But while Nikole was automating accounting and scaling her firm through cloud software, banking was an extreme challenge—until she found Relay.
Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.
Nine years into running Momentum Accounting, Nikole has long passed the initial challenges of starting up a firm. Nowadays, she is zeroed in on eliminating accounting bottlenecks and introducing more standardization throughout her practice. It’s part of her strategy to keep scaling Momentum Accounting.
“We’re thinking about how we scale, how we standardize our chart of accounts, our app stack, and also how we work with clients. In the beginning, it was like, ‘Hey, I’ll work with any client that wants to pay me.’ Now, we can be a little more opinionated and know that not every client is a good fit for us.”
Nikole leads a team of seven — all remote, distributed across the United States. “We're very niched in terms of the client size that we work with and where they are in their business journey,” Nikole explains. Her ideal clients are professional service providers and SaaS companies that are “at an inflection point in their business,” meaning they’re hiring employees and focusing on growing their top-line revenue. When a client engages Momentum Accounting, Nikole’s priority is to create the infrastructure needed to support their growth. The firm’s services include outsourced accounting, advisory CFO services, bookkeeping, and payroll.
As the firm grew, streamlining her clients’ accounting process became increasingly important.
Discovering an “immense opportunity” to automate accounting
Like many cloud accountants, Nikole first cut her teeth at a traditional CPA firm. “I did the whole tax and audit thing,” she says, “then the firm added on outsourced accounting, and I moved to that department.”
Nikole started to feel at home. “I fell in love with working in the day-to-day operations with businesses.” This part of the accounting world was more dynamic and presented many more opportunities than the compliance side. She was introduced to Xero and saw how cloud technology was transforming the industry. But Nikole thought that the firm where she worked could’ve done things differently. “I didn’t like how the firm was run like a traditional CPA firm. I thought that there was a better way to run an outsourced accounting department. So I left.”
She started on her own. Committed to running a modern firm, Nikole dove deep into accounting automation in her first year of operations. “I went to Xerocon, and that’s when I got introduced to this world of having Xero and QuickBooks Online as the general ledger with an open API and all of these applications that integrate with it. I saw this immense opportunity to automate many accounting tasks that historically were done very manually.”
Leveraging automation would make her more competitive. If Nikole eliminated manual processes, she could focus on advisory, deliver more value to her clients, and reduce her operating costs.
Nikole wanted to use high-quality technology to achieve this. “In the first couple of years, I probably tried out a hundred different apps. I was like an app addict,” she jokes. “I’ve toned it down since.”
The firm’s toolset became more standardized as it grew. Momentum Accounting now works with a “core app stack,” and all of the firm’s team members are deeply knowledgeable about each app.
The last barrier to standardization and automation was business banking.
Challenges with managing and administering each client’s business bank
Nikole insists on building standardized processes because it makes her firm more cost-effective.
“We run into issues when we can’t make decisions about the client’s processes and technology. Our team then has to stumble through, change our documented workflows, uncover things from scratch, and try to adapt to a new process.”
Having to develop a new process for a new tool with every new client obstructs you from scaling. And business banks were forcing Momentum Accounting into precisely that situation. “We usually discover that a client has issues with their bank immediately because we run into friction right away — during the onboarding process.”
The three most significant points of friction: lack of access to client banking, poor data quality, and lack of flexibility. Here’s what these issues meant for the firm:
No access to banking
Getting access to client banking has always been a challenge for firms, Momentum Accounting included. “We'll be trying to get view-only access to the client’s bank account, and the client is frustrated because they can't get it to us,” Nikole explains. “And we can't start doing our job until they give it to us.”
As a result, clients either share bank logins with their advisor, or the advisor has to chase clients for bank statements. In the first scenario, the firm takes on liability risks; in the second, it’s stuck with a lot of back-and-forths.
This initial friction point usually starts surfacing other problems. Nikole explains: “Normally during this time, the client goes, ‘Oh, I hate this bank,’ and they'll start describing other issues they're having.”
Poor data quality
One of the other issues clients describe: incomplete or unreliable data. Connecting the bank feed to your accounting system is typically pitched as a timesaver, yet it can create more work in practice. “There’s a lot of friction in the bank feed not working,” says Nikole.
Often, banks send incomplete or inaccurate data into the accounting system.
“It will just be some random transaction description. We have no idea what the transaction is. We'll have this long list of transactions to send to the client and ask, ‘Hey, what was this?’ Then when it comes to filling out the vendor information in accounting, that’s a very manual process, because again, the description fields are inconsistent.”
