some of it's timeliness, if you're getting it as you said at the month end or after HU four weeks, that's too late, You know, needed that decision 29 days ago not 30 days later. So that's certainly an issue. But there's also an issue, and this I think I'm gonna keep on you on this just a little bit because there's a degree to which accountants are often not necessarily understanding the business needs of the people they're reporting to or the people they are helping out. And also may understand how they change from size of firm or from size of business as it grows. And I think of eyes, if I'm getting this, Greg, you guys focus specifically on startup or fast growing companies, which leads into my point of which is that as businesses change in size and complexity, their needs change. And so I wanna talk about, maybe take us through the journey of how those needs change from very small companies startup up through enterprise. And obviously we don't have 10 to 12 days to do all that. So maybe just a brief sort of journey and Edgar, maybe you can kick us off and Graham, you can chime in as make sense. But maybe start with what is a startup? What do they need from their accountants? What information are they looking for from their accountants and their accounting systems?
Edgar Thomas (
Yeah, definitely. Yeah, I'm very familiar with that journey. Typically a small company whether it be a BC back startup or a mom-and-pop shop, the focus is cash and there's cash accounting. So really it's kind of like, what is the cash position? How can we make it through the next month, the next couple of months, the next year if you're really, really planning far ahead at that stage in your other company's life. So a lot of that work is an entrepreneur doing their own bookkeeping or they hire a bookkeeper to do that work. As the business becomes more complex, there's more certainty around the business model and there's more future planning. There becomes a switch to accrual accounting. And the accrual accounting is where I get really excited because that is a way for accountants to really learn more about the business, to understand what are the liabilities out there that are gonna become due for us as a business and anticipating things that are not even yet true accruals.
(
So whenever I go into a new startup as an accountant or as an auditor, I really try and understand the business model and understand where the accruals may be coming that are impacting the business. And then that becomes a focus. And then once you start understanding that, then you can start getting more into the 12 months kind of understanding of what the needs are gonna be for this business, the 24 months and further on. And then as you become even more complex, you become enterprise A level company, you have to double down on that. And it becomes increasingly important to understand that and understand that at a faster and faster pace. And this is even before you become a publicly traded. Because obviously when you become publicly traded, you have to, that it's not only the information has to be there on time, but it has to be very, very accurate in order because you are kind of publicizing that information out there.
(
So throughout that journey, the sophistication of the practitioner, the accounting practitioner has to go up, their understanding of the business has to go up, which is one of the things that Graham and I are like. The reality is the accountants who are doing their work, they do understand the business, they do talk to folks within the company. Accountants cannot do their jobs effectively in a silo. They cannot know what's going, what's happening in the business, what the accruals are without talking to people in the business. So that's a little bit of a snippet there kind of saying that going from a cash accounting bookkeeper to kind of a sophisticated accounting operation that has to be in tune with all the decisions that are being made by the CFO, by the CEO and being able to record that information and put that out to the stakeholders.
Dan Hood (
Excellent. All right, Graham, that's a great picture of that journey, particularly from the accountant's viewpoint. Maybe Graham, I dunno if you can come in and maybe talk about it from the flip side of that. The recipient of the decision making information or decision influencing information as sort of management. Does that match your experience in that journey?
Graham Stanton (
Yes absolutely. And I can definitely speak a little bit to that side, having lived it and knowing a number of people in that position. And all I can say is that most business leaders, and whether they're a CEO or ahead of a function, don't think in terms of gap financials. And they'll think in terms of the other numbers that they often don't understand are ultimately still accounting numbers. So even if it's as simple as ebitda yeah, obviously that's an accounting number just happens to be non-ap. But if it's a software business, they might think in terms of ARR for annual recurring revenue, they might think in terms of CAC for customer acquisition cost. And these numbers are all really fundamentally accounting numbers. But what the business leaders, because the business leaders don't get it, they often cobble together these metrics or they're understanding of them from incomplete sources.
