After 100+ years of combined industry experience, thousands of customer calls, and literally millions of lines of code, we at Digits have come to an unfortunate realization:
Small business accounting, in the United States, is fundamentally—foundationally—broken. And software is to blame.
While this pains me deeply, as a lifelong programmer, to admit, it also gives me great hope, because if there is anything we have the power to fix, it's the software!
So how did we get here, and what are we doing about it?
The Digits Journey
Digits was born out of frustration 5 years ago. Over the course of my two prior startups, I was struck by the difference in data quality between the product-engineering side of the business (where we had live user dashboards, performance monitoring, and real-time graphs 📈) and the finance side of the business (where I was waiting 2-3 weeks after each month for a black & white PDF balance sheet and income statement 👎).
"That's crazy!", I thought. All I wanted was a real-time finance dashboard that showed a live view of our cash, burn, runway, sales, and top expenses. "How hard could it be?"
Famous last words.
Over the past 5 years, we have obsessively peeled back the onion, from accrual- to cash-basis accounting, to bank feeds and reconciliation, to transaction string parsing and vendor identification, to chart of accounts canonicalization, to custom ML models trained on double-entry accounting rules, and more.
Every layer reveals a whole host of new issues that compromise data quality and inhibit automation, and the roots trace all the way back to the banking mainframe revolution of the '60s and early '70s.
But don't worry—you don't need to know COBOL to understand what's broken, or how we can fix it.
Accounting is Broken
In the US, over 99% of all companies are small businesses. They form the foundation of the US economy, are responsible for over half of net-new job creation, and deliver almost half of the country's GDP.
And yet, for these ~30 Million small business owners, accounting is broken.
The Problems with Small Business Accounting
Monthly Reports arrive 2-3 weeks too late. The industry-standard is a 15-21 day close, so by the time you get December's reports, January is already almost over. By then, you're thinking about February, not December - that ship sailed!
Financials delivered via Excel or black & white PDFs take far too long to understand, with the key takeaways lost in a sea of numbers. In the age of AI, you should know in seconds what matters and what to focus on.
Today's entrepreneurs, creators, and influencers have no background in business finance: they do not understand accrual basis accounting and have no interest in learning it. Cash is king, except, you know, when talking to banks or the IRS.
That's… Not My Business
To save time and drive down costs, many accountants conflate operational reporting and tax reporting, resulting in a chart of accounts that doesn't represent the owner's mental model of their business. The result? The reports are useless and largely ignored.
Stop Bugging Me!
The questions from your accountant each month seem endless: "Where's the receipt for this?" "What did you buy on Amazon?" "Wait, what are these t-shirts for?" "Was this really a business expense?" And given all the time it takes to answer, and how confusing the resulting reports still are, it's easy to understand why so many business owners question what they're even paying for.
Bugs, Bugs, Everywhere
Even after all the back & forth, it seems any deep-dive into the numbers uncovers rafts of mistakes. It's a tale as old as time... "Did you know you spent 237% more on Office Supplies last month?" "Wait, why?" "Uhhh that's not Office Supplies." Seeds of doubt grow fast, so it's no surprise how many business owners don't trust their own books and feel like they could do it better themselves.
Budgeting is Too Expensive
Most SMBs operate without a budget for a simple reason: they can't afford one. It takes hours for their accountant to massage their P&L into useful budget areas, and hours again each month to reconcile the budget areas back to actuals. Nobody has the time—or the budget!—for that.
The Forecast? Cloudy
Entrepreneurs tend to be high-energy early-adopters, always looking towards the future for the next customer, the next new hire, or the next unlock to grow their business. But most accountants spend so much time ensuring the past is accurate and the present is up-to-date, that little is left for what really matters: the future.
Don't Hate the Player, Hate the Financial System
At Digits, we ❤️ accountants. We've spent years working with thousands of accountants to understand the challenges they face first-hand. With few exceptions, they are unbelievably kind, passionate, hard-working folks who care deeply about helping business owners and getting the details right.