Lack of banking flexibility
Perhaps the biggest problem for Momentum Accounting was that traditional business banks lack flexibility and rarely — if ever — make it easy to delegate banking tasks.
Nikole plays Golden Gate Australian Rules Football (GGAFL) and works as a treasurer for the league. Since the team, the board, and the leadership team changes every year, everyone loses access to their cards after each change. “Nobody would know how to access the bank account. People were paying things out of pocket and then trying to get reimbursed for it. It would take me hours to do these reimbursements.”
On top of that, the old president — who no longer lived in the United States — was still the only person with full access to banking. “We would try to log into the bank account. It would send a two-factor authentication code to him. He's in Australia, so we’re juggling time zones while I'm trying to log in. If we want to send out a credit card to someone, he has to physically be at the bank to do it. The mail would go to his old address, which we weren’t able to update. It was just a complete nightmare where nobody could get access to anything or use the funds because it was all contingent on him.”
In other words, the way traditional banks worked was poles apart from how Nikole wanted to run her firm.
Finding Relay and speeding up the reconciliation process up to 5x
Having accelerated her success thanks to emerging technology and automation, Nikole was always looking for tools to streamline her accounting process further. Then in 2019, she met Relay’s Co-Founder & CEO Yoseph West at Xerocon San Diego.
Nikole tried out Relay herself first. “Every app I roll out for my clients, I always try myself first. I opened a Relay account for myself and put a few thousand dollars in there. The very first thing that I was focused on and was really impressed with was just how cleanly the data came into Xero.”
Nikole explains why getting clean banking data was such a game-changer:
“When transactions come from Relay to the accounting system, you get to see the transaction type. So you know it was a restaurant, home goods, or whatever without having to call the client and track things down. You can also see which team member made the transaction, so you can go directly to them if you have a question. Then, it comes through with the vendor filled out. It will say: ‘Starbucks. Restaurant. Spent by Nikole Mackenzie.’ So you can sort transactions by “Restaurant” and then mass code all of those to meals.”
At scale — when you’re dealing with hundreds or thousands of transactions per month — having rich and accurate banking data is a huge time-saver. By Nikole’s estimation, “reconciling bank transactions when the bank is Relay is up to five times faster compared to a traditional bank.”
While Nikole’s initial focus was on data quality, she soon found other advantages to using Relay. It was easy to add new accounts. She could manage multiple clients from a single dashboard. Issuing cards was a breeze and simplified expenses for her teams.
Now a Relay power user, Nikole is more aware of how much time traditional banks cost her firm.
Getting clients to switch to Relay by putting a cost on inefficient processes
All of the administrative work created by traditional banks adds up to a noticeable increase in operating costs. So Nikole prefers that clients use Relay as an operating account for business banking. And when they don’t, Nikole has to assess the potential costs this incurs on her firm.
“We have a conversation with clients that use inefficient banks or apps. We explain that their bank feed doesn't work, that it's a manual process for us, and that this is reflected in pricing. But if we get you on a bank that integrates with the accounting software, then the price will go down.”
As Nikole tells it, many clients don’t like their bank as it is — but putting a cost to the inefficient process motivates them to switch. “We had a client that switched banks because we went through this exercise with them. They were on a really old bank that didn't integrate with Xero. We had to call the bank constantly. The client was frustrated with the bank as well, but nobody would make the change. There was no catalyst for that change until we raised their prices — then it was like, ‘Okay, I should do this now.’”
Nikole’s advice to firms who want to streamline accounting
Of course, not everyone is ready to switch banks right away. Some businesses, Nikole finds, hesitate to open a digital-first banking account.
But Nikole sees it differently. “I think some people are hesitant to move because they want to know that there's a bank they can physically walk into. But we explain that if a bank is good, you should never need to talk to anyone or go into the bank. Technology allows you to do everything seamlessly.”
As for those that have a loan with their existing bank, Nikole tells them to keep it. “You can keep that line of credit, we explain, but let's use Relay for all your operating expenses. So we can use features like virtual debit cards and the bill pay module. But, you can still keep the relationship with your existing bank.”
For those on the fence, Nikole suggests starting with a small deposit just to get the hang of it.
“I would say move $500 to your Relay account for your own business, or a side hustle you have. Issue yourself a physical debit card. Issue yourself a virtual debit card. Pay a bill through the bill pay module. Integrate it with your accounting software, and just try it out.”
There’s no reason a business shouldn’t be on Relay, Nikole explains, because “it just makes everything so much faster.”
Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank. The Relay Visa debit card is issued by Thread Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. (or Mastercard U.S.A. Inc.) and may be used anywhere Visa (or Mastercard) cards are accepted. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.
