"Natural path to partnership" with Jason Terry

Today I’m thrilled to welcome Jason Terry from General Ledger Partners onto the show. As a Certified Public Accountant, Jason has more than 15 years in the finance and accounting space, having successfully worked for public, private, and not-for-profit entities with annual revenues ranging from $6M to over $600M.

At General Ledger Partners, Jason and his team offer bookkeeping, general ledger cleanup, and financial consulting services to small businesses and startups, managing the accounting function to maximize their company's potential. It’s a mission our team at Boast knows well and shares, as we have worked with Jason to help innovative clients capture R&D tax credits to recoup a portion of their R&D spend and help extend their product runway.

I’m thrilled to have Jason on to discuss his work in the startup space, the genesis of General Ledger Partners, and the challenges their customers face, as well as what his experience has been wrangling R&D tax credits, working with Boast and supporting customers with a successful capital strategy.

Boast AI accelerates the success of innovative businesses globally with software that integrates financial, payroll, and engineering data into a single platform of R&D intelligence.

Visit Boast.ai, sign up for our Blog newsletter and follow us on LinkedIn for weekly #InnovatorsLive sessions and the latest news to fuel your growth.

Intro and Outro music provided by Dennis Ma whose mixes you can find on Soundcloud at DJ DennyDex.

Transcript

Paul Davenport:

Hello and welcome to What the Tech? From Boast AI, where we talk with some of the brilliant minds behind new and exciting tech initiatives to learn what it takes to tackle technological uncertainty and eventually change the world. Today I'm thrilled to welcome Jason Terry from General Ledger Partners onto the show. As a certified public accountant, Jason has more than 15 years in the finance and accounting space, having successfully worked for public, private and not-for-profit entities with annual revenues ranging from 6 million to over 600 million.

At General Ledger partners, Jason and his team offer bookkeeping, general ledger cleanup and financial consulting services to small businesses and startups, managing the accounting function to maximize their company's potential. It's a mission that our team at Boast knows well and shares as we have worked with Jason to help innovative clients capture R&D tax credits to recoup a portion of the R&D spend and help extend their product runway. I'm thrilled to have Jason on to discuss his work and the startup space, the genesis of General Ledger Partners and the challenges their customers face, as well as what his experience has been wrangling R&D tax credits, working with Boast and supporting customers with the successful capital strategy. So without further ado, welcome to the show, Jason.

Jason Terry:

Thank you very much for having me.

Paul Davenport:

Awesome. Yeah, so for starters, tell us about your background. Where are you based and how did you get into the startup scene in the first place?

Jason Terry:

Yeah, we're based in Texas. I think all of our current employees are Texas based. Part of getting into that tech startup space is being in the Austin area, which is very, very well known for that. Most of my career has been working for small businesses and early stage businesses just kind of ended up happening that way out of college and eventually that space is full of risky companies and you win some, you lose some, and I gained a lot of experience, which is kind of putting down the path of consulting and that's kind of how we've ended up getting experienced in so many different company sizes and industries and that sort of thing. And I am based in Brenham, Texas, which nobody knows what that is, but if you know what Blue Bell ice cream is, it's where Blue Bell ice cream is from. So it's a very important city in the US.

Paul Davenport:

Okay, and that is a reference I can draw from, so thank you for clarifying that, Jason. Yeah, and actually it's really interesting to hear too, that it's kind of out of college, you just found your way into the sector space. That's more or less been my journey too. I'm based up here in Boston. I think Boston and Austin have very similar kind of innovation ecosystems in that if you're in the area and you're looking to work locally, at least before the dawn of remote work and pre-pandemic and all of that, more likely than not there's a startup that's going to want your services or want your skillset there. So yeah, that's something I can definitely relate to and I think Austin is actually enjoying that. And even more than Boston is these days, the growth trajectory down there is huge. So I'd love to learn a little bit more about the customers you're working with today and maybe some of the customers you've worked with in the past. If there are any highlights you feel like pulling up.

