*Note: this article includes affiliate links. We do, however, use all of the apps in this article for our own firm and/or recommend and use them in conjunction with our customers.
Importance of accurate financial data
We often speak of the importance of not only having good, clean books (like we did here and here and here). Without solid financial data – accurate measurements of margins, an accurate read of cash flow, understanding who your most profitable customers are, etc. it’s extremely difficult to grow and scale a business. Accurate and coherent data + quality bookkeeping + financial storytelling will arm you with the knowledge you need in order to grow your business. In this post, we will explore the first input in that equation.
Components of a financial tech stack
Think of your financial tech stack as a data ecosystem. It’s crucial for the various pieces “talk” to each other in order to facilitate your ability to answer the questions you have about your business. Additionally, ensure you have all the necessary apps to avoid gaps in data that could hinder your decision-making.
1. Accounting software (aka general ledger)
Think of the general ledger as the hub of your financial tech stack. Everything should connect into it, and it should give you the ability to run the reports you need to answer the questions you have about your business.
Recommendation: QuickBooks Online (QBO)
Why: QuickBooks has been around forever. If you need help with your accounting, you’re very likely going to be able to find somebody who knows QuickBooks. Additionally, QuickBooks Online has the best app ecosystem (remember my point about connectivity?). QuickBooks connects to just about everything.
Our Top 3 Features:
- The bank feed. Just about every bank will connect to QuickBooks Online and pull your transactions in automatically. You can even setup rules so transactions are classified consistently and/or don’t even need to be touched at all.
- Budgets. Every business should have a yearly budget – it’s your financial roadmap to where you want to go. Budgets in QBO will also port into other financial software, like Fathom, which is our analytics and forecasting platform.
- Mileage tracking. QBO has a mileage tracking feature built into the app. Very useful come tax time and eliminates the need for another app!
2. Bank Accounts
Ok, admittedly, a bank account isn’t an app, per se. However, where you do your banking can greatly impact how difficult it is to do your accounting and how easy it is to work with your accountant. The two banks I’m going to recommend are both tech-forward banks. This type of bank is going to be most ideal if:
- You don’t need to build and maintain an in-person banking relationship. Most often you’ll need human interaction if you need to get financing, or have unique banking needs.
- You don’t go to the ATM much, if at all.
Recommendation #1: Mercury
Why: I use Mercury for the operating account for our accounting firm, as well as for my software company, Herv.ai. It’s hard to explain but using Mercury is just…easy.
Our top 3 features:
- Slack integration. My team spends a ton of time in Slack each day. Being able to query bank account balances on demand is a timesaver.
- Easy card creation. New cards, whether physical or virtual, can be created in seconds. Even better, you can place limits on the card and/or lock them to specific merchants. Have a pesky software subscription that’s hard to unsubscribe to? No problem. Create a specific card for that vendor and when the funds run out, your subscription is effectively cancelled.
- Bill pay. Pay bills from the bank without needing an additional platform. Bonus points for approval workflows.
Recommendation #2: Relay
Why: Basically the same reasons as Mercury, though Relay isn’t quite as user friendly, in my opinion.
Our top 3 features:
- Easy card creation. The difference between Relay and Mercury here is that you can’t specify a vendor restriction for a card.
- Bill pay. Pay bills from the bank without needing an additional platform. Bonus points for approval workflows.
- Accountant portal. This makes it really easy to work with your accountant if you’re a Relay user. You can give them access without necessarily giving them the ability to move money. Super clutch. Mercury is reportedly working on something similar. Side note: according to a study by QuickBooks, 9 out of 10 small businesses say that working with an accountant makes them more successful.
3. Credit Cards
Much like regular bank accounts, credit cards play an important role in your financial ecosystem as well. The goals here are:
- Wide acceptance
- Connectivity to your accounting software
- Rewards that are applicable to your business
- Ability to add other users. Two reasons: 1) employee cards and 2) an accountant for the sole purpose of visibility of your activity.
Recommendation #1: American Express Business Platinum
Why: Yes, the annual fee is expensive. Personally, I travel a good bit and the airport lounge access (free food and Wi-Fi) has saved me on more than one occasion. AmEx has really good customer service and the rewards points are great. For a detailed analysis, see The Points Guy’s writeup here.
Our top 3 features:
- 1.5x points on software and cloud service providers. Our business is software heavy, as are a lot of our customers, so this is an outsized benefit.
- AmEx works with QBO statement fetching in the reconciliation module. Why’s this important? Your accountant likely won’t have to bug you for statements or need separate account access.
- Ability to easily add other users
Recommendation #2: Chase Ink Business Preferred
Why: I am a Chase alumni, and admittedly, I’m a bit of a homer. Fun fact: I cut my teeth in corporate accounting in Chase’s credit card business. That aside, Chase’s points are worth about $0.02. Contrast that with $0.0154 per point for the AmEx listed above. Chase is a great bank and everything seems to just…work (except statement fetching in QBO). For a detailed analysis, see The Points Guy’s writeup here.
Our top 3 features:
- We have a number of marketing agency clients, so the 3x points on social and search ad spend is amazing
- Chase is really good about allowing read-only access to accounts (important for outsourced accountants)
- Ability to easily add employee cards
4. Payroll
After getting paid, paying your employees and vendors is probably the most important financial function in your business. You need a software that makes these easy, provides a good experience for your employees and that consistently and accurately files your payroll-related tax returns.
Recommendation: Gusto
Why: In the course of our firm, it seems like we’ve experienced just about every payroll provider. Gusto is, by far, the best out there. The ease of use and pricing is second to none. We use Gusto for our firm’s own payroll, but it’s also really easy to work with our customers via the platform, too.
