Small business (SMB) adoption of technology can be a process filled with growing pains and friction points, thanks to the cost and disruption associated with integrating a new technology. Those challenges have made SMBs notoriously technology-adverse, though it may be an unfair characterization, particularly considering the influx of small business FinTech innovation in recent years.

One of the most popular targets for innovators is the accounting space, where business processes touch on various aspects of an overall company, from accounts receivable and payable to cash forecasting and financial strategy development. Accounting is at the center of some of the most cutting-edge technologies, including robotics process automation (RPA), artificial intelligence (AI), machine learning and more, said Erik Asgeirsson, president and chief executive officer of CPA.com, and Lawson Carmichael, chief operating officer of the Association of International Certified Professional Accountants (AICPA).

Positioning themselves at the center of small business accounting innovation, the CPA.com and AICPA recently sponsored their second annual startup accelerator, choosing three startups in the SMB accounting market that address particular pain points through technology. The winners include bot-enabled accounting automation firm Gappify, accounting communications platform Client Hub and cash flow forecasting firm Dryrun. According to Asgeirsson and Carmichael, the companies illustrate the broader environment of innovation that the SMB accounting space enjoys today.

“Technology is changing the practice of accounting and finance,” Asgeirsson said in an interview with PYMNTS. “And a lot of the innovation is coming at the early stage.”

Startups are often well-positioned to use technology to tackle the biggest issues of small business accounting because they are small businesses themselves, he noted, experiencing these pain points firsthand.

“The wealth of talent and innovation that’s going on at all edges of the profession is really quite extraordinary,” added Carmichael. “The smaller-business side of innovation is healthy and alive.”

Adoption of cloud accounting is, indeed, on the rise, with FloQast data recently finding that 79 percent of accountants have adopted at least one kind of cloud-based financial application. This has introduced a new dynamic for the small business accountant.

While the industry has shifted from concern that automation and technology will replace human talent, to concern about the ability among accountants to step up to a new role for SMBs, Asgeirsson said the paradigm shift is an opportunity. Today, technology allows CPAs the chance to step into the role of “trusted advisor,” he said, and it’s a change that could not have occurred without the migration of accounting to the cloud.

“There is a collaboration between the business and [its] trusted advisor through the cloud,” he said. “That was impossible when all information resided in a small business’ server room or on [its] laptop.”

Crossing The Chasm

According to Asgeirsson, the cloud’s ability to solidify itself as a new standard in small business accounting has enabled SMBs overall to cross the chasm from technology adoption struggles to technology adoption opportunities — all thanks to the cloud.

“In America, we have millions of businesses using cloud accounting, using cloud-based payroll systems, cloud-based bill payment systems, so they have made that first big step,” he said. “Now, adopting the next solution that integrates into [cloud platforms] is becoming much easier.”

The cloud has reduced barriers to link multiple platforms together, and for developers to introduce new features and functionality into cloud accounting tools, he continued. For small businesses, the challenge now is designing and understanding a business strategy to decide what functionality they need — and, in many cases, collaborate with a third party to act on that strategy.

Small business FinTech innovation continues to accelerate, making it easier than it was a decade ago for entrepreneurs to adopt sophisticated solutions once reserved for the largest enterprises. Yet, that does not guarantee actual adoption and penetration of the new solutions coming into the market.

Carmichael explained that the industry must focus on what he called “practical innovation” to address key challenges that can be solved for business owners. For the business owners themselves, there must be a strategic plan established to identify which solutions are needed, and to implement that tool. He described that process as the “three I’s: isolate, incubate and integrate.”

“Technology isn’t the solution in and of itself, but technology is enabling [and] empowering these firms to evolve the business model, and evolve the operating model,” he said.

Even in the last two to three years, Carmichael added, the small business accounting space has seen a “tipping point” that is driving more dramatic change. It’s not only promoting further innovation among accounting technology developers, but it’s changed the way small business owners think about technology.

At a recent industry panel, Carmichael recalled, one CEO participant said the topic of adopting technology was one of his top-five priorities.

“It’s not a question of ‘do I need to change?'” he explained. “It’s ‘how fast? Am I moving too slow? How can I move faster?'”

The acceleration of small business FinTech innovation, particularly in the accounting sphere, is empowering that shift in mindset for business leaders, he added.

