September 8, 2025 • 27 mins
In this episode of Count Me In, host Adam Larson chats with Mel Latu, author, founder and CEO of The Cash Flow Boss. Mel shares how her personal journey—balancing finances for two households during a family crisis—inspired her passion for cash flow forecasting and reshaped the way she approaches business.
Mel breaks down common pitfalls small businesses face with their finances, and explains how real-time accounting, modern tools, and great habits can make a massive difference. With tips from years of working in turnaround consulting, she offers practical strategies that empower business owners to take control of their cash flow and plan for the future.
Tune in for an engaging, down-to-earth conversation packed with real stories, actionable advice, and the inspiration you need to rethink your approach to financial management!
Sponsor:
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Adam Larson (00:21):
Welcome to another episode of Count Me In. I'm your
host, Adam Larson. Today, I'mjoined by Mel Latu, founder and
CEO of the Cashflow Boss. Mel'sjourney into finance started off
personal necessity, learning howto master cash flow forecasting
when her family faced a majorfinancial upheaval. That skill
soon became a backbone of hermission to help small business
owners build a solid financialfoundation before problems hit.
(00:44):
In this conversation, Mel and Iexplore the blind spots that
often trip up small businesses,the benefits of real time
financial versus traditionalmonth end reporting, and the
importance of proactiveforecasting in today's fast
moving market. Mel shares AxiMLstrategies, top tools, and
advice on how financialprofessionals and business
owners alike can make smarterdecisions and drive growth. You
(01:05):
won't want to miss thesepractical tips, so let's dive
right in. Well, Mel, thanks somuch for coming on the podcast
today and your journey intofinance and accounting is
unique. You know, you started itstarted kind of with your
personal need to manage cashflow.
So I was hoping you could sharea little bit about your
experience and how that shapedyour business approach.
Mel Latu (01:28):
Absolutely. And thanks for having me, Adam. I love to
talk about forecasting. It's themost powerful unused tool in our
financial day to day. Cash flowforecasting started for me to be
a very simple spreadsheet tofigure out how I was going to
manage two households.
My mother had become terminallyill and went from a 6 figure
(01:51):
income to social security, andthat's a drastic change in
income. So we had to do somemajor forecasting and alignment
between two households. And it'ssomething that became a tool of
survival and just, had so manylayers and ways that we could
keep using it and started usingit as a business tool as well.
Adam Larson (02:17):
So what caused you to think, Hey, I can take what
I've learned and go help otherswith it?
Mel Latu (02:23):
Sure. So in that same season of having to learn to
manage money with a drasticchange of inflow and massive
change of outflows, right, twohomes, less money, I also had to
change my career. My corporatecareer was operations
management, C level, greatsalary, not the right balance of
life for being a caretaker and aparent at the same time. So I
(02:44):
had to step out of that role,but I still would be the worst
employee, right? I could notjust come in entry level.
So I needed to find somethingthat challenged me, but wouldn't
give me the staff or the need tobe at work as much while my mom
was fighting her cancer battle.So, I'm on Indeed and I started
(03:05):
looking for executive admin typepositions. That way I'm in a
role that is beneficial, but I'malso not hopefully managing a
bunch of people. And I foundmyself working for a turnaround
consultant. I had no idea reallywhat the industry was or what
the job was, nor did I care alot at the moment.
It was a job that would fit mybalance of life for what was
going on personally. Once I gotin, my job was to help reset up
(03:31):
the back office and thefinancial foundation of these
companies that were coming to myboss to either turn them around
so that we could get them sold,or he sometimes would just buy
them and we would restructureand then we would sell. So
through that work, a couple ofthings happened. One, I got to
work on the back side of puttingout all the fires, which is
(03:53):
really cool because you'rewalking through the fire with
these clients and businessowners and having to figure out
how did you get here? Oh mygosh, what did you do?
And then now you get to turn itinto a proactive process for
other people you meet along theway. Right? And the constant,
every single one of thesebusinesses had that came to the
turnaround firm was the lack ofa financial foundation that
(04:17):
nobody did the bookkeeping,right? No one looked at the
reports. Reporting and anythingrelated to the accounting was
compliance, right?
Just do it because we have to,taxes are coming, things like
that. Never use it as a tool.And so when for me, it just
became like, here's another one.Here's another one. Oh my gosh,
another company, anotherhusband, father that is taking
(04:42):
second mortgages and all thesecrazy financial strains on his
personal life to keep thisbusiness going when he would've
never been in that position ifthere was a foundation and
proper planning.
And so it just turned into Itjust became clear, crystal
clear, there's a hole here. Andthen to dial it back, knowing
(05:02):
I'm in their finances and I cansee that none of these companies
either could afford a C levelCFO on staff, right? When you're
starting up, you're launchingyour dream, you don't have that.
Adam, it turned into a desire tobe a bridge for small business.
How can we design a workingrelationship that we can offer C
(05:25):
level services for smallbusiness budgets and help them
grow, teach them thefoundations, make sure they
understand their bookkeeping.
And that's where it all started,just seeing the common problem
every single day and seeing thefinancial strain these
companies, the debt that theywould take on to fix what they
broke because they didn't know.
Adam Larson (05:46):
So what are some of those what are some of those
blindsight, some of those thingsthat they weren't seeing that,
you know, that if somebodylistening to this is saying,
maybe I should look for that.
Mel Latu (05:57):
Sure. So there's two elements in how we view
differently. And a lot of itcomes to my background of being
in operations management. And Ihad to look at financials and
run a team, right? I wasn'tlooking at financials from a
just I need to file my taxes.
