Greatest Hits: Cash, Clients, and the Secrets Behind Growing Businesses

Speaker A: People buy based on emotion, especially accountancy services. My gosh, there's so much emotion in that. And I look at so many accountancy firm websites or marketing. That's so bland. And so, hi, we're accountants, we do accountant y things.

Speaker B: There's so much focus on profit, whether it be net or ebitda. Uh, but cash is king. You can survive profit issues for a short while, but if you have cash issues that keep repeating themselves, they're a lot harder to overcome.

Speaker C: It is brutal and it is. I think what founders bring and founding teams often bring is energy more than anything, obviously direction as well, but energy is such a big part of it, so. And it's the emotional energy that's the brutal part. Physical energy is quite easy to manufacture, but the emotional energy is harder.

Speaker B: Uh,

Speaker D: welcome back to the new F Word podcast where we talk finances in business. I'm your host, Colin Hewitt, founder and CEO at Float. We're so glad to be back for season three. And this season we've got some great guests that are going to bring a ton of value. We'll be diving further into how fractional CFOs add value, what financial clarity actually looks like, and what systems and apps are leading the way. New guests, sharper conversations. Let's get into it. One of the things Float we are doing a lot of is talking to our customers. So, you know, all the time it's like, get, uh, like we want to launch this new feature, let's get 10 new customers, we've got an advisory panel, we're doing a lot of it. And um, in my agency, we never spoke to our customers about what their experience is of us, you know, and I just think if there was one thing that, I mean, uh, we've moved accountancy firms a few times in our 12 years and I just think if they just come and asked us, hey, what could we have done better? Like, now that you're leaving us, is there anything that you know what would have helped you to stay? Or how's it going?

Speaker A: You know, like I tell people, like, if you're going to talk to your clients, really like think therapist questions. You know, when you go to your therapist and they ask you this mind blowing question like, how are you? Or how's that working for you? Or tell me more and you're going, oh my gosh, my mind is blown. This is incredible. It's so deep because all they're doing is listening to you and drawing out from what's in your mind. I, uh, know there's so many Accountants who are obsessed with, like, we need to do client surveys, we need to send out emails, we need to do all this when actually what you need to do, either in the first five minutes or the last five minutes of every call you have, ideally both. You ask a very simple question like, how are things for you personally? And then they go, well, honestly, I was really stressed about this, or I was troubled about that. And you don't go, oh, gosh, that's tough. Anyway, let's look at your numbers. You connect that. Like, I had a client the other day that we had a deadline to deliver a website page for an event that he had, and I sent him a message, we chased him, we sent project management things, tools, emails, messages. And finally on, like, Friday afternoon, I said, I just want to let you know that we need these three things by end of the weekend or 9am Monday morning, or else we will not be able to deliver this in time. And he said, oh, uh, thank you so much. I'll get on that right now. And he did. By the end of Friday, he had done all of the things we were waiting on to enable us to finish the website and the page and the form and the stuff for the event. And he sent us a message a couple days later and said, I just want to really thank you because I had the worst week. And he had some personal things that were going on that was absolutely awful. And he said, but this thing was important and you helped me to see what the critical thing was and filter through all the stuff. Because we're not perfect at PF either. We've got Slack, we got Monday.com, we got emails. And I know what it's like as a business owner to be like, what do you need from me? I just did it to my book editor. I was like, I don't understand what you're asking for. And she's like, if you scroll up to the third message I sent you before, but she was very gracious. Just like, there it is. And I'm like, ah. Ah, yes, I forgot all about that. Thank you so much. I will do it. So I think there's just this so much even more relevant now with all this AI and speed and tools and tech, the ability to connect with humans and say, how are you really as a person? And if they're not ready or don't want to talk about it, fine. Or if everything's great, fine. They can talk about what they're excited about, what's motivating you. But just that moment to be like, if there was anything that we could give you as an accountancy firm that would make your experience better, what would it be? I guarantee you 90% of the clients you ask will say, I don't really know. That's a good question. Let me think about it. And when they do that, don't let them get away. Don't be like, okay, we'll talk to you later. Say, yeah, sure, think about it. But while you're thinking about it, what about this? And just ask more questions because it's there. They want to tell you things, same as you said, like they're little things. Usually they're not huge. We didn't get this email or this member of your team emailed us six times back and forth. That was a little frustrating. But it's not frustrating enough for me to fill in a survey and tell you that you're horrible or leave. But if that builds up, then it's not a good relationship.

