Avoid These Cash Flow Killers – A Knowledge Bomb

Show Notes

It’s not about how much money you make, it’s about how much money you keep. Learn about the 6 most common cash flow killers and what you can do to keep them from killing your cash flow with advice from Paul Hood (CPA) and the former United States Small Business Administration Entrepreneur of the Year.

Learn more at www.HoodCPAs.com

NOTABLE QUOTABLE – “Every right implies a responsibility; Every opportunity, an obligation, Every possession, a duty.” – John D. Rockefeller (The world’s wealthiest man during his lifetime)

NOTABLE QUOTABLE – “A friendship founded on business is better than a business founded on friendship.” – John D. Rockefeller (The world’s wealthiest man during his lifetime who grew up poor.)

NOTABLE QUOTABLE – “Do not many of us who fail to achieve big things…fail because we lack concentration – the art of concentrating the mind on the thing to be done at the proper time and to the exclusion of everything else?” – John D. Rockefeller (The world’s wealthiest man during his lifetime who grew up poor.)

ACTION ITEMS:

  1. Failing to collect from customers.
  2. Failing to fire poor performing employees.
  3. Invoicing your clients (when you could collect payment upfront)
  4. Casually tracking of inventory
  5. Casually tracking of expenses
  6. Casually tracking of accounts payable
Business Coach | Ask Clay & Z Anything

Audio Transcription

Oh, thrive nation hood nation. Welcome back to the conversation that man across from me is the man with his, the man with the plan. He’s the accountant that many people choose to use. He has thousands of clients all over this country. His name is Paul Hood. Paul, how are you doing?

I am amazing clay. Um, you know, how amazing I am. I’m almost as amazing as you are. Really almost close. That’s a great day. I’m excited. I’m excited by it. I’m offended by how good you’re doing. Trying to be the only one doing well. I’ve got to keep up. I’m keying off of your awake. You know, I’m excited, clay, because you know, I get to do every day at work. I get to help other people achieve the American dream. I hope I get to help them achieve their goals and their results and you know, as opposed to most accountants are just kinda doing tax returns and bookkeeping and accounting and payroll. I get to help people. Clay, it’s fun. I love it.

I, uh, I hate to one up you, but I’m going to have to one up this. Justin. Jason, you know this, you, you know me. You know me pretty well, Andrew, you know me. Yeah. Uh, you know, I have very noble goals, huge goals. I mean, my goals. I, they’re all so other, so altruistic. I mean sinceZ and I have been able to build the 13 multimillion dollar companies. I don’t want to waste my time. Andrew. I have worked hard to create time freedom and financial freedom. So I was able to accomplish one of my goals yesterday and I will explain to you Paul what Id, what while you’re out there helping people, I wanted to one up you. And this is what I did and this I was given back. This was a give back. So my step one there, I went into Walmart there.

JCO The Walmart Supercenter? Yeah. Not One of those small Walmart’s. No, no. A Super Walmart. I went in there and I realized they didn’t have what I wanted. So I went into a super target. Oh, right there. The one off memorial. I go in there like it’s a 111th and memorial I think it is. I go in there and I found a huge box fan. You know the ones you can get like $25, but you can get the premium one for $45. So I upgraded, upgraded. Now again, one could argue this, may. This may kill your cash flow if you do this too much. But I bought a box fan. Well, which Paul later you can explain to me. Maybe it’s not an asset, but I bought this box fan. I bought this box fan and I spent A. I really optimize my time. I have time freedom now Andrew, you know, this time freedom and financial freedom could do whatever I want. And so I decided to give back to the community and I will give back to the listeners this audio clip. This is, this is me yesterday. This is what I did for three hours in a row. This is me. I’ll just give you about a ten second clip of what I did all of yesterday.

Know I am your boss Lorelei, that old

I think. I think the listeners can appreciate the way up to being able to give back there, Paul. So again, I hate to one up yet where you’re helping people with their accounting and their practical needs. I’m doing that.

