There's nothing fast about the consumer, corporate, and small business protections that have been created to get us through the COVID-19 pandemic. We're covering a lot, including problems with the SBA Paycheck Protection Program (PPP); how the IRS can only print 5 million checks per week; and what makes Mnuchin's direct deposit website a fraud paradise. Then we'll touch on how fintech lenders are cutting credit with zero warning, WeWork's further troubles, accounting-industry layoffs, and how Lime screwed up laying off hundreds of employees. In addition, we'll check out what Intuit and other tech companies are doing to help small business, why some states have yet to get the COVID-19 memo when it comes to tax deadlines, and how David nearly got phished!
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Blake Oliver: [00:00:20] Well, apparently the IRS can only cut 5 million checks a week. There's 100 million checks that need to go out, so it'll take them 20 weeks to cut all the checks.
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Blake Oliver: [00:02:21] Welcome to The Cloud Accounting Podcast. I'm Blake Oliver.
David Leary: [00:02:25] And I'm David Leary. Blake, another week. Here we go. I felt like this one was super-exhausting.
Blake Oliver: [00:02:30] Well, we just recorded the special episode all about the Paycheck Protection Program; the SBA loan/stimulus package/bill to help small businesses with their payroll. We just did that last night, right? Was it last night?
David Leary: [00:02:45] Last night, and I feel like it's all getting gray. It just keeps going, and going, and going. The politicians are very happy with it. I mean, apparently it opened and launched, but I think we'll jump into the things that did not work at the launch or banks that aren't ready. We can chat about that a little bit.
Blake Oliver: [00:03:02] Yeah. All the details are in that special episode. Check it out. Short story is, if you are a small business with fewer than - typically fewer - than 500 employees, you, or you on behalf of your clients, can go out and get them a loan from an SBA-approved lender, and they can get up to $10 million; supposed to come really quick. The applications open today, Friday, April 3. But the final rules didn't get rolled out until yesterday, on Thursday, so the banks have been scrambling to get ready. The thing that is really kind of shocking and has been all over Twitter is the fact that some of these big banks are not- they're only lending to a very small subset of their customers, right, David?
David Leary: [00:03:45] Yeah. If you look at the politicians' view of this, this is this great savior. It's gonna help so many small businesses. Then you look at the opposite side of small business owners saying, "Hey, Bank of America - who I've been with for 20 years, but I've never gotten a credit card with; I only have a business checking account - is saying I can't even apply for the loan because I didn't have a checking account, and a credit card, or possibly a loan already with them."
Blake Oliver: [00:04:07] Yeah.
David Leary: [00:04:09] We're seeing that from a lot of banks.
Blake Oliver: [00:04:11] I was thinking about this. Must've been my mind as I slept because I'm thinking about this program, and I'm saying to myself, wait a minute ... So, the SBA is going to pay banks - and we didn't mention this - the banks are going to get one-percent, three-percent, or five-percent commission on the amount of this loan. The SBA is just gonna cut them a check and pay them that amount for originating these loans. So, the loans under $350,000, the banks get five percent of that to keep. Well, they get five percent on top. They get to keep a five-percent commission. Then from $350K to $2 million, they get three percent; then $2 million to $10 million, they get one percent. So, they're getting a pretty decent fee.
[00:04:52] On a $100,000 loan, they're gonna get 5,000 bucks to originate that loan. I just don't imagine that there's going to be that much paperwork that it costs them $5,000 to originate that loan. I think they're gonna make a good amount of money. If the whole thing is $349 billion dollars, which is the amount that was allocated for this program, five percent of that - if they're all small loans - is like $17.5 billion? That's a good chunk of cash that we're paying the banks.
[00:05:27] Oh, and they're also allowed to charge one-percent interest on the loan, if the loan isn't forgiven, which they negotiated up from 0.5 percent at the last second. Now, business owners are gonna get charged one-percent interest over the two-year term of these loans by the banks. The loans are 100-percent backed by the federal government, so there's zero risk for these banks, if they process the loans correctly.
[00:05:50] Here's the part that's crazy that we were just talking about. They get to pick and choose who they lend to. So, Bank of America, which is only going to lend to people who have a checking account, a business checking account, before February 15, with them and also have a credit card, or a line of credit, they're basically de-risking their portfolio because money is fungible. So, they get to give loans to their existing clients, and they have no risk, and they get to choose like, "I'm just gonna give this to my existing clients." So, now, they're reducing the risk on their portfolio, and they're getting paid to do it.
David Leary: [00:06:25] All right, so I've been watching Jovita Carranza, SBA. She is on Twitter, @SBAJovita - J-O-V-I-T-A. she is the 26th Administrator of the SBA.gov. She's been tweeting out, every hour today, stats on these loans, as they come through. So far - this is as of 45 minutes ago - 13,669 loans came through at $4.3 billion. So, my concern with that- I started doing the math. If you take that- divide the $4.3 billion times the 13,669.
