Cashflow and Invoicing

Cash flow and invoicing are pivotal aspects of running a trades business to master

Transcript:

Lion's den Pollard. Welcome to the webinar on flow and invoicing what you need to run a successful trade business. Let me start with a little bit about myself. I started off in plumbing in 1992 in auckland, New Zealand. Not long after that, when I was just young, at 22, he was a building woman. I started my own plumbing business. It grew quickly, but due to my youth and experience, I wasn't able to keep on top of the growth. The textbooks kept piling up and before you know it, I had to close that business and I had a 60 grand tax over to pay off. I took a break and paid that tax bill off, came back in another go for a couple of years. And I also quit that business and the stress of trying to run an outright business. And so I started again at about 30 again. And almost through the 89 years I've grown that plumbing business to 25 staff across to right as insolvency. And I'd also start to focus in the meantime. So the two businesses that didn't do so well. And the last two businesses that did do well, so some in between all learnt a couple of lessons. And so that's what I'm here to talk a little bit about my style. I'm direct and forthright with my opinions and advice, but everything I talk about is based on my own experience. Section one is on cash flow. Section two is how to avoid a cash flow blackhole. Section 3 is collecting money every day. The processes and people you need to do this in section 4 is planning ahead. How to put enough cash away for a rainy day. Right so what is long? Cash flow is the lifeblood of any business. It's how much cash comes in on a regular basis. So that you can pay your bills. So cash flow doesn't mean you're profitable. But what it does mean is it means you can meet your commitments to pay your wages and your suppliers every week, every month. So you often heard you've often heard the term cash flow is the lifeblood of a business. And what it means is you can make a profit on paper because you've got on the balance sheet. So it's made lots of money, but without the cash coming in, you can't pay your bills and you have to shut the doors. So you also often heard is cash flow is like a double edged sword that you need money to make money, right. And it's true. Without money, you can't do work. You can't buy stuff. But if you don't do the work, you can't get the money. And what comes first? We must always do the work first before we do the invoicing, right? Because if you don't do the work now, you won't have any future cash flow to come in. So how on Earth does a business skills get itself in a position where it can do the work and do the invoicing to get to the cash flow? Says a couple of moving parts that you have to do to allow this to happen. The first one is invoicing regularly. You have to get the business into a position where it can actually do invoicing every single day. The other part of the equation is getting deposits. So if, say, are you doing a big tranche job like a city grant. And it's a six or eight week job. And it's not that big a deal for Trent for tranche, right? But 3k is a big sum of money. And over that 6 to eight week period, you'd have to buy a lot of materials, manholes and pipes, and you've got to pay your trades over the six to eight weeks. So it's very, very easy for the business to run out of cash very quickly. So what deposits too is? It helps the business that even helps the cash flow shortfall versus what you will got to pay out over the six week period. This is a time when the customer pays, which is probably 12 weeks, right? The job takes six to eight weeks and the customer pays four weeks after you've completed the job. So you have been collecting deposits. You paid up 30 grand but had no money. And how is the business supposed to pay its monthly bills and make the commitment to supply the traders? The answer is it doesn't. And it's the first big way you get into flow shortfalls. When you have bigger jobs. The other bits of the cycle is having a collection system, so actively making chasing overdue invoices an everyday part of the routine of the business. And you have processes in place to chase tardy debtors. And if you don't want to pay, it's just a way to attract new business that happens every day, like section 2. How to avoid a cash flow back home. Like, how do if you're going to be in a cash flow wrong? So on the screen, on a good job management system, you should have some good dashboard reporting. So on this column, on the top, so on the screen, we've got two surplus highlighted. These are really critical. What is showing you is how much work. Have you got stuck in your business, right. So let's say you've got a couple of guys. You're doing 100 grand a month turnover. If you've got a site in progress, 200 brands worth of work that you have an invoice out, which is common, how is your business going to have any cash flow to come in? That means you haven't done any invoicing for a couple of months. So that's a major concern. And then we get down to the payments column. So you once again tuning of 100 grand a month, what if you've got 200 month outstanding in that last column? Your business has no cash value. What that means is your business hasn't worked out how to get payments made in less than 30 days. If you don't have a good job management package that's showing and showing these numbers at a glance, how do you actually know what's happening in your business? So one of the first ways of what a flow blackhole is get the right reporting to try and find out what's going on. The two things to point out what's going on in your business is the amount of work stuck in progress. So that's the work