A church administrator in southwestern Pennsylvania allegedly skimmed more than $1.2 million in funds from his employer over the past seven years, in part by creating fake auditor reports to hoodwink the church’s board of trustees. That kind of fraud could have been prevented if the church or its financial institutions used RIVIO Clearinghouse, a secure online exchange for private company financial information.

David Reiter, 50, had been employed by Westminster Presbyterian Church in Upper St. Clair, Pa., for 17 years, a job that paid $69,000 in 2018. Yet the Allegheny County (Pa.) District Attorney’s office calculates that Reiter and his wife, Connie, managed to steal $1,227,423 from church accounts – including the organization’s nursery school and child care programs – from 2011 to late 2018. Those spoils allegedly paid for trips to Walt Disney World and Hershey Park, Pittsburgh Pirates tickets, music lessons for the Reiters’ children, medical expenses, and a host of other items ranging from Starbucks visits to Sirius XM radio fees, the district attorney’s office contends.

The alleged scheme unraveled when the church board’s treasurer grew impatient with David Reiter when a face-to-face meeting kept being delayed with the church auditor, identified by Reiter as “Drew Harrison” in a Pittsburgh accounting firm. The treasurer called the firm and was told no one by that name worked there.

Reiter instead offered a cell phone number to contact the auditor, according to the district attorney’s office. But it was for a prepaid phone paid out of the skimmed funds, and Reiter impersonated “Harrison” on a subsequent call with the treasurer. With questions mounting, Reiter confessed to the church’s head pastor that he had done “bad things” and needed to resign, the district attorney's office said.

Investigators later discovered the church had never been a client of the Pittsburgh CPA firm, and that Reiter had fabricated an audit report from it, as well as an earlier audit report from another firm that hadn’t been involved with the church for years.

RIVIO Clearinghouse, jointly developed by CPA.com and Confirmation, is an online financial document clearinghouse that enables private businesses to exchange key financial information with their investors and lenders, as well as retrieve information from their CPA firm, ensuring data is submitted from an authenticated source. It provides a validation process to verify that CPA firms leveraging the clearinghouse are appropriately following the stringent professional requirements to upload attested financial information.

“One of RIVIO’s key features is its ability to prevent bad actors from passing off bogus auditor reports as legitimate,” said Erik Asgeirsson, president and CEO of CPA.com. ” It takes the guesswork out of the sourcing and delivery of critical documents. In the Westminster Presbyterian Church case, the administrator wouldn’t have been able to cover his tracks so easily if RIVIO had been in use by the church or its financial institutions.”

Last month, I received a special invite to an executive roundtable in New York City hosted by the American Institute of CPAs. The AICPA’s event invited 41 technology companies that develop software for the accounting profession.

The roundtable had representation from well-known names Microsoft, QuickBooks, Bill.com and Thomson Reuters. There also was participation from up-and-comer Expensify, a paperless expense management firm, as well as other Silicon Valley technology companies.

Organizers also invited 10 certified public accountants from firms of all sizes. I received my invitation to represent the perspective of some 39,000 small firms across the United States. The objective of the roundtable is for each of the tech companies to present on current product developments and roadmaps for the future. The CPAs are invited to provide the tech companies their perspectives on the needs of the accounting profession.

The presentations of the tech companies made me enthusiastic about the work I do. There has never been a better time to be a CPA because of the work being done with technology.

In with the new
“AI is the new electricity.” That statement was made by Stanford professor and computer scientist Andrew Ng.

For the past many years, artificial intelligence has been presented as a concept that will transform our daily lives – including how we do business.

Ng was staking a claim that AI is no longer futurist, geek speak. Instead, it is real. It is here. And it already is a bare essential for our daily lives – such as electricity.

AI is the technology that makes self-driving vehicles a possibility. Self-driving vehicles are no longer futurist, geek speak either. The innovation is here. Now, it’s just a matter of governmental regulation catching up with the technology. So, while most of the world is still grappling with understanding the depths of AI in general, innovators of tech companies are moving on to the next big thing: voice-activated AI.

Voice assistants in business
Voice assistants are becoming common household items. Apple’s Siri, Amazon’s Alexa and Google Home are part of our daily lives.

