NEVER RUN OUT OF CASH | Episode 2 with Meny Hoffman & Simeon Friedman

So, Simeon, here we are, episode number two. Um I wouldn't believe the importance of the of the series of finance unless I've done it. Um I feel that when we did sales first time we did sales we got tremendous amount of feedback. The reason we got a lot of feedback is so many people are in sales and they're struggling or even they're successful, they don't have the motivation and they're we're connecting in terms of of the content that they're learning. Feedback on finance is all about the importance of it. And and I knew going into this that it's not a topic that oh, I I'm waiting for a motivational finance. Nobody is waiting for motivational finance. But they know it's important. It's the things like in life that we know it's important but sometimes we avoid. As we started the first episode, we spoke about avoiding. So, I appreciate um you sharing your knowledge and I got a I'm ready for episode number two. And I think we already teased that episode number two will be all about cash flow. So, let's dive into it. Ready? Yep. Okay. So, our listeners don't need an introduction to this episode. Um we could see profitable companies struggling on cash flow. And some of the some of those companies end up going out of business because of an issue of cash flow. Although on the P&L, it showed that they're profitable. We could see people that have phenomenal ideas, great businesses employ a bunch of people and all of a sudden, booms it's out. We're running out of cash. We're burning cash and so on and so forth. Tell us from an accountant perspective, let's make a a a a small intro again on the concept of profit. You could be profitable on cash flow and then let's go in some details about it. Right. So, uh as we spoke in the first episode, right? Just a brief review. Uh when you're analyzing your financials, you have the sales component, you have your costs to sell or what you sold, you have your gross profit, then you have your overhead with selling expenses and overhead, and then you have a net profit number. What defines revenue? Revenue is when you earned the income. What defines earning the income? If you sell products, second the product is out the door, shipped to the customer, you earned that money, right? If you're a service provider such as yourself, if you provide a service, right? And you invoice for your services on a monthly basis, once the month is up, you did your service, you earned that money. Technically, you invoice it to the to the client, right? Your costs are whatever costs physically happened during that period, regardless of if you paid for it or not, right? So, uh if for instance, let's say you bought product from a vendor and you owe the vendor money on that product, the cost is associated in the period in where when you sold that product, okay? You have your expenses. You may not have paid for your expenses, but the expense happened. If you happen to be somebody that's delinquent on paying rent to your landlord, and you owe him two, three months, the fact that you didn't pay him rent that month doesn't mean you didn't have that expense. >> Exactly. You owe them money. So, when I'm talking about profitability from a financial statement standpoint, that is looking at your earned revenue, what you earned, and what costs and expenses were what costs was associated to the revenue, and what expenses you incurred Mhm. during that month, right? >> Could I Could I Could I take a detour a second? Um are you touching also now like the cruel versus cash basis? >> Okay, so let's let's define it out. So, that would be a cruel basis accounting, right? Which in essence is the most accurate way of looking at it. So, which means you're looking at in in a specific period, a month, a year, whatever period you're looking at. >> What happened? >> What happened? What what revenue did you generate, right? And what costs did you have or expenses that you had during that period? Regardless of paid or not. That's the reality. The reality is you earned it and the reality is you had costs associated and expenses associated with it. And that is what your net profit number is, right? If you go back 5,000 years ago, somebody got the a dowry on Adam for $1,000 or whatever money they had in those days and he bought a uh uh uh uh uh uh uh 10 sacks of potatoes, right? He then went out uh he went out to the market and started selling his potatoes, right? Um he then starts collecting the money, right? At the end of the day he collects whatever it cost him $1,000 and then he collects $1,500, right? At the end of the day he's going to be he's going to be he's going to have that $1,500 in his pocket as profit, right? If he goes ahead and buys potatoes and then he sells them, he's going to be left with whatever the profit is. There's no accrual, no cash. It's whatever whatever money I spent, whatever and that's where we are. Today in business, right? People don't business doesn't operate that way, right? It's not a cash basis situation, right? You're invoicing customers. Then comes into it it brings into the comes in the issue of of cash basis. What's cash basis? Cash basis is what did I collect on my revenue and what expenses did I pay out? Basically, it's taking a look at your bank statement, seeing the ins and the outs of your bank statements. Do I