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Comment by chrissnell | Hacker News Reader

My dad owns a successful chain of bicycle stores in Texas. He’s been in business for almost 51 years and he’s one of the largest bike dealers by volume in the country. He has nearly a hundred employees and a bookkeeper. Despite having a proverbial dozen balls in the air at any time and despite having people on the payroll to do bookkeeping, he sits down at his computer every night at home, logs into the ERP system, and reviews sales and receipts. He catches all kinds of crazy things. Credit card fraud (before the chargeback even comes), internal theft, mis-priced items, mistakes, you name it. He has great employees but even the best make mistakes and he’s learned this habit over the decades the hard way. I remember sitting next to him as a kid, watching him pour over cash register journal tapes that were yards long, looking for problems.

My point: if you let this kind of fuck-up go undetected for over three months, you have to at least assume some of the blame and acknowledge that you probably could have caught it if you scrutinized transactions. Every good business owner does it.

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> if you let this kind of fuck-up go undetected for over three months, you have to at least assume some of the blame and acknowledge that you probably could have caught it if you scrutinized transactions.

I work in eCommerce and occasionally there will be something like a script or config gets messed up and an issue with billing will happen. And being the "expert" I'm usually the one called to fix it.

I wish I could count the number of tense discussions I have had that are along the lines of:

  Them: We haven't been charging tax in Canada for three months because the config was wrong. Fix it!
  Me: (some more polite variant of) So just to confirm, this has been wrong in your ERP... hundreds of thousands of CAD of uncollected VAT... for 3 months and you're just now noticing?

It is, unfortunately, an extremely common discussion. That or some close variant of.

This tells me we have a long way to go to increase business intelligence literacy in companies.

Not sure a ton realize that data is now a core piece of their operations.

Well, I am sorry but in my eyes this just shows bad product quality, bad transparance and missing understanding of basic business stuff on the side of the product. The only reason for software to be existing is to NOT mandate users to check stuff manually.

Users should be doing sanity checks of financial transactions on a regular basis. You even want an external party doing audits as frequently as is reasonable.

That doesn’t mean every transaction needs to be manually revived, but major outliers and a random sampling is a good idea.

So software is a "guarantee" thing already that people can trust in? I wonder how many software engineers will be out of their jobs if that actually happens, we will see

Quickbooks takes a stab to categorize my books for me. But you better believe, while I’m no CPA, I’m in the books at least once a week making a modicum of effort to understand and work on these things.

I’m far from perfect, and that’s why the CPA comes in after me to check. But if i wait for those quarterly checks to “check in” on quickbooks, that’s on me.

Generally speaking software makes things faster, not better. Good software for a bad process will simply expedite problems.

I tell my clients all the time why I can't just make a "quick change" and I have to manually review the data sometimes and go through a ton of code review. I tell them...

> As a human I can only mess up one or two orders a minute. Computers are uniquely qualified to mess up thousands of orders in seconds.

As it happens, I'm reading this thread while taking a break from writing tax handling in a piece of e-commerce software.

It relies 100% on the settings of the application in question, because tax codes and procedures vary greatly around the world, and it's internationally used software. There are even some stores using this software that sell items to and from different countries using the same website, so it can be set up to handle tax differently per product.

Not everything is taxed everywhere, so it will accept it without question if someone sets up a product with the tax class "none", and happily log, process and store an order with 0% tax.

Yes, it's a footgun for the inexperienced to be able to accidentally commit tax fraud, but no, the software can't just override the user input and insist that a 25% VAT should be applied to random things based on ... what? The name? A hunch? MaChInE LeArNiNg?

Manual audits are used to discover human error, be it my error in creating the software, or your error in the data supplied to the software. I can create the logs and make them as easy to read as possible, but if you don't read them for three months, that's on you.

Everything you wrote is correct. But still, if your product does not transparently show and alert such events, overall product quality is in my opinion bad. Dev or lead or product manager should not be ok with this. But this pretty mich reflects current state of software development. Errors and stuff are in way too many cases "ok" to occure.

I think what the poster is saying is that, as far as the software is concerned there IS no event to alert. You live in the US, but setup the taxes as if you live in the Caribbean? You're responsible for the setup, and as a business owner responsible for either setting it up correctly, verifying that someone set it up correctly or paying the auditors to do that for you.

Yeah it sucks, but the more we try to take the accountability out of the humans and put it into the software, the worse both the accountability and the software gets.

Not AI, just statistics and double checks. In the old days that was done by people that knew what they were doing now it's a job for programmers. Having alerts about too many strange entries in the transaction log/inventory is something I've implemented.

I agree 110%!! This is just a miss by developers who do not understand the use case and business impact. I have rarely seen systems that implemented business logic alerting until after the company has been screwed. Perhaps not even then. It is a disconnect between the developers and the business. Stripe should be sending emails/notifications as invoices pile up in the "draft" state. That edge case was never examined. Total miss and prime example of the move fast and break things world we live in now. I view these services like Stripe as cutesy little services because of this and I would never trust my business to them. Diligence is on you but the marketing department sells the opposite to unsophisticated customers.

Just like everything out of silicon valley, creaky bare bones bullshit with meager support and a total hands in the air philosophy when it comes to responsibility.