Blake Oliver: [00:06:58] Divide $14.3 by the number of loans-
David Leary: [00:06:58] Number of loans.
Blake Oliver: [00:06:58] 13,669 loans.
David Leary: [00:06:58] Divide that by eight because, in theory, you're getting a loan for eight weeks of payroll is essentially how this is supposed to calculate out, right?
Blake Oliver: [00:07:11] It's like two-and-a-half- is it two-and-a-half months of ...? It's two-and-a-half times whatever your monthly payroll is. That comes out to eight weeks- eight weeks, is that right?
David Leary: [00:07:22] Yeah, essentially, it's eight weeks. You take that number, divide it by eight, and then, you get the weekly. Right now, the weekly payroll of the people that are getting loans is at $39,000.
Blake Oliver: [00:07:33] $39,000. Okay, so multiply that by 52. That is an annual payroll of $2 million. Let's divide that by, like, $50,000 to get somebody's ... Kind of a typical middle-class salary. So, that is a business with about 40 employees, if everybody is getting paid, on average, $50,000.
David Leary: [00:07:53] I think what's happening is the banks, they might say it's because of these loans ... There's a lot of excuses; but emails- people are getting told, "No. Go find another bank. We can't service you on this." I think what's happening is they're prioritizing the loans. If a small business just needs 50 grand to make it through the next eight weeks, they're just putting them at the bottom of the pile. Why would you process that, if you can process somebody who's asking for the full $10 million? So, probably everybody asking for the full $10 million is getting all the attention and getting processed first.
Blake Oliver: [00:08:23] I'd be really curious to see what that is. Yeah, they make the commission on each loan, so it makes more sense for them to process fewer applications that have higher dollar values. They make more money, in the end, even though the percentage goes down, it's still easier. More profitable. So, the whole program is $349 billion, and in the first day, we've processed - up to this point, which, it's like 4:00 PST - we've processed $4.3 billion. So, let's do 4.3 divided by 349, and we have, in the first day, processed 1.2 percent.
David Leary: [00:09:09] So, this is going to take a year? None of this makes sense. It's not working.
Blake Oliver: [00:09:15] It's not fast enough.
David Leary: [00:09:17] Because, apparently, also all these loans that are being pumped out today, some of these people had some insight tracks to possibly pre-apply and have all their ducks in order; kind of like going to the Black Friday sale. Some people were in line already. We'll see on Monday where these numbers are at, but they're gonna ... To really get all this money distributed in eight weeks, how many of these are gonna get processed a day?
Blake Oliver: [00:09:38] Yeah, this was supposed to be the biggest day. So, what's happening here? It's not fast enough. This is the same problem with the checks for the individuals. If this money doesn't get out to the small businesses, like this coming week, then I think a lot of them are not gonna be able to make payroll. They're not gonna be able to keep people on payroll. So, then the money will be unused because they're gonna lay everybody off. You can't use the money unless you're paying people on payroll. We've got some more follow-up. We can finish with Paycheck Protection Program, but then we can talk about the stimulus checks that are going out to individuals. There's issues with that.
David Leary: [00:10:23] Last week, we talked like it's probably gonna be, realistically, five weeks, but now there's issues with the distribution?
Blake Oliver: [00:10:28] Yeah, well, apparently the IRS can only cut 5 million checks a week. There's 100 million checks that need to go out, so it'll take them 20 weeks to cut all the checks.
David Leary: [00:10:42] Now, that's physically printed checks, correct?
Blake Oliver: [00:10:45] Right.
David Leary: [00:10:45] But ACH, they could process more than that, possibly, if they have your bank account numbers [crosstalk]
Blake Oliver: [00:10:50] -they have ACH information for- I saw a number, 60 million. Here's an Accounting Today article called: Some Coronavirus Stimulus Checks May Not Arrive Until September." They have 60 million direct deposits they can do. They're gonna do that in mid-April. So, those are the ones that Mnuchin said were gonna come in three weeks, a week ago. So, now, in two weeks, those are supposed to come, according to his timeline. But then there's another 100 million people where they have to send checks. They can only send 5 million per week, so it'll take 20 weeks. So, the final round of payments may not go out until September. The checks are gonna be issued in reverse adjusted gross income order, starting with the people with the lowest income first, but still, there's gonna be a lot of people in there who cannot wait another month because they've got to pay their May rent. Not to mention the fact that $1,200 is not really enough to pay rent in a lot of places that are being really, really hard hit by coronavirus.
David Leary: [00:11:44] Especially if they work for a smaller company, who now still is not gonna have this loan to keep paying them or keep them on the payroll.