Yeah, but guess what? You were making money. We’re doing it right because the business systems and processes and you measure and so you can speak strange or just little things and to make an asset. Yeah, I was trying to imitate darth vader didn’t turn out very well, but okay. Now I want to talk about the definition of cashflow. As we’re talking about avoiding cashflow killers, it’s probably wise to understand what it means. So here’s the definition of cash flow. Cash flow is the net amount of cash and cash equivalence moving into and out of a business. Positive cashflow indicates that accompanies liquid assets are increasing, enabling it to settle debts, reinvest in business, return money to shareholders, pay expenses, and provide a buffer against future financial challenges. Negative cashflow indicates that accompanies liquid assets are decreasing. Net cashflow is distinguished from net income, which includes accounts receivable and other items for which payment has not actually been received. Cash flow is used to assess the quality of a company’s income. That is how liquid it is, which can indicate whether a company is positioned to remain solvent, but the point is there’s money that comes in or somebody that comes out. It’s how much is left after the end and the out. That’s right. That’s cashflow.

That is probably most people you know nowadays they’ll use quickbooks or something and it prints off and hey, we made money, but there’s no cash, there’s no money. We have you. There are so many clients that come in and say, I don’t understand. It says we made money, but there’s no money and you know, they’re just working hard. But the what’s happened is they’re paying debt, they’re taking money out personally there, and so you have to. Cashflow is what’s important. We have to. The first thing we do for clients is to sit down and let’s figure out where the money’s going, clay.

Okay? So we’re going to do is we’re going to identify the six cashflow killers that you’ve written about in your book. I’ll look under the hood of on page 85. You can buy the book on Amazon. It’s a look under the hood with Paul Hood and a Clay Clark. We want to make it fair and balanced. You have an intelligent person and Paul Hood and you’d have a guy who some could argue is mildly retarded to me. So we balanced it out. There’s a smart guy, there’s a dumb guy when you. The thing is, I took Algebra three times. Okay? I took Algebra three times to act three times. A lot of people think accounting’s not possible, but it is. But you got to have a guy like Paul Hood Cpa to bring the knowledge, the wisdom, and then you got to have kind of the village idiot to balance it out.

So here we go. These are the six move of the six cashflow killers. And I’m going to get. I’m going to go to Jason First and to you Paul seconds. Here we go. Great cashflow killer. Number one, failing to collect from customers. Now Jason, has you manage the elephant in the room? Men’s grooming lounge. Have you ever had a customer check out and not have the money to pay for their haircut? Yes. Is a general rule. Do they come back and settle their debts at a later date? No. Right, so this is the phenomena. I’ll call this the two u students because it is the Tulsa University student who does this most often, or the oral Roberts University student or the students in general. They’ll come in there for their second haircut. They’ve already been in before the first haircut’s a dollar, right? And then they say, oh, I forgot my wallet. I don’t know where it is. Have you seen that move? Yep. And then you say what to them it’s like, well, you know, as a gesture of goodwill, I will personally blessed you with a haircut today, but in the future you got to bring back the cash cash and the people who say, I’ll come back. They don’t do it.

No. Can you repossess? Can you put the hair back on? Slap some glue on a staple or something.

I’ll. I’ll say this though. This is a thing where I see people that take us to the next level though. Now they’re doing landscaping. Paul, I had a guy that was working with, this was about four years ago, huge landscaper and what he does is he’ll go out there and lay all the sod, have it immaculately done and then give you an invoice in, give you the customer. Thirty days to pay for it. And we found out that as this company was growing, he was getting further and further behind because he owed money to the sod company member. He doesn’t own his own site. He just lays the sod. So now he owns money. So much money he owes to the sod company, they will no longer let him buy any more sod because he hasn’t paid them, so then the next customer that actually does pay him, he takes the money from them and uses it to settle his debts with the sod company and now he doesn’t have any money to buy new sod and the game then begins to talk to me about the dangerous Paul of invoicing your customers and failing to collect