The job is more manual, and more tedious, than you would ever imagine.
Left Behind by the System
To understand the problem, just glance at your credit card statement. It's great at showing the date of each transaction and how much you owe, but everything else accountants care about—what you purchased and why—is lost to the sands of time. Even critical info, like the vendor's name and location, is shortened into a hard-to-read description, causing unnecessary confusion.
Reconciliation Deserves a Reckoning
Endless hours each month are spent reconciling bank accounts—ensuring that what you see in the bank matches what you see in your books. Back in the day, when bank errors were more common, this was worth the effort, but in the age of digital banking and mobile apps, you generally take your checking account balance as given! Today, bank statements should be accessible as structured data via APIs to auto-reconcile your books, but due to the lack of Open Banking laws in the US, they aren't.
Held Hostage by Ancient Software
The most popular SMB accounting software in the US is over 30 years old. The runner up? 20 years. Both rely heavily on manual data entry and archaic tabular interfaces, with limited autocomplete and no underlying intelligence. Modern software design patterns and modern technology have opened the door to radically reimagining the core accounting and bookkeeping workflows to save time, reduce mistakes, and improve understanding. Bringing this to life has become our obsession.
We Founded Digits to Fix Accounting
We strongly believe that the vast majority of bookkeeping tasks can, should, and will be automated, so we've invested years training Digits AI (our proprietary machine learning models) on the full depths of double-entry accounting.
By relieving the tedium, you reduce mistakes and empower accountants to focus on what matters: reviewing & advising the business.
But it doesn't stop there. Modern technology will completely change the way that business owners engage with their accountant.
Your Reports, Ready
We reject the notion that it takes 2-3 weeks to deliver monthly financials, or that your business is best-served flying blind while waiting for the books to close.
While it is true that parts of the monthly close do take time to finalize, the vast majority of transactional data is available at month-end, giving you an early, directionally-correct view of the business when it matters most!
At Digits, we leverage AI automation to deliver DRAFT reports right at month end, and they continually update as the books are finalized. Once closed, we publish final reports, which are ready to share with your investors or advisers in one click.
A Picture is Worth 1000 Words
Numbers are great, and vast tables of numbers look impressive… until your eyes glaze over. It's far easier to make sense of underlying data via graphs, charts, and trendlines, but today that means time spent exporting data to Excel and fiddling with graph options.
No longer. Digits is powered by a new, object-oriented, multi-dimensional financial modeling engine that can arbitrarily generate graphs, aggregations, and trendline analysis for any aspect of your books. Curated insights draw your eye to key changes and anomalies in seconds!
Cash First, Then Accrual
Cash- and accrual-basis accounting each have their own strengths (and weaknesses) and traditionally you (or your accountant) have to pick just one.
While we believe that accrual basis accounting is the right choice for most businesses, we know how confusing it can make things for business owners with less finance experience—and modern software can help.
Digits' live dashboards make it easy to visualize a cash-based view of your business, so you understand what happened and where the cash went, while simultaneously keeping the full power of accrual-based books.
Transaction Review, Built In
Traditional accounting software focuses on the core ledger, but not the workflows around the monthly close, which means both accountants and business owners are left jumping between tools, emails, and spreadsheets to share receipts, resolve questions, and review reports. It's a mess!
We're reimagining accounting holistically, including the entire monthly process and all surrounding workflows, to eliminate the tedium, maximize time savings, and prove that even accounting can be delightful!
Transaction review, live collaboration & commenting, one-click sharing, and customizable dashboards and reports are all built right into Digits.
The Future is Here: Join Us
It is not possible to reimagine accounting by working just with business owners, or just with accounting firms. We deeply believe in building and delivering modern accounting software to both, in parallel:
We work directly with US-based, VC-backed tech startups to fully automate their accounting.
We partner with top accounting firms to bring modern accounting to the full breadth of US SMBs.
Co-Founder & CEO