Tech and The Future of Accounting

Today, our guest is Jody Padar, the Radical CPA. I’ve known of Jody for a long time. We recently got to talk, which is fun, and decided, well, actually going backwards, I was told when we started the podcast that Jody was one of the first people we needed to get on. I didn’t tell her this. And for some reason I just was delinquent in getting out and reaching out to her. So I’m so glad we connected today. Jody, welcome to The Unique CPA. 

Oh, thanks for having me. I’m excited to be here. 

Yeah. And part of it was we were like neighbors until you recently moved, but you know, we were both in the Chicago suburbs, right?

Yeah, absolutely, my firm was in Chicago for 15 years before it ended. And yeah, so, right in Chicago. 

Right, exactly. So you really don’t, like I said, need an introduction, but why don’t you give us a little background of you and maybe even where the Radical CPA came from, and then after that, we’ll get into what you’re doing these days.

Sure. So it’s years ago now, and I keep forgetting it because it seems like it was just yesterday to me. But my children were small, and I left a mid-sized firm and I actually joined my dad, but it was really kind of creating this new cloud firm, which was 2006. And we were iterating, utilizing those cloud technologies, pricing, all the things that people say are the new firm today, we were doing in 2006. 2010, we were coined a movement by the AICPA. And we really started to share the word around iterating about how to work differently with clients when you utilize new technologies, because too many firms just take new technology and insert it on the business model that’s broken and it doesn’t work. You really have to change your business model. 

And so we were iterating on it like way back when, and I went to Twitter and I started blogging for Accounting Today to figure it out just because I was figuring it out in my head and writing was easy for me. And then I started posting about it and people started to connect to me and they really started to follow me. And so I gathered my following at that point. And then the vendors started to connect with me because they want to build software to where the market is going, not to where they are. And so I kind of got this product background and really understanding of like technologies and how they change.

Fast forward around like 2014, Rick Telberg came to me and said, you need to write the book and you need to write it now. So I published my first book, The Radical CPA, which was really kind of all the things that I had figured out in my firm. I wrote another book, which was more of a “how to” guide. And I became what I always say, like an influencer, the Kim Kardashian of accounting software before, like, you could be an influencer, you know, like nobody knew that’s what it was actually called. I was just a person who talked a lot, blogged a lot, and like really, kind of moved a market, right? 

2020, I exited my firm and I joined Botkeeper as vice president of strategy for them, because it was taking my firm where I wanted it to go with artificial intelligence and bookkeeping. And it was an opportunity for me to really get into the tech side of it and product and like learn kind of the other side, cause I’d always been on the firm side in doing things. And then two years ago, I left Botkeeper and I joined the startup where I currently am, it’s called april, and we’re developing tax software and a brand new tax engine from the ground up. Right now we’re in the consumer market, but we’re shifting kind of to the professional market as well. But we’re really thinking about what tax software is going to look in the future. 

And that’s what I do today. I’m vice president of tax strategy and evangelism. Cause you know, I have a big mouth at april, but I still have my Radical CPA roots and I’m still really passionate about helping the profession as a whole move forward and doing things differently to make their lives better ultimately. ’Cause it’s not about the tech. It’s not about the business model. It’s about having your life and not working a bazillion hours a week and not being happy. At the end of the day, it’s about having a life. 

So you were the original accounting influencer, awesome! And I believe that’s true. I mean, I had heard of you through the moniker, The Radical CPA, years ago, even before people were telling me, yeah, you got to get Jody on the podcast. So I can’t believe it took me this long to get you on the podcast. And that’s my fault. So, a couple things that you said there: In 2006, already cloud integration, efficiencies through technology, all the stuff that I think are so important. I’m not good at it, but I think are so important for firms these days. When you look at what’s going on today, what are the big things that  you’re seeing affecting the profession? And I assume it’s going to revolve around technology. 

Well, I think it’s technology and talent. And I think we’re at actually the perfect storm to actually change the way we work. And I would have said, oh, like it was going to be cloud, you know, years ago. But when you look at artificial intelligence and how the technology works behind the scenes, and you don’t have to worry so much about putting the widget together, which is kind of what my firm and the early adopters really had to figure out, like, it means that the market’s going to move so much faster now because you don’t have to know AI. You just have to know the problem you’re solving, and the AI is just going to work. 