Jason Terry:

We do a wide range of things here. You touched on it a little bit in the intro, but I think the most exciting stuff we do is with these early stage, is seed round businesses. One of the clients actually worked with you guys, started out with them when it was two guys and they were like $5,000 in a bank account and now they've done a seed round, they've done their A round pulling in pretty big amounts of venture capital and being able to see companies like that go from two people and an idea into a team of 15, 20 people and in significant backing and pulling in big name customers. We've done that. The other side of it is that we do a lot of... Which is not as much in the tech spaces. We actually get a lot of these GL cleanups, which is companies who decide they want to raise money but have never hired professional accounting and their books are in pretty bad shape.

And being able to come in there and help a founder who's focused on growing his business and doing things the right way operationally, helping them get past that roadblock in fundraising by redoing the past two, three years of their accounting and getting them through there. Those are kind of the two of the big tracks that we go on that we really like to get involved in. It feels like [inaudible 00:04:07] thing about startups and small businesses, you can have much more of an impact. Nothing wrong, I've worked for a large public company, there's nothing wrong with being one of 20 people in your role, but it's a lot more satisfying. You get more job satisfaction of knowing that you're having a more direct impact on the business.

Paul Davenport:

Absolutely. And you can actually see those material outcomes when you're working with a startup versus a behemoth. I know I've said it on the podcast before actually. I've been at startups that have been acquired and then I've had the opportunity to go work for the behemoth company and it just felt like early retirement to me. And I mean, I still want to work. I'm still hungry, I'm still thirsty, and I honestly have too much energy to just go sit back and do the marketing thing at one of those giant companies. So I hear you. That startup ethos is something that I also think is very characteristic of the team here at Boast too, just because we're more or less a startup on our own, right? We've been around for a while, but I mean we started too, like you had said earlier, scrappy couple of founders and now we're 150 plus organization across North America. So watching that impact while still having kind of that startup mentality here is that nice, happy medium. So before I go too long-

Jason Terry:

Yeah, part of it is you're working with... Because of how the credit works, you guys spend tons of time working with startups, so you're always engaged with startups no matter how big you get, that is your bread and butter.

Paul Davenport:

Oh, yeah. We always stay in that lane and I mean it might be a euphemism I've used too many times here, but we are elbow to elbow with a lot of the founders we work with. Similar to what you guys are doing at General Ledger too. I mean, it's not so much fractional work that we're doing here, but founders are busy, founders are focused on driving innovation, they're focused on actually developing the new solutions and developing new products and they don't have the time or the focus and nor should they really be focused on things like applying for R&D tax credits necessarily because it takes a skillset that again, isn't their purview. They should really be focusing on the core values of their product and getting that over the line. So that said, I'd love to know a little bit more too about what you guys do at General Ledger. I know you did allude to it a little bit, helping teams at that early stage embark on fundraising, but what are some of the other services that you guys kind of do as an expertise?

Jason Terry:

Yeah. Our main kind of focus by just volume of clients is just fully outsourced accounting. So that point of a founder or a small team that has... They don't have the expertise, it's not a good use of their time. We can kind of take on the full range of all accounting, finance, payroll, HR, all those sorts of things. As firms get a little bit bigger and maybe just need a specific role like a kind of controller or CFO, we can also kind of plug in on a fractional basis.

But yeah, we really kind of live in that. We will take everything off your plate, just manage it, work with you, your board, and just kind of really do a lot of those things as well as these more urgent kind of, we need to pass an audit, we need to do a fundraiser real quick, and that is more of a... We kind of drop in behind the scenes. They have a team maybe doing the accounting and we just focus on cleaning all that stuff up without disrupting their current operation so that they don't skip a beat and they don't have the expertise to do that necessarily, but we can do that behind the scenes.