have more money at the end of the month than I had at the beginning of the month? I made a profit. Do I have less money? I had a loss. Doesn't mean in reality you made you made profit or in reality you lost money. Just got a payment from from 5 months ago. >> I got a payment from 5 months ago. Wonderful. So, when you look at it from the cash basis, I'm ahead in cash, but that doesn't tell you how your business is performing, right? So, and it's support it's important to differentiate the two. Right? So, then you ask yourself the question, if I'm on the accrual basis, I'm making money, right? Why is my cash flow tight? Right? Could be many reasons. You invoiced the customers during the month or whatever it was, and they're slow on paying. It's going to take you 2-3 months until you're going to collect those receivables. That's a problem, right? If, let's say, you decided to buy a piece of equipment for your company, which is not an expense, it's an asset that you're going to retain, and you have to spend money on that, it's going out of your cash, but it's not a profit and loss item. It's an it's a asset that you have that you're going to continuously having for the next couple of years, but it's still $50,000 out of my cash flow. So, there's a lot that is attributed to the cash flow of the company. One of the documents on a financial statement is called a cash flow. Cash flow statement, which is reconciling your accrual basis profit to your cash. If I made a million dollars in my in my in my during the year I made a million dollars in profit, where's the money? Where's the money? I don't have a million dollars more than I had last year in the bank. I have the same amount of cash. Where did the money go? The cash flow statement actually does a reconciliation to to back out the numbers that are only accrual basis numbers, right? To what the cash basis call it increase or decrease in cash is. So, that's a very important statement which shows you the difference between the two. So, so is there so you could have companies that are on paper, but then they still go out of business because they have an issue with cash? So So, where does a as a business owner, where do I start? >> So, again, it's when you're saying that somebody's profitable on paper and then they run out of money, um it could very well be. Uh it it is it is it is unusual to say that somebody has a one has a great business and he's profitable and he's just running out of money until he gets to a point where he closes down, right? What's the meaning? If he's profitable, where is the money? The money has to be The money has to be sitting somewhere, right? If the person is Chances are it's sitting in I don't know, it's sitting in inventory. He has receivables, right? Where it's not liquid, he doesn't have the cash, right? How do you How do you leverage those assets? So, usually a bank comes and finances the inventory and the receivables and gives you a loan against it, right? So, it is unusual to say I have a profitable business, but I ran out of money, I'm closing down, right? Now, you originally started you know, somebody that's looking to build a business and and has a has a run a run rate of X dollars where he didn't even generate a revenue, there yes. You can have a great idea where the company could could could could be as a great company and maybe a starting to make some money, but I'm running out of cash, right? >> Mhm. In that case, yes, that could very well happen and that's why statistically startup businesses is after 2 years it's a pretty high number in which startup companies after a year or two are are closed down, right? So, how do you how do you mitigate that? We can discuss that and Yeah, so so before before we go into to details on that is um I think I want to I want to dive a little bit deeper. So, you mentioned let's say um slow receivables is a very important thing and I think that business owners don't realize what it does for their business. Um, you know, different industries, let's say construction. We know that a lot of companies, service providers in the construction industry, they they you know, they like they're trying to get the business and they'll and they'll they'll get the business and and then they negotiate on the price and they'll come down from the original margins. So, they're already making less margins on the project. Then there's slow receivables on that and they don't know that that's actually killing all this the profitable projects that they have because they can't just keep up. Exactly. The the the way to look at it is This episode of the Let's Talk Business podcast is sponsored by Flow Digital and Pipedrive. Sales is the lifeblood of every business. No sales means no revenue and no business. 