what play in that sod example that his quickbooks was show that he was making money, but there’s no money hitting the bank. Yeah, if you can. If it’s a cash is king. It doesn’t matter how much business you do, if you’re not bringing it. If you’re not collecting, you can’t pay your bills. And so you’ve got to figure out. We. One of the things we do at Hood Cpas is help our clients figure out how to get paid up front or get a portion up front or to make sure that when they walk out the door and the job is finished, they’re just get the, you know, maybe they’ve already received 90 percent of the, the income, so, but the, the, the funny or sad part of it is a lot of them, they just don’t think about it. They’re not tracking it. They don’t know

Paul Paul like tell a story real quickly. Just kind of a quick story. There was once a man, he was in the salt business and what he did is he would lay the most beautiful solid and he would put the salt in this sort of at the head of the sun that always had a rule here. He always had a rule. He always said green side up, green side up with his room and he would go all around and he would, he would lay the sod and it was bloody awesome. And then one day he realized he’s been invoicing everyone, that he hasn’t collected any money, and now that man lives in a van down by the river.

That’s what happens. Yeah.

He used to be from Jason. Now he’s from what? Ireland? I don’t know.

No, Paul. I don’t know why. Sometimes I change accents midway through. I don’t even know. All. So now we move on to step number two. This is a diy cashflow killer. Number two, this is the step. You do not want to take this step. Don’t do it. Don’t do it. Don’t fail to fire. Poor performing employee. That was easy for me to say. Let me try it again. Don’t fail to fire. Poor performing employees. Good.

Keep that clay. Can you imagine having a professional football team? You, you like one team in particular are the Patriots. Those guys. Come on Josh Gordon. Stay sober. Josh. I pray for you to stay sober, man. Can you imagine if, if they’re a quarterback was underperforming and they had another guy on the sidelines? It could do a thousand times better, but you know, they just felt bad. I felt bad for not taking that quarter back real quick. I have

audio of what the Cleveland Browns were saying. This is what their coaches said last. Remember the browns previous to Baker Mayfield’s taking the field. These guys hadn’t won 16 games and this is what the head coaching staff of the Cleveland browns apparently said to each other when they realized that their quarterback was underperforming for three consecutive years. This is what the coaching staff said. They all got together and they said, our quarterbacks are underperforming and this is what they said.

You know what they say? See Abroad to get that booty down, smack him Yacko and no one knows what that means. No, they just let these guys play. Hey Clay, you know along those lines. You know, Baker Mayfield came in and did a really good job and I’m not a sooner fan, but I am a Baker Mayfield. He’s a warrior. He is. He could play any position on the field, but you know what the coaching staff said, we’re not sure if he’s going to start next week.

I tell you what, the Cleveland Browns, those guys, one, they have a dump team name, Brown Brown’s. Why don’t you just change the team name to the Puke Greens, the Cleveland Puke, Green Greens. These guys, I mean belichick went there to coach and he had to get out of there. He had to quit cause he’s like this, this team is crazy. Like the ownership wouldn’t let him make the changes. They wouldn’t let them fire. People want people don’t understand that bill belichick is the general manager for the Patriots and the coach. So he chooses the players he wants and he coaches the players and if you can’t have decision making powers over the players, you have Jason, you manage elephant in the room. We have a great staff at the elephant in the room, men’s grooming lounge. You and I’ve talked in the past and it’s been like, hey clay, this person needs to go.

What are some telltale signs that someone needs to go lateness for one? Yeah, you just can’t build on a culture of lateness, attitude and arguing with either management or the coworkers. That’s a huge, huge. No, uh, just general negativity brings drama everywhere. Oh my gosh. Did you see the way he looked at me? Oh my God. Okay. Now I want to ask you this, Andrew, you’ve done wedding photography for me back in the day with one of our companies called epic photos. What kind of people needed to be fired? What kind of people not, don’t know, and don’t list their names like you’d normally do it, right? I’m the kind of people who are late is especially like Jason said, that’s one of the biggest things when you’re late to a wedding and don’t photograph it. That’s a, that’s a pretty serious offense. Um, two would be a people who constantly make mistakes, like lose cards or don’t get photos that were specifically specified. Tell us the story about the danger man. Oh yeah. So on the first wedding that I shadowed, I’m the lead photographer decided it would be a good idea to get the ring shot. The shot.