I had to look at these numbersand figure out how to get a team
to work more efficiently,whatever, so I can move those
(06:19):
margins. So my outlook on theoutput of financials that we
produce needs to be when youlook at that report, does it
tell you something about yourbusiness? So step one is look at
your profit and loss statementand your balance sheet. If you
don't know what those are orknow how to read them, you gotta
start there. It's very first,just understand them because
(06:42):
it's something that we continueto see in small business that
you don't learn about until youare at the bank asking for
money, you're on the sellingblock asking for top dollar, and
now you're leaving a bunch ofmoney on the table because your
books are bad, right?
Or you need an investor and youcan't get a good valuation of
your company because you didn'tdo these things in the very
(07:04):
beginning. So looking at yourfinancials. Number two, the
second part of that is theforecasting element and
projecting all of your expensesand planned revenue and see
where those gaps in your cash isgonna be, because we all have
them. No matter what size budgetor operation you're running, we
all run into those cashflow gapsthat we either need to pull from
(07:25):
a line of credit, increase ourcredit spending, cut some
expenses, whatever that lookslike, right? You got to at least
have the ability to see in thefuture to know when that time is
coming and have time to pivot,get there.
What can we do before, oh no, Ican't process payroll today.
There's not enough in the bank.
Adam Larson (07:44):
Yeah, there's not enough in the bank. When you and
I first spoke, we were chattinga bit about the topic and what
we were going to talk about. Youmentioned something real time
financials, you know, model, asopposed to that kind of
traditional end of month, end ofquarter reporting, which, you
know, many people who listen tothis podcast are, they're
accounting and financeprofessionals. You know, their
organizations probably do likethe end of month they have to
close each time at the end ofmonth. So let's talk a little
(08:04):
about the differences there andwhy that's important.
Mel Latu (08:07):
Sure. So another thing, what's really fun about
all of these things that I feelthat we do, that we have changed
and kind of disrupted the oldindustry and cycle of small
business is that we, smallbusinesses is operating at,
things might be going reallywell, and in three weeks the
(08:27):
whole thing could shift and youneed to go get a line of credit.
You need to be able to take yourfinancials at any moment to be
viewed, to see if you have anyability to get some working
capital and things like that.And in the old way of, or
traditional way of end and monthend and quarter end puts a lot
(08:49):
of people in a position wherethey're not prepared when they
need to go. Part of being ableto use those financials for the
operation standpoint of drivingchange in your company, they
have to be real.
They have to be as current asthey can be. So we believe in
real time accounting. What thatis for us is we are bookkeeping
every single day. We are askingquestions every single day if we
(09:10):
don't understand an inflow or anoutflow for two reasons. One, so
that it gets reported correctly.
And two, the opportunity for taxstrategy. Maybe you don't know
that you could actually dosomething different with that
expense or revenue for a betteryear end. So we get that
opportunity in the real timewhile the business owner's
memory is still fresh, they'removing that money, but we also
(09:31):
have the opportunity to breakhabits like, Oh gosh, no, you
shouldn't have done it throughthat entity, or That's going to
be at a taxable event. We'reable to have the conversations
again before you're at tax end,trying to figure out all these
things and paying the extra feesfor tax preparation when you
could have cleaned as you go andbe ready for year end. So real
(09:53):
time for us is we're constantlybookkeeping, we're constantly
asking the questions, and we'reable to pull a reviewed P and L
statement and balance sheet atany time.
They're as current as lastSaturday.
Adam Larson (10:06):
That's yeah. So is that is that sustainable as a
business scales and grows?Because it seems like that would
be a lot if you're if there ifyou become more and more things
that you have to check eachtime.
Mel Latu (10:16):
Sure. And we have experienced incredible growth in
five years. So, it's a greatquestion because we had to adapt
to that, right? We had toinnovate some of our processes.
We had to lean on some of thereally cool software and
innovations and differentconnections that are out in the
world.
I love Uncat. So accountants, ifyou have not heard of Uncat, U N
(10:38):
C A T, it hooks up to yourQuickBooks online and anything
that you put in uncategorized oryou can pick whatever category.
If you put something in thatcategory, it automatically
notifies your client that youhave a question for that income
or revenue or expense, and theycan answer it right there on
their phone. They're not gettingspreadsheets and emails and all
that. And what's really funabout Uncat is you can answer it
(11:01):
back on the accounting side andit syncs right back to
QuickBooks.
So you don't have to log backinto QuickBooks. The client can
attach the receipts, any kind ofdocumentation. And my fun part,
all of the accountants listeningwill be so excited, is whatever
note that client communicatesback to you, it stays in the
general ledger memo. So a yearfrom now, or if sometimes we
(11:22):
find ourselves in a little bitof a dispute of where something
should be categorized, right?And it's like, Hey, at the end
of the day, we're not gonnaargue it's your business.
We're gonna put it there, butyour tax preparer might have a
different discussion, right?That note will always be there.
So I love Uncat. And then wejust make it to where, I'm a
(11:44):
business owner too, right? Everyprocess that we roll out, what
makes it easy for my team tofeed me my financials and that
thing that we talk about all thetime, know your numbers.
Well, what are your numbers?Every industry, every company,
their numbers are somethingdifferent, right? And we want to
pull those out and make them soexposed and highlighted in your
(12:05):
financials, whether it be werestructure your chart of
accounts, so that we're namingthings in your language. Use
those financials to drive yourgrowth. Does that answer your
question, Adam?
Adam Larson (12:22):
I think so. Yeah, because the way you were first
describing it, it made me thinkof, well, that's great for
somebody who's really small andjust, you know, trying to get
things in order. But once thingsget in order, do you have to
adapt that method to because itdoesn't seem sustainable to do
that every time?
Mel Latu (12:39):
A 100%. So on our side, we utilize rules in
QuickBooks and all the differenttechnology features out to make
it as quick as possible. Andthen our team's able to minimize
the daily touch and then themonthly reconcile. It's actually
quite more efficient becauseit's real time. I like to say
clean as you go, right?