As a US customer Eventbrite sends me an invoice/receipt in GBP yesterday. I scramble around looking for an invoice in USD and find nothing despite putting all of my information in pointing to the US. It's like doing business with toddlers.

They payment was processed in USD but there is zero mention of exchange rates or anything. My support option? Contact the poor guy trying to make his life easier by using their service. I have come to expect this vapid garbage unfortunately.

> The only reason for software to be existing is to NOT mandate users to check stuff manually.

Software exists so users don't have to do stuff manually. But people should absolutely check on things periodically. That doesn't mean it's always necessary to check every single transaction, but spot and sanity checking is mandatory diligence, IMO. I pay my CPA to do my taxes so I don't have to do them myself, but of course I sanity-check the end result before signing off on it.

And OP made a huge change to how he was invoicing/taxing his customers, and then didn't verify that things were working properly after making the change? That's just irresponsible.

Stripe's documentation and API could probably stand to improve here, but that's the nature of products and API UX: never perfect. I do think it's pretty lame that Stripe's support and product people were evasive and did a bad job of admitting that the product had some rough edges that need to be improved.

But... c'mon. Not checking something as basic as "are my customer's payments being processed properly" after making a large change to the payment processing pipeline, and only finding out something was wrong, three months later, after an honest customer asked why they weren't being billed? That's pretty bad.

At EOD how many invoices are in draft status?

Is it more than 0?

Is it more than yesterday?

Seems like 2 or 3 dead simple controls on his part could have avoided this.

The existence of software does not abolish your audit & compliance responsibilities.

The existence of audit & compliance responsibilities does not abolish the responsibility of the software to reduce foot-guns. The number of people here arguing the opposite is completely insane.

A re-reading of the remarks suggests to me that they aren't arguing exactly the opposite. I'd put forward, after all, that no-one wants to create footguns, but folks are recognising that footguns are inevitable anyway, so plan accordingly.

As for why they're inevitable, the context is that most enterprise software is off-the-shelf and serves many markets, so configuration becomes the point of weakness. Only bespoke software written for a very narrow sector, or tailored to serve a single business, can really hope to do better.

We might hope things were different, but they're not, and as long as software continues to be developed by the humans, it's likely to remain that way.

None of this is meant to absolve Stripe, however, since in this particular instance they rather appear to have contributed to the fuckup by omitting a key element of auditability, viz. the clear reporting of exceptions.

No disagreement at all that ERPs are generally garbage, especially for how much they cost. But this comments makes me think you have never dealt with international taxes. The rules are insanely complex, there is no global standard for communicating the tax, multiple systems have to be in sync with each other, and some systems even use different rounding algorithms...

I'm all for blaming the software (which by the way in this case is made by a huge company I am 100% sure you know and costs hundreds of thousands of dollars to operate)... but the real problem here is the complexities of tax (I used Canada as an example but the US is the absolute worst because each state makes their own lows) is not a software quality problem, it is a data and open standards (or lack their of) problem.

But since the lack of standards is not being fixed any time soon, sometimes it "is" the user's fault.

> all that ERPs are generally garbage

I'd argue most ERP's are fine, it's the implementations that are garbage.

It's funny that, with the importance of tax to government revenue, why do governments not make a habit of funding/creating really high quality tax software for businesses/individuals to use? Increases in collection efficiency have historically been associated with growth of the state coffers (and state's whose bureacracies failed to adequately capture tax had to resort to funding themselves in other ways, frequently in the past through "expansionist tendencies", ie, war--for territory, resources etc...which then only works if you can pay for soldiers and equipment). Not that governments seem great at making software (in general), but with something so critical, a focus on this seems like a "sort of" low-hanging fruit...

> It's funny that, with the importance of tax to government revenue, why do governments not make a habit of funding/creating really high quality tax software for businesses/individuals to use?

Because there is a strong lobby that prevents it.

https://www.propublica.org/article/inside-turbotax-20-year-f...

Money has too strong a foothold in American politics. (In other countries too, but especially in the land of the free.)

Ah yes I heard about this tax software lobby before. It's weird in this case since it's like "money fighting money" haha

Not just the “TurboTax” lobby, but also a strong contingent of anti-tax conservatives. One of their approaches to gain sympathy to their cause is to keep making taxes hard. If taxes are hard, the general population will want less of them.

That's not fully true. There is also a contingent of people who like to use the the tax code as a mechanism of policy apart from efficient collection of revenue.

Tax credits for education, clean energy, penalties, small businesses, mortage interest, each one of those one-off changes adds complexity, and in total ultimately can make the process dramatically more difficult.

While all of this is true, other countries have a system where the government tells you what tax they believe you owe, and provide the details of how they reached this number.

The citizen can either pay that number, or offer amendments to the details which imply a lower rate (or higher if you're a masochist, I suppose).

That's independent of the complexity of how that number is derived, and in balance I would rather the US (as a citizen thereof) use this sort of system than the one we happen to have.

One thing to add: You're typically still obligated to file a return if the prepared taxes are not correct. You're not "off the hook" in any way by accepting what the prepared statement says. This mostly bites e.g. entrepreneurs with more complicated taxes, especially if you filed for an extension on the business side.

In the US that's mostly because that's the biggest lever the Federal government has to pull. The power to legislate things within states directly is mostly devolved to the states so Congress mostly has the tax code to point a firehose of money to incentivize things. It's why the Affordable Care Act hinged on the individual mandate initially, all the regulation of healthcare legally depended on the existence of a tax to put it in Congress's legal authority.