Speaker D: I think, you know, this is maybe controversial because we felt when we started, you know, back in that 0con 2012, I'm sure Xero were saying, moving away from compliancy and into advisory. You know, I'm sure they were saying that, talking about that transition and we thought, fantastic, because Cashflow is a, is an advisory service, it's not a compliance service. And yet probably all the way through, until a couple of years ago, we would have said it still hasn't really happened on the mass scale like that. Most accountants, uh, are sticking with the bread and butter of compliance, which is fine. But what we were picking up from businesses when we spoke to them was actually we. There's a gap now because businesses don't, they need more than that. They need somebody to come alongside and go, how's it going? How are your numbers? Are you getting what you need? So this is where we think the kind of role of the fractional FD is kind of coming in. And, and that's not to say that accountancy firms can't provide that. And I think it's a great opportunity. But people are coming in and going, well, I can do that. And that's what we had to do, you know, and it was only when we did that we were like, oh, this is like how we can get our numbers in a place of like having a damn process. Like our accountants didn't tell us that all the things we needed to do to build, we can actually do a lot with our bookkeeper. But just having somebody sit there and go, we're going to get you management Accounts. At the end of the month, we're going to give you a cash flow forecast for the year. We're going to give you a 13 week and we'll review it monthly with you. That kind of stuff is, is really the opportunity that I think a lot of fractional, um, CFOs are picking up on. And it's just so, yeah, I think it's a really interesting time to be in the space.

Speaker A: It is. And uh, uh, like, I mean, I've been in this space for probably 20 years, but I feel like every new iteration is a fascinating one and this one is no exception because of the opportunities. There's always these opportunities if you see them that way. And this firm I was telling you about, the ones who were saying, oh, do we wait? Do we wait until everything's set? And I'm like, no, be experimental. Try stuff. I just had a meeting with them recently and I said, what's interesting is you are already trying stuff because you told me last week that the last prospect you had come in, you looked at everything they gave you and what they were doing, and you said, do you know what? I think we're too expensive for you. I think that from what you've said about what you're willing to spend and what you're expecting and the kind of service that we give, I don't think it's a fit. And they said, this person went, it's too expensive. I, uh, want you guys to work with me. And they said, well, it's going to be this. And they're like, okay. And they went, man, look at what happens when you go in with confidence and say, listen, there's no harm if we're too expensive for you. It's not a fit or you don't see the value. No hard feelings. We wish you well. And sometimes they say that and the person goes away. But they said it was remarkable that that one little shift of mindset for them was, oh, if we take on this client at that smaller amount of fee, it will cause the whole problems of, uh, the reason we're having this marketing conversation in the first place. And we don't want to perpetuate that. So we will stop that in its tracks. And they will either say no and we'll wish them well, or they'll say yes and we will charge appropriately. And they said they had a client who was. They would have in the old days charged 230amonth and they increased it to 450amonth to be accurate. And the client said yes. And the same thing with a, uh, tax project. Somebody was starting a new venture and they said, normally we would have been obsessed with this new venture, but we said, well, hold on. What all services do you need from us? And this tax project is separate. And then they got higher fees from that. The point is people will pay higher fees when they get a result that they maybe didn't know was possible. So this whole concept of I thought accountants were just like that. I thought that they just contacted me once a year. I thought that I would get a bill with three days notice to pay 50 grand. I thought it sucks, but that's the way it goes. So their whole approach is like, that is not what you have to expect from an accountant. Did you know that? And I've had that happen as well. I talked to somebody who, I think he does woodworking. And I said, I work with all these different accountants. You've just got a 30 grand tax bill. I can find you an accountant who can help you with that. But I can also find you an accountant who can help make sure that that never happens again. That is like that it comes with three days notice. Not that you don't get a 30 grand tax bill. You might get a hundred grand tax bill and be excited about it because your revenues are so high. And I said, plus I could find you an accountant that you really like and that you'd enjoy having a beer with. And he's like, do those people exist? I'm like, they do. And I know loads of them. So just circling back to the, the buyer's perspective that I don't believe they know what they need, but they know what's wrong and they know what's frustrating and they know what's driving the mental. And if they can come in and accountant or the FD or the VCFO can be like, did you know that this was possible? Did you know that we can manage all of your numbers? You don't have to worry about any of those. But these three numbers, these KPIs, if you want to call them that. But whatever these numbers you need to be obsessed with. And if you are not obsessed with those, you are going to get into the same trouble. Any business owner can understand that. And they're sitting there feeling shame and guilt and blame for themselves that they're not understanding their accounts. And a good accountant says, you don't have to understand all that. That's what I'm here for. But you gotta fault track these numbers obsessively and when they go up or down Massively talk to me about it. And then like you said, it's that human relationship so that you're not having this super formal meeting with your accountant. You're just going, colin, listen, this happened. Is that cool? Is that good? Is that bad? What do I do? And then you have that help.