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The expenses and cost are all out the door already. >> Mhm. Customer owes you $50,000, that's your money. That's your money. In essence, if it's not monitored, and you don't you're not on top of your collections, you in essence became a bank. If that money is lost, right? Just to tell you the the magnitude of it. It is money out of your pocket because the costs associated to it was already paid for. Yeah. Right? So, if let's say somebody is working on a his business gives a net profit of 10 10% I'm assuming, right? Which which could be normal, right? I'm not talking gross profit. After everything, a guy makes 10%, right? If a customer owes you five $50,000, right? You would have to do $500,000 of sales to make that back if you lose it. Yeah. If you lose it. And sometimes we see business owners, let's say, go for loans. We'll talk about it separately. And they're paying interest just because they could have made it from their own money that's sitting out there. So, I think business owners just don't So, getting to your point where people don't get a handle of it, my my father always makes always says it where an owner should have a handle of of the receivables to a certain extent, right? Let's say somebody has a 100, 200, 300 customers or whatever it is, right? And he tells his bookkeeper or or CFO or controller, "Give me a printout of the accounts receivable, right?" He gets a He gets a printout of the accounts receivable, right? He goes A, B, C. By the time he gets to letter H, he's bored. I'm not bored, but he's >> because I'm also a business owner. We do the same thing. He's He's done, right? What he should really get is, "Give me a list of the top 10 or 15 customers that owe me X amount over 90 days. I want to see a dollar amount that's above $5,000, $10,000, or whatever it is. Give me those focus accounts. I'm not going to go through a list of 20 pages to go through the receivables. You give me my summary that I need." In other words, >> [clears throat] >> um gear your focus to where the problems are. I just need those top 10 customers. And then you start seeing what's going on. Why we extending them credit for further purchases or uh why isn't collections going after Why we shipping out product when the guy owes me for 90 days, right? There has to be a focus. I'm I can say that that I I throughout my career I've been called many times to companies where the sales team is begging to release an order and the back-end office is saying, "No." because they're extended their their credit limit. And then sometimes I've been called in to to try to explain that they're not enemies, they're actually working for the same company. And the same Well, I have a I have a solution for that, but I don't know if it's controversial or not, but I have a solution for that. >> I like I like to say the following. People may like it, may not, but I've I've been proven that it works very, very well, okay? When you have sales people, they have their interest in mind, right? You have the owners that have their interest in mind. How do you align the interests? Right? If you're going to pay commission on sales, if you're going to pay commission on sales, the salesman wants to get the sale done. Once the sale is done, they earn the commission, they don't really care what happens if the margin is higher, the margin is lower, if we collected the money or we didn't collect the money. I always advocate for my clients. Let's assume that the for argument's sake, I try to keep it as simple as possible. Let's say gross profit on your business is 50%, right? The salesman earns 5% on the sales, right? Which means that how much does he earn on the gross profit? So, he's getting from gross? He gets from gross 5%, right? So, let's take a number, easy number. $100,000 he did over the year, right? He gets 5%, $5,000. >> Yes. The company has a 50% gross profit, which means that the company made on that 100, the company made $50,000 gross profit. The $5,000 he gets is equivalent to 10% of gross profit. I advocate, give him 10% on gross profit. He's not losing money, he's getting the same money. The difference is that now the salesman is conscious of the price that he's selling the product because if he's going to lower the profit, if he's going to lower the sales, right? If he's going to lower the sales by whatever it is, if he's monitored on gross profit, he's going to lose money because of that. So, you want to align the interest together. Yeah, and that's that's a separate conversation because there's so many different ways how to structure. People also speak about gross versus net and then and what goes into that. >> Yeah, net net I I am very against net. >> It does It just makes You have part You have You're a partner with every salesman. Exactly. >> You're going to have to give it the Denver cash money with every salesman after. Why you spend Why did you hire this other person? That's a >> and now the margins went >> Now the now the profits went down. If you keep it the gross profit, there's no argument. It's black and white. We sold what's our cost, that's our gross profit. Don't get involved in overhead, it's none of your business. Okay, so let's go back to to >> Cash flow. cash flow in in terms of So, we spoke about slow receivables is is is a reason. What other reason? You mentioned inventory. >> Inventory, right? You buy in advance. Right? If you're seasonal if you're planning you're a seasonal business and the season comes once, twice a year or whatever it is, you have to start buying months before, right? Your cash you didn't generate the the revenue yet on that receive on on those on that inventory. You're not going to going to start selling it whenever you're going to start selling it. You buy from China, you got to many times you have to give 50% You have to maybe even pay in full prior to them putting it on the boat coming to you. You're out laying cash for which you're not going