> There is also a contingent of people who like to use the the tax code as a mechanism of policy apart from efficient collection of revenue.

There is nothing inherently wrong with that. Whether you do or do not agree is a different question.

It's interesting to look at different cultures:

The Swedish word for "tax" is "skatt", which literally means "treasure". Historically it was part of the treasure to be collected by the monarch and other people in power. So, not really a way to cover government expenses, but for somebody in power to enrich themselves further. Luckily, the country has moved on from that, just kept the word (and the king).

The German word for "tax" is "steuer", which literally means "to steer". That makes it clear that those fees are not just collected to finance government expenses but to even steer society in a certain direction, i.e., what you mean with policy.

One could make taxes very easy in a way that would definitely boost the popularity of the anti-tax crowd. Makes taxes a single bill sent out at tax time. No tax collections, not withholdings, etc. You get a bill, you log into an IRS website, enter in the information for donations, dependents, etc., and you get your final bill you have to pay. IRS can even prepopulate that data for you and just have you sign off or make any needed modifications.

You can streamline the process and at the same time turn it into a single bill that would be much more shocking to tax payers than the current situation where they often get either a refund or a small bill.

Given how bad people are with money, the number of people who can't pay their taxes would skyrocket if withholding is replaced with the scheme you are proposing.

Let's say somebody makes 100,000 USD a year and pays 40,000 USD in tax on it. Today, they see 5000 USD on their account every month. Sometimes it gets adjusted a little up or down, depending on what they did on the side, had some stocks, mowed the neighbors lawn, whatnot. But their lifestyle is generally adjusted to 5000 USD a month. Housing, utilities, entertainment, restaurants, hobbies. Now tomorrow we switch to a scheme where they instead get 8333 USD on their account every month, and a 40,000 USD bill every spring. You'd be surprised how many people would adjust their lifestyle, with direct consequences even for tax revenue. You can even imagine a new loan sector that offers you those 40,000 USD in spring that you then can pay off over time. Great, now the monthly payments essentially go through a bank before ending up as tax, but the bank takes their cut. Everybody loses. (Well, except the bank.)

Now you could argue that's the individuals' problem. Get better with money. Educate people, teach it to kids in school. (Really? The education sector is already overwhelmed as-is.) That's not how society works though. Even if the well-off educated elites would like (which is what the HN crowd is part of, no offense..). Humans are not rational agents. If they were, the world would look very different.

>Given how bad people are with money, the number of people who can't pay their taxes would skyrocket if withholding is replaced with the scheme you are proposing.

If I was optimizing my actions based on what would create the most anti-tax sentiment, this would be a positive outcome, not a negative one. What's worse than a bill from the government? One you can't afford to pay and that causes you to take on debt.

To be clear I'm not optimizing my behavior on such a metric nor advocating for others to do so. I was talking about the purposed hypothetical of lawmakers who were making such an optimization and what sort of laws they would, in theory, be supporting.

>One of their approaches to gain sympathy to their cause is to keep making taxes hard

I'm not sure where you get this from. People on the right have been yelling about simplifying the tax code for a long time. Flat tax, "postcard-sized tax form," national sales tax, all kinds of ideas have been floated. Even eliminating the income tax altogether and going back to funding the government through tariffs, those the people who suggest that wear a lot of tri-corn hats or subscribe to "Reason" magazine.

The fact of the matter is the tax code is the biggest trough from which politicians can reward donors, lobbyists, and other allies. A nice tax carve-out for left-handed buggy whip manufacturers is easy and cheap, and nobody reads all 1100 pages of some omnibus bill, so whoever slid it in can claim to be "for small business!" (the right), or "making the rich pay their fair share!" (the left).

As for the general population, all of their taxes are taken out of their paycheck. Taxes aren't hard for them. They pay a few thousand in income and payroll taxes over the year, they get a thousand or so back in a refund, and they think everything is great.

If there was a bill that eliminated all the tax code and replaced it with a brochure-sized alternative, there might be some on the right who would object, but EVERYBODY on the left would lose their minds. I can't think of a single progressive who has supported a simplification of the tax code.

Straight from the horses mouth. Grover Nordquist and other anti-tax conservatives have been staunchly against allowing the IRS to do any sort of tax prep for the public for fear that will somehow lead to more taxes (ignoring the fact the IRS doesn’t create tax policy out of thin air).

https://www.huffpost.com/entry/grover-norquist-taxes_b_30056...

You seem to recognize that "tax prep" and "tax code" are completely different things, so I don't understand how or why you are making this your argument. Simplifying the tax code is much more a right-wing thing, maybe even an entirely right-wing thing.

Very odd argument.

Because I was responding to a question specifically about government-provided tax prep solutions... why do governments not make a habit of funding/creating really high quality tax software

Nordquist can be both against improved tax prep software/procedures and for simplified tax laws. We know he's against the former; he's explicitly stated he doesn't want the US government producing tax prep software or doing any sort of additional legwork on the behalf of tax filers.

Your comment was showing up as a reply to mine, so I assumed you were responding to me.