Speaker D: And I think, I mean, just to sort of move it into how this would apply for somebody who's moved into that fractional CFO business. I, presumably all of this applies, you know, somebody sides, right? I'm making the leap. Uh, I've been a CFO and I want to move to having, you know, less or do four days a week and have four or five clients. And what would the steps be that you would that again, they should go through? Because I can see people going, oh, um, am I going to have to post Every day on LinkedIn? Am I. How am I going to get clients? Am I going to, you know, what happens if I lose a client? What did I charge? Like, what are the kind of things that you would start from that point of view?

Speaker A: Yeah, it's a really great question. I would say there's one big question to ask right at the beginning, which, it's okay if you don't know the answer to this yet, but at some point, pretty quickly, within the next six to 12 months, you're going to need to know, is this a personal brand? Is this Colin the B CFO or Karen the CFO consultant, or is this potentially a scalable business? Is this the CFO company? No offense, if that's somebody's actual business name, but you know, X, Y, Z company, is it going to be scalable or is it going to be just you? Because that is going to change how you do your marketing. Now if you don't know, like genuine, you're like, I, I don't know. Right now it is just me. It could be scalable later. I don't even have time or energy to think about that. I just want to get the four or five clients, then treat it like a personal brand. Which means that it's about your name, your experience, your case studies and stories. Make your marketing very human. You know, just tells whatever format, we will get to that. But whether it's LinkedIn or blog posts or videos or whatever, it's about telling the stories of success and failure. You know, I worked with a client who this was a big failure. Then we did this and then they had success. People love to hear those stories. And if you have that in your mind, it's going to ease the burden a bit. Because if you know for sure that this is going to be a scalable thing, you're going to bring in others. There's maybe two of you. I was talking to some people recently who are in exactly that situation you described, but they're two of them, and they each have their own personal brand, their own website, their own services, but they're offering this VCFO thing together, combined. And I said, well, minimum viable marketing, just each of you create a page on your websites and do it separately. And if it goes super well, we can worry about bringing it together and giving it a name and all of this. But that's another easy mistake to make, is be like, okay, there's two of us, we need to give it a name. We need to get a branding agency in. And, um, we need to build a website, which you may do, but if you haven't proven the concept, you might just be spending a whole bunch of money on something that doesn't work or isn't what people need. So once you've answered that question, then it's the 12 elements from the Accountant Marketer. So it's the book I wrote for accountants or anyone financially doing marketing. And chapter one, number one, who is your audience if you don't know that everything else in marketing is going to be harder for you and for your potential buyer. And the specifics of this audience need to be sharp. So the more vague you are, the harder it is for them to find you, the harder it is for them to decide to work with you, the less they're willing to spend and the less likely they get in touch at all. The more specific and clear and sharp that you are, the more they can say, oh, I think that is me. They work with me. And therefore they lean in. And it doesn't take all these extra brain calories for them to be like, is this, Is this like, do we work together? How does this work? They just go. They work with. You know, I've always used this example that if they say they work with female owners of creative agencies that have been going for more than 10 years and pass the million pound barrier or whatever those things are, and who happened to live on a remote Scottish island and, you know, have brown hair, whatever, I mean, the more specific you are, the better. But if somebody said that, I'd be like, wow, that's almost spooky. And I actually had somebody say that to me. They sent me a LinkedIn message and said, I feel like your book is almost spooky. I sat down to Read it. And I felt like you and I had been at the pub and I had unburdened my whole soul to you, and. And then you wrote a book about it. And I love getting messages like that because that's why I wrote the book to say, if you just follow these 12 things in order, starting with your audience, you will be a little clearer. And that's all I'm trying to help you with in the first stage, is to be a little clearer and then more and more clear, because the more clear you are, the more clear they can be about whether they want to work with you. So audience first, then the issues that they have, then the way that you approach things, and it goes from there.