(
And when I think back to when I was trying to run a business or part of a business and operating on these sorts of metrics without getting information from the accounting team, I would sometimes lose sleep at night thinking that, am I missing something? And one of the beauties of double entry bookkeeping is that it's almost ipo. If you do it right, it's almost impossible to miss anything <laugh>. Right. And so I guess what I would say is that both sides need to understand that these aren't two different worlds. And the way the business leaders want to look at the business and the way the accountants present the business are not at odds with each other. And it's actually critically important that you can reconcile one to the other. And so then my advice to business leaders would be spend time with your accountants <laugh>. Right? And my advice to accountants would be find a way to provide this information to the business because if you're not doing it someone else's and they don't have this rich history of double entry bookkeeping and the practice of accounting to lean on
Dan Hood (
<laugh>. Well, yeah, I mean as you talk about that, describe, there's a famous line that a lot of accountants to say this, accounting is the language of business. The problem is for most business owners, it's a foreign language. Accountants are speaking one language and the business owners are speaking an entirely different language. As you say, the information is often the same or often the information needs and the provision of that needs can be done. It's you're talking in two different languages. And as you say, if they could both just spend a little more time with each other and understand each other's needs and languages a little bit better we'd be a lot more business. It might be a lot more successful. I wanna follow into this and dive a little more deeply, specifically into fast growing businesses. Cause I know that's a focus for revis but first we just need to take a quick break. All right. And we're back and we're talking with Grant Stanton and Edgar Thomas of Avis about changing information, accounting information needs, I should say specifically. And a little bit what we sort come into is a little bit of the gap between accountants and business leaders. And it's not really on opposite sides of things, but as we say of speaking somewhat different languages and the need to bridge that gap advise, as I say, particularly focuses on accounting for fast growing businesses. And I've been using that as a synonym for startups. Is that a safe assumption?
Edgar Thomas (
I think is it is a safe a proxy? Yes. I think is a lot of there's a lot overlap there between the two. But it's been really cool for us as we've kind of gone to market that we've seen a lot of different business that are fast growing that maybe BC backed, may not be BC backed and are in industries that are tech focused and industries that are not tech focused.
Dan Hood (
Gotcha. All right. Excellent distinctions. All right, so well let's dive into them and talk about their information needs specifically. We've talked a little bit as you both traced that journey the organization's journey from small to establish, but maybe we talk a little bit in a little bit detail about those fast growing businesses. Edgar, let's start with you. What advice would you give accountants who are serving those kinds of businesses? What should they know?
Edgar Thomas (
Yeah, so I think when both in my experience and also as we've talked to different accountants now as we're kind of going to market with our product, is that there has to be the mindset that I'm providing valuable information to the business owners and therefore I need to get that information out in a timely fashion. So I remember an early conversation where we talked with a controller, both a task growing business and we're talking about his clothes and he said, Oh, I'm pretty good. We closed the books in 10 days. And for me, I'm thinking 10 days for Graham and I, when we make decisions about, okay, where does the business stand today? We need to make a decision one to two days after the last month is done, not 10 days. And for him just kind of like, well, this is the way he grew up.
(
He saw 15, 20 days. So 10 days is pretty good. But when we dive into the processes that he was doing in order to do that in 10 days, I get it right. It was kind of a lot of very manual process there. They had inter information into two or three different systems. They had to draw information manually copied into Excel and then uploaded. So it was a very manual process, and he was focusing on the fact that his team was working very hard and getting the information out in 10 days. Whereas for us, as we thought about that, that problem just kind of like, okay, how can we use technology to help make that 10 day close a one to two day close? And technology can't be all in end, All right? There has to be an attitude shift. There has to be like I'm providing value information to the business and I have to do it in a timely manner.
(
So at advise we're really listening to our customers and listening to our potential customers about their pain points. And we had a call earlier this week where we were presenting one of our features, and the viewer or the potential customer was just like, I had never even thought that that could be done faster. It had never crossed her mind because he had gone from being an auditor to an accountant and only seen things done one way. And this re-imagining the same process, which got to the same result, but much, much faster and checks in place on that information.
Dan Hood (
It is interesting cause for a lot of accountants, I think that's a bit of mindset that of their job is to complete these processes and the amount of time that process takes, well that's how long it takes. I'm just here to complete this process as opposed to what the real goal, the final goal is supposed to be providing useful information in a timely manner. Right now you think for a lot of organizations, the information they're getting from their accounts is just confirming the guesses they made eight days ago when they had to make a decision. I know obviously every small, every business is different and every fast growing business is different. You mentioned that your cash as a major consideration for that stage. Are there other types of information that are generally useful across all of that category of business? Or is it really just gonna vary depending on what they're doing?
Edgar Thomas (
Yeah, I think for early stage startups, really Cassius King, for a lot of them, it's kind of like they have a certain amount of capital that they're starting with and they're trying to get to a milestone, like a revenue milestone or whatever. Well, they're trying to get cashflow positive at some point, but if they can't do that or if they don't understand what time it takes to get there, then they might make erroneous decision. So they're an overemphasis in a lot of places on cash. But unfortunately a lot of the processes that they're to try and arrive at not only what my cash position is today, but what my cash position is going to be 30 days from now, based only on the commitments that we have currently made. Assuming we make no other commitments, what is our cash position gonna be 30 days from now?
