Jaclyn Anku, ProAdvisor Training & Certification Leader: On today's episode of In the Know, we'll be exploring split billing, which is the ability for you to mix and match client or firm billing for each of your client's products. Here's what to expect. You'll see the update in action, and we'll then be joined by ProAdvisor correspondents Terrell Turner and Michael Ly who weigh in on how this helps them price their firm's services.

Hey, ProAdvisors, I'm Jaclyn, and you're watching In The Know. It's the show designed to keep you in the know on the most exciting updates to QuickBooks Online. So here's the scoop. Currently, you have to choose between your firm or your clients paying for all of their connected QuickBooks online subscriptions, but we heard you want to have more flexibility and control over how to bill, especially for products such as QuickBooks Online Payroll and QuickBooks Time, which have variable fees. Enter split billing now through QuickBooks Online Accountant and you can choose by product who pays for the subscription and fees. This includes QuickBooks Online, QuickBooks Online Payroll, and QuickBooks Time, with bill pay coming later this year.

And now for the Fast Facts:

• Split billing is available to all QuickBooks Online Accountant users who have access to their firm’s billing and subscriptions.
• You can access split billing through QuickBooks Online Accountant, and then go to add a client.
• This was launched in July to all users in the United States. 

If you find this update interesting or helpful, go ahead and like, comment, and subscribe to our In the Know YouTube channel.

So with that, it's my pleasure to welcome Abby to the show. Abby, thanks for being here.

Abby Chu: Thanks, Jaclyn. I’m happy to be here. So to jump into the actual experience, there are a few ways you'll be able to do this in your products. 

Navigate to QuickBooks Online and you'll actually see a couple of changes. You may have already noticed this in your subscriptions and billing, but we've now consolidated all of your clients into one tab. And from here, you would be able to see split billing—who is split, who is only billed to your firm, and who is only billed to the clients. The great thing about this is we have added a couple of quick shortcuts so that you can filter down your list and very quickly see who is on split billing. In your subscriptions and billing tab, you would be able to tell who is actually paying for that subscription, whether it's billed entirely to the firm, entirely to the client, or potentially under the split billing model.

How you would add a product to split billing can be done in two ways.

The first way is when you're adding a new client. This would be your typical QuickBooks Online Accountant add client experience. In the past, you could only select one of three options: bill my firm, and bill my clients either with a direct discount or revenue share. The great thing about this new ability is now you can choose to split the billing, and as you can see reflected here for QuickBooks Online versus QuickBooks Online Payroll and QuickBooks Time, you would choose the billing option for each subscription.

So again, you can choose to bill my firm under the ProAdvisor discount with QuickBooks Online. For payroll, let's say you don't want to handle that and you want your client to pay for it. In this case, you would select a different billing type. Let's say you could choose to bill my client on the direct discount or the revenue share option, where the client carries the billing, instead of your firm carrying the billing for that subscription in particular.

The other way you can do this is in the subscriptions and billing tab in QuickBooks Online Accountant, where you would add payroll. You'll see the three different options reflected here, so you can either bill my firm under the ProAdvisor discount, bill my client with a direct discount, or bill my client and the firm receives a revenue share. Keep in mind that this is only available for any new subscriptions on QuickBooks Online Payroll or QuickBooks Time.

For existing customers who may already have QuickBooks Online Advanced and QuickBooks Payroll, you can also choose to split the billing after the fact. So if you have already set up your client on firm billing and now you're saying, “You know what, I think it's better if you can handle the cost for payroll,” you would be able to go in to  existing customers and choose to transfer the billing to them. That's the other way that you can do this for, again, existing customers.

Both of these flows showed you how you can split the bill for new customers, as well as existing clients you're working with. I'm really excited to share this feature. I know this has been something accountants have asked us for for a long, long time. We're hoping that this will help simplify your monthly bill just a little bit more as you continue to work with us in QuickBooks Online Accountant.

Jaclyn Anku: Awesome. Thank you so much, Abby. We'll turn now to ProAdvisors Terrell and Michael for them to weigh in. Terrell, Michael, thank you so much for being on the show. So happy to get to hang out with you and talk about split billing.

Terrell Turner: Awesome. Absolutely. Thanks for having me.