(13:00):
If you pick up your laundry,instead of throwing it all over
the bedroom, you're not fightingyour children on the weekend to
clean the room, right? So thesustainability has been in the
process and the effectiveness ofstaying current.
Adam Larson (13:12):
Gotcha.
Mel Latu (13:13):
And we have found that you begin to train your business
owners, right? They know whatwere the things that you start
to ask. And some of that, theautomation just starts to become
more easy because the one offsand the things that you gotta
ask about are starting tominimize their habit to
(13:33):
commingle and use the wrongbanks and cards starts to stop
because you're harassing themnonstop to, Hey, you can't do
that. So the scalability comesin using the innovative tools we
have in the marketplace. Of ourclients are QuickBooks Online.
So, of our effective scalabilityis we only do QuickBooks Online.
All of our staff is pro leadaccountants, so we live and
(13:56):
breathe one system. So it makesus more efficient as well. And
we'll migrate you over if youcall up and you don't have
online. No problem.
We'll we'll get you over toonline.
Adam Larson (14:06):
So when you're looking at forecasting, you
mentioned how importantforecasting is, and especially
in this type of a a format. Arethere certain key indicators
that you're you're working withthese business owners saying,
hey, these are indicators thatyou should be prepared for, that
you should always look at tomake sure you know what the
future is going to look like?And, you know, and how are you
how are you training thosetraining them, especially, you
(14:28):
know, you come from operationsmoving into the accounting side,
you know, how are you how areyou teaching them the right
language and getting the rightwords so they understand,
especially for the nonaccountant?
Mel Latu (14:39):
Great question. We use the cash flow forecast as the
tool to drive operations. Andwhat I mean by that is, as it
gives you the ability to reviewyour spending, a balloon ride
up, right? We're busy as theowners. We don't have time to go
sit and look at our generalledger.
However, a very quick view everyweek of seeing on a linear view,
(15:00):
what's going out of my bankaccount week to week to week to
week, right? Gives you theopportunity to see Small links
will sink the boat, right? Youget to see, Oh, wow, look at all
those YouTube Prime and Hulu,and why is all that stuff? It
gives you a different viewbecause if you look at your
financials at the end of themonth, that may all just be in
(15:22):
subscriptions. It might all justbe in software and apps, right?
It might be all bundled insomething that you might be too
busy to drill into. But ifyou're looking at your cashflow
on this linear review, everysingle week, money that's going
out by category, why it'sleaving, it's going to indicate
you're gonna see an increase,right? Because you're gonna see
that weekly expenditure. So ifyou're paying something every
(15:43):
month and you're seeing itconsistently go up, you've got a
very quick, Hey, we need to calland re rate our insurance, or do
we have too many licenses onthis software? What changed?
What happened? But the biggestthe biggest help that cash flow
forecasting is the revenue side,right? Because we all live and
plan around the revenue comingin. So on a weekly basis, if you
(16:07):
planned $50,000 to hit youraccount this week and only 35
came in, you need to that nextMonday, that needs to be an
operational meeting. Likewhere's that AR?
Why did it not come in? Did itcome in and it just didn't clear
the bank till this week? Do wehave a process in our billing
department that we need to finetune? Is there something over
in, you know, whatever your, itdepends what the industry is,
right? Is there a step in theprocess before it gets to
(16:29):
billing that we're not executingfast enough?
It's able to just expose for youto where to dig in deeper and
spend your time wisely, right?We're not just spinning our
wheels. We've got a lot ofthings to do. So when it comes
to indicators, I think it's justthat you're looking at it very
quickly, ten, fifteen minutesevery week to see what's
changing as it's changing. Andthen the second part of that is
(16:52):
when you run your P and L everymonth, run it at month over
month.
Look at your whole year incolumns of month and watch
things change as your year'sgrowing.
Adam Larson (17:03):
I can't help but wondering, you know, how does
that how does that how do youconnect all of that, you know,
that type of forecasting andlooking at that to the budgets
you've made, you know, becausewe all have to create those
budgets and that connects to theforecast. You know, how do you
how do those two connect in thismethod?
Mel Latu (17:21):
So, Adam, the way budget and forecasting will work
together on the template that wehave created is when you're
first setting up your forecast,your forecast is your budget. So
I like to call the forecast ourworking budget, right? We have
the opportunity every singleweek and month to analyze, are
we spending what we said wewould? Are we getting in what we
(17:43):
said we would? It gives you adifferent pace and way to view
that budget as you're walkingthrough it.
And it gives you the opportunityif you're in any kind of setting
where there needs to be a votefor a new budget mid year, after
first quarter, whatever, youhave that trend. You're watching
it. When fuel went updramatically overnight for a lot
(18:04):
of industries that have fleets,right? You could quickly see how
much of a change that was makingin their weekly budget, right?
So the budget piece is, that'show you start your forecast.
Your forecast is your budget.And every week, the secret sauce
and the discipline of reviewingand reconciling that forecast,
you are reviewing and editingyour budget. When
Adam Larson (18:33):
you chat with other finance and accounting
professionals and kind ofexplain what you do, do you ever
get pushback saying, oh, you'renot you're not are you still
holding true to like traditionalaccounting principles, you know,
or is it more like a, hey,you're embracing it and doing it
from a different perspective,but still keeping your right
internal control, you know,processes in place?
Mel Latu (18:51):
Honestly, we have the best CPA partnerships. It's
where 90% of our business comesfrom. Do the dirty work and we
understand both sides of thelanguage. There's not a lot of
pushback and it's a reallybeautiful embrace actually,
because when me and my team getto clean up some books and then
(19:13):
get on the call to start the taxpreparation, when you're able to
have the conversation where youclearly understand where
everything is and why it'sthere, and it's a different
relationship, right? And thenthey're very excited.