There’s not going to go. Well, it’s not the shot of the photo of the rings, but he decided to put it on a tree that was over being what it being the bride’s ring with a huge diamond on it and the groom’s ring on a tree on a tree, but it was over allege that he had to reach over, put the rings on the branch and below was like probably two feet of water and he decided that’s where he wanted to take the ring shot. So we had to lean over the stairs, over the ledge to the tree to get the photo, and if it fell there was no getting the rings back. This is the same man who at the summit club leans over the railing to get a shot around the railing. I’m not kidding, with 60 percent of his body weight leaning over the 31st floor balcony. Oh yeah. His feet are like talents gripping on truth wrapped around the, the railing and if the railing gave out or his feet gay, but he’s dead. Oh yeah. That guy had to be fired. He also like Netflix at work. Oh yeah. He loved to watch. No kidding, this guy watched game of thrones sex scenes. It is while at work and when I told him, you can’t watch netflix and sex scenes, he said, oh, I saw it. Okay.

Then he started watching it just not the sex scenes and I’m like, no, no. So you got a fire pit. That’s a cashflow killer and we come back from the break. I will tell you about cashflow killers. Three, four, five, and six Paul Hood. You’re given a free copy of Warren Buffet’s book, snowball away to each and every listener. If they schedule one hour consultation with you at [inaudible] dot com, the consultation’s free. The book is free. Why are you giving away this incredible book? Well,

I believe that my role in life is to invest in other people and sometimes you have to teach them that they’re worth investing in and they just don’t know, and so I’m willing to invest my time as well as I pay these people, my staff people claim they cost me money to sit and visit with people that come to my office for that hour for free. I’m willing to invest in them. If they’re unwilling to invest in themselves,

go to [inaudible] dot com today and schedule your consultation once again. That’s put CPAS DOT com. Stay tuned. Attend the world’s best business workshop led by America’s number one business coach

for free by subscribing on itunes and leaving us an objective review. Claim your tickets by emailing is proof that you did it and your contact information to info at thrive time. Show.com cash flow

killers. You’ve got to avoid these cash flow killers. There are six of them that I want to focus on today. Six cash flow killers. Cashflow killer. Number one, failing to collect from customers. If you are a baseball coach or a basketball coach or a doctor or a dentist, it’s so easy to say, hey, don’t worry about it. Bring a check next week and let me tell you what happens. They don’t bring a check next week and then the next week and all of a sudden now they owe you for two months or double the service. Point is you’re getting behind. Don’t do it. Move number two, cashflow killer. Number two, failing to fire. Poor performing employees. They will eat your food literally. If you have a restaurant, they will steal. They will lie, they will go. They will cause refunds. Just a disaster. Get poor performing employees off the field. Move three invoicing clients. Just do not invoice clients if possible. I want to give somebody an epiphany that can absolutely change your life. You don’t have to invoice people, man. You could just give him a receipt.

Absolutely clay. You know a lot of people that own a business, they almost. It’s like they feel guilty getting paid. You’re out there and you’re showing up and you’re putting in the time. Get paid for goodness sake and get paid now so that the money is in your pocket because you know people spend their money if they don’t control. What you got to understand is the people that are you’re doing business with are your customers or clients. They’re not very good at managing money and so if you don’t get paid now, you’re probably not going to get paid. They’re going to be paying somebody else that actually is proactive and getting paid.