Blake Oliver: [00:11:53] Right, and this 5-million-check-per-week rate, I think that might be historical, based on what they've been able to do in the past. What are they gonna do if their process takes longer because of COVID-19 and having to maintain distance and all of that and people being out, or sick, or what ...? That's why there has been a lot of chatter about fintech companies coming in, and helping, and assisting with this; taking over this process and getting the money to people.
[00:12:20] Supposedly, there's going to be a website, where people can go and put in their direct deposit information. Mnuchin said this in a press conference that we're gonna have a website, where people can go in; they put in their information and then can get the money sent to them. But I'm thinking, oh, no! Now we've got a big fraud risk because the information that the IRS can use to verify them is not necessarily that hard to acquire; because what is the IRS gonna use to verify your identity? Probably information from your tax return and your Social Security number. So, I, as a hacker, could obtain that ... It's not that difficult. So, there's gonna be a lot of people who can't get their payments because some hacker went in and stole it, just like with regular tax fraud, right?
David Leary: [00:12:58] Yep.
Blake Oliver: [00:12:58] So, the fact that we don't have a national identification database ... This is something that we've resisted doing here in this country because of privacy concerns. We don't want the government to have - the federal government - to be giving out an ID to every American. But then, this is the problem. When you actually need to get something to every American, you can't. There's not an easy way to do it.
David Leary: [00:13:21] I was listening to a podcast with somebody who worked in the 2008 banking crisis, and he was in charge of rolling out the stimulus money for that. He said the mistake they made is they were too careful in rolling it out. Basically, his opinion is you actually should just err on the side of we don't care ... "Are you a business? All right, here's a check. Are you a business? Okay, here's a check," and take the chance that, yes, some percentage are gonna be fraudulent; some percentage of those are gonna be people that maybe don't deserve the money, but it's the only way to get the money out to everybody as fast as possible. Even with this, if it means there's gonna be some percentage of people that are gonna put in fake numbers and get checks, they have to take the chance because you've gotta get this money out as fast as possible to the vast majority of people. Even if even if a criminal gets it, they're gonna go spend it, right? It gets it into the economy ...
Blake Oliver: [00:14:09] Yeah, exactly. Think about it this way - we're paying, let's call it $17.5 billion ... It's not gonna be necessarily that much, but I don't know, $10-$15 billion dollars to the banks to get this money out to these businesses. I bet you if we just gave the money away without having all this paperwork and stuff, there would be less fraud than that. It just doesn't make sense.
[00:14:29] Let's just talk about this whole program, like the way it was thought out in the first place, it's super-complicated, of course. Congress comes up with something that's super-complicated, when you need to do it really quickly. They could have just made it grants instead of making it a loan, to start with, since most these loans are gonna be forgiven anyway, just make it a grant. Then, if you don't spend the grant on payroll, then there's like some tax-clawback provision, at some point, anyway.
[00:14:52] But these are loans that are forgivable, and then, if you go out of business anyway, you're not gonna have to pay it because there's no personal guarantee. So, making it a loan, maybe that wasn't even necessary. It's just like way ... All this paperwork that has to suddenly happen very quickly ... We're talking like 30 million potential loan applications because there's that many small businesses - when you count all the freelancers and independent people who are gonna have to go out and do this next week.
David Leary: [00:15:17] The name of the game here is speed, right? It's speed. That's the name of the game.
Blake Oliver: [00:15:21] Right, and the people who really need this money are the really small businesses, the sole proprietors who don't have any work now, who don't even get healthcare from their employer, who didn't get laid off because they didn't have an employer to begin with. The program is making them wait a whole week before they can get any money. So, what if all this money ... Well, at the rate they're going, it won't be gone, but ... What if these people who really need it end up at the back of the line, and then there's this huge backlog, and the money runs out, and they never get any? I see that happening.
David Leary: [00:15:54] It was very clear. Did you see the unemployment numbers this week?
Blake Oliver: [00:15:58] It was crazy. It was like-
David Leary: [00:15:59] 6.6 million.
Blake Oliver: [00:16:01] So, what are we up to, total? Like 10 million, or something?
David Leary: [00:16:04] The total was 6. [crosstalk] three last time, and then, 6.6. It'll probably go up to 12. The whole point of the Payroll Protection Program is to give small businesses money, so they don't have to lay people off, so they don't have to go file for unemployment. It's very clear that this money is not going to solve this problem anytime soon, which means unemployment is gonna just go up-
Blake Oliver: [00:16:26] Yeah, unless it just magically gets out to people faster than it seems like it's going to. Yeah, at this rate, I don't see it. But maybe the banks will work over the weekend; they'll work really hard and more of this money will get out on Monday.
David Leary: [00:16:41] If you have any clients that have successfully had a loan approved, I would love to see proof of that. Tweet it at us. Show some proof. Because all I see on Twitter ... I've yet to see one small business owner say, "Yes, my loan got approved for the Paycheck Protection Program. I'll see my cash in three days." Nobody is tweeting that. Tons of businesses are showing all their denials, but nobody is showing that they successfully moved through this loan process, and that's scary.