Speaker D: It's funny because honestly, at float, you know, we. That's not where we started. We started with thinking that I was the customer from my previous business and I thought everybody else would be like me. And I think that's a big sort of lesson you have to often learn is like, not everybody else is like you. And, you know, in a shocking. So the audience question was actually something that kept coming back to bite us.

Speaker B: I don't think I would do anything differently because I feel like we grew at a very healthy pace. Because there are a lot of people out there who may not realize that you can grow at an unhealthy pace. You can get ahead of your working capital, you can get ahead of your cash. And so I feel like we grew at a very healthy pace, educating our staff along the way about how to use these new tools that were in their hand. Because we're talking about 20 year contractors who have been turning in time on a piece of paper and a pencil for those 20 years. And now you're asking them to use an app on their smartphone. One way to get over the anxiety of change is to really come alongside of them and educate them, um, and help walk them through that process until they're comfortable. And so we were able to do that by growing at a healthy pace instead of getting out there too fast.

Speaker D: And you mentioned, like, customers stretching cash flow to 90 to 120 days. Is that where you needed the credit or what were you able to do to mitigate against some of that sort of side of things?

Speaker B: One thing that we did was work out with our customers and common banking relationship between us and them. Um, we were able to work out an early payment program. I mean, it cost us a little bit of interest. It was very low compared to waiting the 90 or 120 days to get the money. So that was one option that we did. Another was the increased line of credit. We were able to lean more on that to get us through till our billing cycle started repeating itself. And then you know, at that point into that contract and into that cycle and it repeats every month. The 90 to 120 days doesn't hurt at that point, but for the first 90 days it does. So that increased line of credit was an option. So both of those helped us get through it. Plus growing at that healthy pace and not burning through cash, just chasing top dollar revenue at an unhealthy pace.

Speaker D: Makes sense. What happens to a company when they hit that a hundred million? That's kind of like uh, a lot of companies aspire to get there. Do they kind of go right 200, 300, were they exiting at that point? Like what happened next?

Speaker B: I see all types of results. I see owners who take their foot off the gas and they say, okay, I'm happy right here. This is where I want to be. I've seen owners who take it through that hundred million because they're looking and exiting the company. They're wanting to hit that a hundred million and then put it out there for sale. And then uh, I've seen the group that says, okay, we're at 100 million, let's take a deep breath and let's plan on going to 250. Then you know, they've got a plan at 250 to go to 500. So it really depends on the ownership and the leadership and what they're willing to do and what they want to do. So like I said, I've seen all different options.

Speaker D: So you're building out this fractional department. What kind of companies are you focusing in on that still in that nation? The construction, manufacturing side of things, is that where you, you stay in that lane? Are you looking for more diversity or how do you find that?