I read Norquist's article as more along the lines of "don't let the IRS determine what is and is not taxable," not so much about having them produce tax prep software. I suppose you can squint and read that, fair enough, but that does not address the issue of whether Norquist supports or doesn't support simplifying the tax code.

The only right wing proposals to "simplify" the tax code have been ridiculous proposals like the flat tax.

You know, the one where a single mom with children to feed pays the same percentage of her income as the single billionaire that wants to buy a 3rd yacht.

Look up Grover Nordquist. He has devoted his life to making sure paying taxes doesn't become too easy. And he ain't no lefty.

>You know, the one where a single mom with children to feed pays the same percentage of her income as the single billionaire that wants to buy a 3rd yacht.

And the proponents of a flat tax would say "so?"

There's a fundamental ideological incompatibility here and unless one side stops caring or puts the other in the ground the bickering will continue.

>You know, the one where a single mom with children to feed pays the same percentage of her income as the single billionaire that wants to buy a 3rd yacht.

I guess you have never read anything about the various flat-tax proposals. There have been several, and they have all accounted for those with lower income levels.

One of the fundamental tenets of the flat tax is 14th Amendment "equal protection." Is it constitutionally acceptable to treat a rich person differently from a poor person? The flat-tax people say no. Progressives say yes. I do agree that a progressive tax system has merits with which I agree, but I also think it's perfectly reasonable to assert that falls afoul of equal protection, and therefore should either be rejected or an Amendment should be presented and passed to account for it.

Progressives tend to turn this distinction into a moral argument about fairness, which is not how a government that is bound by law is supposed to work. If you want the government to work on a moral basis, don't be too surprised if a later government with different moral frameworks do things you don't care for.

>Look up Grover Nordquist

Somebody else brought him up in a comment. Taking your assertion at face value, you have one data point suggesting the right doesn't want to simplify the tax code. Good job, but I've got a competing data point of Paul Ryan, who was an actual Congressional leader in the Ways and Means Committee talking about the flat tax, and not an activist gadfly. I think my singular data point carries more weight than your data point.

A progressive tax treats everyone equally. It taxes Jeff Bezos the same rate for the first $25k as it does me. Just like it would charge me the same rate for the last billion I earned. Everyone lives by the same set of rules. Anyway, progressive vs flat tax is orthogonal to simplifying the tax code because a graduated tax rate is not complex and is the very least of our current worries when it comes to tax code complexity.

As for Paul Ryan, he proves my point. His proposal included a huge break in corporate rates in exchange for a modest break in middle income taxes.

Not sure how software is going to always find "...credit card fraud, internal theft, mis-priced items, mistakes....".

I don't care how good AI in finding tumors in x-rays is, I still want a set of skilled eyes to confirm findings.

It's the same reason I double check all my paychecks to make sure I'm paid the right amount and the deductions are correct. All of it's automated on the backend, but it's still my money and worth double-checking.

No I wasn't thinking it's a replacement, not 'directly' replying to the ancestor, just riffing on the idea. :)

> why do governments not make a habit of funding/creating really high quality tax software for businesses/individuals to use?

They do. We can leave aside the practice in many European countries to compute your income taxes for you, based on reporting by your employer and financial services. Even in the US, high quality software is provided for sales tax compliance. In fact, according to the Supreme Court, the presence of that software is one of the main reason they overturned their "no interstate online sales tax" decision in 2018. One reason was

> Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state-level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability.

Which, I guess to return to the point we set aside, is because companies can lobby for public software for their benefit, but tax prep companies can lobby against public software for their benefit.

I have enough experience with local and federal government that there is no way I want them to build any kind of software. Much less a complicated tax software.

It might work in the EU but in the US there’s state/county/municipality taxes that can get quite complicate. My zip code has a small area in my county and my county is at a 6% tax rate. Most of the zip code is another county that has a %7.5 tax rate. I have to double check large online purchases just to make sure it’s correct. Almost every place shows the wrong tax at checkout due to using my zip but’s it’s always fixed when my card is actually charged.

Most people are using SAP or Oracle to do this kind of thing because they already know the ins and outs of tax locales.

If the tax law is so complex that the government can't correctly implement tax software, how is the government going to collect the taxes?

They pour the resources and money into the enforcement side instead of the collection side.

It's often easier to evaluate compliance than it is to engineer a compliant system.

The software would have to work everywhere. The tax collections (review/enforcement, really) process only has to work in one place. Tax law in one place is usually clear enough; the complexity is in the aggregate.

My state doesn’t have to give a rip that NYC has a city surtax on this but not that, or that some other jurisdiction treats clothing items up to $100 as non-taxable while we put the limit at $175.

The federal government is only one part of it. States, counties, and cities can also impose their own income taxes or sales tax. Or like Florida they can choose not to have an income tax.

I suppose that would be like asking the EU commission to provide tax software for all its member states.

> why do governments not make a habit of funding/creating really high quality tax software for businesses/individuals to use?

In the US, jurisdictional/funding issues are the biggest blocker. There is no federal sales tax, so the IRS can't use its budget to pay for this. State agencies are not going to be able to use their funds to pay developers to add functionality for a different jurisdiction, and ditto for counties/cities/special districts, which tend to have much smaller budgets anyways.