Blake Oliver: [00:17:08] A lot of people are pissed at Bank of America. I've seen that on Twitter because #PPPloan is trending. They're all taking screenshots of the Bank of America website saying, "Based on our records, your account doesn't qualify to apply for a Paycheck Protection Program loan through Bank of America." Apparently, you can't even apply if you don't already have an online banking username and password. I guess that kind of makes sense, but, I mean, are they gonna ... If you get one, then can you apply?
David Leary: [00:17:33] Well, I get that because branches are closed; there's physical constraints going on, as well, on this. At least they could try to apply at Bank of America and get declined. Other banks aren't even up yet. They're like, "We might be up on Monday." Other banks aren't even ready yet because so many late changes came. Obviously, we'll be talking about this a lot, again this week ...
Blake Oliver: [00:17:54] There's even a video from Marco Rubio that's trending on Twitter, where he's calling out the banks, but not in a way where like, "Hey, banks, you suck." He's more like, "Come on, guys, we bailed you out during the financial crisis. You gotta help us ..." I'm thinking, what the hell!? You set this up!
David Leary: [00:18:13] Actually, this morning, I saw him tweet about how important this was and what a great move by Trump, et cetera, et cetera ... All the politicians are celebrating this as this great thing. I think it's gonna- I think by the time we get through all those Sunday morning political shows and by the time Monday morning hits, the tune's gonna change from politicians on this because it's not something to be celebrated, at this point. Now, if the numbers were different- if it was 1.3 million loans were given out, and they've hit- $100 billion has been, after one day, then let's go celebrate.
Blake Oliver: [00:18:46] Right.
David Leary: [00:18:46] What's $4.3 billion dollars? It's s*&%! It's s$%&! [crosstalk]
Blake Oliver: [00:18:51] I will bleep it. I think the number to highlight is the volume of loans. Something like 13,000-14,000. That's nothing. That's a drop in the bucket of the millions and millions of small businesses. For them to be touting those numbers as very successful is- it's silly because we said it's 1.2 percent of the amount allocated by Congress that's been, so far, given out on this first day. Let's say there are 30 million businesses, and let's say 14,000 of them got funding today. Then, divide 14,000 by 30 million, and we get what? 0.0005?
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David Leary: [00:20:31] Very disappointing. To make matters worse for small business owners ... I don't wanna turn this into a pessimistic show, here, but my understanding is [inaudible] some accountants and bookkeepers is there are clients now who have ... This is where the tech companies start coming in, right? People have credit cards with some of these newer startups for the spending cards, and their credit lines are getting shut down and lowered on the credit cards with no warning whatsoever.
Blake Oliver: [00:20:54] Oh, yeah. Are you talking about Kabbage? [crosstalk]
David Leary: [00:20:55] I think I saw Divvy. It's Divvy's related credit card. So, apparently that's ... I've seen some things that said Divvy's done that. Kabbage, apparently, because people have ... Kabbage works like- they watch your inventory, and your accounts receivable, and give you real-time credit-
Blake Oliver: [00:21:11] Because they're plugged into your QuickBooks file or whatever.
David Leary: [00:21:13] Your data, yep. Apparently, they have started to shut down people's credit left and right.
Blake Oliver: [00:21:18] Well, yeah, and specifically, Washington Post had an article: "SoftBank-Backed Lender Kabbage Cuts Off Businesses as Cash Needs Mount." It's got quotes from a bunch of Kabbage customers saying that Kabbage didn't give them any notice. Then, they learned that their credit lines had been suspended only upon logging into their accounts. So, imagine that you're thinking, "Oh, God, I can't make payroll. I'm gonna log into Kabbage, and get my loan, like I would normally do." You log in, and then, there's no money - how much that would suck. There's an example here. Joydeep Paul, who runs Medserv Healthcare Solutions, an emergency-medical training company in Princeton, New Jersey, said his line of credit was cut from $22,000 to zero. "You just turn it off without saying a word - not an e-mail, not a phone call. Nothing." Ouch.
David Leary: [00:22:09] This is not just a Kabbage thing. This is apparently happening across the board with a lot of the players in their OnDeck, Fundbox, some of these other ones. They've all had to tighten up their underwriting standards because, to some extent, they've really been out there giving very expensive loans to begin with.
Blake Oliver: [00:22:26] Yeah, I think they have a ton of exposure.
David Leary: [00:22:28] We've talked about this in the past. They're giving out loans at 30 percent. Very risky loans. It's just a risky game. So, now, instantly, the money's drying up. Then, you, as a small business owner, can't borrow from these companies. But then I look at these companies now, what road do they have to actually give new loans? Because the government, in theory, is giving loans out at one percent. Who's gonna take a loan at 19, 29 percent?