Speaker B: I love the construction and manufacturing world. That's where I enjoy working. That's the type people I enjoy working with. So I'm not really looking to veer out of that lane too far. And the need is so great, especially in construction. Construction as a whole tends to be behind in the adoption of technology and some more forward thinking financial tools. So the ground is fertile out there. And not saying they can't be up to date, it's just the fact like going back to our earlier comments, they're really good at their craft and they're out there and they're building and they're getting things done and the finances Kind of seem to just drag along with them because they just don't have the time to put the attention to it. So it's an industry that has a lot of potential and like I say, I enjoy working within it. So I don't really see chasing anything outside that line.

Speaker D: When you start off with a new company, maybe haven't had a fractional cfo, like what's the typical way you're coming in? Um, maybe how do you start? Like, what are the things you're looking forward to get right? Is it the reporting? Is it systems and processes? What are the first things you're kind of looking to do? And when you're coming into a, uh,

Speaker B: new gig, when you come in, generally the game plan is you come in the door, you meet the team, you meet everybody, and then you kind of sit with each person and map out the processes and what their daily, weekly, monthly duties might be. And at the same time you're kind of assessing their abilities and if they need additional tools or training or if the team might need to be structured a little different. And so it really starts with the processes, mapping those out, punching holes in them, um, seeing where you can gain some quick efficiencies, some low hanging fruit and go to the owner and say, give them an analysis. Okay, here's what I see. Here's where we can make some improvements. Here's what I see about the team. Now let's talk about next steps. Do we need to take a, uh, technology approach or is the technology there and we really just need to do some training with your team. Even training. One area that I've kind of seen a lot of focus on lately is training the field staff, the project managers, the superintendents, to increase their financial acumen. So getting the back office and the field personnel on the same page, that's a large key to company success. Because there's always been this type of feeling that accounting in the field are combatants. And to get past that and get them working together makes their jobs easier and takes the stress level within the company down a little bit and it produces better reporting. Just if the field personnel know how their decisions out there affect the financials, and then letting the accounting staff know the challenges that the field personnel have in gathering this information and transmitting it to the back office. It's the old saying about walking a mile in another man's shoes, you'll understand

Speaker D: him a lot better and you'll be a mile further away and you'll have his shoes. So

Speaker B: that's right.

Speaker D: I love that. And I think in terms of cash flow, you know, something we talk a lot about, something we're very interested in. What tips do you typically give to the mistakes companies are typically making? I'm sure it's the same in larger companies. Uh, that would be in smaller companies as well. Like what are you looking for from an efficiencies point of view? When you look at a company in terms of shoring up cash flow, you

Speaker B: would think that the larger companies have it down, have it working smoothly, but it's not uncommon to see the same problem with cash large to small companies. And the biggest problem is the fact that there's so much focus on profit, whether it be net or ebitda. Uh, but cash is king. You can survive profit issues for a short while, but if you have cash issues that keep repeating themselves, they're a lot harder to overcome. And so putting tools in place, just like a 13 week cash flow forecast, there may be some superstitious people out there. You can go 14 weeks, but don't go any less than 13 weeks. 13 weeks is a three month window to let you look into the future based on what you know right now and see if you can tell what problems may be coming, what benefits may be coming and if it's benefits, how you can use those benefits to push the problems out even further or to overcome problems that may be out there that just may not be in your forecast yet. But just having an eye on what your cash flow is, because so many times I hear, you know, what are you doing for cash flow? Well, I look at my app on my phone and I have a positive cash balance, which means I'm good, which they. So many of our contractors think that way. And not that they can't open up to being able to forecast, but just no one's ever shown them how or they've never thought about it because like I say, if you can get that visibility into what's coming in and what's going out, then you can kind of control that spend, that discretionary spend along the way and just help get through the hurdles.

Speaker D: That's for us. That's the big thing we've been focusing on and float is just there's a lot of FP and A tools that do longer term three way forecasting. You get a 12 month, a uh, two year, three year forecast looks like cash flow but it's actually missing that detail that you get from the 13 week, it's a big missing piece. In so many companies they say, oh look, we've got either they get no cash flow or they got a spreadsheet that is, it has a cash flow report. But it's very general and I think we're trying to. That's the thing that we want to try and help. Why do so many companies not have it? Like what's your. Is it lack of knowledge? Is it they put it in the too hard bucket or. And how do you go about like oiling the wheels to get it in process? Is it a financial controller that does it? Do you do it? He makes it possible.