The best avenue would probably be something like ITOR (the funds that give USDS its wide remit to help any gov agency with their tech needs), but states and localities aren't always open to receiving this kind of help. (It did happen with unemployment programs during the pandemic, but the lawyers had to lawyer pretty hard to make that possible.)

That said, congress could fund this tomorrow if they wanted. Budgetary concerns apply to executive actions in this arena, but the whole idea sounds like it's necessary and proper for smooth interstate commerce.

Government made software… I imagine yearly or bi-yearly updates, horrendous UI/UX, count me out.

That’s honestly only a small part of why I would never want this. More significant, for me, is that this TaxSoftware.gov idea would mean literally thousands more employees on the government payroll, being ineffectual, slow, and bureaucratic. And when their government career is finally over, those people will all take home government pensions, as will their future replacements. Once you create more government, it will never end and will never go away.

“The only thing government is good at is creating more government.” - P.J. O’Rourke

This applies to every industry and consequential process unfortunately. Take something like GDPR deletion requests. Many mid-to-large organizations have automated flows setup to purge accounts after users make requests after very detailed planning with legal and compliance teams. Companies assume this is the end of it and that they don't have to audit and perform maintenance at the engineering team level because it's something that someone in support or another team shoved off the side will own. What you find is one time it's not purging file uploads, other times it's not purging user PII, etc.

This all comes back to how poorly we integrate the solutions we build. The position of engineers is such that a free pass is often given for failures like these that are fairly well obscured from view. Similar failures for different roles within the same companies get treated differently. While engineers hold outsized power, it is very difficult to completely address these issues.

One more thing to add to this: scrutinizing transactions isn’t just for catching bad stuff. It’s also a way to spot the good. For my dad, it’s a way to spot up-and-coming salespeople who are punching above their weight, for noticing high-dollar sales to repeat customers and making sure that those folks are well cared-for. It also tells him what bikes are selling well and helps him make strategic decisions for buying.

For your SaaS, it might be noticing patterns across your customer base and using these patterns to refine your product to cater to a certain facet of customer that seems to like your product, or spotting potential transactional issues before they cause a churn.

To be fair, in this case, the author was tracking his KPIs, and those suggested that all was hunky dory, but what he wasn’t tracking were the actual payments being received against invoices that never converted to an open state. In this case, the invoices were left in a draft state on Stripe’s side. And who could’ve expected that they’d need to occasionally check for draft invoices?

It seems like it wasn’t made clear in the docs that invoices aren’t finalized in these circumstances until later.

This sounds like something good old fashioned double-entry bookkeeping would have caught immediately (hunky dory income from Stripe seemingly falling into a black hole). No need to scrutinize every transaction until you notice the ledger isn't adding up.

It sounds like a classic example of how accrual bookkeeping can be misleading due to timing issues (the sale has already been booked even though the cash hasn’t been collected). I know it has other advantages vs. cash bookkeeping, but cash is so much easier to understand that I have always chosen it whenever possible (i.e., for a service business).

If you have the data, either form of bookkeeping should be 'just' a shift in presentation?

(I don't know whether the software used makes this easy?)

Yes, a lot of software can toggle between them via a trivial UI toggle

Thanks!

Btw, you could also fit this into the conceptual framework of accrual accounting, if you modelled counterparty risk.

Could you? I thought accrual methods weren't allowed to think about future probabilities and had to decide on whether to recognize an event or not. I mean, if you had counterparty risk insurance, that would make sense. So I guess if you treated yourself as self insured, you would could create the same accounting treatment?

I don't know about what's legally allowed or not. (Might also depend on jurisdiction.)

From what I remember, in general you have to recognize outlays with certainty, but you have more leeway in how you treat inflows.

In general, you can also keep whatever you want in your books and run them however you like; you just have a legal obligation to also keep accounts that are in line with established standards.

You see this distinction in GAAP vs non-GAAP numbers in the US, where GAAP stands for Generally Accepted Accounting Principles.

In banking there's an obligation to model counterparty risk; but I have to assume that banks keep multiple copies of their balance sheets and accounts around:

One version for eg tax purposes, and another version for things like determining capital requirements and risk exposure; if different rules apply in the different domains.

Double entry booking would have shown a growing accounting accounts receivable and an undersized cash account. Sure, you might dig into why that is, but it wouldn't leap out.

Heck, in many ways, double entry bookkeeping on the accrual basis would be less likely to notice it.

Depending on the process, maybe. I don’t know the landscape of accounting integrations with Stripe, but I probably wouldn’t want to sync a Stripe draft invoice as an open invoice to my accounting app. If there’s no open invoice, there’s no reference in the GL, and there’s nothing to be caught apart from an informal ‘cash flow seems to have taken a hit’.

It’d take both an open invoice and running an A/R aging to catch this one, which isn’t implicit in double-entry accounting.

I don’t think it would. All the invoices were left in a Draft state, so I don’t think that appears on your ledger. You’d have to look at your list of Draft invoices to see it going up and up.

That feels weird to me. If some dashboard is telling me "nice, your revenue is growing!", but the money actually flowing into the bank account doesn't look right, I'm going to investigate. Immediately. I'm not going to just trust those metrics when the actual real-world measure doesn't match.

What is weird is how their accounting software didn't raise 5 different alerts when they have AR outside of their due dates. I have a small business and mine raises alerts all over the place when something slips the due date for AR.