you've done. But have an invoice and it really shouldn't be more than a month's worth of turnover. Your other big bucket to look at is the amount of money you write. Once again, it shouldn't be more than a month's worth of turnover because most bills are paid on 20 day cycles. Right so those are two important metrics to try and check to see if you've got a cash flow shortage looming. And it also tells you how efficient your firm is at actually invoicing every day. So let's say you're in a cash or Black hole. What are you going to do? So the immediate step is you have to start paying your suppliers on 90 Day terms. So the interesting, interesting thing here is if this applies now, you in your case would have they're not actually going to close you down, created for two reasons. One is they actually want you to turn over. The second one is if you actually go under, they've got no chance of you ever paying. That did. So they're in a bit of a bind, right? So they actually have to work with you, extend your credit terms. And as long as you keep them informed of what's happening in your business, they'll keep exceeding you credit. But they do not go past 90 days. The next thing you can do, which is always a bad thing, is to arrange an overdraft. So borrowing money to pay bills is the worst sort of thing you can do in your business. If that's your only choice, then it's what you must do. You must trade your way out of a situation. You can't put your head in the sand and pretend it's not happening. If you can't pay your flow. If so, if you can't pay your bills, you won't to have to borrow money on overdrafts and just trade your way out of it. The other thing is you can reduce your power lines. What this means is you have to stop advancing credit to your large customers, whether it be a large delta or a large supermarket or a large school. Yeah, they give you lots of work and they keep you guys busy, but it's just paying you on 90 Day terms or 120 day terms that they've got invoices outstanding for six months. You have to really go, is it worth working for this person if they never pay me? Because if you look at it this way most things. My 19 the same in profit right now she's to be real six write this in. So if a customer owes you money for six months or more, that means I've eaten to six or 8% profit. Which means all the work you did for the customer was for nothing. It was just tune. There's no profit. So some customers just aren't paying you emails will not work for them. So let's talk about deposits. So in my plumbing company, I got into a spot of bother. I was on 98 rooms for whatever reasons, and I landed a big job, a big dinosaur show. Ak was. And I went to the suppliers to try to put all the main holes in the company pocket, and they wouldn't give it to me. And I was like, Oh man, I need this job. And so I remember seeing the customer an invoice on Friday night for 50% For the job, and by Monday morning that deposit was in my bank account. And that was a revelation to me that people will actually pay deposits. And so I'm able to do that. Week we started doing deposits, screening jobs with Gordon to raise the cash. And here's what I learned that really surprised me. People are used to playing deposits. They pay deposits for Kitchens, roofs, concrete, windows, joinery, all this stuff. What it also what I also meant was if a customer won't pay deposit, that's a really bad sign. What it also meant was because they paid half the bill upfront, but only to pay half the but at the end. So it was a lot less emotional pressure for them to pay because they made the commitment to buy in the first stage. Deposits completely transformed our cash flow in our business. So when you ask for deposits, depending on your nature of your business, I know if you've got regular customers and they always pay regular, you might not ask for deposits, but even if they are a good customer and it's a large job, why wouldn't you ask for deposits? And so a typical deposit arrangement for what we're doing, ruthless generally tend to get say 50% to 60% deposit because of a lot of roofing, all harvesting to get 50% for the drainage of right. And so what you normally do is you ask for 50% upfront in the bank. And it is not, there's not a huge job going on for months and months. You just get the balance on completion. So part of avoiding a cash flow back home, so when you're in trouble, you cash flow is tight, tighten, so you've got a deposit, right? So you've only got half the bill to pay. The next big thing you want to do is actually get payment on the completion of the job. So what this does is what we learned. If you want to pick up completion on payment, you have to make sure the job is 100% complete. Because let's face it, how often do we do a job? We get it. You get it like 98%, there's a bit of rubbish things over, you know, special and range. We haven't finished doing the topsoil and the grass eating. We've been taking all the rubbish away. We've got to see the apprentice running with the trailer and just finished all of them. Water, glass, the concrete and you know, we'll get there. But it takes another week or two, right? And so the customer comes home and it's like, Oh yeah, the drains fixed. But are the places that are on site or the happy the drains are back on, but they're not happy. The place is a bit of a mess. Right? but if you explicitly ask for payment on completion, that means you're going to meet the customer after work and go through the job. That means the whole team is laser focused on making sure the job is 100% finished and so you get the double whammy of the job is more profitable because you're not going back to finish it and the customer's happy because the job's all finished and you've got