(
I think there has to be more of a, and that's where it starts coming to the accrual basis, accounting and say, how can we think about the future and what a future's gonna look like? And being able to project further and further out. So Cassius King, and then going through this process of saying, okay, over the period of time we're gonna go. And then supporting the business and looking at the processes around the business, not only just to support the needs of the accounting department to be more effective, but also just supporting the business itself, the growth of the business. So that's why I think it's very important. And I was fortunate, I was working in an ag tech startup and I learned a lot about agronomy. I learned a lot about the agricultural sciences and stuff like that. And at the time, this was all all very new to me, but then there were ways that we could partner with the agronomists to be more efficient and make the business more efficient. So for accountants, I think thinking about that beyond just the numbers and thinking about the business is very helpful for their own personal career growth and supports the company
Dan Hood (
Ultimately. Absolutely. And it's gonna make the numbers make a lot more sense to them as they're collecting them and working with them and massaging them and hopefully getting 'em out faster. All right. So I'm gonna summarize that as accounts need to be faster <laugh>, they need to know the business as deeply as they can, but also speed is really a crucial thing to get that information, useful information in the hands of management pretty quickly. That's a gross oversimplification. But let's say that's just the simplification for now. Graham coming at it, and I don't mean to pitch you guys on opposite sides, but it's just a handy way of approaching this topic cuz it is both sides when you look at it. What you look at these kinds of businesses, what do you look at in terms of their accounting needs and how they can be better served?
Graham Stanton (
Yes. And would absolutely second the speed portion and say that if things are happening quickly, waiting for a lengthy close process is just not an option. Decisions will be made, it's gonna be done. And it's worth recognizing that the clock doesn't start at the end of the month when the closed process starts, the clock starts the moment the event happens. So if an event happens on the first of the month and this is material to the business and the accountants won't tell anyone about it until they're done with the close sometime in the subsequent month, that's really not helpful. And so what I would say then is that there needs to be some connection between accountants and real time decision making, whatever that means. And maybe that is coming up with an approximate answer or having some portion of the income statement balance sheet ready on a continuous basis and then reflecting after the close. But saying that the accountants don't even get involved until the books are closed. That's not an option. The other part is exactly what Edgar was talking about and the ability to add value beyond. Yeah, traditional rote accounting work. Accountants, for the most part are very smart people.
Dan Hood (
Mostly <laugh>,
Graham Stanton (
Mostly, Yeah,
(
It, there's a higher bar on the profession than for most. And accountants by the nature of their jobs get to understand the business. And some of them at least understand that that has value beyond just getting the books prepared and they can add value there. And so that means they need to free their time up so that they're not doing busy work to fill the whole month and they're actually able to contribute. And one other aspect of fast growing businesses that is critical here is that oftentimes the systems and teams they have in place were the teams for where the business was, where the teams and systems, where the business was recently and not for where it is today and entering into a six month to two year system migration, multi month or year long, hiring spree to support it isn't real, is also not an option for decisions that have to be made today. And so what we would say is that it's really a mindset shift. What can we do to change our existing process? What new systems can we add quickly? Or systems? What systems can we remove in order to support the business as it is today, as it will be in the near future with the resources that are present right now?
Dan Hood (
Excellent. Yeah. Well, I mean, cause right, we keep saying fast growing businesses, that also means fast changing. So you need to be preparing for the future rather than just taking care of the needs or the needs of 30 days ago. It's fascinating. It's a fascinating journey for a lot of companies and it's a fascinating journey for both sides in that relationship. Cause that is really, that's a hugely important relationship within a business between their accountants and management and the decision makers and how they need to support each other. We're almost just about time, but I wanna give you both a chance, any final thoughts you would share on either side for accountants or for business decision makers, or for anybody else who's interested in this topic? Any final thoughts? Graham?
Graham Stanton (
Yeah, I think has been great. I think we've touched on the most important topics and really it's I hope the accountants kinda wake up and realize that they're in the driver's seat or not. The driver's seat right next to the driver's seat and the businesses they're in, and it's a bright, exciting future.
Dan Hood (
Excellent.
Edgar Thomas (
Yeah, and I would just echo that. And I think for me, when I look back in my career and I look at where technology is today, it is a really exciting time to be an accountant just from a personal professional standpoint where at an inflection point where the tools are changing, the ability and the ability to do their jobs. I shouldn't say it's become easier, but it gives them into more exciting things. So I would say don't be afraid of technology, leverage it. It's not coming to replace accountants, it's coming to enable the accountants to do their jobs most effectively in supporting growing businesses.
Dan Hood (
Excellent. All right. Great final thoughts, gentlemen. Thank you both. Graham Stanton and Edgar Thomas of Avise. Thanks for joining us.
Graham Stanton (
Thank you so much.
Edgar Thomas (
Thank you, Dan.
Dan Hood (
And thank you all for listening. This episode of On the Air was produced by Accounting Today with audio production by Kevin Parise. Rate and review us on your favorite podcast platform and see the rest of our content on accountingtoday.com. Thanks again to our guests and thank you for listening.