Is it just me thinking this is actually crazy that they didn't notice even through a quarter closing? One could argue they're a small business but then how does the business not notice multiple months of AR being delayed.

Poring over individual transactions sounds like a terrible, if not impossible, way to identify aggregate trends

You’re absolutely right and to be clear, my dad also pours over data roll-ups, charts, etc., but he’s never stopped looking at receipts. It’s a habit he’s had since the 70s. Back in the day, he used these electro-mechanical cash registers that had very loud typewriter-like receipt printers. At the end of the day, the manager would run the journal and my dad—-in his office across the store—tell you what kind of a sales day it was simply by listening to the sound of the register doing the end-of-day sequence.

There's a persistent meme on HN that it's straightforward to make a business that "runs on autopilot", with no human intervention. I'll admit that such a business is possible, but I'm deeply skeptical of the durability of such a business.

I'd much rather bet on a business owner like your dad, who's deeply involved. Sounds like your dad's receipt reading was a great habit to have, and paid dividends far outside of just "making sure things were running OK on a daily basis".

LOL, it's true. The idea of the quick exit is also part of the HN culture and I think that would be very foreign to people like my dad. People who build small but profitable, businesses and run them for the long-term are underappreciated in the tech world. I don't know about you but if I was building a SaaS, I'd be looking for the tech equivalent of In-n-Out Burger: something you build and spend most of your time making sure that it does the same thing consistently for years on end, and just enjoy the profits and dependability.

I'm right there with you. I've been building and running a job board for the last few months, and I'm hoping it becomes my own little SW equivalent of an In-N-Out. It's profitable, and slowly growing, so it's moving in the right direction.

Someday it'll be my own personal Double Double Animal Style.

Then you underestimate the human ability to recognize patterns.

Most of the time, the brain does this better than any machine.

That's why we don't have self-driving cars yet.

Unless you're Kim Peek you're not doing inventory or trends in your head.

> The SaaS GUIs sort of work for the high level stuff but there's way too much information to decode the Business.

> You get used to it, though. Your brain does the translating. I don't even see the code.

> All I see is up and coming salespeople, valuable customers, strategic products.

> You want a drink?

> he sits down at his computer every night at home, logs into the ERP system, and reviews sales and receipts

Sorry, what?

How is this OK or even normalized - he should not have to check every single receipt every night. You hire people to do that, and if they cannot do it right, you hire someone else.

As OP mentioned, it wasn't a gradual thing, and when you have a lot of customers, it can easily slip through. Even your father would be the same here - if a few people who should have been charged a recurring bill did not, how would he remember that?

> Every good business owner does it.

Absolutely not. Every good business owner gets someone to take care of it, and then double checks their work at times.

Yeah, this is nuts. Sounds like he has no internal controls, except for going over everything each night. But that’s not a very smart nor efficient way to go about it.

If you compare that dad story to the SaaS story that this article is about, it's pretty clear whose strategy is more successful.

My dad is not next to me to reply, but your rebuttal patterns a conversation that he and I had many times over the years, when I was first getting my start in business and tried to tell him he was too old fashioned in his business methods. The bottom line is that you absolutely have to be involved in all levels of your business if you want to be successful and don’t want to be taken advantage of by the unscrupulous. This doesn’t mean that you shouldn’t trust your folks. In fact, he’ll be the first to tell you that you have to trust your people. But, bottom line, you can’t outsource this level of care and attention to detail; you must be involved and you must be constantly on the lookout.

It sounds like a lot of work but over the course of many years running the same business, you develop a sixth sense for problems and can quickly scan a spreadsheet of receipts and spot issues. There are dozens of other “versions” of the late-night ERP scan. He can do the same thing walking across a showroom floor or taking one of the company’s Sprinter vans out for a drive.

It’s a way of life for him. He lives for his business and still works seven days a week at age 74. His business is exceptionally well-run and has been recognized nationally for it.

https://www.mysanantonio.com/sa-inc/article/SAInc-Flux-Bike-...

I love this Q&A exchange:

  Q: How’d COVID impact your business?
  A: Terrible. We haven’t lost any employees, but we’ve had staff who’ve lost family members to COVID.

I was expecting him to talk about financials but this highlights what you said around his interaction with employees. Thanks for sharing.

Your dad seems awesome, what a great role model.

> you absolutely have to be involved in all levels of your business if you want to be successful

But it does sound like your dad is a very effective delegator and has given a lot of autonomy to people in the business - a skill you definitely need to be highly sucessfull in business.

So, maybe... stay involved at all levels, then find people who are good at a role (that you trust) and give them autonomy... and the you don't have to stay in the weeds for all roles any more?

To the parent comment's point, maybe the receipt checking part could have gone that route, but there was never any one who was right for a role like that in the business?

> maybe the receipt checking part could have gone that route, but there was never any one who was right for a role like that in the business?

It would be interesting to learn what his red flags are (for errors and fraud), what his markers for attention are (good customers and staff).

I wonder if some of this could be scripted or otherwise encoded. At a minimum it might help him out.

> The bottom line is that you absolutely have to be involved in all levels of your business if you want to be successful and don’t want to be taken advantage of by the unscrupulous.

I am a highly anxious person, and it can be debilitating.

But when you're talking about taking payments and arranging the collection of tax, I reckon it's wise to treat your anxiety like a colleague. Give it the best chair; make sure it has lunch, and not too much coffee. And listen.

