Ep. 213: Robert Bendetti, Jr. - An expert’s guide to cash flow management

Connect with Robert:
https://www.linkedin.com/in/robertbendetti/
Check out IMA's Statement of Cash Flow Tutorial


Full Episode Transcript:


 < Intro >


Adam:           
Welcome to Count Me In. The podcast that brings you an insider's
look at accounting and finance professionals working in business.
I'm Adam Larson. My guest today is Robert Bendetti Jr. Robert is
a CPA and the CFO of Lifecycle Engineering, and he joins me for a
high-energy discussion about cash flow management. 


He shares timeless wisdom, he learned from an early boss, to how
he uses the latest technologies to optimize his entire cash flow
process. This is one of those inspiring podcasts where you can
tell the guest is not only a true expert in his field, but
passionate about helping others take their skills to the next
level. Enjoy. 


 < Music >


Robert, I want to thank you so much for coming on the podcast
today. It's really exciting to have you on. And today we're going
to be talking a lot about cash flow and cash flow management,
which is near and dear to the accountant's heart. But before we
get to that, I just wanted to start with if you could just tell a
little bit about your story and how you got to where you are, and
then we'll continue the conversation from there.


Robert:         
 Adam, pleasure to be here. Cash flow management is
my favorite topic and always has been. I describe myself as a
CFO, husband, father ultra-runner, and when I'm doing all of
those things, I'm thinking about cash flow management. 


I don't know about everybody else, but it's certainly important
and it seems like everywhere I work it has been important. Yes, a
little background, I've always done corporate accounting. I am a
CPA and member of the IMA, best org ever. But I never worked in
public accounting, it's always been corporate accounting and the
kind of standard internal individual contributor to manager,
director, to VP, to CFO.


Adam:           
So what is it about cash flow and cash flow management that
excites you so much?


Robert:         
 Really early on, I had a boss tell me, and he
stole this quote, and I don't know who said it originally,
"Revenue is vanity, profit is sanity, cash is reality." And it
just really stuck with me that everything else is just fun and
games, until we actually get paid cash. I cannot pay payroll with
your hopes and dreams, your purchase order, your good meeting.
The only thing I can make payroll with is cash.


Adam:           
That's very true. And speaking of cash flow, IMA has a Cash Flow
Management course, that I know you took. So you can take that
course and you can learn the basis of cash flow management. Which
most accountants do know, but they probably forget, depending on
what their job role is. But then what happens?


Robert:         
 Yes, first I'm going to plug the course, free CPE
for IMA members. I am, like many CPAs and CMAs, always delinquent
in getting my CPE. It's two months before the time to send in the
paperwork. I'm like, "Ha! What? Do I have to do that again? Is
that every year?"


I don't know how I've forgotten it for 20 years. But, yes, I love
it when there's free CPE, as a member of the IMA, and, yes,
Statement of Cash Flows tutorial. Great course, one hour, little
hitter is a fantastic reminder on the foundation of the cash flow
statement and how important it's. 


But to, "Now what?" It started to get my creative juices flowing,
and I started to think about also the framework of the days of
the fast, cheap, easy money might be over. That we might look
back at 2010, '18, '19, even '20 as the good times and that the
future '23, '24, '25 might be rising interest rates, recession,
it might be inflation all in the same stew. So no time better
than the present to get your cash flow in order.


Adam:           
So how do you do that?


Robert:         
 Number one, I think is, obviously, the cash
conversion cycle, CCC. That’s the foundation and, yes, check
mark. And I'm not going to cover that because we're a bunch of
accountants. But next, maybe 102 level accounting is going to be;
you need to review your customer and job selection for profit and
credit worthiness. 


A lot has changed in the past two years and maybe you looked at
it pre-pandemic and you understood your customer profitability,
project profitability. Or you understood your job profitability,
or your customer credit worthiness, a lot has changed. Somebody
that was credit-worthy before may not be in the future. And, so,
I think right now is the perfect time to be checking those
things. 


Number two is what are your policies and procedures around job or
milestone, invoice timing, and, for that matter, what's your
invoice processes like?


Well, did it used to all be physical and now you're fully
remote? 


Did it used to be lean and now it is cumbersome? That's the
number two thing. 


And then the third thing is collections, not everybody likes
collections. Some people find that it's a little uncomfortable
to, "Am I being annoying? Am I being rude? Will the salespeople
not like me?"


You need to stop caring, there is somebody on your team who is a
little rough around the edges, and that is the perfect person to
promote to leader of collections and to be right on top. Because
the squeaky wheel gets the grease and you want to get the grease,
you want to get the cash. As maybe we are entering into Q4 '22,
and '23, and '24, maybe we're entering into some tough financial
times, if not you, potentially your customers.


Adam:           
So as the customers enter that tough financial times. As we're
looking at rising interest rates, and all the different things
that are affecting us. What can accountants do to prepare for
that? You just mentioned some things that they can do. 


But I imagine that there are other elements that they would have
to do like technologies, making sure that all their systems are
in place. Making sure all the regulations and all those things
are in place. But what recommendations can you give them as we
look to that future? Because it's not going to get better yet.


Robert:         
 Yes, I'll give you level one and level two.
Because sometimes you skip level one because you assume
everybody's doing it. But maybe there's one person on the call
that isn't. Level one stuff is just to remind the team that it's
really important, that maybe you got PPP money, or customers were
paying you early. 


You're a government contractor and the government was paying you
in seven days instead of 27 days. That's not going to happen in
the future and I know everyone's overtasked, and they are super
busy with other things. 


Level one is just reminding the team, "Hey, sending those
invoices out on time, coll...