All of our CPAs are excitedabout us pushing the narrative
of forecasting because whobetter, who does it, who would
not love for our clients to beprepared and ready for the end
(19:35):
of the year. Right. Or not be inshock at the different scenarios
that happened by quarter four,because you didn't do all the
things you should have done forthe year. So I can't think of
any pushback. Some people cashflow in a different theory,
different pattern, differentformats.
There are some companies, andthen some of our clients that we
(19:57):
cash flow forecast for thatdon't necessarily need to do the
discipline or the process ofweekly because cash flow is
good, available liquid money isgreat. However, they want to
hire more staff. They want toopen a second location. So the
tool starts to work in theirbenefit that we scenario, and we
plug in all these things theywant to do and we see, does it
(20:18):
work? Or are they going to gotry to get an SBA or a large
bank loan that's gonna want athree to five year, ten year
forecast?
And every single business ownergoes, what is that? I've never
done that before. Right? So thefirms that we work with that
know that our clients arealready prepared to one, be
lendable. They're already readyto go to the bank with clean
(20:40):
books and that we understand thelanguage.
There hasn't been a lot ofpushback. One thing that I can
tell you is we like granularchart of accounts, right?
Because again, I want them to beoperational, intuitive. So I
need it to speak to the opsmanager. I need them to speak to
the doc supervisor, right?
Like whoever needs to know thatpiece of it. So the only
(21:04):
pushback we might have is, holycow, that's an eight page P now.
We're like, no problem. Let uscollapse it for you and we'll
shrink those and just give youthe overall category. So other
than that, no, it's been areally good working relationship
that we don't want to touchtaxes and they don't want to
touch bookkeeping andaccounting.
So it's a really funrelationship.
Adam Larson (21:24):
Yeah, it's it it it really sounds like it is. And
because you're puttingeverything in the right place,
you might be using slightlydifferent names or things or
slightly different methods. Butbecause it's working and
everything's lining up, whywould somebody be against it
anyway?
Mel Latu (21:40):
And then we get to have the really good discussions
that both parties get to learnsomething, you know, especially
when we're doing our real estateinvestor clients. You know,
there's so many different ways,depending if they're flipping
the home, holding the home,selling the home, right? Is it
capital improvements? Is it canwe go ahead and expense it? All
those different elements, we canexplain why, like we already
(22:03):
know, we're talking to thisclient all year long.
We know for six months it wasrented out. So we needed to book
some of the expenses for part ofthe year differently. And we can
have that discussion why we wentbalance sheet or profit and
loss. And again, it's been veryappreciative that understand the
strategy and the why, and nowthey feel confident to take
(22:23):
those books and just do theirpart, their favorite part of the
job and the tax preparation.Without all the, you know, get
to be the liaison too, right?
Those emails back and forth fromyour tax professional can just
be overwhelming, especially ifthat's not your daily language,
right? So it's a very fundynamic to be that third person
(22:47):
on the email and be able to helpnavigate those conversations
with the ultimate goal ofeducation and impact. We want
this business to grow. We wantthem to understand, and we wanna
make sure that as the accountingteam that we've circled around
him with their CPA and our team,that business is moving in the
right direction. We don't wantto just be recording numbers to
(23:09):
just be recording numbers.
That's super boring.
Adam Larson (23:12):
Yeah. So, you know, with all the work you've done
with small small businesses andhelping them improve and improve
their books and stuff like that,Do you where do you kind of see
things moving in the future,especially with the markets
going up and down with so manydifferent industries with
uncertainty and, you know, somany choices, you know,
especially in The U. S, youknow, the government's making a
(23:33):
lot of different interestingchoices. And so, you know, where
do you kind of see things goingas we kind of look toward the
future of the industry?
Mel Latu (23:44):
Truly believe I'm so passionate about the force of
small business in America. Are,we fuel local economies, jobs,
impact our communities. And Ifeel that it's something that it
is the most important at thispoint in the world that we must
(24:06):
forecast, we must plan. Eightytwo percent of businesses fail
due to poor financialfoundation. And the fact that
all it takes to shift that andstart seeing more of a success
rate is to teach and to make itfun.
I like to say we're energizingfinancial management. We want
you to be excited. Don't bescared. Release the shame of bad
(24:29):
bookkeeping or bad financialmanagement. It's almost like if
I was your personal trainer andI'm looking at your food log, I
gotta see what you're reallyeating because you're showing up
for the workouts and you're notgetting toned, right?
Let's dig in and look at it, butit's okay because everybody does
it. Everybody, you don't knowwhat you don't know. When I
think about the future ofbusiness and finances, one of
(24:53):
the biggest tools is planningahead. And you a tool to
forecast, to plan. The abilityto see the future in your
business is leverage in so manydifferent situations.
And it's you have the toolsright in front of you to really
grow whatever your goal is,right? Not every business has to
(25:13):
be Grant Cardone and go 10X andbe a billionaire. Sometimes a
successful small business is youcan provide for your family,
provide a really cool workplacefor a couple of people and give
back to your community. So Ithink it's really important that
we just find out what ourfinancial goals are as the
business, right? And thenforecast and plan and be able to
(25:33):
pivot.
I think relationships are gonnamatter more than ever in the
upcoming years when it comes tonegotiating with prices and even
hiring people, right? We'vegotta take care of people
differently because we're anenvironment where you wanna find
that top person and you want toretain them, right? So that's
how I see it. Planning, beingable to pivot and just having
(25:57):
all the tools in front of you sothat you are operating with
facts and not feelings, becauseit's really easy to run our
businesses on how we feel.
Adam Larson (26:05):
Just
Mel Latu (26:07):
remove all those fields and look at the black and
white data and you'll see seethat margin move a lot faster
than it would.
Adam Larson (26:15):
Awesome. Well, Mel, I just want to thank you so much
for coming on the podcast. Thankyou so much for your insight
with our audience. And it's justbeen great chatting with you.