to you're going to generate revenue in a few months. Then you're going to collect in a month or two or three after that. So, you can have a window of three, four months from when you had an outlay to when you're actually going to collect. That becomes a very, very tight tight issue. Right? How do businesses survive? Right? It's either you have investors or the business has reserves or the business finances, which is very normal to get a line of credit from the bank. >> So, what is the what is a healthy cash flow look like? Like what would again I know that it's going to depend on which company it >> A cash The way I like to do it is if a business has This is a good test. If a business has a line of credit with a bank, right? Let's say your line of credit is $3 million and you give yourself a goal that during the year assuming I have to borrow the $3 million, I want to be able to either pay off the line of credit. Meaning at some point during the year, I should be able to bring it down to zero. Or your goal is I want to bring it down to 50%, right? If you're able to do that chances are you have a healthy cash flow. Doesn't mean it's money in your pocket. You're not walking away with your paying down debt, but at least you're running your business in a way where it has the ability to pay down that. And that's always a good indication. But I'll tell you another secret where business owners don't realize it and I'm very very strong in that way. They don't realize many times the reason why they're tight on cash flow is for the amount of money they personally take out of the company. Once it's out the door, it's out the door. Right? You can say I'm being tight, everything is tight. Yeah, but you took out a half a million dollars out of the company during the year. Where did I take it out? I don't remember taking it. No, okay, let me give you the report. Let's Oh, this and this and this. Oh, the Hassan, I forgot [laughter] about the Hassan. I forgot about Oh, wait, there's taxes and then there's this and there's that, right? You don't realize how much you're taking out of the company. That also affects cash flow, right? Correct. Money goes out. I'm making an investment and the guy said oh, this it goes to them. We're wiring it to this LLC. We're making an investment. It's money out the door, right? At some point it catches up with you. Yeah. So, I think very important is this cash flow projections, you know? Correct. So, what is a how does a cash flow projection >> flow projections basically you need a baseline of knowing what your profit and losses, right? What you're anticipating your sales are going to be. When you're going to collect those sales. When can I expect that money to come in. What my expenses are going to be. When I expect to pay those expenses out, right? So, you're projecting what your flow is and you use historical data to see what the trend is and how how how quickly you you collect on your your your sales and how how how your how you're paying for your expenses. You may have financing and let's say you have term loans where you have to make monthly payments. Two loans has to go into that analysis, right? So, once you you figure out what your expected cash in is based on your projected sales, what my expenses are, how much debt do I have to pay off, throw in the owner wants to take out every month $20,000 from the company, put that in as well. You can project what your cash is going to be in 12 months from now. Then once you have that projection, you monitor it to see how close you are. Mhm. But it could be done. Yeah, but I feel even for small business owners, um you could do cash flow projections as for the year and you could then do it broken down for the next 5 weeks, 10 6 weeks, 8 weeks. >> And I feel that like um going back to what we said I think in the first episode which was a lot of times you you will start coming um um tight on cash because you made this investment, yeah? Now sometimes business owners, especially small business owners, are making this this isolated decision. Let's let's go for this. Let's buy this machine. They're not realizing, okay, where where is the catching up with cash? Yeah, but if they would come to me and I had a client many many years ago where he was in a he was in a business where um he bought he bought the business of some some, you know, el- older gentleman Mhm. and uh it was running, you know, nothing major and he wanted at some point expand and he decided that he wanted to buy a piece of equipment which can help him uh in his production. We financed that piece of equipment. I think it was a $50,000 piece of equipment that he financed over 5 years. Right? >> Mhm. Monthly payments are affordable over 5 years. I'm not talking about the the the the I'm not talking about the tax benefits of buying equipment. We're not getting into that. But from a cash flow standpoint, he bought a $50,000 piece of equipment. He put down $5,000, financed the rest over 5 years. His business was able to afford it. And a year later he bought another three. His business can afford it. He obviously generated more revenue, goes on. Today he probably has 15 20 pieces of equipment that are doing whatever it is that he's doing. But he finances, it doesn't mean you have to uh um take out of your cash X dollars to buy a piece of if it's financeable. Mhm. So, in terms of in