Is Intuit® Building the 'H&R Block®' of Bookkeeping?

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Social media has been blowing up recently about Claudell, a real person who is a highly experienced bookkeeper. Why all the angst about a bookkeeper named Claudell? Well, it really isn’t about her. She is simply the marketed face of a “product,” Intuit is considering – a low cost, subscription-based bookkeeping service coupled with QuickBooks Online.

The Facts about Intuit's New Bookkeeping Service

After reading numerous social posts and reviewing the product messaging on the QuickBooks website, I met with my contacts at Intuit to gain a better understanding of their upcoming bookkeeping service and clear up some of the confusion about what, exactly, Intuit plans to offer.

First and foremost: According to my sources at Intuit, they have no defined intention regarding this potential offering and that the product offering that appears on the QuickBooks website is a test to better understand small business interest.

But the test does show that Intuit is considering launching a subscription based bookkeeping service, and that they are testing the price point of $200 per month. Should Intuit decide to move forward with this service, it is important for QuickBooks ProAdvisors and other professional bookkeepers to know as much as possible and to beginning planning now.

The following are the facts as I understand them from my conversation with Intuit.

Fact 1: Should Intuit proceed with this program, the program would be designed for QuickBooks Online users who are doing their own bookkeeping and who need to be rescued, in very specific ways, because they are doing their own bookkeeping. It is not designed for people who seek to engage or currently engage a professional bookkeeper.

Fact 2: The pricing that is listed on the website may not be the final pricing. Intuit is currently running a market viability test around the pricing.

Fact 3. Should Intuit proceed with this program, it would be their intention to discern who is a good candidate for their bookkeeping service… and who is not. They would most likely route the latter to Find-a-ProAdvisor.

Fact 4. The service would be about ensuring bookkeeping transactions recorded by the user are accurate and current. It would not be about managing day to day transactions or about proactive guidance. In other words, it would not be outsourced bookkeeping, partial or otherwise.

Fact 5. Though there is a healthy amount of setup assistance involved with the service, advanced setup steps like payroll, sales tax, and the entry of historical transactions (manual entry) would most likely not be included. Intuit would probably route businesses seeking help with these setup processes to the Find-a-ProAdvisor site.

Fact 6. The service would include monthly activities like the review of transactions, making corrections and providing tips and best practices for the use of QuickBooks Online. Its scope would almost certainly not expand to more advanced areas of the bookkeeping process like forecasting, financial planning, payroll support, payroll processing, or payroll compliance/reporting.

My Concerns about this Possible QBO-Attached Bookkeeping Service

Given the facts above, my conversation with Intuit alleviated some of my concerns…but not all of them. I shared the concerns below with Intuit during my call, and, to their credit, they were very receptive to this feedback.

Concern 1: Price Anchors around Bookkeeping

Though the pricing of the launched service may change, the pricing on the QuickBooks website right now is around $200/month. Even if the pricing does shift up or down a bit after Intuit’s initial market viability test, I suspect the pricing won’t swing up or down by more than 20%.

Though the bookkeeping support service would not be designed for people who seek to hire a full-time bookkeeper, this low-cost service could create a price anchor for bookkeeping services, working against the ability of professional bookkeepers to maintain their value-infused fixed pricing models.

There is precedent for this concern. The product price point of QuickBooks (especially QuickBooks Desktop Pro), has, for many years, provided a price anchor that makes it difficult for QuickBooks ProAdvisors to effectively value price QuickBooks Desktop setup, training and consultation services.

Might the same issue now apply when small businesses compare the price of Intuit’s bookkeeping support service to bookkeeping offered by QuickBooks ProAdvisors?

Concern 2: QBO Users Detaching from Professional Bookkeepers

There are two potential impacts on the professional bookkeeper related to this concern:

First, many QuickBooks ProAdvisors already play the “Claudell” role with their clients – charging a monthly fee to support the client as they perform bookkeeping tasks in house. It is doubtful ProAdvisors would be able to compete with Intuit’s scaled pricing models should Intuit decide to launch this type of offering. This bookkeeping support service is where the QuickBooks ProAdvisor would likely take the biggest hit.

Second, Intuit’s bookkeeping service could lure businesses that are currently using professional bookkeeping toward a do-it-yourself model.

If QuickBooks Online users were equipped with highly affordable bookkeeping assistance by Intuit, they may gain an over-confidence in their ability to handle the bookkeeping in house, to their own detriment.

With this concern there is also a precedent that goes back to the late 1990’s when Intuit ran a heavy TV advertising campaign claiming, “If you can write a check, you can use QuickBooks.”

Click here to view the TV commercial about QuickBooks from 1997.

This isn’t false advertising. If you can write a check you can, indeed, use the Write Checks window in QuickBooks Desktop. For most of the other transaction types the user probably needs assistance from or training by an accounting professional…at least to record the transactions accurately.