Paul Davenport:

Nice. So they can keep being agile, they can keep scaling and they're not going to miss a beat, like you said. They can move at pace and limitations in terms of I guess human resources, the actual people who need to go in there and do the financial work isn't something that they're going to have to contend with if they're working with you guys. Now, a bit of a broader question that brings it back to General Ledger and working with Boast. I guess I'd love to know R&D tax credits among the companies that you work with, I'd love to know just how many of them are taking advantage of R&D tax credits. How many of them knew about R&D tax credits, I guess, when they were getting into the startup game, and what has it looked like in terms of capturing this capital for the clients that you work with?

Jason Terry:

Yeah, I mean for the most part no clients starting, especially in the software and tax base, they don't really... I guess maybe if you were a serial entrepreneur, you've done it recently, but none of the clients we've had were familiar with this. And for a lot of them, especially ones that are still pre-revenue, being able to factor in additional cash coming back, because they're at that stage where they actually get recoup money, it's not like a credit on their taxes that they're going to use in 10 years when they're profitable. Like actually tangibly getting cash back in the door is a real big difference. In fact, one of our clients we brought on with you guys this year, it was like pulling teeth to get them to answer questions and help us out. And one of our other ones, they got a physical check from the IRS in the mail and it was, I don't know, 50, $60,000, I don't remember, but I took a picture of it and kind of redacted it and sent it to another client.

I'm like, "Do you want this?" Like you want the government to send you a check in the mail. If you can spend an hour answering questions, I think it's worth 40, $50,000, whatever it ended up being for them. And yeah, I think a lot of the thing is, especially with that, there's lots of government credits. I think people understand that there's credits on your taxes, but one that will actually send you cold hard cash is I think something where... I've got some, I think pushback that people necessarily believe that that's how that works or no, I'm not going to actually get that. I don't really need to credit on my taxes. So that has been very powerful in getting us to convince some people to help us help them because from my standpoint, it doesn't change what I do. It doesn't help me out at all. It's purely for their benefit to get this thing and take advantage. The government's wanting to increase the R&D work, they're trying to incentivize it, so take advantage of it.

Paul Davenport:

Yeah, I think that you've made a couple of really good points that I just want to bring back up too. It's also recouping expenses and investments that these founders have made into their own business or that their founding teams have made into the business. So it's not necessarily some magic figure. It is, you are putting the effort in, you're putting the time in, you're putting the brain power, and the government wants to encourage that. And again, they want that innovation. We can get into kind of the geography of it all, but they want that innovation to be homegrown. They want to support more businesses. It's give and take for everybody. I mean the government benefits, the US benefits by having these companies create more jobs, create more solutions, and just drive innovation in the US. And those companies get to kind of launch a virtuous cycle of innovation too, because you get that cash back.

Again, it's a check. It is money going straight to your bank account, invest that in more R&D, use that to tee up even more activities that could be credit worthy down the line. I know that's something that we really try to emphasize with a lot of our customers. You can plug it in and just see that credit compound year over year because you're really doubling down on that innovation. And I think too, at that early stage, it is incredibly important. I mean, you had said it too, it's pretty revenue for a lot of these companies, there isn't necessarily a lot of capital to play with beyond what you're getting from your bootstrapping, from your angel investors, from your friends and family even. So pulling in this other kind of facet of non-diluted funding, it's awesome. And yeah, very happy to hear that. Now, I'd love to know too, working with Boast to capture tax credits, how has it been? How did you hear about us and what has been your experience working with us to date?

Jason Terry:

Most of our clients have a relatively similar kind of tech stack for what they start out with. And Gusto is a payroll platform that for a lot of customers that don't need a full PEO sort of solution, we work with a lot of people on that platform and I think you guys partner with them. And I'm not a hundred percent sure if it was through some communication or some research there, but it's been three or four years. So my memory's not that great to go back to the exact nexus of this. But I think it came about partly through your relationship with Gusto and the fact that we work with them very closely as well. So it seemed like a pretty natural solution. And as far as how the work has gone, so like I said, obviously we're happy. I'm happy to bring customers in.