Jaclyn Anku: Okay, so as you heard about in the current state or in the previous state, it's really been this all-or-nothing proposition where either your firm or client has to pay for all of the connected apps. So tell me, Michael, a little bit more about why this has been kind of painful.

Michael Ly: When we talk about billing for our customers, especially the apps and the software that we use to serve them, oftentimes it's a selling tool. If we want to be able to close a client, sometimes the ability for us to absorb the cost of their software and make it a part of our service package gives the client a view of us that we're increasing value for them, and they're not having to worry about managing the billing. They can see our services and the software we use with QuickBooks, all packaged into one fee.

The challenge becomes when that client wants to sign up for more software after we've started working with them—when we didn't originally agree to absorb that piece of software. Or when it comes to things like payroll or timesheets, charges for QuickBooks Time are done on a variable basis per user or per employee that's using the product. And often, the speed at which our clients grow doesn't align with the rate in which we can increase prices on our side. So it makes administration of the billing of the software very cumbersome. Can we just have all of our clients pay QuickBooks directly versus us handling the charges for them?

So that's why it's a big deal for firms like mine, because the ability to be able to actually split the billing gives us another option in this whole process.

Terrell Turner: When you think about it strategically and take a step back, it's a very big deal. As I spend a lot more time on sales and marketing, you start getting a gauge of the expectations clients are having; a lot of times, the expectation is that if you [the firm] start off paying for something, they're [clients] going to expect all the stuff that they add on is just going to be included.

As Michael was saying, the sales conversation becomes a lot easier to say, “Hey, you want to add this?” Now we can say, “Do you want it to be billed directly to you or do you want it to be billed to us?” So now, if you want it to be billed to us and we raise our prices, it’s no longer an uncomfortable conversation. It's not like you're just trying to slip something in on the back end. I think this split allows us to have a helpful conversation.

Jaclyn Anku: Okay, so that’s a perfect segue and a helpful conversation with split billing. I think firm owners like yourselves will have the opportunity to go back and talk to their existing clients about their billing relationship, or for new clients, have different types of conversations with them. How does this split billing give you the ability to elevate the conversation at this important moment in the client lifecycle? Terrell, let me let me start with you on that one.

Terrell Turner: If I say to the client that we can bill a portion directly to them, what that's going to mean is that the rate of increase in our prices may not be as high as it was in the past. For a client that's trying to manage their expenses, that sounds like a good deal because they're now going to have a set fee between them and Intuit. How much of the price increase do we have to bake in to cover it? Bow that we can clearly split it, this gives them [clients] more visibility. It also makes the conversation a bit more of a win win.

Jaclyn Anku: Oh, I love that. Win win. How about you, Michael? Does this enable you or your team to have more strategic conversations with clients about billing?

Michael Ly: Yes. It actually allows us to isolate the different service lines and tie them to the different software packages we're purchasing from QuickBooks on behalf of the client or that we're directly billing to the client. So instead of saying it's all or nothing, we either have everything absorbed with us and/or have the client pay for everything. We can isolate QuickBooks Online's charging to our bookkeeping services. We can isolate payroll charging to our payroll services, and we can isolate QuickBooks Time charging to our timesheet and people management services so that conversation allows more variability.

Based on the client, it also lets us understand what they value. Do they value us handling a lot of those fees and monitoring those so they don't have to see them and they want to see them packaged—and in our bundle of services. Or do they want to be able to monitor and see how price increases are affecting them and the actual cost of software to administer these services? And if they value that, then we can obviously direct bill on each of the different types of products through QuickBooks. 

Jaclyn Anku: Oh, I love that this allows you to better serve your clients, meet them where they're at, and Terrell, as you put it, a win-win situation for everybody. Or maybe a win win if we include Intuit in the mix: a triple win with split billing on the picture. Michael and Terrell, thanks so much for hanging out on the show and for sharing your invaluable time and insights. Appreciate you. Thank you.

Michael Ly: Thank you.

Terrell Turner: Thanks for having me.

Jaclyn Anku: And thank you for watching this episode of In the Know. I'm Jaclyn, the host of In the Know and leader of ProAdvisor training and certification. Be sure to like, comment, and subscribe so that you don't miss a single episode. We'll catch you next time.

Meet the ProAdvisors

ProAdvisor Terrell Turner: Co-Founder, TLTurner Group

ProAdvisor Michael Ly: CEO, Reconciled