Blake Oliver: [00:22:52] Well, and their risk profile just increased dramatically because a ton of these businesses are gonna default on these loans, if they haven't already. It's just a matter of time. So, Kabbage isn't gonna be able to get their money. They're gonna have to write off all these loans, and then they can't lend out more because they've gotta have a certain amount capital in reserve.
David Leary: [00:23:11] I don't know if you saw this, Kabbage even knows this. They laid off 80 percent of their staff-
Blake Oliver: [00:23:15] Wow.
David Leary: [00:23:15] They furloughed 80 percent-
Blake Oliver: [00:23:18] That's not a good sign. I have a hard time imagining how some of these lenders make it out of this. Interesting fact - Kabbage, in 2017 - raised $250 million from SoftBank. You know who else SoftBank invested in?
David Leary: [00:23:31] WeWork, and then one of the scooter companies that just laid off people. I wouldn't be surprised if they're pulling their money back out of places.
Blake Oliver: [00:23:38] We've talked about WeWork, when they were gonna go public, and they were filing for their IPO that got aborted because everyone realized it didn't make sense. One of the big questions - I had this on the show, a lot of analysts pointed this out - was that, well, what happens to WeWork in a recession? Because everybody was talking a few months ago about how, oh, there's eventually gonna be a recession; what happens to WeWork because WeWork has long-term leases, and they do short-term subletting. So, now, all these businesses that can't go into the office are gonna cancel their WeWork memberships.
[00:24:14] I actually saw some folks that we know on Twitter saying, "Well, I had to pay April, but I'm not gonna pay May ..." because there's a cancelation, 30-day notice kinda thing. So, they're gonna cancel- everybody's canceling, or a bunch of people are. They're not gonna pay for May, and WeWork is gonna be unable to pay their rent, or their mortgages on the buildings that they own. They're locked into long-term leases. So, now, WeWork is trying to negotiate with their landlords to get a discount. There's an article in Bloomberg. and the headline is "WeWork Asks Landlords to Help it Cut its Rent Bill by Up to 30 Percent."
David Leary: [00:24:53] Which is interesting because my understanding is one of WeWork's big successes was they negotiated tons of their leases when everything crashed in 2008, so they already had pretty good deals from all the leases [crosstalk] renegotiate them even lower.
Blake Oliver: [00:25:08] We'll see if WeWork can survive this ... If this goes on as long as we think it will, which I'm betting on August/September that this really calms down and people go back to work then, could be a problem.
David Leary: [00:25:24] I did see some things the tech companies are doing that are good. There's something called paytoday.club. This is some tech companies - Gusto, Fundbox, Homebase ... Actually, other tech firms can actually join this. The gist of it is if you owe a small business money, you need to pay them. So, right now, currently, small businesses are owed $900 billion in receivables and a lot of it is corporations, or government agencies. They owe this money, and they need to pay these invoices.
Blake Oliver: [00:25:55] Mm-hmm.
David Leary: [00:25:55] It's super-super-important. That will get money back into small business owners' hands [inaudible] ... They have artwork. They have a hashtag, #paytoday. That's out there. Then, I don't know if you saw Intuit is doing a small business relief initiative with GoFundMe.
Blake Oliver: [00:26:12] I hadn't seen that.
David Leary: [00:26:13] They've started to bring on other tech companies along with that. The gist of it is you sign up for a GoFundMe, and if you can raise $500, Intuit'll match- give you an extra $500. That's the short answer, but there's a lot of hoops to jump through. You've got to use the right hashtag and ... I think it's one of those, it's much better on paper that maybe possibly execution. But Intuit did step up to the plate today. I saw information that Intuit is going to do the Payroll Protection Program loan right from inside of QBO. So, all your data's there; obviously, Intuit has QuickBooks capital, and they're gonna start doing those loans from within QuickBooks. Now, when that starts, I don't know.
Blake Oliver: [00:26:55] Yeah, that's the big question, right? How quickly can they make it happen?
David Leary: [00:26:58] But if you could get one-click loan- if you could apply for that loan using one click in QuickBooks ... Especially now that QuickBooks owns Credit Karma, Intuit has all the data. They have the small business data and the credit card data ... They could approve these loans so much quicker ... So much quicker. They have payroll for a million small businesses. Just start pumping this data out and get this money out. Some tech companies are starting to step up to the plate and bypass these government programs with creative ways to help.
Blake Oliver: [00:27:27] Makes sense. We've talked about the potential threat to accounting jobs on the show. There have been some layoffs, though, not a ton, here in the U.S., which is good news so far. We'll see how long that lasts. Friedman, which I think is mostly in New York, ended up cutting 50 folks loose. They were one of the first firms to go do that. KPMG has also done layoffs in Canada, and Australia lost a couple hundred jobs. Those are the ones that Going Concern is covering. They're doing a good job of covering the layoffs. They have a header on all of their articles, "Layoff Watch '20," so you can easily find those and see where else jobs are getting cut.