We've been doing it for several years now. I think we have a client that sets on their third year. We've got a couple more that we brought on this year. So we definitely have seen the benefits. Again, it's a great win to the customer from a standpoint of its money that you kicked out on payroll taxes that you're going to get back on this credit as long as you meet all the requirements. We specifically don't do taxes. I don't ever want to do taxes or touch taxes or understand anything about taxes, so it's certainly not a service I'm going to do. So for us, it was kind of a natural path to find a partner to work with on that. And you guys, we kind of worked with you at some calls and it's just been a good process the whole way through.

Paul Davenport:

Oh, that is music to my ear, Jason. And again, you kind of hit the nail on the head. I think taxes are such a bear too. And also it just takes so much expertise. You need to be able to speak not only in the vernacular that the IRS dictates, but you also got to understand the innovation that the customers are actually driving and put that into just verbiage that the IRS will not only understand, but they will want to invest in. And you got to make that case. And I think again, without cheerleading, Boast too much, getting that communicated to the customer and also just arming them with that report at the end, that kind of details, these are the credit worthy activities that you did. These are the kind of investments you should be making to get not just those returns back, but to continue driving innovation.

It's valuable beyond the tax credit. And I hope that that is being felt across the customers that you work with too. I'm so happy to hear that we've had some that have been returning for three years, so we want to keep those relationships going. And also to your point about the partnerships too, that's kind of how we've made our entree into the US market. Again, as listeners with this podcast know, we're originally a Canadian business. The Canadian tax credits are robust. They have their whole scientific research and experimental development program that is huge. In the US, there's a few more hoops to jump through, I think, in [inaudible 00:14:07] those R&D tax credits. It's a lot more complicated. So what we've done to date is partner with your payroll providers, partner with your Gusto, partner with your Justworks, partner with anybody who you're already working with at that startup level and using their bona fides, kind of get us through the door, but also to explain what the real value is that we're bringing, that it's more than just doing the heavy lifting of the tax prep for you.

It's really kind of shining a light on the innovation you're driving and how to continue driving that innovation. So happy to hear that's how you found us, because that shows that our partnership strategy is hopefully working and will continue to pay off into the future. From your perch, what is your current take on the view of startups or at least the startup economy today? We talked earlier about I guess Austin and Boston being tech hubs and there being a great ecosystem of both partners and just brainpower in both of those hubs. But I guess what advice would you give to any of your customers heading into 2024 as they were embarking on, whether it's mapping a new capital strategy or just weathering any headwinds?

Jason Terry:

Yeah, it's been an interesting year. I think a lot of the startup space got hit pretty hard or got scared to death by what happened with SVB, and there was another bank too. I think in general, I've seen a lot more cautious activity, a lot more focus from venture funds on cash management cashflow. A year or two ago, board meetings and pitch decks were all on growth and acquisition and just build your customer base, build your revenue at all costs sort of thing. And I have seen that change dramatically this year to where board meetings are much more focused around cash preservation and runway and how do we make sure we get through the next six to 12 months? Because we don't want to be raising funds in this environment right now. They're not necessarily, I would say being acting scared about it, but there's a much more almost like fiscal responsible approach as opposed to this kind of growth at all costs.

Don't worry about it. Someone will acquire you sort of mentality. So I think going into next year, what we have been working a lot with on our kind of tech companies, venture-backed companies, has been being very, very deliberate and very clear about not only growth customer acquisition, but what does that runway look like? How much is the growth going to cost you? How can you protect your cash while not kind of limiting the upside of the business? And how do you communicate to your investors and your board, what that looks like and what that plan's going to be for the year?

Paul Davenport:

I'm just taking some notes. I actually do love that you brought up the bank collapses that were happening, I want to say at the beginning of the year. It happened right when I started with Boast actually, and one of my first writing assignments was covering the SVB collapse and trying to just make sense of it for a lot of our founders. And I think it hit the nail on the head about having a diversified capital strategy and focusing on the runway. Again, I think that's where tax credits become very valuable because in lieu of having funding from those other avenues for more dilutive sources, tap into the money that's going to be available because of the work you're doing. And that's again, a recoup on your investments.