terms of um um you mentioned before the the concept of having a reserve. Um is that is that something that you advise business owners to work towards it? I know there is the model of profit first and there's model of putting away money for a certain amount of weeks of operations like So, that >> So, there's two ways to I mean in general, people don't want to operate when they're, you know, they're literally uh fighting and comes the week, I got to make payroll, I got to do this, I got to do that. You you want to have a little breathing room, right? >> Cushion. A little cushion. >> Mhm. Depending on your business, right? You want to have an X amount of cash at any given time, right? Uh one way depending on what the amount is, I can't tell you how much to preserve, right? Some people I've seen that always want to have in a in a whatever it is, a money market or whatever they I they have the operating account, the employees don't even have to know about it where I moved uh whatever it is into a reserve account and that's where I keep it. Mhm. Yes, after the pin, but then once operation once the operating account generates, I move it back. I always want to maintain that, right? It's one way to look at it. Another way to look at it is if you let's say have a line of credit with the bank and you utilize it properly >> [snorts] >> which is that you're only using it for the purpose of covering your cash flow crunch and then as soon as you're generating cash flow and then you put it back and bring the bring it down the bank line of credit is a reserve. The difference is you're paying >> of it. But the difference is you're paying interest on it, but the interest rate relatively speaking is 6, 7%, right? And you're cycling the line. It's not that you're maxing out the whole year. You're cycling the line. It's a business expense that's worth it so that you're you're adequately running your business. You're paying your vendors on time. You may get a 2% discount by paying them within 10 days or 30 days, whatever the terms are. Take advantage of that. Why not? Right? 2% if you run the numbers, 2% could come out to more than the interest that you're paying the bank cuz 2% for that month, right? Run it that way as long as you're cycling the line of credit. As you collect, you pay it down. But you're you're you're again business owners have to have the discipline to know that I'm putting it back. Yes. >> So, are you are you like you're advocate of having lines of credit for a business? >> Yes, sure. But you have to use it. >> No, I'm I'm not saying that you have to have a line of credit. I just What I'm saying is is that then I have many clients that that have a line of credit. They don't Never use it, but they know they have it when they need it, right? And people don't want to have debt, right? It's not that you should have debt. It isn't, but it's a legitimate a tool. Right? A legitimate tool and most businesses or, you know, do utilize a line of credit. The problem that you get to is when I find out and this happens many times is you owe the bank and you're maxed out on the line of credit and you've taken out of the company money while not paying back paying down the bank debt. That's unhealthy. A for the cash flow of the company, right? And B, the banks don't like it either because then in essence you're telling the bank you're telling the bank you're you're my investor. I take the money and I do my other things with it, right? It's not healthy. Banks have ways to control it, but Got it. This is very important. I I want to still get another topic into to this episode which you touched upon and it just uh I know it's a very important related to cash flow. Which is you mentioned um owners taking out money from the account. I I just reminded me a story. I had a friend which is a business consultant and I had a somebody reach out to me that's looking for a consultant, so I I basically introduced the my friend to to them. And the first month I heard and it was great and they're both of them happy and then the like the second and third month it was over and I asked him like, "What's going on?" He says, "Because he wasn't making money and he was tight on cash and I kept on looking at the numbers and I found out that the business on its own could make a lot of money. He's just he's draining the account from from for all kinds of expenses." And I and I and when I started telling him that we have to start putting a cap he said, "Not for that I hired you." So, you're not going to I'm not going to make myself my life costing my business, but at least I I was living comfortably. Now [laughter] now I have to, you know, tighten tighten my own amount of money taken out of business. So, I'm just just reminded me that. So, for small business owners, you could speak to a lot of business owners. In the beginning, they're not even taking out anything from the business. And then at one point they take out a paycheck and then they start taking out more from the company. What would you advise companies and how how do they how do they go about that? >> Right. So, I'm obviously not I'm not saying that I I advocate for not taking money out of the company. You're You're working for a reason. >> the first episode that we we mentioned that everybody can agree that the goal is to make profit and have money, right? And use it obviously for good