And I think that’s what people don’t understand because they think of this technology, like it’s the technology that we’re familiar with from years ago, and they think you have to learn it, but in reality, it’s just going to work in the background, and we’re not even going to know it’s like built in and things are just going to work so much better. I say it’s like 1992 again, if you think about like I started pre-internet, like right when the internet wasn’t ubiquitous, and how much, like, if you were alive and you worked at that time, you realized how much the internet has changed what you do. And I believe, like, we don’t even think of it as being the internet, it’s just how we do work. And I believe that’s what AI and machine learning are going to do for us as CPAs. We’re not going to be like, oh, I have to go do AI. It’s just the work we’re going to do. And we don’t even have to learn it. Just like you never learned the internet. It just kind of is there.

Right. I agree. And I’ve heard that similar statement before, because I think people do freak out about AI, like, “I can’t understand this. How am I going to learn how to use AI?” And what you said is exactly right. You don’t really have to learn. It’s just going to be in there. It’s going to be part of the tools that you’re already using, and it’s going to get integrated into them. From that standpoint. You know, I’m sure pretty much everybody out there probably already is using AI. And some of them, they don’t know it. I mean, do you see that in integrations already? 

Well, yeah, so I’ll take it back. Do you use Netflix? Does Netflix give you a suggestion as to what you should watch next on TV? Guess what? You’re using AI. So people don’t even realize that, right? Like it’s in already, things that we do every day. We just don’t realize it. And so I think the bigger thing is, it’s in these new tools, but I think what’s going to be hard for accountants to think about is the brain shift or the mind shift of how we’re going to do things. So like, if you think about even like machine learning and artificial intelligence on transactions. Instead of looking at 400 transactions, now you’re only going to review four, because 400 were already approved and the machine figured out were correct, right? Whereas before as an accountant, you had to look at all those transactions and say, yeah, they made sense. Now you’re looking at the exception, not everything. And you’re going to have to like, kind of get to trust that those exceptions, like the machine is smart enough to know that it’s only going to give you the exceptions. 

And so that’s the, like the mind shift that I think people are going to have a harder time adjusting to is like, you don’t like, and I always say too, like you go to the cash station, do you count your cash every time it comes out of the cash station? Right? Like, it knows. And I think we, as accountants, we like, double check things that we shouldn’t have to double check. So if it gives you these exceptions, you should only look at the exceptions. You don’t have to look at the 400 transactions behind it. Or it’s going to do things that you’re not even going to think about, and you’re going to be like, okay, wait, what is the problem I’m solving for? And how is the technology going to actually fix the problem? Because the things we used to do, aren’t necessarily going to be the things we do in the future. So kind of those process changes and things like that are going to be the adaptations for accountants that we’re going to have to kind of get used to.

Yeah. And I think that’s a huge part of it because as a profession. Well, we have a mindset that we have to work so hard and we have to do this. And I got this impression, if we don’t feel like we’re putting in 60 hours a week, we’re really just not doing our job and we have to help everybody. And this is all. And so now what you just said, yeah. We have to double check what AI is doing, which we know is going to be right? No, don’t do it because that’s the efficiencies that this is going to build in. And just like, do you have to trust the people that we work with? You have to trust the AI because it is accurate, it is going to be. 

So I will make one caveat about that though. I will make the caveat that if it’s like a generic model and you’re using ChatGPT I don’t know if I’m asking it something, I wouldn’t necessarily always trust that exactly. But if it’s a highly specialized model that’s built into some accounting or tax software that’s already ours, then like I would trust it, right? So I think there’s a little bit of like, kind of this generic overview of AI versus a tool that’s purpose built for accountants. And then those are the ones we trust. Just so like, there’s not any confusion around that. 

No, and that’s a good call. I mean, I use like ChatGPT now just to do some research, but I still am double checking that, just because and that’s the way it is and whatever version 4, whatever is supposed to be so much better than 3.5. I’m just using 3.5. I haven’t paid my $20 a month yet or whatever it is. I probably should, but just for me, I mean, from just that simple thing, when I’m writing, I was writing a part of my mental health presentation recently, I wanted new statistics on it. And it, when the first version of that presentation, it took me hours to find these statistics that I wanted to throw in there, you know, 52 percent of us are feeling burnt out at some point in their careers, all this stuff, and that took forever. ChatGPT gave it to me in three minutes. I took another five minutes just to confirm, you know, look at that, search that is an accurate quote, figure out where it came from at least, and which I could have just asked ChatGPT, you know, give me the reference for this. I wasn’t that smart yet, but it did it. And so just that simple thing saved me two hours. And that’s just, that’s nothing compared to the accounting integrations and tax integrations that are coming. From an april standpoint, I assume this is something that you’re all integrating or maybe have integrated already. What’s the plan there? 