Mel Latu (26:24):
You as well. Thank you, Adam.
Announcer (26:27):
This has been Count Me In, IMA's podcast, providing
you with the latest perspectivesof thought leaders from the
accounting and financeprofession. If you like what you
heard and you'd like to becounted in for more relevant
accounting and financeeducation, visit IMA's website
at www.imanet.org.
Welcome to another episode of Count Me In. I'm your
host, Adam Larson. Today, I'mjoined by Mel Latu, founder and
CEO of the Cashflow Boss. Mel'sjourney into finance started off
personal necessity, learning howto master cash flow forecasting
when her family faced a majorfinancial upheaval. That skill
soon became a backbone of hermission to help small business
owners build a solid financialfoundation before problems hit.
(00:44):
In this conversation, Mel and Iexplore the blind spots that
often trip up small businesses,the benefits of real time
financial versus traditionalmonth end reporting, and the
importance of proactiveforecasting in today's fast
moving market. Mel shares AxiMLstrategies, top tools, and
advice on how financialprofessionals and business
owners alike can make smarterdecisions and drive growth. You
(01:05):
won't want to miss thesepractical tips, so let's dive
right in. Well, Mel, thanks somuch for coming on the podcast
today and your journey intofinance and accounting is
unique. You know, you started itstarted kind of with your
personal need to manage cashflow.
So I was hoping you could sharea little bit about your
experience and how that shapedyour business approach.
Mel Latu (01:28):
Absolutely. And thanks for having me, Adam. I love to
talk about forecasting. It's themost powerful unused tool in our
financial day to day. Cash flowforecasting started for me to be
a very simple spreadsheet tofigure out how I was going to
manage two households.
My mother had become terminallyill and went from a 6 figure
(01:51):
income to social security, andthat's a drastic change in
income. So we had to do somemajor forecasting and alignment
between two households. And it'ssomething that became a tool of
survival and just, had so manylayers and ways that we could
keep using it and started usingit as a business tool as well.
Adam Larson (02:17):
So what caused you to think, Hey, I can take what
I've learned and go help otherswith it?
Mel Latu (02:23):
Sure. So in that same season of having to learn to
manage money with a drasticchange of inflow and massive
change of outflows, right, twohomes, less money, I also had to
change my career. My corporatecareer was operations
management, C level, greatsalary, not the right balance of
life for being a caretaker and aparent at the same time. So I
(02:44):
had to step out of that role,but I still would be the worst
employee, right? I could notjust come in entry level.
So I needed to find somethingthat challenged me, but wouldn't
give me the staff or the need tobe at work as much while my mom
was fighting her cancer battle.So, I'm on Indeed and I started
(03:05):
looking for executive admin typepositions. That way I'm in a
role that is beneficial, but I'malso not hopefully managing a
bunch of people. And I foundmyself working for a turnaround
consultant. I had no idea reallywhat the industry was or what
the job was, nor did I care alot at the moment.
It was a job that would fit mybalance of life for what was
going on personally. Once I gotin, my job was to help reset up
(03:31):
the back office and thefinancial foundation of these
companies that were coming to myboss to either turn them around
so that we could get them sold,or he sometimes would just buy
them and we would restructureand then we would sell. So
through that work, a couple ofthings happened. One, I got to
work on the back side of puttingout all the fires, which is
(03:53):
really cool because you'rewalking through the fire with
these clients and businessowners and having to figure out
how did you get here? Oh mygosh, what did you do?
And then now you get to turn itinto a proactive process for
other people you meet along theway. Right? And the constant,
every single one of thesebusinesses had that came to the
turnaround firm was the lack ofa financial foundation that
(04:17):
nobody did the bookkeeping,right? No one looked at the
reports. Reporting and anythingrelated to the accounting was
compliance, right?
Just do it because we have to,taxes are coming, things like
that. Never use it as a tool.And so when for me, it just
became like, here's another one.Here's another one. Oh my gosh,
another company, anotherhusband, father that is taking
(04:42):
second mortgages and all thesecrazy financial strains on his
personal life to keep thisbusiness going when he would've
never been in that position ifthere was a foundation and
proper planning.
And so it just turned into Itjust became clear, crystal
clear, there's a hole here. Andthen to dial it back, knowing
(05:02):
I'm in their finances and I cansee that none of these companies
either could afford a C levelCFO on staff, right? When you're
starting up, you're launchingyour dream, you don't have that.
Adam, it turned into a desire tobe a bridge for small business.
How can we design a workingrelationship that we can offer C
(05:25):
level services for smallbusiness budgets and help them
grow, teach them thefoundations, make sure they
understand their bookkeeping.
And that's where it all started,just seeing the common problem
every single day and seeing thefinancial strain these
companies, the debt that theywould take on to fix what they
broke because they didn't know.
Adam Larson (05:46):
So what are some of those what are some of those
blindsight, some of those thingsthat they weren't seeing that,
you know, that if somebodylistening to this is saying,
maybe I should look for that.
Mel Latu (05:57):
Sure. So there's two elements in how we view
differently. And a lot of itcomes to my background of being
in operations management. And Ihad to look at financials and
run a team, right? I wasn'tlooking at financials from a
just I need to file my taxes.
I had to look at these numbersand figure out how to get a team
to work more efficiently,whatever, so I can move those
(06:19):
margins. So my outlook on theoutput of financials that we
produce needs to be when youlook at that report, does it
tell you something about yourbusiness? So step one is look at
your profit and loss statementand your balance sheet. If you
don't know what those are orknow how to read them, you gotta
start there. It's very first,just understand them because
(06:42):
it's something that we continueto see in small business that
you don't learn about until youare at the bank asking for
money, you're on the sellingblock asking for top dollar, and
now you're leaving a bunch ofmoney on the table because your
books are bad, right?