payment on completion. I mean it's just a win-win all round. However, that means your whole firm has to get really used to actually claiming payment on completion and finishing jobs to a really high standard. The great thing also about a good job management system is they've got mobile payment through the devices. So it's not like yesterday it was terminals and like this stuff rams, you just show the invoice on mobile by putting your credit card in and get payment. So now let's talk about credit to customers, right? If you've got a big corporate you're working for, you know, such as a big daycare here, you know, as a supermarket chain, they'll often ask for a 60 to 90 day payment terms, but they're always going to pay the big corporates. And it's just the deal, if you know it, that's the deal. It just means you have to learn to put more cash away in your bank accounts to weather that storm until the cash flow will comes in. But if you are going to extend 60 to 90 day terms for someone, what they do have to do is provide you with regular work. What you need if you're seeing big, big credit is if you can with a 69, they tunes and they're giving you regular work. You end up having regular cash flow for every month coming through. What you don't want to do for a corporate is give them a 60 to 90. They tunes, but they only give you work intermittently. So one month they give you a grand, next month they give you 20 grand in no work at all and then 15 grand. If this is real for what you're working for, that's going to really miss off your cash flow because you can't have enough credit with them. So the unions are we get a cash flow cycle. So if you can extend those payments, make sure they're giving you a regular amount of work to even out your cash flow credit. You've extended them. You definitely don't want to give credit to high risk businesses. So high risk businesses, cafes, nightclubs, the sort of businesses that have got a high rents, high staff turnover is very fickle. So make sure you do credit checks on those high risk businesses. And if you actually in credit, it's no more than 30 days mix. If they won't pay, you, don't go back into any more work. Also, avoid waiting for people who want to get money out of. Over time, you'll learn what these people are like. They're very effective on the phone that to be incomplete details how to get hold of they don't want to pay deposits as you're asking questions and you get a sense. Some things don't seem quite right. If that's them, then make sure you send them a deposit upfront if they don't pay. And there was your answer they were going to be a vampire. It's definitely worth getting enough awful person to make a few phone calls to check the credit worthiness of customers before you give them credit. Right so part of invoicing qualification, right. Is invoicing, right? So this is a complicated subject, but it's quite subjective. So do you get traders to invoice one side or do you not? Some things really look to get trees invoice on site. I myself found it didn't work for me very well, and the reason didn't work for me very well was because the tradespeople left off a lot of money on the invoices. Because I got to do it. They forgot to add. And more charge fixing charge miscellaneous charge rubbish charges, call out fees. They didn't add on the correct margin on materials. And so, yes, we were getting cash, but we also leaving a lot of money on the table because what I'd worked out was a lot of our customers were paying customers. And if he'd done a very good job for them, they would pay with and they would pay within the normal cycle chains. So there was no real need to get cash on completion form from them. So what did cash flow to you? Invoice on site, would you not? And so there's a few parts of this I absolutely believe you should invoice on site for new customers. You've never done work before. You must absolutely invoice for call outs after hours and weekend work. Those are your highest risk jobs where you won't get payment. So without a doubt, you've got to invoice and collect payment on site. You definitely want a good job manager package. They can allow invoice you on site and collect payment on site through a mobile device. That's a given. Those are the easy ones, right? So now we come back to the question of how often do you invoice on site and do you try to invoice on site? So I'm trying to give you what happened for me when we invoiced on site. So we're invoicing on site. I'm talking about invoicing for regular customers that you do a lot of work for, not the one off customer recall. That's right. So we tried that. But what we found is that I was losing more money than the cash we always get, because what we found is that the tradesmen left a lot of stuff on the invoices. They forgot to include modern charges, miscellaneous charges, faxing charges, rubbish charges, call out fees, all those additional charges that really help your business to make a 40% gross margin because we invoice every day. It was no big deal for us to invoice the customer the next day and Chase the payment up and get paid at least in 30 days. Whereas we found when the charges were invoicing, could it be cash on site by the living between 40 and $60 with a fairly often invoice? And we're doing know, we were doing 6,000 jobs a year it turns out by 40 is $240,000. We were leaving on the table. That's a big deal. The other thing to consider is most tradespeople don't actually like invoicing on site. The reason the tradesman is they didn't really want to be office people so eager for not to put them out of their streets to collect the cash. And they said was customers who are high risk. And if that was the case, niche traders didn't mind collecting the cash