Speaker B: I think one of the issues why you don't see it a lot is just the fact that you know balance sheet and P and L, you don't even hear cash flow statement a whole lot. Which the cash flow statement gives you great information, but it's still not a forecast either. But you hear balance sheet and P and L. Balance sheet, P and L. And I think that right there is kind of your first line problem of why people don't focus on cash. Because they're so focused on that net profit. And then showing them that is important. Now I'm not saying the balance sheet and the P and L are not important, but showing them that cash is what drives your business. Cause if you don't have cash in the bank to make payroll, that's a problem that snowballs into every part of your business. Cause if you can't pay your people, they leave, can't get work done, customers are calling. So cash is the number one issue that you need to focus on. And so just to whether it's in Excel or whether it's report within their ERP system, having a template that you can put in front of them. And just like we were talking about with the technology for the older, more experienced contractors coming alongside of them, um, building it for them, um, the first time and showing them what you do and then letting them build it the next time and be there with them to point out where information comes from, what information you might need to be thinking of, is there a large annual payment coming up, asking questions like that to get them thinking of all the ins and outs that are coming over this next 13 weeks. And just to be able to organize that into a simple readable format that they can point to a week and go, oh, there's a problem, we need to plan for that. It comes down to educating and showing, walking them through the steps, taking away that anxiety because like I say, nobody likes change. And to go, hey, you need to do this 13 week cash flow forecast and good luck. I'll be back in a month and I'll see how you do. And they're not going to do anything with it. So just spending time with them, walking them through the steps and educating them and telling them that this is just another tool in their arsenal to run their business just a little better.

Speaker D: Tell us about that. You sold and then you took some time off. Love to hear a bit about that.

Speaker C: Um, it's actually not that happy a story. So what, so what happened was it was in 2017 and we were in the middle of the Series B process and that was the first time there was going to be the opportunity of a secondary sale of shares. The opportunity to actually make some money having built this business for seven years. But that seven years as much as from the outside looked like a success. I as an individual didn't own a car, didn't own a house, had credit card debts, all these things. As much as one ostensibly could say, oh, there's Michael, he's got this high personal balance sheet or asset value or can't think of the right phrase, actually. It didn't feel like that at all. And so we had the Series B. There was going to be a chance of some serious secondary that would enable me to buy a house for the first time in my life. That was exciting when we're going through that process and suddenly acquisition, uh, offer was made for the whole company. And it was a very odd moment to live through. The phone call was made to me, let's say sort of five o' clock in the afternoon, so saying, oh, Michael, verbally, we'd like to buy the company for X. And okay, so I've communicated with Alexis, my co founder, communicated with the board, you know, this has happened. Went to bed and woke up and realized I was exhausted. And it was that thing of I was 100% happy that, uh, 24 hours before I was 100% happy to proceed with a Series B, Series C, keep building, keep building, keep building. But the fact that someone had phoned me and said, actually this pressure, this conveyor belt, it can stop, made me realize how emotionally tired I was. And so I went back to the board, said, whether we accept the acquisition offer or accept the series, I don't mind, but I can't be part of the pitch for the Series B because I realize I need to stop. And so we did do the Series B rather than the acquisition. And I worked till the next six months, you know, to sort of slowly off board things and stop at Christmas and. But then my health collapsed. But within A week or two of stopping. So that I think speaks to the pressure that I think all entrepreneurs and founders and early teams and exec teams and I think many people listening to this probably would nod along of knowing about it. And my health still hasn't recovered. That's eight years ago now. I found ways of managing, I found ways of improving it and I hope one day it will fully recover. But there's obviously something about the stress of that journey that absolutely took a toll. So I would love to say in those years away I was on safari or I was learning to surf or went back to uni and studied PPE or something like that, but that really isn't the truth. There was quite a lot of visiting doctors and it wasn't all bad. I wasn't completely sort of bed bound or anything, but it wasn't sort of fun and games.