Or you need an investor and youcan't get a good valuation of
your company because you didn'tdo these things in the very
(07:04):
beginning. So looking at yourfinancials. Number two, the
second part of that is theforecasting element and
projecting all of your expensesand planned revenue and see
where those gaps in your cash isgonna be, because we all have
them. No matter what size budgetor operation you're running, we
all run into those cashflow gapsthat we either need to pull from
(07:25):
a line of credit, increase ourcredit spending, cut some
expenses, whatever that lookslike, right? You got to at least
have the ability to see in thefuture to know when that time is
coming and have time to pivot,get there.
What can we do before, oh no, Ican't process payroll today.
There's not enough in the bank.
Adam Larson (07:44):
Yeah, there's not enough in the bank. When you and
I first spoke, we were chattinga bit about the topic and what
we were going to talk about. Youmentioned something real time
financials, you know, model, asopposed to that kind of
traditional end of month, end ofquarter reporting, which, you
know, many people who listen tothis podcast are, they're
accounting and financeprofessionals. You know, their
organizations probably do likethe end of month they have to
close each time at the end ofmonth. So let's talk a little
(08:04):
about the differences there andwhy that's important.
Mel Latu (08:07):
Sure. So another thing, what's really fun about
all of these things that I feelthat we do, that we have changed
and kind of disrupted the oldindustry and cycle of small
business is that we, smallbusinesses is operating at,
things might be going reallywell, and in three weeks the
(08:27):
whole thing could shift and youneed to go get a line of credit.
You need to be able to take yourfinancials at any moment to be
viewed, to see if you have anyability to get some working
capital and things like that.And in the old way of, or
traditional way of end and monthend and quarter end puts a lot
(08:49):
of people in a position wherethey're not prepared when they
need to go. Part of being ableto use those financials for the
operation standpoint of drivingchange in your company, they
have to be real.
They have to be as current asthey can be. So we believe in
real time accounting. What thatis for us is we are bookkeeping
every single day. We are askingquestions every single day if we
(09:10):
don't understand an inflow or anoutflow for two reasons. One, so
that it gets reported correctly.
And two, the opportunity for taxstrategy. Maybe you don't know
that you could actually dosomething different with that
expense or revenue for a betteryear end. So we get that
opportunity in the real timewhile the business owner's
memory is still fresh, they'removing that money, but we also
(09:31):
have the opportunity to breakhabits like, Oh gosh, no, you
shouldn't have done it throughthat entity, or That's going to
be at a taxable event. We'reable to have the conversations
again before you're at tax end,trying to figure out all these
things and paying the extra feesfor tax preparation when you
could have cleaned as you go andbe ready for year end. So real
(09:53):
time for us is we're constantlybookkeeping, we're constantly
asking the questions, and we'reable to pull a reviewed P and L
statement and balance sheet atany time.
They're as current as lastSaturday.
Adam Larson (10:06):
That's yeah. So is that is that sustainable as a
business scales and grows?Because it seems like that would
be a lot if you're if there ifyou become more and more things
that you have to check eachtime.
Mel Latu (10:16):
Sure. And we have experienced incredible growth in
five years. So, it's a greatquestion because we had to adapt
to that, right? We had toinnovate some of our processes.
We had to lean on some of thereally cool software and
innovations and differentconnections that are out in the
world.
I love Uncat. So accountants, ifyou have not heard of Uncat, U N
(10:38):
C A T, it hooks up to yourQuickBooks online and anything
that you put in uncategorized oryou can pick whatever category.
If you put something in thatcategory, it automatically
notifies your client that youhave a question for that income
or revenue or expense, and theycan answer it right there on
their phone. They're not gettingspreadsheets and emails and all
that. And what's really funabout Uncat is you can answer it
(11:01):
back on the accounting side andit syncs right back to
QuickBooks.
So you don't have to log backinto QuickBooks. The client can
attach the receipts, any kind ofdocumentation. And my fun part,
all of the accountants listeningwill be so excited, is whatever
note that client communicatesback to you, it stays in the
general ledger memo. So a yearfrom now, or if sometimes we
(11:22):
find ourselves in a little bitof a dispute of where something
should be categorized, right?And it's like, Hey, at the end
of the day, we're not gonnaargue it's your business.
We're gonna put it there, butyour tax preparer might have a
different discussion, right?That note will always be there.
So I love Uncat. And then wejust make it to where, I'm a
(11:44):
business owner too, right? Everyprocess that we roll out, what
makes it easy for my team tofeed me my financials and that
thing that we talk about all thetime, know your numbers.
Well, what are your numbers?Every industry, every company,
their numbers are somethingdifferent, right? And we want to
pull those out and make them soexposed and highlighted in your
(12:05):
financials, whether it be werestructure your chart of
accounts, so that we're namingthings in your language. Use
those financials to drive yourgrowth. Does that answer your
question, Adam?
Adam Larson (12:22):
I think so. Yeah, because the way you were first
describing it, it made me thinkof, well, that's great for
somebody who's really small andjust, you know, trying to get
things in order. But once thingsget in order, do you have to
adapt that method to because itdoesn't seem sustainable to do
that every time?
Mel Latu (12:39):
A 100%. So on our side, we utilize rules in
QuickBooks and all the differenttechnology features out to make
it as quick as possible. Andthen our team's able to minimize
the daily touch and then themonthly reconcile. It's actually
quite more efficient becauseit's real time. I like to say
clean as you go, right?
(13:00):
If you pick up your laundry,instead of throwing it all over
the bedroom, you're not fightingyour children on the weekend to
clean the room, right? So thesustainability has been in the
process and the effectiveness ofstaying current.
Adam Larson (13:12):
Gotcha.