[00:28:16] BDO USA, notably, is cutting everyone's pay instead of doing layoffs. The CEO announced this, and this article came out yesterday. Wayne Berson said that BDO is taking a five- to 10-percent pay cut at all levels, salaried, from May 1 to August 1. Hourly is the same, just starting one or two days later after the salaried guys. The pay cut will be on a sliding scale, starting from employees making $60k or more annually. I think that's a good way to go - rather than laying people off - is everyone take a small pay cut.
David Leary: [00:28:48] Yeah, because I think the other route - and I think I heard this is happening at KPMG in Canada - the partners were just cutting lower staff people because the partners don't wanna take a pay cut.
Blake Oliver: [00:28:59] Right, but that's a bad move. If this works out ... I mean, it could still go very, very badly, but if things actually work out and the economy kicks back into gear in the fall, you're not gonna wanna be left with looking to hire staff after having laid people off. Nobody's gonna wanna work for you. So, the best thing is to just try to keep everyone employed; maybe take a loan; hold the course.
David Leary: [00:29:24] I think I saw Goldman Sachs was predicting that this is gonna be the fastest recovery ever.
Blake Oliver: [00:29:30] It should be, assuming the government does the correct amount of stimulus; gets money into people's hands. My big fear is that zillions of people can't pay their rent; zillions of people don't pay their mortgages; then we get into this mortgage-crisis situation where, if people aren't paying their mortgages, then you have a zillion foreclosures, and then we have a housing crisis, and we all know how well that went. So, that's why it's so important that the government gets the stimulus out, so people can keep paying their rent, keep paying their mortgages because, for a lot of people, that's the biggest expense they have.
David Leary: [00:30:02] Yeah, and I think if you do have to lay off people, there's probably some correct ways to do it. I don't know if you heard about Lime? The scooter company?
Blake Oliver: [00:30:06] Oh, yeah. They're probably doing horrible, right now.
David Leary: [00:30:11] They invited a bunch of employees, apparently, into a Zoom webinar. They realized quick- the employees started realizing, wait a minute, the people that are invited to the webinar versus not invited to the webinar are people ... The people running the webinar are people that they didn't recognize.
Blake Oliver: [00:30:30] Oh ...
David Leary: [00:30:30] Two weeks ago, they got sent home to work from home. They haven't heard anything from management or the founder. Then, they basically get included in a webinar; not a Zoom meeting, a Zoom webinar. During the webinar, they shut off all their computer access to the network and then kicked them out of- basically laid them off.
Blake Oliver: [00:30:48] Wow.
David Leary: [00:30:49] Just not the right way to do these things. You're right, when these things do recover, people will remember this, and people aren't gonna go to work for those companies.
Blake Oliver: [00:30:58] No.
David Leary: [00:30:58] You've gotta stay classy as you do these things, or you're gonna burn bridges going forward with talent. You just can't afford to do that.
Blake Oliver: [00:31:04] Obviously, you can't do these in person, but at least do individual one-on-one meetings, even if it takes you days, just do it. To do it in a group setting like that is just horrible.
David Leary: [00:31:14] We talked about phishing attempts and ransomware, if you want.
Blake Oliver: [00:31:19] Yeah. I've been reading about how security is a big problem with everyone working from home in this confusing time. It's easier than ever to fall for phishing attacks. So, yeah, what's going on with that?
David Leary: [00:31:30] Well, I can tell you my experience this week. I fell for a phishing attack.
Blake Oliver: [00:31:34] What? Did you send $10,000 to Nigeria or something?
David Leary: [00:31:38] No! So, I got an email. It came in, and it was from a coworker who, coincidentally, is a coworker I have not exchanged any emails yet, but I just started to that morning.
Blake Oliver: [00:31:49] Because you're- you have a new job.
David Leary: [00:31:50] New job, right. I got an email that said ... Most of the team's in New York City, and they're really locked down in New York City, right now. It was like, "Hey, I need you do me a huge favor. What's your cellphone number?" I'm like, all right ... Didn't think anything of it, but I didn't notice the email address wasn't a real email address. It had that person's name.
Blake Oliver: [00:32:09] Okay.
David Leary: [00:32:09] Things have been chaotic [crosstalk] I replied back. I gave my cellphone number. Then, instantly, I get a text. So, it moved from a fake email to a fake text. The texts were like, "Hey, where are you at? Can you go to the store? I need to get some gift cards for eBay. Let me know when you're at the store ..." This is the importance of having multiple communication channels with your coworkers.
Blake Oliver: [00:32:32] Yeah.