from invoicing. OK section 3 is about collecting money every day. So how can we get the business into a position where it can invoice every day and actually collect money every day? So there's two paths of collecting money. This is creating and sending the invoice. And this is what I call collections, which is chasing the invoice up to get the payment. So the first part we'll talk about is how can we get the invoicing to happen every everyday? Now, the oldest question I get asked all the time is how big do you need to be before you can employ an office person? And I think that's the wrong way to ask that question. So when I started, Glenn, because I had failed to businesses before the third time, I was like, I'm going to have an office person from just day one to do the invoicing to get the cash in. So this person who started she only started one or two hours a day, three days a week. So I could do my invoicing and reconcile my package picking slips and do my timesheets. But as the business grew and grew and grew, she did more and more hours until we had her going, you know, to full time, three, four or 5 and employ the second one. Right so the White house, the question is only going to employ a person on my invoicing for the amount of hours needed to be in every day. So even if you're one person, you can afford to have office support from day one or you can't afford to do to not have your invoicing going up because you won't have cash flow. Right so the first part of taking money is do you get invoicing every day? And the easiest way to do that is to employ an office person for the hours required to help do the invoicing every time. Right so this more premises, you need all those people to help you to get invoicing every day. Now there's a whole list which you have to do before you sign the invoice to the customer. And this is what I learned. What I'm into sending an invoice to a customer is often the wrong thing to do. The first thing you should do before you sign the invoice is, is the customer happy with what you did? Has anyone actually phoned up and check that they got the outcome they were after? Because when you find the customer and ask, are you happy? You probably know 4% of your jobs, the customer's not having is a direct is a bit of rubbish. Something isn't quite right. So if you send the invoice to the customer without having to pay what they're going to do, they're going to sit on that invoice and they won't call you to call them. Ask them what they're going to pay. You know, how long can that take? Most famous might take months to see an invoice. The month strikes it up. And before, you know, 8 to 12 weeks before you've had any reason as to why that invoice isn't being paid. So, first of all, let's call the customers, make sure they're happy monthly jobs is complete. And then you can see in the invoice out right in that order, the first thing you do is you once you got the office person to actually call the customer to make sure they're happy to pay. It's amazing how often the customer isn't happy. Probably 2% to 4% of your jobs are actually the customer's slightly unhappy with something you've done or that you are late. You haven't finished it. The zeros behind is a dreadful light switch. Doesn't work quite right. So if you didn't send them the invoice, it's taking a month to see in the invoice how many customers actually call you up and say, I'm not happy to pay. We know that most customers don't actually call. They'll wait until you call them and Chase them. And then they say, no, I'm not happy. So that takes eight weeks. But then you go in and fix the work, raising the invoice to take another month. The people that are unhappy with you, you've now hit $120 job. It's taking you three months to get paid. What was the point of doing that job? So what you have to do is you have to get the other person to call. Are you happy? Get it? Yes or no? If it's a no go, they can fix it once you've got to use you and if they've got permission to invoice them, right. So, you know, invoice them, call the next time your office person is to call all the invoices that was sent to New customers, a new charge from the day before. You don't want to calling a progress claim to a builder because he's a good customer on. The reason you want an office space and calling in your customers. It's amazing how many invoices will end up in Spain or you've got the wrong email address or they've just missed it by calling them, you get to find out whether it also includes going really quickly. You more likely to get payment because they're feeling good about you. So what one salesperson calls them, you make sure they've got the invoice to make sure it's not in spam or jargon. Wrong email address. Who knows what can happen with invoices, but you're just trying to get a verbal understanding. Are they happy to pay? You were happy not to pay. It's having to pay. Try and get you to take payment over the phone, through credit cards, things like the cash. If they're not happy, you give us some authority to take a discount or get your operations manager to call the customer to find out why they're unhappy. But at least you're now getting the answers in about 48 hours, not 12 weeks. It next. Me one. So the office person's next big job then is to follow any deposit invoices that are sent. So one of the things you'll find is if you a customer agree to pay you deposit invoice, but they've now going to deposit invoice for ten, 10 grand. And he was like, oh, great, I don't really want to pay that off. So sort of, you know, I'll hold off for another week or two. That emotional, emotional troublemaking actually part of the money on the first time. So you make sure the office person is actually just chasing you up and