Our top 3 features:
- It seems like Gusto files tax returns accurately and on-time more consistently than other providers
- Integration with QuickBooks Online, including the ability to customize how your payroll transactions are recorded in QBO. For instance, the ability to book payroll expenses by Class (e.g. – funding round, admin department vs. sales department, etc.) is great.
- The ability to pay contractors, including issuing 1099s at the end of the year. Believe me, this relieves a huge headache.
5. Accounts Payable & Bill Pay
If you have multiple people reviewing and paying bills and you don’t have a bank that has an approval workflow in their bill pay function, you may need a separate platform. In comes…
Recommendation: Melio
Why: We like Melio for the sync with QBO but also the approval workflow. As accountants, we want to be able to facilitate payments without necessarily moving money – we want you (our customer) to have the final say when money moves. Melio allows for that and the platform is incredibly easy to use.
Our top 3 features:
- Import bills into Melio via Gmail attachments. Pretty cool.
- Check, ACH and instant transfer options are available. Forgot to pay a bill that’s due today? Got you covered. You can also send a request to your vendor for them to tell you how they want to be paid.
- No platform fee so you’re not paying a subscription if you don’t have any bills during that period.
6. Expense Management
If you have employees that need credit or debit cards and you need to put strict controls on those cards, you may want to consider an expense management platform. An expense management platform will give you a bit more control, and be easier to collect documentation for such expenses, than a traditional credit card alone. With a traditional credit card your employees may need to put together an expense report in order to substantiate their spending, which you may or may not receive in a timely manner.
Recommendation: Ramp
Why: Frankly, we struggled for quite a while to put in an effective expense reimbursement process for when teammates traveled. Since moving to Ramp, that hassle has gone away. I like how much flexibility and control Ramp gives us over employee spending, as well as added visibility.
Our top 3 features:
- Price Intelligence. If you’re connected to an accountant or advisor on the Ramp platform, they will be able to give you strategic guidance on the expenses you incur for software. Ramp collects data on what the average cost per user is, as well as whether or not the provider is willing to negotiate, and makes it available to advisors. This can save you tons of money if you’re on Ramp and working with an accountant or advisor.
- Reminders to provide documentation for an expense and provide the same via text message. Pretty slick. Have employees that are habitually lax in providing expense documentation? This will help, plus there’s an option to turn off their card if they fail to provide documentation for an expense.
- Gusto integration. Seamlessly provision cards to employees during their onboarding, cutting out a step in the process.
- BONUS: Slack integration. You can create cards or upload expense documentation from right inside Slack. Pretty awesome.
7. Time Tracking
Your business may need to track time for one or two reasons: 1) you pay employees or contractors by the hour, or 2) you track time for project management purposes. If you’re only tracking time for reason #1, you may be able to use Gusto for this. However, if you have more complex time tracking needs, you may want a standalone app. If you’re going with a standalone app, try to find something that both integrates with your payroll provider (if you pay people by the hour) and your project management system.
Recommendation: Harvest
Why: Full disclosure, we don’t track time inside our firm. That said, of the customers that we have that do track time, the ones that use Harvest seem to have the least amount of problems. Harvest has an integration with QBO, however, it does not integrate with Gusto.
Our top 3 features:
- Invoices in Harvest sync to QBO
- Integration with Slack. Time tracking is painful enough, being able to do it from within a platform that you’re already in makes it more palatable.
- Forecast time by project – helpful to see where your project is headed before things get out of control
8. Project Management
Effective project management is absolutely crucial to maintaining customer satisfaction, work quality and profitability within your business. If you don’t have a project management system, even if it isn’t a fancy app, you’re really missing out.
Recommendation: ClickUp
Why: We have several customers and know a few accounting firm owners that use ClickUp for project management and love it. I like the flexibility that the program affords, particularly the number of integrations that it supports.
Our top 3 features:
- Integration with Make and Zapier. If you’re building custom automations to connect data within your business, you’re probably using one of these two platforms. This might come in handy if, for some reason, you want to trigger something to happen in QBO based on something that happens in ClickUp, or vice versa. ClickUp also has a built-in automation function, as well.
- Native integration with Harvest. If you’re going to track time, your time tracking software really needs to integrate into your project management platform.
- Native AI built into the platform. The possibilities for leveraging your project management data are endless.
9. Customer Relationship Management (CRM)
Your business really, really needs a CRM of some sort. Really. One of the top questions we ask growing and struggling businesses alike, albeit for different reasons, is “what does your revenue pipeline look like?” The basis for any financial forecast is going to be the revenue forecast. Financial forecasting is crucial so you can plan for where you’re going before you get there.
Recommendation: Hubspot
Why: We’ve used Hubspot in our firm almost since day 1. It’s not cheap, but it’s definitely cheaper than some of its better-known competitors. Hubspot will give you all the data and functionality you need to develop and nurture prospects as well as forecast for the future.
Our top 3 features:
- Bi-directional data sync with QBO of customers and invoices. This should cut down on manual data entry, as well as ensure data accuracy and consistency.
- Deal tracking. Know where your deals are in the pipeline, what their probability-weighted potential revenue is, when they’re expected to close and more.
- Hubspot pixel. With a little code on your website you can see which pages (among other data, like email opens) a prospect has looked at. For example, you can see if they’ve looked at your pricing page before you jump on a sales call, which helps to tailor the conversation.
Conclusion
Well-informed business decisions require data and those decisions become more difficult if you don’t have access to the data you need when you need it. Potentially worse, the data you need might be in data silos, or require additional steps to analyze. A well thought-out financial tech stack should not only provide the financial information you need, it should integrate into the entirety of your business’ tech stack.