It's money you've already spent and you're going to get it back and that's going to extend your runway, especially when again, we have all these market headwinds. I know it's variable industry to industry, some people are more optimistic than others, but I think just a purse tightening in general is kind of the vibe going into 2024 at the very least. And just again, more fiscal responsibility and communicating to the people who have helped you get where you're going that you are working on keeping that runway tight. I mean keeping it lengthy at least. So what's your plan for 2024? What's General Ledger's goals for the new year?

Jason Terry:

Yeah, it's a good question. We kind of have been... Similar to you, we focused a lot on partnerships for our growth. I've told my partner, I don't ever want to hire a salesperson, not that I have anything against salespeople, but if you can get partners that do all your selling for you, that seems like a much more cost-effective way of growing if you can build in that way. So we're definitely focusing on continuing to build on that. And I think we're not in a fund space like tech, but we're still young. We've been around for about two and a half years, and I think this year we're about a hundred percent year-over-year growth. So I think we want to continue that trajectory next year. Definitely as with all industries, things break when you do that.

So we are cautiously planning, next week, my partner and I have a planning session, try to figure out how we can get through that a little bit, be better about client management, about forecasting. One of the things that we face, which I blame the tech industry to some extent, is there is a huge shortage in the accounting tax financial space. I think partly because salaries in the tech space went up so fast and in the financial space they did not. And so the type of college student that's going to go into an accounting degree, that sort of a field, why would you do that when you can make 40, 50% more in the tech space? So we've seen a huge kind of drop off in available people for roles. So one of our big challenges going into the year is how do we build a pipeline, not of customers, but of people who do the work, people that are interested in the field, and how do we train so we can build up a team of people that can help us grow?

Paul Davenport:

I'm very actually glad that you brought up that point about the accountant shortage just because I think as we've demonstrated at Boast and you've demonstrated at General Ledger, you can still interact with those exciting companies that are driving change, even if you're not working directly in tech. Sure, salaries, that's a point that cannot be overlooked at any rate, because that's at the end of the day, why somebody is going to go to work in the industry they do. You got to live, you got to make a living. But again, tax credits aren't the sexiest thing in the world.

But I'm talking to founders two to three times a week that have the most innovative stories to tell and we're helping them get that done. And I think that, again, showing that meaningful outcome, having a material impact on their business and taking even a .01% of the credit for helping that innovation get off the ground is incredibly gratifying. So as just kind of the whole accounting space reshapes and I think navigates their unique headwinds going into 2024 too, I at least clinging to the hope of knowing that I'm just going to be meeting a lot more really cool companies over the next year and helping them solve unique challenges that while maybe not technically technology focused, are still going to have an impact and drive innovation in the future.

Jason Terry:

The other thing I guess I would just say that I've noticed from working with you guys is from three years ago, the investments you've made in the platform. A couple of years ago I was emailing files and we were sharing stuff, and now I don't have to do a whole lot because you plug into our payroll system, you plug into our accounting system. I don't have to do the tech interviews. I don't understand any of what they're talking about in those. So yeah, my life's got a lot easier as you guys have continued to kind of roll out features. So that's been very much appreciated.

Paul Davenport:

Oh, I'm so happy to hear that. And again, that is something that we're super excited about because we've rolled out all of our integrations. We have our new AI classifier, which to your point, actively and passively tracks for credit worthy activities. And also, again, we just have that expertise, now we have a platform that matches our expertise with the actual workflows. And again, syncing your payroll, syncing your actual Asanas and the actual project tracking all into one source of truth, it makes it a seamless process at the end of the day. And again, we'll write the reports, we'll make sure that its language that the IRS is going to digest and that they're going to return a claim for you. So I'm very happy to hear that. And again, we have even more coming up. I'm trying to zip my lips. Happy to hear that our platform makes a difference. Because I really think it's going to drive us again in the US, in Canada and globally. Great stuff. Jason, I can't thank you enough for hopping on the show.

Jason Terry:

Yeah, thanks for having me.