David Leary: [00:32:33] I was able to- I just finally asked the person who I thought it was- on Slack, I was like, "Hey, are you sending a message on WhatsApp, right now?" Then, I told the person I was texting with- not WhatsApp, sorry - the text ... I said, "Hey, please respond to my message in Slack," and that's when this person knew I was onto them and said, "No, I can't do that right now," and they left.
Blake Oliver: [00:32:52] At what point did you get suspicious?
David Leary: [00:32:55] At least four or five texts in-
Blake Oliver: [00:32:58] When they asked you to go to the store and buy gift cards?
David Leary: [00:33:00] Not even then because it wasn't fully reconciled, because I was like, oh, she's in New York. They're locked down [crosstalk] It did not even register.
Blake Oliver: [00:33:11] Well, good for you for doing the thing that we always preach and verifying this information; secondary communication channel.
David Leary: [00:33:18] It's like two-factor, right? It's always two-factor. Go down some other tech path and get an answer a different way that's separate from the one you're currently conversing in, if you get any tingling that something's wrong. So, it can happen to everybody. It happened to me, folks. It can happen to everybody.
Blake Oliver: [00:33:32] That's brilliant.
David Leary: [00:33:33] So, the IRS is warning that phishing attempts are increasing, and it's all related to COVID-19 stuff, so you have to be very careful; very, very careful on that. They're warning about that. Then, the other thing that's going on - and this is not good - is ransomware is starting to target hospitals and hospital VPNs. If it's not-
Blake Oliver: [00:33:54] That would be the worst timing ever.
David Leary: [00:33:57] Yes. If it's not bad enough for hospitals, right now, there's a variant of REVIL group. They're probing the internet for vulnerable systems because VPNs- everybody's using- as open doors for VPNs, right now, trying to let their employees work from home. So, that's really scary, if they're targeting hospitals-
Blake Oliver: [00:34:20] I've only got one item of follow-up left here, which is the tax deadline. So, we've all moved on from that real quick, didn't we?
David Leary: [00:34:27] That was just last Friday.
Blake Oliver: [00:34:30] I think so.
David Leary: [00:34:31] It felt like a decade ago. It was just last Friday we took a breath, like, "Oh, the deadline's been moved ..." Everybody breathed, and now, we're right back at it.
Blake Oliver: [00:34:38] There's some parallels to what's going on with coronavirus and what's going on with the tax deadline. There are still some states that are just letting people walk around because, "It's not a problem here yet. Maybe it's a problem in New York. But, hey, in Texas, we're fine!" At least statewide. There are some states that still haven't delayed their state tax deadlines to match the new federal July 15 deadline. Idaho, Mississippi and Virginia are holding out. Virginia, in particular, is offering taxpayers relatively little relief.
[00:35:09] According to the Tax Foundation in Virginia, the tax payment deadline has been postponed to June 1, but the tax filing deadline is still May 1, which is their normal deadline. That's important because interest rates accruing the next day. So, on May 2, your interest rates are accruing. Only late-payment penalties are waived through June 1, not interest. The Commonwealth is urging everyone to file by May 1, as usual, to avoid interest.
[00:35:34] That's gonna create a bunch of issues because people have heard, oh, the tax deadline is extended, and then they're not gonna file. They're gonna wait until July 15 in Virginia, and then, they're gonna pay a bunch of interest. In Idaho, they only bumped their deadline to June 15. That's not confusing. Then, Mississippi extended filing and payment deadlines one month to May 15. What is wrong with these states or what is wrong with these lawmakers, I should say, in these states?
David Leary: [00:36:00] That's the bigger problem. I think it's the lawmakers ... Anything to be complicated. People will do it to be complicated.
Blake Oliver: [00:36:08] Just make it simple ... They should just have done a blanket federal and state delay - every single tax deadline that was before July 15 is now on July 15. Just keep it simple.
David Leary: [00:36:22] All this just rolls onto accountants and bookkeepers.
Blake Oliver: [00:36:27] Oh, my God! I've never seen so much chatter in the groups that we're in with all the accountants. It's insane. People are not sleeping. It's worse than the week before tax day.
David Leary: [00:36:37] At least in tax day, they know what they're doing with it; there's just a lot of volume.
Blake Oliver: [00:36:41] Right.
David Leary: [00:36:41] This, it's changing deadlines. It's changing this ... The loan- you can do this, or you can't do 1099 vendors now, and the Payroll Protection Program ... The AICPA had- they basically called out that accountants should help these small business relief efforts. I would argue that accountants and bookkeepers are actually delivering on that promise.
Blake Oliver: [00:37:01] Right. Oh, but notice how [crosstalk] the accountants- all this work is piling onto accountants and CPAs. Yet there is no provision in these acts to pay accountants for their work. Most of the banks ... I think virtually all the banks are not gonna honor this agent fee that's apparently possible, where people can get ... If you file on behalf of your client, you can get like a one-percent commission. They're not gonna do it. They're gonna keep it for themselves.