Mel Latu (13:13):
And we have found that you begin to train your business
owners, right? They know whatwere the things that you start
to ask. And some of that, theautomation just starts to become
more easy because the one offsand the things that you gotta
ask about are starting tominimize their habit to
(13:33):
commingle and use the wrongbanks and cards starts to stop
because you're harassing themnonstop to, Hey, you can't do
that. So the scalability comesin using the innovative tools we
have in the marketplace. Of ourclients are QuickBooks Online.
So, of our effective scalabilityis we only do QuickBooks Online.
All of our staff is pro leadaccountants, so we live and
(13:56):
breathe one system. So it makesus more efficient as well. And
we'll migrate you over if youcall up and you don't have
online. No problem.
We'll we'll get you over toonline.
Adam Larson (14:06):
So when you're looking at forecasting, you
mentioned how importantforecasting is, and especially
in this type of a a format. Arethere certain key indicators
that you're you're working withthese business owners saying,
hey, these are indicators thatyou should be prepared for, that
you should always look at tomake sure you know what the
future is going to look like?And, you know, and how are you
how are you training thosetraining them, especially, you
(14:28):
know, you come from operationsmoving into the accounting side,
you know, how are you how areyou teaching them the right
language and getting the rightwords so they understand,
especially for the nonaccountant?
Mel Latu (14:39):
Great question. We use the cash flow forecast as the
tool to drive operations. Andwhat I mean by that is, as it
gives you the ability to reviewyour spending, a balloon ride
up, right? We're busy as theowners. We don't have time to go
sit and look at our generalledger.
However, a very quick view everyweek of seeing on a linear view,
(15:00):
what's going out of my bankaccount week to week to week to
week, right? Gives you theopportunity to see Small links
will sink the boat, right? Youget to see, Oh, wow, look at all
those YouTube Prime and Hulu,and why is all that stuff? It
gives you a different viewbecause if you look at your
financials at the end of themonth, that may all just be in
(15:22):
subscriptions. It might all justbe in software and apps, right?
It might be all bundled insomething that you might be too
busy to drill into. But ifyou're looking at your cashflow
on this linear review, everysingle week, money that's going
out by category, why it'sleaving, it's going to indicate
you're gonna see an increase,right? Because you're gonna see
that weekly expenditure. So ifyou're paying something every
(15:43):
month and you're seeing itconsistently go up, you've got a
very quick, Hey, we need to calland re rate our insurance, or do
we have too many licenses onthis software? What changed?
What happened? But the biggestthe biggest help that cash flow
forecasting is the revenue side,right? Because we all live and
plan around the revenue comingin. So on a weekly basis, if you
(16:07):
planned $50,000 to hit youraccount this week and only 35
came in, you need to that nextMonday, that needs to be an
operational meeting. Likewhere's that AR?
Why did it not come in? Did itcome in and it just didn't clear
the bank till this week? Do wehave a process in our billing
department that we need to finetune? Is there something over
in, you know, whatever your, itdepends what the industry is,
right? Is there a step in theprocess before it gets to
(16:29):
billing that we're not executingfast enough?
It's able to just expose for youto where to dig in deeper and
spend your time wisely, right?We're not just spinning our
wheels. We've got a lot ofthings to do. So when it comes
to indicators, I think it's justthat you're looking at it very
quickly, ten, fifteen minutesevery week to see what's
changing as it's changing. Andthen the second part of that is
(16:52):
when you run your P and L everymonth, run it at month over
month.
Look at your whole year incolumns of month and watch
things change as your year'sgrowing.
Adam Larson (17:03):
I can't help but wondering, you know, how does
that how does that how do youconnect all of that, you know,
that type of forecasting andlooking at that to the budgets
you've made, you know, becausewe all have to create those
budgets and that connects to theforecast. You know, how do you
how do those two connect in thismethod?
Mel Latu (17:21):
So, Adam, the way budget and forecasting will work
together on the template that wehave created is when you're
first setting up your forecast,your forecast is your budget. So
I like to call the forecast ourworking budget, right? We have
the opportunity every singleweek and month to analyze, are
we spending what we said wewould? Are we getting in what we
(17:43):
said we would? It gives you adifferent pace and way to view
that budget as you're walkingthrough it.
And it gives you the opportunityif you're in any kind of setting
where there needs to be a votefor a new budget mid year, after
first quarter, whatever, youhave that trend. You're watching
it. When fuel went updramatically overnight for a lot
(18:04):
of industries that have fleets,right? You could quickly see how
much of a change that was makingin their weekly budget, right?
So the budget piece is, that'show you start your forecast.
Your forecast is your budget.And every week, the secret sauce
and the discipline of reviewingand reconciling that forecast,
you are reviewing and editingyour budget. When
Adam Larson (18:33):
you chat with other finance and accounting
professionals and kind ofexplain what you do, do you ever
get pushback saying, oh, you'renot you're not are you still
holding true to like traditionalaccounting principles, you know,
or is it more like a, hey,you're embracing it and doing it
from a different perspective,but still keeping your right
internal control, you know,processes in place?
Mel Latu (18:51):
Honestly, we have the best CPA partnerships. It's
where 90% of our business comesfrom. Do the dirty work and we
understand both sides of thelanguage. There's not a lot of
pushback and it's a reallybeautiful embrace actually,
because when me and my team getto clean up some books and then
(19:13):
get on the call to start the taxpreparation, when you're able to
have the conversation where youclearly understand where
everything is and why it'sthere, and it's a different
relationship, right? And thenthey're very excited.
All of our CPAs are excitedabout us pushing the narrative
of forecasting because whobetter, who does it, who would
not love for our clients to beprepared and ready for the end
(19:35):
of the year. Right. Or not be inshock at the different scenarios
that happened by quarter four,because you didn't do all the
things you should have done forthe year. So I can't think of
any pushback. Some people cashflow in a different theory,
different pattern, differentformats.