Yeah. So the way april is thinking about AI is that, I’ll say it’s not the sexy stuff, which, like, we’re using it behind the scenes to actually read tax instructions. So, like, when you interface with our product, it’s not like you see it and say, oh, that’s AI, right? Like, that’s why I’m saying it’s not the sexy stuff. But on the back end, it’s allowing us to basically code forms 10 times faster than everyone else in the industry, because we’re building models to read instructions, and then they basically code the tax forms faster. So when the laws change, and we go from, you know, 2023 to 2024, it’s going to take us, you know, one fifth of the developers to do that work, because we’re automating that process, right? So that’s where we’re using it. And again, it’s cool, but it’s not like, ypou know, I don’t know. It doesn’t make some pretty picture or something.

And it’s not again, but though, it’s like you said before, it’s just going to be in the background. You’re going to see it for you in the background. That’s helping the efficiencies to put the program together. And I’m sure there’ll be efficiencies in other areas. And so as an example of things that I’ve seen, so I was just at a conference last week, or this week, actually, yesterday, actually, man, I don’t know where I am or what day it is, where they rolled out things that they’re doing with AI for this new, program. I don’t know if I’m supposed to say who it was, so I’m not going to say names, but it was just like, help write a job description based on putting a couple words into a payroll software, this is what we want, this is the role, here’s the location, here’s the whatever. 

And boom, it put this whole thing together. And then they said, well, we don’t like that. We want this to be better. So they said, why don’t you do that in rhyme? So they put this job description out there in rhyme and it was so cool. but then they also showed how they could take an Excel spreadsheet with hours on it with not even the same, you know, headings that are going to be in the software and just said, hey, integrate this in and run the payroll. And it was so intuitive that it just figured out where everything was to go, where the overtime was, all this. And so again, don’t, like Jody said, like you said, you don’t have to double check it. It’s there. At least at this point, we assume, as you might want to do a couple of double checks, but man, it’s just good. The efficiencies are just going to be crazy. And that’s what we need in our profession. 

So the other thing is when we talk about efficiencies and like, you know, we’re like the lack of talent, it’s hard to find people, right? So we’re going to get those efficiencies. But the other thing that I think people forget about, because they say, well, like, you know, it’s going to take our jobs, and then I keep thinking, if you really understand what the power of AI does and how it gives you access to so much more data, and honestly, I think it’s going to create more work for us, because now we’re going to have to compare it to things that we just kind of ignored before, because we never, like, it was never really easy to figure it out, so we just said, well, like it’s good enough, right? But now when you bring all that data in, because AI can bring it in seamlessly. Now we’re going to have to figure out how to include more things in analysis because we’re going to have access to more data that we never had before. 

So I think too, like when people start to hear that, then they’re like, oh my god, there’s going to be like that much more work, and that’s the stuff that’s like, we don’t know what we don’t know yet. And so like, to me, that’s the exciting stuff. Like, what’s going to come, how else is being an accountant going to change and evolve, as we have so much more access to unstructured data that’s now structured data, and once it’s structured, you can do so much more with it. So to me, that’s the cool stuff. 

Yeah, and it allows us then to be more freed up because we have more data, we have more information to be this high end advisor, the advisory services everybody’s talking about as well, but now, we are freed up to do this high value, high priced advisory services that our clients really want, but now it frees us up to do it because we have more access to data at our fingertips.

Let’s project for a minute. I mean, five years, 10 years, I know it’s hard because, I mean, AI, really, we’re less than a year since ChatGPT came out, and that’s where everybody really started to get an idea of, okay, this AI exists. Now, things have been out there before, but that’s where it really came out. And the progression that’s happened just in that short time has been big. Have you gone out and like thought, okay, what are we going to look like in five years? Do you have a prediction, or 10 years down the road? 

So I think I have a unique perspective because of my space in the high tech world and that kind of VC run world and my brand as The Radical CPA. Quite a few startups reach out to me with their ideas to show me what they’re building before it’s like, before even some of it, before they’re funded, some of it as they’re getting funded, some of it is like, just for my opinion. So some of the tools that I’ve seen are like, wow. Right? Like, and these are tools that are, like, people say, oh, it’s coming. No, it’s here, it’s just not widely distributed. Not everybody sees it, right? 