I concur. I also happen to run a business and although I employ almost a hundred people I have never let my eyes of the "tape". I trust my team and owe a great amount to them for helping run the business. But if they make a mistake that directly affects my bottom line, it's ultimately my fault.

Your dad sounds awesome.

If your dad loves the work, okay cool. But your effective implication is you cannot have anyone else do this, which is obviously absurd because there are companies much much larger than either of ours that pull it off.

The key point is not "the owner has to do it", it's someone has to be held responsible for this.

For smaller businesses, it's likely the owner. For someone like your dad's, it's usually someone else. Even a solid bookkeeping system would have picked up what OP missed.

> you develop a sixth sense for problems

100% agreed, but for the owner/operator it's usually all things, but for the person who is responsible, it's usually a lot more of the minutiae.

It's literally impossible to be the master of all things.

To a point, yes. I mean, bikes have changed a ton in 51 years and I guarantee you my dad would struggle to work on the newfangled high end high tech stuff, nor would he be the guy that you'd want to professionally fit you to your new road bike. He's got people on the payroll who do that, for sure.

Bookkeeping is different, though. He's actually been defrauded by a bookkeeper in the early 1980s. I don't know the details but she was siphoning money from the business in some scheme, probably a 1981 version of OP's Stripe API issue. If you simply trust a person like this and don't verify regularly, the mistakes and frauds happen. Receipts is where the rubber meets the road for a retail biz and I just don't see a substitute for an owner who cares and checks.

> and don't verify regularly

I think that's it really - you need to have checks and balances on all things (including yourself imo as the boss).

Personally I would not want to be double-checking receipts every day (and with 100 employees, the volume is likely significant), but if he enjoys it, that's all that matters eh!

While I'm pretty sensitive to "victim-blaming" and feel for the fellow involved here, and there's certainly some evidence that Stripe may have shipped an under-tested product, I would argue that the distance between

> Every good business owner does it

and

> Every good business owner gets someone to take care of it

is…maybe not really that large? Both amount to "every good business owner ensures that receipts are checked daily," and that clearly wasn't happening here.

Similar situation as OP. My dad started the business (his 3rd overall) 22 years ago and it's been growing steadily since. My dad still does daily scans of our ERP. I run the business with him and we have 40 employees, and I too have had similar conversations with him.

While I'm sure there is a better way to do this (e.g. invest in BI, hire and train a person to do this etc.), the fact of the matter is no one else is as invested in your business as you. So you are wired to find issues (even if none exist). It might just be an old-school small business mentality, but it works.

At the same time, it's tied him to the business in a way that he doesn't know how to get out.

I think your mentality is right (as a small business owner myself).

However, to push back a bit, I think sometimes it’s easy to believe that we’re the only ones who can do something because we’re the only ones who have lived and breathe it for 5+ (Pick your number) years. And one might be surprised if they actually tried outsourcing how competent some folks can be.

Can you share what kind of tasks you've successfully outsourced? In my experience it was very hard to outsource task with a vague definition like "look for things that aren't running smoothly".

The low hanging fruit answer is "admin." It's easy to fall into this trap of "only I know how the whole business runs; so I should just keep doing admin stuff." But you'd be shocked at how quickly a competent administrative assistance can handle some of this stuff (including pre-drafting email responses in your "voice").

Next step up is stuff outside of your core-competency. So that's where the CPA comes in to take some financial stuff off your plate. This can be hybrid with an admin assistance.

Then you get into the "core" functions. For a media creator, that might mean editing. Again, it's easy to fall into a trap of thinking some other editor won't be able to match your style or voice. But when you hire someone who sees themself as primarily an editor, and they're good at their job, they're really good at adapting and adopting voice.

With all of these things, often the person you're offloading to can't match your output 1:1. But if they can get you 90% completed rough drafts of the final deliverable, there's immense value there all the same.

Thanks. Maybe my issue was that the people I hired just weren't competent enough.

I completely agree.

Coming from the tech world, a lot of my focus has been setting up processes, piece-meal outsourcing and letting employees have more autonomy. Recently we even set up a small team in the Philippines to handle data entry.

However, I've grown to appreciate his view as well over the years.

> no one else is as invested in your business as you

This is so important, and I think it's what differentiates small owner operated businesses from multinationals and chains.

Your employees are not going to idly look through logs to see if everything is running smoothly when they are done with their tasks, they'll just go home and call it a day.

> Your employees are not going to idly look through logs to see if everything is running smoothly when they are done with their tasks

Because that's a job!

To me that makes sense, like if you own a factory, visiting the production line might tell you what is really going on at the core of the business.

You are a business owner? I have similar experiences as the OP. You cannot simply hire someone to oversee such large extend of information and business. Yeah that would be a CEO. But no ceo is willing to do that shitty administration work. Automation could help maybe. But generally it's just you yourself who needs to do it.

LOL did you miss the part where he said his dad has 100 employees and is one of the biggest bike dealers in the country? How successful is your company?

I think this is an unfair comparison. There is a big difference between checking the work of multiple employees who might type stuff in wrong or credit card fraud compared to OP who has a fully integrated billing system provided by a very large and well-funded company who have failed to get some real basics right.