There are some companies, andthen some of our clients that we
(19:57):
cash flow forecast for thatdon't necessarily need to do the
discipline or the process ofweekly because cash flow is
good, available liquid money isgreat. However, they want to
hire more staff. They want toopen a second location. So the
tool starts to work in theirbenefit that we scenario, and we
plug in all these things theywant to do and we see, does it
(20:18):
work? Or are they going to gotry to get an SBA or a large
bank loan that's gonna want athree to five year, ten year
forecast?
And every single business ownergoes, what is that? I've never
done that before. Right? So thefirms that we work with that
know that our clients arealready prepared to one, be
lendable. They're already readyto go to the bank with clean
(20:40):
books and that we understand thelanguage.
There hasn't been a lot ofpushback. One thing that I can
tell you is we like granularchart of accounts, right?
Because again, I want them to beoperational, intuitive. So I
need it to speak to the opsmanager. I need them to speak to
the doc supervisor, right?
Like whoever needs to know thatpiece of it. So the only
(21:04):
pushback we might have is, holycow, that's an eight page P now.
We're like, no problem. Let uscollapse it for you and we'll
shrink those and just give youthe overall category. So other
than that, no, it's been areally good working relationship
that we don't want to touchtaxes and they don't want to
touch bookkeeping andaccounting.
So it's a really funrelationship.
Adam Larson (21:24):
Yeah, it's it it it really sounds like it is. And
because you're puttingeverything in the right place,
you might be using slightlydifferent names or things or
slightly different methods. Butbecause it's working and
everything's lining up, whywould somebody be against it
anyway?
Mel Latu (21:40):
And then we get to have the really good discussions
that both parties get to learnsomething, you know, especially
when we're doing our real estateinvestor clients. You know,
there's so many different ways,depending if they're flipping
the home, holding the home,selling the home, right? Is it
capital improvements? Is it canwe go ahead and expense it? All
those different elements, we canexplain why, like we already
(22:03):
know, we're talking to thisclient all year long.
We know for six months it wasrented out. So we needed to book
some of the expenses for part ofthe year differently. And we can
have that discussion why we wentbalance sheet or profit and
loss. And again, it's been veryappreciative that understand the
strategy and the why, and nowthey feel confident to take
(22:23):
those books and just do theirpart, their favorite part of the
job and the tax preparation.Without all the, you know, get
to be the liaison too, right?
Those emails back and forth fromyour tax professional can just
be overwhelming, especially ifthat's not your daily language,
right? So it's a very fundynamic to be that third person
(22:47):
on the email and be able to helpnavigate those conversations
with the ultimate goal ofeducation and impact. We want
this business to grow. We wantthem to understand, and we wanna
make sure that as the accountingteam that we've circled around
him with their CPA and our team,that business is moving in the
right direction. We don't wantto just be recording numbers to
(23:09):
just be recording numbers.
That's super boring.
Adam Larson (23:12):
Yeah. So, you know, with all the work you've done
with small small businesses andhelping them improve and improve
their books and stuff like that,Do you where do you kind of see
things moving in the future,especially with the markets
going up and down with so manydifferent industries with
uncertainty and, you know, somany choices, you know,
especially in The U. S, youknow, the government's making a
(23:33):
lot of different interestingchoices. And so, you know, where
do you kind of see things goingas we kind of look toward the
future of the industry?
Mel Latu (23:44):
Truly believe I'm so passionate about the force of
small business in America. Are,we fuel local economies, jobs,
impact our communities. And Ifeel that it's something that it
is the most important at thispoint in the world that we must
(24:06):
forecast, we must plan. Eightytwo percent of businesses fail
due to poor financialfoundation. And the fact that
all it takes to shift that andstart seeing more of a success
rate is to teach and to make itfun.
I like to say we're energizingfinancial management. We want
you to be excited. Don't bescared. Release the shame of bad
(24:29):
bookkeeping or bad financialmanagement. It's almost like if
I was your personal trainer andI'm looking at your food log, I
gotta see what you're reallyeating because you're showing up
for the workouts and you're notgetting toned, right?
Let's dig in and look at it, butit's okay because everybody does
it. Everybody, you don't knowwhat you don't know. When I
think about the future ofbusiness and finances, one of
(24:53):
the biggest tools is planningahead. And you a tool to
forecast, to plan. The abilityto see the future in your
business is leverage in so manydifferent situations.
And it's you have the toolsright in front of you to really
grow whatever your goal is,right? Not every business has to
(25:13):
be Grant Cardone and go 10X andbe a billionaire. Sometimes a
successful small business is youcan provide for your family,
provide a really cool workplacefor a couple of people and give
back to your community. So Ithink it's really important that
we just find out what ourfinancial goals are as the
business, right? And thenforecast and plan and be able to
(25:33):
pivot.
I think relationships are gonnamatter more than ever in the
upcoming years when it comes tonegotiating with prices and even
hiring people, right? We'vegotta take care of people
differently because we're anenvironment where you wanna find
that top person and you want toretain them, right? So that's
how I see it. Planning, beingable to pivot and just having
(25:57):
all the tools in front of you sothat you are operating with
facts and not feelings, becauseit's really easy to run our
businesses on how we feel.
Adam Larson (26:05):
Just
Mel Latu (26:07):
remove all those fields and look at the black and
white data and you'll see seethat margin move a lot faster
than it would.
Adam Larson (26:15):
Awesome. Well, Mel, I just want to thank you so much
for coming on the podcast. Thankyou so much for your insight
with our audience. And it's justbeen great chatting with you.
Mel Latu (26:24):
You as well. Thank you, Adam.
Announcer (26:27):
This has been Count Me In, IMA's podcast, providing
you with the latest perspectivesof thought leaders from the
accounting and financeprofession. If you like what you
heard and you'd like to becounted in for more relevant
accounting and financeeducation, visit IMA's website
at www.imanet.org.
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