With the holidays fast approaching, many are gearing up for the hustle and bustle of preparing family feasts, traveling domestic and abroad, shopping (in store and online), attending events and parties and everything in between. For the entrepreneur, not only can these flurry of activities induce stress and anxiety, but it doesn’t take in account for wrapping up the loose ends in business affairs, particularly when it comes to financial matters.
Dee Bowden is the CEO and founder of BCS Solutions, a progressive revenue recovery company whose mission is to help companies proactively reconcile invoices and untangle disconnects in sales, accounts payable, and accounts receivable. BCS provides personalized strategic solutions that mitigates lost revenue, time and business decline and increases a business’ bottom line.
We recently caught up with Dee to discuss how to reduce stress in unresolved money matters and create more financial peace:
What is your perspective on how “money issues” can bring on stress?
It’s no secret that money issues cause the greatest amount of stress in relationships, even to the point of breaking up marriages. It’s no different for businesses. Every day, business owners are challenged by several pressing issues that can arrest anyone’s peace. Among their top worries, four are money related. This sounds like many business owners are stressed about money continuously. Like the rest of us, they’re not immune from financial stress, which means that a CEO or company president that’s overwhelmed with money worries has the propensity to make serious mistakes in attempts to eliminate debt, keep company expenses low, contribute to employees’ retirement funds, pay health benefits, pay federal and state taxes, and so on. One wrong decision influenced by stress may bring irreparable financial disaster for the company and cause their workers to look elsewhere for employment. Therefore, I’m not surprised when I read stories of business owners having trouble balancing work and life because they are consumed with staying on top of the money issues.
Is it possible to obtain “peace in mind” when it comes to business financial affairs?
Financial peace is possible, especially if good risk management is involved. At minimum, business owners should identify anything that puts their business at risk of losing a profit, including paying for such things as health benefits for their employees. They should lay out a plan that minimizes the risk of those expenses getting out of hand or for when a healthy economy plunges into a recession. As simple as this sounds, many business owners especially newly formed small businesses neglect to identify, assess and develop plans that address risks that may devastate them financially. Consequently, when those risks come (and they will come), the company that failed to plan for them will suffer the most.
It doesn’t take a miracle to turn your company’s finances around. What it does take is your closely and continuously monitoring your company’s financial performance and identifying associated risks. Remember risks are those instances that can get out of hand or situations that you cannot control. For instance, what happens when your accounts receivables stop? What is the percentage of accounts receivable that would jeopardize your company’s bottom line today if they are not paid? How much money would it take to keep your company viable until you can retrieve those outstanding sales? And, where would you get that money?
Equally important to anticipating risk is a plan to keep your business going after a crisis. Do you return to business as usual once the dust settles? If the answer is “yes”, you’re in for a rude awakening. Crises teach us that nothing is the same afterward and that we must plan for disaster. As harsh as that may sound, it’s necessary, responsible, proactive behavior that makes peace of mind possible, not sticking your head in the sand until the financial storm passes.
It’s understood that the purpose to sustain any business is all about profitability. However, do you believe that money is a difficult subject to talk about when things aren’t going right?
I’m not sure why money conversations are taboo, especially during difficult times. On the other hand, even when things are going well, talking about money is uncomfortable. For various reasons, there are some cultures and even social classes where talking about money is simply not acceptable. I personally believe that people who do not like to talk about money are the ones who do not have a healthy relationship with money in the first place. For business owners, the psychology behind their reasons to avoid money talk is not important. What is important is that they face the financial stress and talk about it—even when it’s hard.
Answers do not come when we stick our heads in the sand until somehow the storm passes. This is why I tell my customers that they must do the hard thing—talk. Do not be embarrassed to admit that you’re struggling right now. Then, once they do, we begin exploring the reasons for the financial stress and planning ways to avert risks that may stress the company. Imagine if the business owners I consult refuse to talk about their financial woes, I would not be able to help them. What I also find is that the more they talk about their money problems, the more they become comfortable talking about money period.
I realize money can be a sensitive topic. But not talking about it will not make it any less sensitive. If you’re a business owner, whatever your discomfort with money conversations, my advice to you is to get over it. The success of your company depends on your ability to get past your cultural sensitivities concerning money conversations and talk openly about financial stress and how to plan around it.
Why do you believe that it’s imperative to keep track of your business’s finances?
If you are a business owner and have all the talent in the world in your area of expertise but lack a strong management system to collect your money, you will be out of business in no time. I have heard countless stories from talented, well-meaning, hard-working entrepreneurs who needlessly lost their companies over poor money management. Unfortunately, they did not appreciate that strong invoicing produced continuous revenue, not their talent. Had they been aware beforehand that their success was as simple as establishing and maintaining a strong accounting system, they would still be in business today.
Another cautionary note on tracking your business’ finances has to do with your company’s DSO (Days Sales Outstanding), a crucial factor to your ability to stay in business and thrive against competition. In accounting terms, the DSO is the period of time it takes a company to collect on its invoices. So, if a company takes too long to collect on outstanding invoices, the cash flow is negatively impacted. And, businesses surviving solely on a slow cash flow are looking at inevitable loss. Contrarily, a short turnaround on collecting receivables means the company will be able to enjoy profits more readily, and in turn, re-invest those profits in its growth. Ideally, the goal is to use fewer days to get paid faster. This is why I suggest companies convert to a principle of being paid “On Receipt of Invoice.” A thirty-day wait to get your money is way too long. By the time your company receives what was owed, it’s not only time to bill again, but the bills your company had to pay in the interim never stopped. In fact, they likely came at a faster rate than the receivables. Therefore, the accounts payables outdistanced the accounts receivable, putting your company in the red and eventually out of business.
Here’s another caution about waiting too long to collect receivables: a longer wait time means the company will have to spend even more money collecting what is owed so that it can continue functioning. Remember the discussion on risk management? Well, this (wait time) is one of the risks you have to factor in. How long can your company wait to be paid in order to turn a profit? Pay employees? Pay your bills without your bills overwhelming your profits?
The bottom line is you are tracking your money. So, do not be afraid to take aggressive steps to go after what belongs to you!
If you have specific inquiries or interest in how BCS Solutions can help your business or organization, schedule a complimentary discovery session here.