things, whatever it is, right? So, that is obviously the goal. I'm not here to advocate don't take money out of the company. Other than that, if you're making money, you're entitled to it. You're paying tax on it, you're entitled to it, right? >> Sure. But, you you you have to be a responsible to do it in a way that keeps your business that's that maintains the health of your business. Maintains the health. I like to say, if somebody was to prepare for himself a personal financial statement, right? Personal financial statement, right? Many times you have to give to the bank or whatever. What is the most business owners, what is their biggest asset other than their wife and kids? What is their biggest asset that's on the the business? Yeah, but I invested in real estate. I have this [snorts] or I have that. Yeah, I have the the summer home or I have this home or whatever it is. Yeah, but how how are you able to afford that? Business. >> The business. So, the business is the biggest asset, right? Which needs the most protection cuz that's the source of where you're generating your wealth from. Therefore, you want to maintain its health as possible. So, what I like to tell my clients is take out money, right? But, it should be a budgeted amount every month, same amount. Make as if it's your salary, whatever it is, right? Make it same amount. On each quarter, you make a cash burn on how the quarter did and then you generate and you have excess cash and you say, "Okay, I did A, B, and C. Now, I'm entitled to take a call it a bonus distribution." And then the following months, the same consistent prior monthly amounts that you take out. What I like to say is no not without a cash burn. I'm taking out I need this, I need that. If it's within the budget, right? Obviously, you can take out as you're making profit. But, don't just take one day like this and take that and yeah, I'm going to put it back. It's it it it affects the cash flow of the company, the stability of the company. And you'll find yourself in a situation where you're very, very tight. Now, you got to go back to one of your properties and refinance because now you got to pump money back into your business. It becomes a goggle a hoyza. >> Yeah. I'll I'll just add on this point is that if you could plan like pre like I had a somebody that I worked with and I told him he told me that he wants to take out more money from business. I said, "Early in beginning of the year, tell your bookkeeper tell your CFO that this is your plan. You're going to be making or something and I want to be able to accomplish be able to afford They actually adjusted their goals of revenue based on what I want to see out of my business this year." And it was pre-planned beginning of the year. He was able to be very successful. But it but on the flip side, if you don't do that, sometimes you burn out your own people. Right. >> Because they're they're just chasing their tail. They're doing collections just to cover and all of a sudden, whoops, what's that wire that it was just happened? Or what's that >> I I have I have a client with two partners and very conservative and very meticulous. How busy they want to take out money and they're very successful. They have a rule that we can In other words, obviously we take our regular monthly distributions, but for take out a significant amount of money we have to first bring our line of credit down to 50%. Oh, wow. That's a discipline. It's a discipline. Once it's 50%, which means we utilize that cash flow for the right reason, reducing the debt. Now, obviously next year we're going to borrow again when we need it, but we we're disciplined to bring down the line of credit to 50%, right? Now, let's take a look at what our profits are and X amount of the profit we're taking out as a distribution. It's real metrics. The metrics and discipline and and and and and it's all planned out and therefore they even There's sometimes these decisions dictate your what you're going to be doing in order to achieve it. Exactly. >> realize it without doing it. They're like I just reminded me a story. One of the services we do is printing services and earlier years um somebody came to me um you know that um somebody one of his family members that is going to make a hustling and he wanted some you know, a charity. And asked him what's going on. He's he's a successful printer. He says, "Successful printer? Let me tell you how they operate." So, they have a printing shop. They're very like in the in in the outside they're successful, but the way they operate is the following. Um somebody comes to them and says, um "I have a closeout of paper. Do you want to buy it?" And he says, "Yeah, how much?" "I have two two trailers of paper and you could buy it for cheap." They're going to be using the paper, so they buy it. Then it arrives, they they get a notification it's going to be arriving, but we don't have place where to storage it, so we pay storage. And then when the the the client comes for quoting a project, they say, "Paper we have already. So, just the labor, let's get it out and let's make some money." >> Right. Right. >> They forget to realize how much effort was put in on buying the paper and then ultimately uh storaging the paper and doing stuff and and all of a sudden they find themselves. So, going back to the point I don't know we we covered