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...