I have two groups that I want to attack on the show and if you are a member of this group and you are innocent, that’s cool. I’m just going to tell you my example of the dangers of invoicing. Many years ago I owned a company called Dj Connection Dot Com. That still exists and thrives today. Check them out. Dj Connection Dot Com. I used to Dj for schools a lot in churches, schools and churches. These are my two groups now. I love pastors. I’m pastor Brian Gibson, how to consider him to be my pastor, a great guy over there. His church, his victory church in Amarillo as well as river city church over there and in Owensboro, Kentucky. I liked churches. I liked pastors. I like most pastors are like most churches. I like most teachers, but here’s the deal. I was deejaying for schools and the schools on the night of the prom.

I terms where this, you pay a hundred and $50 deposit and the remaining balance is not due until the day of the prompt. Every single prom that did not pay me on the night of either a never paid me at all, or b, I had to chase him for 90 days and I did not discover how horrible this was until I had a big team and it was prom season Paul. And we’ve got, you know, 10 proms, 20 problems we’re doing at the peak, 40 proms in one day, Bro. 40 prompts. So we’re talking about the average event maybe be $750. So we got $750 times 40. So we’re talking $30,000 of cashflow coming in and none of them paid. And every single one of them say, Oh, I’m going to, I’m going to do it. And then I used to work with churches and pastors. This is my favorite line that I couldn’t believe they would say.

It was almost like a comedy that I was. It’s like a tragedy for me, but a comedy for you, the listener, they would say, well, I’m praying that God’s gonna really be able to provide to be able to take care of you. And I’m going, you booked me. And hired me. And then now you’re praying that the money’s going to come in. What I mean? This is crazy. And Paul, you’ve seen this before. Businesses dying on the vine by invoicing. Please explain the profundity, the power, the intensity, the reason why we’ve got to stop invoice and contractors of America.

Well, clay, you know, the number one reason that businesses fail is they run out of money. And the reality is, is they, they may have a great product, they have a great service, they have, you know, they’re, they’re delivering, they’re just not getting paid. And you have to realize you entitled to get paid. You showed up, you, they contracted with you. It’s an agreement and that you need to get paid. You need to get paid soon. But the sad thing is, is if you’re not proactive and you actually do not, uh, intentionally, uh, make sure you get paid, you’re not going to get paid and you lose 30, 40 percent of what you’re supposed to get.

Now we have six cashflow killers we’re talking about today. I’m going to go through four, five, and six pretty quick. So we have time to marinate on each one here. Cashflow killer number four, casually tracking inventory. Paul, why can we not casually track our inventory?

Well, inventory is if you’re in a business that sells things, that is your bread and butter, and if you don’t keep track of it very intently, guess what? Your employees are gonna steal from you. Things are gonna. Last things are going to get broken and if you can’t track that, those small leaks sink that ship and so you have to control and count and check. Then is the number one thing that that people have a business based on. Inventory failed to do besides not collecting.

We had a listener that heard this, heard us talk about cashflow killing last year and they re. They decided, you know what? I’m not going to track my inventory and I guess that’s the decision you can make. I didn’t know them. They would just listen to the show. A lot of times we don’t know who listens to the show and they called in and Andrew thought it was really not that it wasn’t appropriate to lead them through the on the show notes, so is our call screener. He was able to talk to them. What you and I were just discussing there kind of offline, and this is the audio recording of what listener said. It’s kind of advice that he would give to you, the listener today, because he went a year without implementing these moves and he said, this is what’s going to happen if you don’t implement these six cashflow killing kind of anecdotes. If you don’t, if you don’t use implement the things you’re learning today to not to do, to avoid cashflow killing. This is what’s going to happen to you.

Hey, I’m going to go out and I’m going to get the world by the tail and wrap it around and put it in my pocket. Well, I’m here to tell you that you’re probably gonna. Find out as you go out there that you’re not going to do Jack Squat.