a lot on this on the first episode is understanding that when you look at the business, understanding what profits is what margins you're really working with. What is does profit look like? At the end of the day, how is that affecting your cash flow? And and although we're living in a world that you want to get every client to work with you and you want to get as many clients as you want, but understand a client that drains your cash flow, how much calories you burn on a weekly basis just to cover for that. Exactly. And it's not always worth to do the sale. If part of your sale is going to be banking it for the next 5-6 months, who says it's worth it? It could be a It could be a It could be a big risk, right? Yeah. >> And I've had situations where um client was doing a tremendous amount of money, but his margins were very, very slim. Where I told him, "I don't care how profitable you will how profitable your business is. I wouldn't buy a business. You make one mistake, you're done, right? I would rather you cut your revenue in half and increase your margin from X% to to the other percent. You'll probably end up making the same amount of money where your business is less at risk. You're jumping, you're doing the sales. You have Now, it is important to know where you you you do want to have cushion room to give good deals to to to customers to be able to bring your pricing down. You know, you want to You want to have that ability. you have to have the a cushion for that, right? So, you make a decision based on how you're doing. If you can give a little up, sometimes it's worth you have a situation where it's a quick deal, an easy deal. I'm not getting the usual price, but it's a deal that I can just do or whatever it is, a product that I'm selling. I'm still going to make X, Y, and Z, but it's a nice nice big deal. Yes, it's going to affect my margins, but at least I'm getting this big sale, and the guy give me 50% down, and he's going to pay me a money is not the issue over here. You can sell it for a lower margin than you're used to, right? >> know that there's a risk with it. >> know what the risk is. It and then that's not nothing wrong with that. Yeah. No, it's sometimes like you see these corporate companies and you see um you get a 2% discount within 10 days, that's exactly that. They know that if I get paid earlier, I could afford a 2% less because I know >> I I have a client that um at least the couple of years ago, I looked at it. I was monitoring it. He uh this company made during the year, right? A million dollars on taking advantage of the 2% discount. Wow. With with their vendors? Yeah. Wow. It's their money. All they have to do is manage the cash flow, make the payments. It's serious money. Uh this is this this is something to learn from. Serious money. And it again, it's it's it's figuring out ways how to maximize. He didn't change anything. All he did was make sure to pay it during the terms to take advantage of it. Beautiful. Beautiful. That's it for episode number two. So far, if you're listening to this episode, um I want you to take away a couple of things. The couple of things that I took away is first of all, understand the importance of cash flow and what it does for you, your sanity, and your business. Number two is take out of the company as much as you want. Just plan for it. Make sure it's in your budget, and ultimately like this, the company doesn't suffer, and ultimately it's planned for. Number three is make sure that even you don't like cash flow, it's not a something that you're not good with numbers, whatever it is, ask your team to prepare a cash flow projection the next 6 months, the next 8 months, the next year, whatever it is. So, at least we know we're not scrambling Thursday for for Friday's payroll. That's it for this episode. I hope you enjoyed it. In our next episode, we will be discussing the mistakes that cost business owners thousands um in a lot of different aspects of a business where they are avoiding looking at different things. We'll talk about the different topics that are related to that. But with that said, again, as I mentioned last episode, if you enjoyed this episode, please please share it with other business owners. You'll just They'll thank you afterwards for just listening because if you make one small change, everything will change. As we always say, version one is better than version none. So, if you start over the cash flow projections, maybe it's not accurate, but at least there's something there to work with. See you next week. This episode of the Let's Talk Business podcast is sponsored by Flow Digital and PipeDrive. Sales is the lifeblood of every business. No sales means no revenue and no business. So, if you are a business owner or in sales, you already know how important it is to have a proper CRM. A good CRM helps you manage your sales process and keeps leads from falling through the cracks and make sure you have the proper reporting so you could analyze what's happening every single day. If the CRM is too complicated or not set set up properly, the team just won't use it. When that happens, leads get lost, follow-up will get missed, and ultimately deals stall. That's where PipeDrive comes in. PipeDrive is an easy-to-use CRM designed to make tracking and sales process simple. 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