One of the benefits of technologies like artificial intelligence and optical character recognition (OCR) is their ability to free humans to concentrate on more complex and high-value issues.
Trullion is doing that for accounting, auditing, and financial professionals, its co-founder, and CEO Isaac Heller said.
The problem Trullion is solving
The sector’s most significant issue is the collision between business systems that are becoming increasingly complex and an underlying system that is manual, disconnected, and backward, Heller began. The sheer pace of business is accelerating while regulatory burdens for business increase. The resulting inefficiencies cost time and money.
“Scarier is the risk of fraud, non-compliance, and the risk of not trusting what GAAP and IFRS standards stand for,” Heller said.
Businesses contend with data in different formats and locations, and those numbers support some big decisions. They inform investor decisions and are the basis of financial reports and retirement plans. Trullion improves financial professionals’ abilities to work with those numbers by removing what Heller said are three typical silos in the industry.
They are the internal accounting team, the ERP system, and the auditors. What Trullion does is utilize OCR, AI, and natural language processing (NLP) to extract the source data and place it in a clean, normalized layer. Connect the internal team and the ERP silos, and you’ve eliminated all three because auditors want clean and accurate data.
Trullion’s unique solution
Heller said many solutions focus on one of two areas in this process. Some improve data extraction while others concentrate on calculations. Extraction-related companies often dive deep into that side to seek a higher extraction rate. Heller said that is a complex problem to solve and offers diminishing returns.
Trullion does both to generate a proper feedback loop.
“We don’t put all of our eggs in the OCR and AI bucket,” Heller said. “We put some in that bucket, but we focus on the overall workflow. Maybe OCR and AI take 70 to 80% of the data they need; maybe it just suggests some data. But at the end of the day, that’s the confidence. It’s just going to help with some of the grunt work, but they’re going to have the strategy and decision-making on their play ultimately.”
An ideal blend of humans and technology
This is not about replacing accountants; it’s about freeing them up for higher-value tasks. The technologies connect more, but not all, dots, so a more detailed workflow is established—less manual entry, more problem-solving.
“To connect the source document or Excel or system with the financial workflow is a much more accurate and powerful experience,” Heller said.
That embedded OCR can preprocess imperfectly scanned documents or ones containing non-standard terms to ensure their readability. Trullion’s system is also overlaid with NLP capability. Over time that will allow systems to begin rules-based NLP training. It has already started with lease contracts and will soon extend to revenue recognition and purchase and finance agreements.
“We’re building the model and applying it to different contracts,” Heller said.
How ESG and other regulations are changing the environment
One area where NLP can make significant contributions is helping professionals contend with the constant evolution of accounting standards, Heller said. Specific lease options and delivery obligations are now a focus.
Heller said these standards are also expanding from the quantitative to include the qualitative. Companies now have to address ESG responsibilities, a shift still in its infancy. It will take time to understand the implications and duties required of this shift fully. A certainty is that it will make business more expensive for some.
“I think it’s going to be a lot bigger than accounting, and it’s going to be a lot bigger than what’s in a few contracts,” Heller said. “It’s going to be very, very global and cross-functional, and there will be much pushback because it forces people to do business a lot differently.”
Does blockchain have a future role?
Heller suspects the accounting industry is five to 10 years away from blockchain-based protocols. He believes blockchain presents some challenges related to its nature of connected, immutable experiences happening in real-time. The instant a transaction occurs, commissions and taxes are paid. That puts accountants and auditors in a unique position as they seek to fulfill their duties.
Silo reduction as a fraud-fighting tool
The majority of finance professionals who responded to a recent survey said they expect fraud to increase in the future. A more connected system, one with no silos and can get more and better information into the hands of the pros, is a solid fraud-fighting tool.
“The more source-based accounting you can do, the more you can bring into the workflow, whether it’s communication between internal parties, communication between an internal and external auditor, is significant,” Heller said. “The general idea that with automation, the auditor can do more of what’s essential, which is catching fraud, and less of what’s not crucial, which is, let’s say, reading agreements, that’s our mission here.”
“(Trullion’s) not a fraud-catching platform. We’re a platform that helps people go into a more modern framework to focus on catching the fraud. Look at Wirecard in Germany, a $2 billion cash asset that was missed year over year by one of the big four. As recently as a couple of months ago, a company like Clariant, a Swiss chemical company audited by the Big Four (had a similar issue). These things are happening all the time.”
Trullion closes $15M Series A
In mid-February, Trullion closed a $15 million Series A round. It was co-led by Aleph and Third Point Ventures, with participation from existing investors Greycroft and Verissimo Ventures and financial executives including Bob Mylod, Artie Minson, Jody Padar, and Guzel Lumpkin. The funds will be used for hiring and product development.
“Trullion is upending the traditional accounting paradigm by breaking down data silos and creating a single source of truth that saves teams time and gives them new levels of accuracy in their financial data,” said Robert Schwartz, managing partner at Third Point Ventures. “Trullion has quickly demonstrated the unique value it delivers to the accounting and finance industry, and we’re excited to invest and directly assist Trullion as it executes on its mission.”
“These are real kingpins of the financial services world,” Heller said. “They’re real stakeholders. They’re early-stage investors, but they’ve seen what it’s like to go IPO and be on a public company board.
“I think it’s an interesting trend to note that many of these VCs are now going through cycles of IPOs. They also had the appetite for risk and innovation and investment, accounting and audit – on their radar. It might not have been 10,15, 20 years ago, but it’s here. And I think that we as a company are probably the best representation of that maturity.”
Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.