“Hey Google, add milk to the grocery list.” Or, “Alexa, set my alarm for 6 a.m.” If these voice assistants can help us master our personal lives, why can’t they help us master our work lives? They can, and they’ve already started.

As a business owner or entrepreneur, can you imagine a day when you come into the office, sit down at your desk with no keyboard and have this type of conversation with your accounting system: “Hey QuickBooks, show me all the bills I need to pay this week.”

“OK QuickBooks, pay the rent and utilities with an ACH transfer on Friday.”

Of the 41 tech companies represented at the event, the overwhelming majority of the companies’ roadmaps for future products included a form of voice-activated AI. In fact, at the end of the event, there is an award presented for Most Compelling Presentation as voted on by the attendees. This year, it went to Chata.AI, a tech-company laser focused on integrating voice-activated AI into our accounting systems.

Why speech?
Am I the only one who is challenged by a constantly growing to-do list? Do you feel it’s a vicious cycle of whack-a-mole for you?

As quick as you mark through items at the top of the list, do twice as many items fill up the bottom of the list? In these days of constantly wearing our busy badges and crowded to-do lists, where is the life-preserver?

The roundtable event helped me understand that voice-activated AI could be that life-preserver for all of us in accounting. Why? A simple presentation slide from the event helped me gain this understanding. A person with average typing skills can type 39 words per minute, but can speak 130 words per minute. That’s 233 percent faster. Even a slow-talker like me can win a race against the fastest typing.

This should give us hope for gaining more productivity in our daily lives.

New horizons
Have you ever observed a child using voice-activated tech? For example, asking Siri to call a family member on FaceTime or play a song? Search it on YouTube for a laugh. And the next time you see this, pay attention to the pure joy on the child’s face when the tech does what it asks. It’s fascinating.

As a CPA, I am joyful about this technology; same as those children experimenting with the technology. I welcome it to the accounting profession with open arms. AI and VA-AI are not about job replacement for CPAs and accountants; it’s about embracing and leveraging the tech so we can provide greater service for our clients. It allows us to truly become a trusted business adviser.

There is no aspect of the accounting profession left untouched by technology, and no corner left unimproved; if there is any lesson to be drawn from the very wide range of tools our editors singled out as the Top New Products from the past 12 months, that is surely it.

From tools that create better methodologies for auditors to platforms that leverage the power of vast pools of data to help accountants offer insights to clients, and from solutions for soothing a client’s fears about an IRS notice to security tools you can carry in your wallet, this year’s picks reach into every part of the profession to make it more efficient, more valuable to clients, and more profitable for its members.

With that in mind, enjoy this year’s roster of the Top New Products!

Three winners have been named by a startup accelerator sponsored by the Association of International Certified Professional Accountants and CPA.com.

Winner Gappify is a San Francisco company that uses bot technology – “dubbed Alan” – to automate time-consuming, repetitive tasks for corporate accounting teams in areas such as accounts receivable, accounts payable and general ledger.

Client Hub is based in Gainesville, Fla., and provides a communications platform for accountants and clients through an all-in-one workspace and mobile app, aimed at eliminating the need for email conversations and easing the delivery of critical data.

Finally Dryrun, based in Canada, make a cash flow solution, cash flow being one of the most critical pieces of information for small businesses.

“The value proposition for these companies is they get access to insights from senior leaders of the Association and CPA.com, as well as a panel of distinguished advisors with deep ties to the accounting profession,” said Lawson Carmichael, chief operating officer of the Association. “And for us, the program keeps us connected to front-line innovation.”

Each winner will be given the opportunity to present information about their company in June at AICPA ENGAGE, the American Institute of CPAs’ annual educational and networking conference (the Association of International Certified Professional Accountants is a joint venture between the AICPA and the Chartered Institute of Management Accountants, a professional member organization for U.K.-based accountants). They will also get a nominal funding investment and guidance from a panel of experts in the profession on marketplace needs.

The startup accelerator was set up two years ago to promote innovation in the accounting profession and give the Association and CPA.com more visibility into disruptive trends from emerging technologies.

“Early-stage technology companies are driving great innovation and new capabilities for the CPA profession,” said Erik Asgeirsson, president and CEO of CPA.com, the technology subsidiary of the AICPA. “We got great feedback from our first class of companies last year, and we expect to build on our progress with this current group of innovative startups.”