saying, oh, I just went on the deposit where we have a plan and that much is enough to get people to pay the deposit. Right so invoicing. So there's a skill set for invoicing, right? So if you just seen the customer, an invoice was 1965. What does it tell the customer? They've got no idea. Right? what are your customers of busy, busy people that they weren't at home when you were there? They've actually got no idea what was involved in doing that job. So this is an example of a miracle that we did. One of my guys was on call. He was out. He was out team in Bowling with his Mates and he was called away to his wife. You know, night, Vinny. John Wayne drove around there and the water was pouring out the ceiling and he rushed to the garden for the water main. Turn it off, go inside, cut the ceiling open, repair the crack pipe, clean the mess up, you know, hop back in the van, drive it to bowling. And his Mates had gone right. It's all quite funny. So we told this story in that way because they communicated the failure in the effort and trouble that we went to give that customer the outcome. And so we shared the story of the beginning, middle and end. We had a bit of a crisis and had a bit of resolution. We share what happened to the customer. How often do you think I see invoices that say call out tax form? Which one you think is more likely to get a complaint, especially for the fees you are charging to call out? Of course, the second one. Right so you've got to create a store that creates some empathy with the customer. It's really important to help them understand the value that you actually deliver for your solution. So when you're creating your invoices, you actually need a person who actually understands a bit about the trade or who can cross a story to try to go to invoice. Right so they talk to try and get the details across the story. That's the worst bit of invoicing is the story. They bring in the wall materials and that make sure the photos are attached in quotes and creates the draft invoices. So when you want a good job management system that allows you to create jobs, invoices that they can then save and assign dishonor for approval. So that means when you're the business owner comes, then you can sit down and all your information is ready to go. Right so this is part of invoicing, right? Is collections, right? So it's like you've sent the invoice. Job customer is happy with the job. They're happy with the invoice, but they sort of just can't afford it. Well, they want a bit of a discount. What are you going to do? So this is part of being active on your collections is the core part, the second core part of invoicing. You have to have someone who is dedicated every day to doing it. And the reason you want to do you want to happen every day is it's really easy to keep on top of things on a daily basis. So you do a weekly or biweekly. Let's say you just doing 20 invoices a week. If you do it once a week, it's 22 weeks. Is 40 into the month 80. All of sudden 80 invoices is quite overwhelming. If you do it every day is only for invoices to keep on top of. What do you think is emotionally more achievable? Of course. Is that right? So OK, cool. You call the customer having to pay, but they can't afford everyone. Now what are you going to do? Well, if you've got an office person who's calling out debts, you offer them a payment plan over four weeks or six weeks or eight weeks, whatever. Whatever it is you say, OK, pay $100 a week, have eight weeks and pay it off. That's a very good thing to offer a lot of customers because you've got all this person, they make a note and every week they call them up and get the credit card out with the fine. Easy now say they're a bit unhappy, which is pretty common for customers, right. We often used to joke that toys fix all problems for a customer. So you want to have some automated discounts. And it means that the office person can offer, I mean, immediately on the phone. So normally it's up to 10% or $200. Right, which is the smaller amount. So she needs to have that approval to do that straight away. The only condition is you say to the customer, yes, I can offer you a discount, but only if I type payment over the phone straight away. Because if you offer a discount, say yes, OK. And they'll send you an invoice. It's amazing how many customers are still grumpy even when they get the discount, because if a customer is unhappy with you, the discount doesn't make them happy with you. What it means is that are unhappy with the outcome you provided. So no matter what you do, you can't come back from that. However, by offering the discount on the day and taking place on the date, you can normally convince them to pay you straight away. You'll still need to make them happy generally. OK, so we come to the third, but those people who don't want to pay is always a few, not many. So we were doing 6,000 jobs a year, so we probably hit 10 a year. That would just hardcore. And so what I leave with him is if someone doesn't want to pay, there's not much you can actually do about it. But what you want to do is you want to find out as soon as possible. If they are not going to pay. So you can just stop working with them because you don't want anyone who is spending an hour a week for the next six months trying to chase them. So this is what we learned. The easiest way to find out a genuine hard core non payer. And so we had the adjudication forms from the district court. Right there's a slate as a team like and we would just fill them out and then we would send it to the customer. No one wants to go to adjudication. No one can be bothered. Right so if you throw the forms out sent to the customer, I think our whole life just got real rotten. It shows you're