How Quickbooks Online Will Change The World

by ProjectionHub on February 7, 2013

I believe that Quickbooks Online is the final piece of the puzzle for Intuit to control the financial world for you at home, at work, and in the eyes of the government.  You may not realize this but Intuit owns the 3 top finance web applications in the world:

  • Mint.com – Personal Finance
  • TurboTax – Tax Finance
  • Quickbooks – Business Finance

As all three services make the transition from driving to Best Buy, picking up the latest version of TurboTax or Quickbooks, and installing on your computer via CD, to a cloud based solution, Intuit is unlocking an absolute gold mine of data.  Intuit can now take that data from their over 65 million accounts, and make it available to developers like ProjectionHub who will cut and slice the data in order to provide incredibly valuable information to a wide range of customers.  As my day job, I manage a small business loan program, I can think of several ways that we could use Intuit data to make our job of lending money easier.  These are just a few of the ways that I believe Quickbooks Online, and it’s partner programs Mint and TurboTax will change the world for lenders, investors and small businesses everywhere:

  1. Predict Business Failures – As a lender and business consultant I would love to be able to take the Quickbooks data of a small business and compare it to aggregate industry data.  For example, an application could easily be developed to compare your restaurant’s sales, margins, cost of goods sold, labor costs, etc to the aggregate of all other restaurants that use Quickbooks Online.  This would tell me what areas the business needs to improve on.  The data can go way beyond that though.  A couple of clever statisticians could find trends that might show that a business with certain sales levels, certain margins, etc fails 40% of the time within 5 years.  You could find commonalities with the businesses that succeeded, and focus on those areas for your business.  No longer do we need a thousand management consultants to tell us their idea for how to improve our business, the data will speak for itself, and the numbers don’t lie.    
  2. Benchmark Against Industry in “Real Time” – I already mentioned the idea of benchmarking and comparing your business to other businesses in your industry, but you could take this a step further and compare your business in real time.  Many Quickbooks users are entering in data on a daily basis for their business.  You could watch your daily sales at your coffee shop compared to daily sales of all other coffee shops around the country.  Maybe you run a promotion and business picks up by 10%, and you assume it is because of the promo you are running, but if you noticed that other coffee shops in your region also saw a spike in sales, you might realize that it was not your ad, it was the fact that it was exceptionally cold this week and more people wanted a warm beverage.
  3. Simplify Loan and Investment Approval – Finally, I believe that when Quickbooks Online is connected in a coherent way with Mint.com and TurboTax, Intuit could vastly improve the loan and investment approval process.  Lenders typically want to look at both personal and business financial information.  Mint can provide the personal, Quickbooks can provide the business financial info.  Since you can put anything you want into your Mint and Quickbooks account, a tax return is typically used to validate that you are telling the truth.  TurboTax can provide that information quickly and easily for both the personal and business finances.  I could imagine a day when the bank clicks one button that brings all this data together and gives the person a score immediately that will describe their creditworthiness.  This level of information would put the credit score to shame.  Credit score information would still be important, but it would be only a small piece of the overall puzzle, instead of the primary number that most banks look at.

I truly believe I am only scratching the surface with all of the really crazy and cool things that we will be able to do with Intuit data someday.  I would like to develop an app here at ProjectionHub that utilizes this data that is now becoming available, I just need to focus in on one core problem that this data can help solve, and then build it.  Any ideas?

{ 2 comments… read them below or add one }

Harry Grier February 8, 2013 at 4:41 pm

While I agree with your assessment that the data gathered from Intuit’s online customers can potentially be used to make predictions, benchmark businesses, and simplify some aspects of the lending world; I have to throw up a red flag to anybody who is interested in doing so.

I have seen too many businesses who use QB, whether on-line or desktop, who have absolutely no valid data I would want to use for any of the ideas you mentioned. The problem stems from the fact that QB is used by small business owners who have no idea about accounting principles. Their Income Statement and Balance Sheet simply can’t be trusted to make critical decisions. They make critical errors in their entries. IF, and I stress IF, QB brings the error to the owners attention, they often don’t know how to fix it and take whatever suggestion QB proposes. Reconciliation Discrepancies is a very popular GL in QB. In the vast majority of cases, the business owner isn’t purposefully creating bad accounting entries. They just simply don’t know any better.

Here is a perfect example. I know of one sole proprietor who paid themselves from their Retained Earnings account. They wrote the check out of QB, crediting the Cash account and debiting the Retained Earnings account. Their logic was that anything that was retained after all of the expenses was available for paying themselves. Their accountant didn’t question a thing. I don’t know if they prepared tax returns based on this flawed data or if they made a correction and moved on. Either way, the CPA didn’t bring the error to the attention of the sole proprietor. This went on for two years before I discovered it and showed them the correct way to do payroll.

Anybody who buys the customer data from Intuit needs to take it with a grain (a ton would be better) of salt. The data is most likely very flawed.

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ProjectionHub February 8, 2013 at 6:21 pm

Harry,

I agree there is a lot of room for error; however, any data scientist worth their salt would be able to quickly devise ways to determine what data is likely untrustworthy. For example, you may throw out any business with less than $50,000 in annual sales from your data set, or maybe you get rid of all businesses less than a year old. In your example, we would quickly throw out that data point because it would be an obvious red flag to have a business with significant sales and no payroll. We could probably also throw out businesses that do not reconcile on a monthly basis. We might not have any data left haha, but I think you could find a million businesses out of their 11 million clients that have solid data, and a million businesses is certainly enough to show some clear trends.

Adam Hoeksema

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