This ease-of-use messaging (and the actual ease-of-use in the product) created an overconfidence among small business owners that led many to fire their accounting professionals and bring bookkeeping in house. Many QuickBooks users then equated the value of accurate, timely financial records with the price point of QuickBooks Desktop. Tax preparers largely paid the price for this over-confidence with a massive workload during tax season to clean up QuickBooks financial reports that resulted in:

  • Strained client relationships as the result of increased pricing for tax return preparation.
  • Decreased profits for tax preparers who wrote down tax return preparation (which now included clean-up of the client’s books) to stay competitive with their pricing
  • A meet-in-the-middle approach that combined increases in tax preparation pricing with decreased profit margins for the preparer.

Important consideration: Though this overconfidence created a disruption 20 years ago for professional bookkeepers (and CPA firms offering write up services), it also launched an entirely new profession called QuickBooks consulting. Many accounting professionals, including me, significantly advanced their careers in this newly-created category. Could this potential bookkeeping service offered by Intuit provide accounting professionals with a surge of work…new ways to engage small businesses?

Concern 3: Competition with ProAdvisors Who Provide QB Online Setup Services

If there is a heavy amount of initial setup offered by the service, this prospective offering by Intuit could displace or reduce the setup assistance work QuickBooks ProAdvisors are currently doing. Many QuickBooks ProAdvisors currently generate revenues by offering similar services, and Intuit’s bookkeeping support service, if launched,  could cause one of the two following negative outcomes for these ProAdvisors:

  • Price anchors on QuickBooks Online setup that cause ProAdvisors to significantly reduce the price of their services and/or
  • Redirection of the service from the QuickBooks ProAdvisor community to Intuit.

Note: If Intuit intends to route businesses with more advanced setup needs to the Find-a-ProAdvisor website, it is possible this lead generation could offset any loss of work ProAdvisors may suffer. But, even in this best-case scenario the QuickBooks ProAdvisor would have to overcome very low, deeply-entrenched price anchors.

The Bookkeeper's Response

With TurboTax Live providing CPA support for tax preparation and with Intuit exploring this type of bookkeeping support offering  I draw two conclusions:

(1) Intuit believes there is an underserved sector of the small business market and,

(2) Intuit seeks to provide this service directly – though if they launch this bookkeeping service, they may engage accounting professionals in one of the following ways:

       (a) By hiring them as part time or full-time employees

       (b) By engaging them in as gig workers – using a model like Uber, Lyft and Task Rabbit

       (c) A combination of both

It is important to note that bookkeepers should start thinking through the shifting landscape even if Intuit doesn’t launch this bookkeeping offering. Other companies are already exploring models to scale low cost bookkeeping services the way H&R Block scaled low cost tax preparation. Technology innovations equip players to succeed with these types of scaled models by providing unprecedented levels of data entry automation.

The critical unknown is the impact of these disruptions on the professional bookkeeper. The critical question is how this community should respond.

I cannot speak to the impact, at least not without more specific information about Intuit’s prospective service (or a crystal ball). I can, however, speak to the response by professional bookkeepers.

Response 1: Offer a Level of Bookkeeping Far above Intuit's Prospective Service

Build your bookkeeping practice around larger businesses with more complex accounting needs, the type of business that isn’t a fit for Intuit’s bookkeeping service. Doing so will insulate you from both competition and price anchors. I recommend focusing your practice around:

(1) Industries that have complex reporting requirements like government contractors, non-profit organizations, law firms, etc.

(2) Comprehensive back office outsourcing where you couple record keeping (i.e. core bookkeeping entry work) with human resource management (including benefits management), fixed asset management, property tax return preparation, and other advanced back office administrations.

(3) Businesses with reporting and operational needs QuickBooks Online doesn’t handle like inventory management, job costing, advanced project accounting, trust accounting, etc.

  • If these businesses don’t use QuickBooks Online, you can avoid competition with Intuit’s prospective bookkeeping service
  • If these businesses do use QuickBooks Online, they need your support with integrated applications for more advanced functionality, giving you a way to differentiate your services from those Intuit may offer at some point in the future.

Response 2: Offer Services Beyond Bookkeeping

While remaining a bookkeeper, embrace a larger role with the client that encompasses both the “back office” and the “boardroom,” At WoodardTM we refer to “boardroom” work as “Transformation Work.” You can learn more about Transformation Work at www.TheTransformativeAdvisor.com

Conclusion

Accounting professionals are undergoing a massive disruption, not just with the prospective service detailed in this article, but also with next-generation technologies like machine learning, blockchains, crypto-currencies and, ultimately, fully formed artificial intelligence. (View our “Future Proofing Your Practice” webinar series for more on this technology-driven disruption.)

To remain relevant in this ever-changing landscape, accounting professionals must provide comprehensive bookkeeping services to larger businesses with more complex needs, and they must expand their role to include business coaching, shifting the economics of their client relationships from overhead (“back office” only activities) to wealth generation (“boardroom” activities).

Then, regardless of who compiles the financial reports – “Claudell” or some slate of disruptive technologies – you remain relevant and highly valuable to your small business clients.

Intuit® is the registered tradename of Intuit, Inc. headquartered in Mountain View, California.

H&R Block® is the registered tradename of H&R Block, Inc. headquartered in Kansas City, Missouri.