really serious about collecting this days. That normally elicits a very good response with all this, not actually talking to a negotiating and the need to pay a plane ticket payment to or taking the payment. It also lets you know someone's really hardcore. It is just not going to pay you. And I'll give you an example of what we said chasing really hardcore noctis. So you can go to court and get adjudication and you'll probably win the mediation case for payment. Easy if you've got a paper trail that shows, you see teams trade, you see inequality did work. So looking good. You'll win the mediation case. But the mediation case doesn't mean they have to pay. What it means is you were awarded judgment in your favor. So now you can actually enforce payment. So cool. So now to enforce payment, you have to go back to court again now in front of a judge and he has to then look at the case and go, yes, you can enforce that and appoint a debt collector. This takes months. So now you've got a decrypter you can now go around and start trying to seize assets to try and sell. The problem is when you start finding out people who know this crisis and are used to it. They've got all their assets tied up in a trust. So the pilot can't go into the house and seize any goods, because the person doesn't own any goods. So what do you do? You can spend months at court trying to chase a person who's got no assets. It's a big waste of time. So the smart thing to do is to never get yourself in that place in the first position, the way you don't put yourself in that place in the first position as she's seen the deposit because the vampire doesn't want to pay the as long because they don't want to pay nothing either. So the best thing you can do to never get yourself into a position of nonpayment from happening on paper is to never extend credit terms to a person that you've never worked for before. The other thing that really helps on collections is now all these automated systems, right? So what that means is you want a good job management package or accounting package that's got automatic email reminders that assigning it reminders to the customers. How you got this invoice, you got this invoice. Those systems really help to keep your invoice talking point. So if you've got a few guys. So when I was at 25 stuff, you know, things are getting serious, right, with you turning out a quarter of $1,000,000 a month. But those numbers are scary. You only make in 17 or 15% in profit. So on that money, you only still make it say 30 grand a month of net profit. So that means every month you need $200,000 to come in to meet your wage obligation and your supplier relationships. That's $10,000 every working day you need coming into the business. That issue starts to be some serious money. Right and then we business never really goes well, sending $10,000 a day. You know, you can get some bad months. So how do you create some buffers in the business to even out this cash flow? That's right. So what you really need in a business that's really growing is you need someone who actually knows about money sometimes actually got a bit of a finance or an accounting background. Somebody is used to dealing with money, you know, you know, your money works, right? You don't want your neighbor who used to be the kindergarten pre-school manager won't be a very good manager, but they've got no money experience. So you don't want a personal debt. You also want someone you can trust completely. So normally a partner will fairly me, but the amount twice. Companies that have money stolen from a finance person because they didn't know is staggering because once they're in there, they know you've got no processes, no systems. They can delete jobs, they can create a job as they can transfer cash out of a business. And you never know. So when you're small, be very, very careful who's actually got access to the bank. You want some, you trust 100%, which is normally your partner or a good friend. And to be really great if they had experienced the hitting money really good. You'll see as we go through that. Why? right. So I said my first two businesses didn't go so good. I was like, man, I don't want to be. I had an overdraft. It's terrible. A lot of interests, a lot of hard work going out to pay overdraft interest rates every month. And it's ridiculous because you shouldn't have to if you've got cash flow. Right so how can you actually have enough money in your bank accounts so you can pay your own cash when you're going? Right and so I'm going to try to take a little bit of time to explain what we did, because it's a little bit complicated and it seems a bit like robbing Peter to pay Paul. But it works really, really well. On one of the slides, you see all the bank accounts that we had in the business. So what I wanted to create was the money go ahead in my check account. I knew I could spend it to pay bills like that. Money goes, and then I could just pay bills and I didn't have to worry about saving it. So we had all these other accounts. So let's talk about them. One of them was the payroll. So as soon as we paid our staff, we would put the payroll plus 10% into that payroll. You know, you've got to put around away at least 8% every time you pay a person to cover their holiday pay and activities. Let's say you've got a payroll tax of $1,000. You need to put away another $80 on average to cover holidays in ICC meetings. Right now on that payroll account, you put that away every week and it becomes untouchable because by law that money now belongs to the idea and if you spend it is actually classified as almost a thief to please don't ever spend that money no matter what comes. Right to get a payroll account and I see money goes never touch