That’s what’s going to happen. If you do not implement these moves to thwart the cashflow, killing and cash flow, killing by the way happens by default. If you don’t, if you’re not intentional, this will happen to you. For sure. This will happen by default, by entropy. You will just drift into this abyss. It’s going to happen to you. Move to number five. Number five here on the NPR edition. Have a look under the hood with a cps cat, casually tracking your expenses. Paul. That’s dangerous, man.

Oh, it’s huge. It’s huge. And Clay. I’m reading a book right now that you recommended outwitting the devil. Oh, it’s so good by Napoleon Hill. Yes. Sharon. Sharon Lechter. Yeah. This is a question. Whatever, but it’s. It’s the premise of this book is drifting. It’s not being deliberate, not being intentional, drifting in life, and his premise is that sin and you know in a business if you’re drifting, if you’re not intentionally tracking every single dollar, you’re. You are basically, in my opinion, sinning against your business, against your family. You’ve got to track it.

Didn’t that book start off weird, but isn’t it good? Now?

I start off really weird, really strange, but you know, it’s, it’s a, it’s a unique look at, at things, but the premises is very, very strong and very true and the thing is his back, he, it was written back in the day and before, a lot of things that are going on today that that seems like he’s writing about today, so it’s great, but the bottom line is, is you have to track your dollars, money in money out. You’ve got to know who owes, you know, you’ve got to know who’s going to get paid and what you’re going to pay. And it’s the old adage that that small leaks sink ships, and that’s one of the things we do over the hood. CPAS is track where that money’s going.

Okay? Now move number six, cashflow killer. Number six, you want to be aware of. It’s casually tracking the accounts payable and some businesses you have to invoice people and if people owe you money, you have to know who they are because eventually the statue of limitations, the statute of limitations, okay, not the statute, but the statute of limitations will happen as Paul. You’ll have money that’s owed to you and if you haven’t collected beyond a certain point, you can’t collect it. You can’t call somebody for years from now, right? Paul or fibers, what’s the limit typically like if you, let’s, I’m a dentist and I don’t get paid from you because I didn’t invoice you. How long before it. It’s no longer collectible.

Well, you know, I don’t know about the statute limitations, but I do know this, that if you don’t collect within 90 days, you’ve got probably less than a 15 percent chance of you getting your money in. The same thing applies on money that you owe, like accounts payable when you owe other people. If you don’t track that, you know a lot of times when your pain, when you, when, when you owed them money, you can get discounts and discounts are real money in your pocket and so if you don’t, if you don’t take advantage of those discounts or if you delay paying and you end up paying a penalty or you pay interest, that’s just wasted money in and really it’s. You probably have the money. You’re just drifting like we were talking about. You’re not staying on top of what you owe and taken care of and taken advantage of these discounts.

Jason, I’m going to need you to be my echo track for these next notable quotable. I have three notable quotables from John d Dot Rockefeller, a guy who grew up crazy poor who started working at the age of 16 to support his family because his dad abandoned the family and became the world’s wealthiest man. So I’m going to read the notable quotable if he could supply some eco tracker. That’d be great. Here. So let me get it ready here. Okay. Let me

hit my epic music and like, it’s Kinda. Let me stretch. Don’t mail this one in here. Okay. Every right. Every right implies a responsibility. Responsibility. I need a little more like every opportunity or an obligation obligation. Every possession, repossession a duty duty. Andrew, maybe you could help out here. Jason got a friendship. Founded. Our business is better. Jason. I didn’t. You can’t mail that and you got to keep going. Gotcha. A friendship founded on business is better than a business founded on friendship. How could a guy with so much rhythm not provide a better eco track? White noise, sorry, do not many of us who failed to achieve big things fail because we lack concentration. The arch of concentrating on the mind, on the thing to be done at the proper time, and to the exclusion of everything else. This echo track was sadly provided by Jason. Welcome. First Time I’ve ever asked to do is pretty good. It’s pretty good. CPAS DOT com. Good Hook,

CPAS DOT com. Schedule your one hour consultation and get your free copy of Warren Buffet’s book. Snowball. Get it today at hood

CPAS. Have a great day.

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