Low Code Services - OutSystems
An award-winning family-owned accounting firm, Schwartz & Schwartz has helped thousands of individuals and small business owners in Southern California achieve greater financial success. The firm’s partners take great pride in their deep understanding of their local community, their decades of tax preparation experience, and their people-first approach to accounting. They’re also committed to maximizing the benefits that a modern technology-driven approach to tax planning and preparation can bring to their clients.
To realize the full potential of this future-focused, tech-forward approach, managing partner Jacob Schwartz had a vision. He wanted to build a software application that would make it possible for more people to access Schwartz & Schwartz’s accounting expertise. Called Hedgi, the new app would leverage the power of AI to enable small businesses to maximize tax deductions and minimize audit risk. Schwartz partnered with Xebia to bring his vision to life by building the app on OutSystems.
Turning industry-leading small business accounting expertise into software
After more than 35 years in business serving the greater San Diego community, Schwartz and Schwartz was thriving. Providing a full suite of small business accounting services, including corporate and partnership tax preparation, bookkeeping, and payroll, kept the partners busy and in high demand. But Jacob Schwartz imagined a more scalable business model for the firm – one that would make it possible for Schwartz and Schwartz to share their industry-leading expertise with a far larger clientele.
“We’ve long served as a one-stop shop for small businesses in our community,” says Jacob Schwartz, Managing Partner at Schwartz & Schwartz. “As the business has continued to grow and blossom, we wanted to be able to reach more people, and help them, without overtaxing our personnel. That’s the idea that Hedgi is founded upon, taking our data, our benchmarks for tax write-offs, our ways of coding transactions, and transforming those things into an app that could help small businesses operate more efficiently and stay out of trouble.”
Hedgi codifies the vast library of tax deduction histories that Schwartz & Schwartz has built during the firm’s many years in business into a set of rules that users can leverage to determine how conservative or risky they’re being when they categorize a particular transaction as deductible or not. This way, users can see whether or not professional accountants from Schwartz & Schwartz would agree with the categorization, but they can also see what percentage of other users from their industry would categorize the transaction in the same way.
“In the app, this percentage is expressed as the user’s risk,” explains Schwartz. “Within the app, you can designate how much risk you’re willing to take, meaning how many people have to agree with each categorization for you to be comfortable with it. Some people look to minimize audit risk by only applying deductions with a high approval rate, while others are willing to stand by every encountered deduction regardless of the Hedgi risk score. Every small business owner is different. The program democratizes the idea of being able to do your own books while gauging how much risk you’re willing to take on your tax return.”
Hedgi also includes a performance benchmarking feature, which can help small business owners understand how their key performance metrics, such as gross profit margin and spending in various categories, compare to those of others in their industry.
To build this innovative app, Schwartz & Schwartz needed access to software development expertise sophisticated enough to create the AI models that drive the benchmarking process. They also needed to be confident they were building on a platform with robust data security – so robust that larger financial services firms wouldn’t hesitate to rely upon it. And they needed to stay within a limited budget.
Schwartz & Schwartz found all of these capabilities – and more – with Xebia.
Building Hedgi on OutSystems
After an initial engagement with another development firm didn’t work out as Schwartz & Schwartz had hoped because the organization failed to deliver on time and with quality, Schwartz turned to Xebia.
“From the moment that Xebia stepped in, the app started going where it needed to be,” says Schwartz. “The vision was there from the start, and the Xebia team would create something, and we’d give feedback. Hedgi was born from the constant back-and-forth that’s the sign of a strong collaborative relationship.”
Schwartz & Schwartz chose OutSystems because they knew they needed a scalable platform that had the potential to serve a growing regional or even national customer base. They didn’t want to be burdened with managing on-premises hardware, applying software patches, or ensuring availability and uptime. And, with the firm’s reputation for accuracy and reliability on the line, they needed industry-leading data privacy and security.
“One of our biggest concerns has always been data security,” Schwartz says. “For us, reputation is everything, and if we were to have a breach, that would severely compromise our reputation. We needed a platform that was built to deliver secure digital financial services at the scale we hope to eventually grow into.”
With identity management, role-based access controls, data encryption, and audit-readiness features all built into the basic OutSystems platform, and available monitoring for SOC 2 Type II compliance, Xebia’s approach fit the bill.
Plus, Xebia’s team was able to deliver the application faster and at much lower cost than competitors. Because Schwartz & Schwartz was funding the projects themselves – rather than relying on investors – this cost-efficiency was a key factor in their choice of a partner.
“Because the team was building on OutSystems, they were able to leverage a lot of pre-constructed modules that a custom dev shop would have had to build from the ground up,” Schwartz says. “I’d estimate that this approach delivered 30 to 40% more value than we got from the first firm we worked with. And it’s not just the platform, it’s the team. Xebia took our idea and made it real.”
A future-ready app built on a scalable platform
Hedgi’s recent go-live has been successful, but the app had already received rave reviews from many of Schwartz & Schwartz’s existing clients, who were already making use of the software before its general release.
“Our clients love Hedgi,” Schwartz says. “We shifted everyone over to the app back in 2021, even before all of the features were complete. Even when there was just a general ledger and profit and loss statement, users felt the program was helping them have more visibility and control over their bookkeeping. Now, with the addition of the benchmarking features, it’s helping them make better business decisions, and that’s something they really value.”
Hedgi has created massive internal process efficiencies for Schwartz & Schwartz, enabling the firm to complete clients’ tax returns in a small fraction of the time it took before. It’s also allowing them to expand their business model by offering new partnership services to accounting firms. The goal is to help CPAs and EAs stay relevant in the face of advancing competition from larger companies, by automating low-risk transactions into tax-basis financials. This saves CPA firms time and money, so that they can combat rising labor costs and improve profitability, all while maintaining people-centric, relationship-based businesses.
Hedgi is ready for future growth. Because the app was built on the scalable OutSystems platform, it’ll be able to handle expansion as more and more customers sign up.
“The benchmarking scores will just get better and better as more people use them,” Schwartz says. “The ultimate goal is to create a vast library of bank rules that can be applied across industries to improve risk management and decrease audit risk for small businesses everywhere.”
Already, Hedgi is streamlining the audit process for the tiny fraction of Schwartz & Schwartz’s clients who do get audited, making it so that what used to take multiple months to resolve can be concluded in a matter of days or weeks. By building Hedgi in partnership with Xebia, Schwartz & Schwartz is accelerating the entire accounting and tax preparation industry’s progress towards the future.