it. Now Thank you GST. So when you get a little bit bigger, our GST bill will stay 4 grand every two months to pay. That's a lot of money, right? Now, every week we would put four grand away for the GST. So that means every single week money is selecting the general account into the GST account. Because at the end of two months, if you add it up, it means you've got $32,000 for a white paper GST. Now if you're not putting that GST money away, you can pay GST. Where's the money going to come from? So it's much easier to put the GST money away every single week to set those up. It also becomes a non-taxable venue. So now we've got these other. Thanking us. And so what we did with rainy days, so what I worked out is something that was going to happen to business. I want some money. But principally for photos of my employee. Every week when you go 20, stuff starts to be a significant figure on what kind of takes on it. Every week that me the money that was Medicare was actually tax free. It was tax paid. And we would use that money for the India work two of someone's back into a house. It was sort of major goes on, I've got a slush fund for an unexpected cost, right? So there's one fund building. And the other thing is vehicles always breaking and wearing out, right? And so you really don't want to be going to the banks and getting vehicles on only through a hassle, having all that cash flow going on every month of paying event. But you need to be saving money every week to upgrade your fleet. So how do you do that? So what we did is we also put away 150 every week per employee for a vehicle fund. Once again, a $50 went to the takes account. So it was $100 free cash going into a bank account every single week. You multiply that by 10 guys is $1,000 cash in a year. That's $52,000, of which is 2 good signaling vans here. You can upgrade your fleet, right? I'm not going to the bank to borrow things at least. Right so I've now got some buffers in these two accounts. The third thing I did was funds introduced. So what I also did here is I would take 450 a week out of business. I paid 150 week in tax and put 300 back into the businesses funds introduced. Now the reason I did that was if I put it back on an accounting team as funds introduced and the tax has been paid, that means I as the shareholder actually own that money and believe the base of the company says on the balance sheet is funds introduced. The business has the right to use it as cash flow but it needs it but actually belongs to me. So that means when something happens at home, I want to go on a holiday or do a renovation. I think you draw down on that money and the taxes being paid. And I can take it out straight away. But what Paul was actually doing there long term was having these three bank accounts of putting all this cash. And because what I wanted to do was have enough free cash in these bank accounts that equaled one month's turnover. Right so in my accounts, at around $200,000 worth of free cash that I could use as my own overdraft. So if your cash flow was a bit lumpy and I didn't have enough cash in my general account to pay all my suppliers, I wouldn't write these three accounts to get money back into the genuine check account, pay my suppliers and wages on time. And as the money came in, because we're taking money every day, I was in replenish those bank accounts so that they would top back up to where they were. And so it takes a very long time. But after two or three years of putting money away every day in these accounts, you know, some quite large sums of money. So any face, you become your own bank that you can lend money to. Right beside it a little bit. Just on salary expectation. How much can you take out of the businesses company director? It's near as much as you would like. Right so if you're still growing a business, Uh, really try to take the minimum business concerns, the more important and personal. So if you can really just take enough to pay your bills and mortgages and trying to be still back in the business, invested in office, people and processes and systems. Once you've got your cash flow invoicing, collection cycle really, really working. That's when you start taking it back to salary because, you know, the business can afford to pay you. So the big thing you want to think about when I start this job, cash flow cycle, we went from 78 days average, paid down to 28 days. When your business is a net position, it's a really good place to be. So hopefully you can reflect what could I do in my business? Like an invoice every day and collect cash every day so I can actually have my invoicing collections on. Less than 30 days. Because what a great place that would be. Wouldn't that be awesome? Hopefully at the end of this, you go away thinking, what systems and processes and levers can I put my business like an invoice every day and can it be cash every day? So I've got an average 30 day invoice collection cycle, which means I can pay my suppliers every month on time. When your business is a net position, it's in a very good place and very nice to work in losing cash Roi pressure. It's one of the best things we had to go through. So this is that sort of disclaimer. I'm not a legal financial advisor. You must talk to a chartered accountant or financial advisor for more accurate information. Explore different ways you can let your team in the office operations in your business more efficient, including your case. Obviously, I'd like you to sign up for a free trial with Vegas. And with that in mind, we've got this promo code. Use cash flow. Essentially, you can receive these slides via email and $50 off your first payment. Thanks for your time. I really appreciate it. pipeline to the Hudson Valley to you.