And I think the cool thing for me is, like, rethinking how all this stuff is going to work in the future. So, I think in three years is not too long, to say that what we’re doing today is going to be pretty different than what we were doing, like in three years. I think three years is probably the right timeframe. I don’t think it’s next year, but I think in three years, like a lot of these tools are going to be ready for primetime and we’re going to be like, wow, like as accountants look at what we can do now utilizing these new tools.

Yep, for sure. And I know one concern that, and a legitimate concern that people have out there, because right now, you know, ChatGPT is pretty much anything you put in there and becomes public data. And if we’re going to be using this to deal with tax returns and financial statements and bank accounts and credit card accounts, obviously one of the things we need to figure out is the security end of things. And I didn’t know if you had any insights or comments on that?

Well, I think like anything else, if they’re building tools to fit the CPA profession, they’re going to think through those issues. I think it’s still like new, right? As a whole, like it hasn’t been litigated yet. So like, even like smart attorneys are going to make assumptions and we’ll see, because eventually it’ll get litigated. It’ll take time, but I think that, you know, I think as a CPA, you have to keep your eyes open, but I also think that you don’t want to lose, because you’re waiting for, you know, 10 years for AI to be like “approved,” right? Like, because I think you’ll lose some of the value too. I think it’s risk-reward and every business owner has to think about risk-reward in their business. And I think we should be thinking about it too. 

Yep, I agree. Alright, so I think that was a great discussion. You are obviously, you know, at the forefront, you’re seeing these things way before a lot of us are, you’ve been, and this is not new to you, you’ve been doing this for 17 years now, going back to ’06, so you have been The Radical CPA, you have been at the forefront of these kind of changes. So before we wrap this up, I don’t know if you want to Put a bow on the discussion. Just a couple of final thoughts before we move on. 

No, I think my big thing is just be open to it and to be like curious. And that’s all we can ask is to be curious about the things that are changing and go with it. Because otherwise, like, I don’t want to be talking about this in 10 years and we’re still calling it “the firm of the future.” I can’t. 

Yeah, that’s true. So, well, I’m not sure I’ll be still, working in 10 years from now. So, I’ll leave that to you then. I’m not sure how much longer I can take. No, I’m enjoying it. I’m having fun. 

Alright. Well, before we wrap up, there’s a couple of final questions that we do every show. and the first one is. You know, we just obviously talked about AI and all the cool things you’ve done for such a time, you know, going back to ’06 when you started the cloud and embracing all this change. When you’re not thinking about technology and innovation and the profession, what are your outside of work passions? What do you enjoy doing? 

So, I live in a wonderful place called Door County, Wisconsin. People call it the Cape Cod of the Midwest. If you’re not from the Midwest, you don’t know. But if you’re from the Midwest, you know how beautiful it is. I live right on Green Bay, and I have a kayak that in the summer, I love to be out on. Now in the winter, it’s 20 below, but in the summer, I am out on my kayak enjoying Lake Michigan in all its beauty. 

Yeah. We talked about that a little before we started recording. You know, I’m a couple hours from Door County and I’ve actually never gone there. 

You’ll have to come visit. 

There you go. We’re going to do that and go up there and get some New Glarus beer or two while I’m up in Wisconsin then. So, alright, and then final thing, if anybody wants to follow you or hear more about what you’re doing, where would they connect or, you know, what’s the best place to look to see what Jody Padar is doing these days?

So the easiest place to find me is on LinkedIn. So just go to LinkedIn, type in Jody Padar and I will pop up and you can follow me or you can connect to me, either one. 

Yeah. And I didn’t say this earlier, but you have the second most connections on LinkedIn of any guests we’ve ever had. I think Tom Hood was a little bit more, but you’re right there. You’re neck and neck with him, so. 

I believe Tom Hood probably has more, but we were both early adopters of social media, of which I have to say, everyone told the CPA profession, don’t go on social media, and you see how, like, where that, like, left people. So, like, you kind of got to take a risk every now and then.

Yeah, and to that end, I’m sitting in Denver today at the Tax Twitter Retreat, which is all these individuals met because of this common bond of the tax world and created their own hashtag, #TaxTwitter, and now created this community, and community, I think, is so important in our profession, or in general.

Absolutely. 

Well, Jody, this has been a pleasure. I am so mad at myself that it took four years to get this done, but it’s so gracious of you to agree to be on and believe me, I’m hoping we can do it again someday. 

Well, thank you for having me. It’s been a pleasure.