Here’s a low-cost way to help your clients keep track of their finances and your small business clients to keep their books up to date.
Do you have small business clients, and would like to find a way to give them cash flow advice? Or wealthy clients who have lives as complicated as business owners, with household staff, vacation homes, a yacht they charter out and multiple properties they want to track? Would you like to be able to see your clients’ accounting information and monthly financial statements, so you can advise them on what they should be doing with their capital?
Yes, that sounds like a lot of work—unless you’re familiar with a service that is popular in the accounting world, but for some reason has never made it into the world of financial planners. The service is called Botkeeper (https://www.botkeeper.com/), an automated, AI-driven bookkeeping company that works much like an account aggregation engine in that it pulls data from banking institutions and credit card statement websites. Except that you can also input (or have clients input) their chart of accounts—all the expense and revenue categories of their business or personal lives, plus any liabilities, prepayments, depreciation or accrual entries that the client wants to track as line items. The system not only pulls data from the financial institutions; it also automatically reads your clients’ bills, invoices, credit statements and receipts, and can learn to categorize the different items on, say, the receipts to different customers or different projects.
Botkeeper, based in Boston, MA, has been around since 2015. “It’s actually my third company,” says Botkeeper founder Enrico Palmerino. “I was involved in manufacturing and designing LEDs, and we were growing so fast that our accounting couldn’t keep up. So I invested in a small bookkeeping company, built some software to help automate the bookkeeping process, and then I realized that if I was going to build a truly robotic bookkeeper, I’d have to start all over from the ground up.”
By 2017, the company was bringing in 80 new accounts a month. “That was when we had accounting firms reach out to us,” says Palmerino, “and say: hey, is there any chance I could use this with our clients?” The professional version of the program is white-labeled to accounting firms and (mostly CPA) advisors, and now includes workflow and audit trail features. For the first time, advisors and accountants had an affordable way to offer bookkeeping services to their clients.
“The solution costs 30% less than doing it by hand,” says Palmerino, “and it is more reliable, more accurate, never talks back, never goes on vacation, never gets sick, and processes transactions with a 99.97% accuracy. It has its own document capture tool, so you don’t have to buy or subscribe to filing forms. And it does its own statement creation, and so there are cost savings there.”
But…. What’s the point of the receipt capture tool when most companies and individuals already have their card payments and checks showing up on their online statements? “Botkeeper breaks out different components of the expenses,” Palmerino explains. “If you’re a construction company, and in one transaction you bought lumber, tools and equipment, we could take each of those items and categorize them appropriately, instead of having to work with a lump sum on a credit card statement.”
In addition, if the client receives an invoice, it can be uploaded through Botkeeper, which would extract the appropriate information and enter it into bill.com, so that the client could cue up the appropriate bill pay workflow (including check printing) for the bill to be paid. “Right now, we have a pretty big partnership with bill.com,” says Palmerino. “We have structured it in such a way that instead of a base fee plus a user fee plus a per-check fee, if you access through us, you are paying only for each check that they process.”
Is the system smart enough to recognize that the receipt that’s fed into the scanner is redundant to the same transaction on the credit card or banking statement?
“Botkeeper would notice the timing of the transaction and the dollar amount, and it is going to flag that,” Palmerino explains. “It may not be able to tell if the transactions are truly redundant or there are two purchases of the same amount, but they will be flagged so that someone can review it and see if it is redundant.” Botkeeper’s AI will learn from the process, and become increasingly aware of what is redundant and what is not in the future.
How many credit card and banking institutions does Botkeeper integrate with? Actually, you would type in each bank’s name, and Botkeeper’s AI will find the bank, determine if it is an existing integration, and if not, build out the authentication more or less instantly.
“By the time you’ve finished typing the URL, there’s a good chance the integration will be completed, and it will render the bank on the screen, so you can enter your credentials,” says Palmerino. “We’ve learned that there is enough similarity in the processes from one bank to another, that we were able to teach our AI to learn the differences and integrate automatically.”
Advisors who have worked with account integration in the past will naturally be skeptical. What happens if the link is broken—if, as often happens, the client changes his or her password? “That is a problem we are not going to be able to prevent,” Palmerino acknowledges. “So our response was to improve the reaction time and simplify the process for clients to update their connections. If you changed your banking information, you would get an immediate email from Botkeeper that would say, hey, we noticed that there was a password change. Did you do that on purpose? If you DID do it on purpose, please click here and update your credentials for our system.”
Of course, the system comes with a standardized chart of accounts that can be customized to the business or individual’s particular situation, and Palmerino acknowledges that no two are likely to have exactly the same revenue and expense categories, liabilities, prepayment and depreciation items. Assuming the client is agreeable, clients and advisors have redundant access to the statements that Botkeeper produces, but not the underlying accounts.
Cost? “If you’re a small firm, you can use our service completely free,” says Palmerino. “That speaks to how much we’ve been able to automate.”
Advisors will probably want to use the professional version, which costs $99 a month. “If clients are doing accruals and using our system to pay their bills and invoice their customers, then it would be around $300 a month,” Palmerino adds. “A larger growing business might pay $500-$600 a month.” The goal is to have the service be more accurate, and less expensive, than an outsource bookkeeper using QuickBooks.
Cash flow planning for younger clients and new businesses represents an untested frontier for the mainstream financial planning profession—untested because it hasn’t been cost-effective for advisors to dig into a client’s checkbook and pull out the relevant information. Services like mint.com have been frustrating to use, and they sometimes recommend that their customers avoid financial planners.
The accounting world has embraced Botkeeper as a way to automate and drive down the cost of services that its practitioners routinely provide. It’s new to the traditional advisor/financial planning space, but it might be a solution if you’re working with small businesses or looking for meaningful services for younger clients.