The MINIMUM most people would expect would be a notification either by email or on the dashboard to say that an invoice cannot be processed and at least that would highlight the problem. Even better, when you enable Stripe Tax, it should highlight the people who cannot be charged tax and likewise when you add a new customer who doesn't have the right info, it should notify you.

I find it really frustrating when a multi-billion dollar company cannot think of UX 101 and the customer has to do the heavy lifting.

Agreed that Stripe has some product & UX issues here, but if I'm going to make big changes to how my customers are billed and taxed, I'm going to very carefully watch the result of those changes for a while to make sure it's working properly. Seems like OP didn't do that, and that's pretty irresponsible, IMO.

Agree. Such behavior is unacceptable for a paid service. I can understand there would be bugs etc., but leaving draft invoice dangling there without any alarms raised is beyond reasonable. Let invoices go out and help the client collect the money on time is vital for such products. It's eye-opening to see someone blaming the business owner instead of the software vendor.

OP assumed that Stripe would get it right exactly as they wished it would work, and wasn't verifying it. The problem literally started as soon as they enabled it: "I deployed it on November 6, 2021, the same day that Stripe stopped billing a significant number of my customers, left all their invoices in a Draft state, and didn’t tell me about it."

This is just another variant of "cloud first" mentality, assuming that cloud service providers are actually going to be better than you (as opposed to just cheaper) in carrying out these tasks.

The companies I've worked for put enhanced auditing and reporting in place before this sort of thing went live to make sure it was working right.

> This is just another variant of "cloud first" mentality, assuming that cloud service providers are actually going to be better than you (as opposed to just cheaper) in carrying out these tasks.

I think it is a variant of "assumed correct" which gets me into all kinds of trouble when I make that assumption.

Your Dad has 100 employees to delegate to, and therefore has time to go into detail on the things that matter to him, in this case sales and receipts.

This guy is working alone and likely has less time to go into detail like that.

It doesn't sound like he reconciles the ERP system to the bank statements every night. That seems to be the appropriate analog. Meanwhile, the author was monitoring all the KPIs, so they were looking at what they should look at.

I would think that "money flowing into my bank account" would be a KPI. OP did seem to notice something was off there, but ignored it! Instead he decided to trust a dashboard that just told him "you revenue is growing, yay!" That seems foolish.

From what I understand from the article, the Stripe dashboard shows nothing wrong, and indeed, apparently shows draft invoices as income, or it’d have been fairly certain the revenue stream had cratered.

> ...and he’s learned this habit over the decades the hard way...

Yes. 51 years in business. I'm positive that the "hard way" that Dad learnt his lesson was by losing money.

Please do not be judgmental of OP.

I agree that a business owner should be tallying things at minimum every month to make sure numbers add up, but Stripe handled the screw-up poorly, and needs some serious retribution.

How does he catch credit card fraud? What does it look like?

I was about to reply to you, then I realized I was typing out a guide on how to commit credit card fraud. Not this time! ;)

(I worked for 6 years in that side of the industry. Particularly when it might apply to point of sale software.)

Here’s a real example that happened to him a few years ago. He was out of town on business and there was a big sale, around $15K if I recall, to a customer from Mexico. The sale was done just before closing (something he saw in the review) and the card was manually keyed in. The story was that the guy’s card “wasn’t reading” so the employee keyed it in manually, a huge red flag. The charge went through but of course ended up in a charge-back a bit later. If you weren’t scrutinizing your receipts and doing double-checking of the big sales, you might miss this until the chargeback hits. For him, there was nothing to do except educate employees and double-down on policies regarding manually-entered cards, big sales made just before closing, etc.

Could you explain why a big sale just before closing is an indicator of fraud? I don't understand.

In a brick-and-mortar business, closing time is when employees (i.e, non-owners) are in a hurry to get the store cleaned up and shut down so that they can go home. They’re tired and they might feel pressured to just get the sale done. Scammers know this and so closing time is a good time to come in and try to pass off a fake credit card with a stolen number. Weekends, when many less-seasoned employees work, is another popular time.

That's also the only time (closing time and weekends) for anyone with a job to buy stuff, no?

Assuming normal closing hours of 18:00-20:00 o'clock of course.

Yes, absolutely, and this is why fraud detection is often as much art as science.

In the example above, you have someone coming in making a large purchase, which is probably odd if you've never seen this person before (eg: you would have expected them to come in and "kick the tires" and talk to employees a few times before making the actual purchase, even if they did a lot of online research). Plus the non-working card, and being late in the day. Of course, it's also possible that the whole transaction could be legit. If you suspect fraud though you can often do or say things to gauge the persons response. Tell them that for such an expensive purchase you'd really like to tune the bike up and make sure it's perfect, can they come back and pick it up first thing in the morning? Stuff like that, if the person accepts that, or seems to genuinely consider it, it's probably not a fraud sale. If their immediate reaction is "no way", or they get defensive, it could be a red flag.

The fraud indicator in this case is that the card is a dupe, hence why the machine couldn’t read it and the number needed to be manually entered. So when the charge went through, some poor soul elsewhere in the world had to issue a chargeback.

ed: sibling comment nailed it also. Didn’t even consider that, good stuff

Blaming the victim, wonderful.

When I step on your toe, you should apologize to me, because you could've been more mindful of your surroundings and prevented it.

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