David Leary: [00:37:30] Yeah, and my understanding, as an accountant, or bookkeeper, you have to do a little bit of creativity here. Maybe you create a 90-day CFO package and you have a client buy that. Then, part of that service is you'll take care of any loan things they need done during that time.
Blake Oliver: [00:37:45] Right, but that makes you look like a jerk, because now you're taking money out of that client's funds. It's because the banks, they're getting that commission on top, so it's not like it ever comes out of the principal that I'm getting loaned; whereas the accountant, if they wanna earn a fee, they have to charge the client and take it out of that loan. It's just setting us up to look bad, even though we're the ones doing all the hard work.
David Leary: [00:38:10] Yeah, I think, obviously, our healthcare professionals, anybody that's working at grocery stores, and food service delivery, and those professionals, as well ... I mean, for crying out loud, sanitation services are still running, right? I think there's a lot of people that are heroes, but I also think, right now, accountants and bookkeepers are completely unsung right now. People have no idea what they're going through because they're feeling the brunt of the tax deadlines; they're feeling the brunt of tax payments; they're feeling the brunt of these loans.
Blake Oliver: [00:38:35] Oh, yeah.
David Leary: [00:38:35] They have 50 jobs, right now ... Not to mention the whole scariness for their clients that's going on.
Blake Oliver: [00:38:42] I only have one client, right now, and this client is applying for PPP. So, after this recording session - it's Friday. I wanna go have a drink - I'm gonna be pulling payroll reports and compiling information so that my client can apply. Thank God they're not making me do it. I can't even imagine what I'd be doing right now if I had 200 clients to worry about. So, to all of you who are listening, who are dealing with all that, right now, I mean, at least David and I appreciate you.
David Leary: [00:39:10] Yeah. Go to your refrigerator, when you listen to this, get a beer, toast the mirror, and pretend you're toasting Blake and I because we'll be toasting you. You're right, Blake. In these groups- in some of these Slack channels, and Facebook groups, it is insane what they're dealing with, right now [crosstalk]
Blake Oliver: [00:39:24] Yeah, it's ridiculous.
David Leary: [00:39:27] I have some cool tech news, app news, but I don't know what else you have. Are we still talking stimulus? Is there anymore?
Blake Oliver: [00:39:33] Well, unfortunately ... I would love to hear that but we're gonna have to save it for the next episode because my company is having a team happy hour, so I'm gonna go join that [crosstalk]
David Leary: [00:39:43] A Zoom happy hour-
Blake Oliver: [00:39:47] A Zoom happy hour. So, I'm gonna go try to do that, decompress a little bit ... What are you up to this weekend, David?
David Leary: [00:39:52] I don't know, what am I up to this weekend? [crosstalk] I'm not gonna do any Zooms. I am Zoomed out. I have no brain power left for another Zoom. I'll probably play catch-up a little bit. I'm gonna actually probably apply for the loan, myself, tomorrow, so I'll see how that goes.
Blake Oliver: [00:40:01] Oh, let me know how that goes.
David Leary: [00:40:09] I'll see how that goes [crosstalk]
Blake Oliver: [00:40:09] Does your bank have a page up to let you do that?
David Leary: [00:40:13] Well, they sent me an email. Then, I clicked the email because it said, "Click here, and sign in." Then, I signed in, and it had a pop-up that said "Click here to apply." As soon as I clicked that, I got a 404 error page, so it's not looking good. The page may not really exist yet. Yes, I will let you know how that goes next week.
David Leary: [00:40:13] The other thing I'm gonna work on - and hopefully any of you listening, I'll have some information about this up on Twitter and social media - but there's- one of the review sites we ask people to write reviews on, Podchaser ... Podchaser is partnering with Meals on Wheels, and Meals on Wheels is donating ... They feed elderly, who can't leave their houses, which, right now, is every elderly person in the country.
Blake Oliver: [00:40:56] Right.
David Leary: [00:40:56] They're doing a fundraiser for Meals on Wheels. The way this works is every time you leave a review on a podcast, they will donate 25 cents. Then, if Blake, and I- if you leave a review on The Cloud Accounting Podcast and if Blake, and I reply back and say, "Hey, thanks for the review," they're gonna double that amount. So, you can help us writing reviews about the podcast on Podchaser.com. That would be great. Then, it'll help raise money for Meals on Wheels. I'd love if we were able to be one of the top podcasts raising money for Meals on Wheels. Just a way for us to kind of give back a little bit.
Blake Oliver: [00:41:25] Cool. Well, David, it's always a pleasure. If people wanna reach you online, where can they do that?
David Leary: [00:41:33] On Twitter and LinkedIn is probably the easiest - @DavidLeary.
Blake Oliver: [00:41:34] I am @BlakeTOliver. Until next week. David, stay healthy and safe.
David Leary: [00:41:41] Awesome. Bye.
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