Speaker D: Thanks for sharing. I didn't realize it was that serious and I've heard other people go through similar things. The pressure and the uh, exhaustion is real.

Speaker C: It is brutal and it is, I think what founders bring and founding teams often bring is energy more than anything, obviously direction as well. But energy is such a big part of it and it's the emotional energy that's the brutal part. Physical energy is quite easy to manufacture, but the emotional energy is harder.

Speaker D: So with that context then the fact that here you are going again like an idiot, that's obviously a huge decision coming out of knowing what you know and what it's going to take. I think you were living in was it when, when you first started translucent. And we get to hear about how that came about and um, you saw the need.

Speaker A: Sure.

Speaker C: In building receipt bank, now Dext. We are eight entities around the world. You know, obviously we had companies in the UK, Australia, South Africa, France, America, et cetera. So eight entities around the world. There was eight zeros and one QBO, because QBO@ the times in France for our uh, French entity and Zero was not. We were, we were this multi entity business. And this was for 2015. I saw firsthand the problems of trying to run a multi entity business, a group business, across multiple copies of, let's say zero. And what we did was obviously we knew that netsuite was some natural progression, but that wasn't a project that anyone wanted and in some ways it wasn't so software anyone particularly wanted, but it really was the project. So we spent two years putting it off. And that was using a lot of different apps, it was using different hacks and things like that. And doing what we could. And I was spending a lot of time speaking to other sort of prominent UK startups that are in the same BO of, you know, how do you stay on Xero longer, how do you stay on QBO longer? Uh, but after two years in the end we had to make the move to netsuite and again that was an interesting project to watch because of course you're not just changing your accounting software, you have to change all the ecosystem of apps that's around it. You normally have to make some changes within the finance team to have people that driven NetSuite before, et cetera. So I became very aware then of what I call the 0netsuite gap. And obviously there are mid market vendors out uh, there, sort of Sage, Intacct, iplicit, uh, accountiq, various other people. But I feel the market is now best described as this zero NetSuite gap. And so we went from zero to NetSuite. And so ever since then I've been fascinated at ah, this opportunity and sometimes different entrepreneurs would call us, uh oh Michael, you've got any good ideas? And I'd be oh well if you want to build a huge company, build for the 0netsuite gap. And the reason I'm saying that is because the Xero API is so good now and uh, the QBO API is good and Penny Lane in France API is good and exact in the Netherlands the API is good. It means that there's the ability to build the mid market functionalities on top of the SMB accounting software. So therefore you don't need to migrate, you don't need to go through that big project to leave, you don't need to incur the extra costs. I'd been aware of this for a long time and then after several years my health got a bit better. I thought, you know what, I'm going to solve that. That was founding Translucent about two years ago and Translucent is exactly what I've described. It is a number of apps in one and all the apps are aimed at the same client, that business that's operating a multi entity setup but doesn't need to go to a NetSuite or something above. So our apps are things like consolidation, intercompany, automation, prepayments, deferred revenue, cash management, etc. And so we're launching more and more apps. There's a huge long list we want to build because we think it's really interesting to have many of these apps all on one platform so they all work together but also sitting on top of the accounting software that does a really good job. There's no need to move away. So that's why we're building up Translucent.

Speaker D: I love it and it makes so much sense. And um, we haven't been through that journey of moving to netsuite. You know, we've stuck with zero. But I've heard so many people having horror stories of just how much it costs and then when they get there, the cost to maintain a platform like that or system like that. And um, that's like you say why you have these other ones, iplicit and Coins iq that are seem to be growing as well. But like you say, what's the advantage of moving to one of those platforms when you get everything you need in Xero if you just have these extra parts that you're building out?

Speaker C: So I think the big innovator in this space was a company called Rippling, which many people listening to this will be familiar with. And Rippling created this concept of the compound startup but for HR software, starting with payroll and onboarding software, et cetera. And there's various ways of describing what they do, but my favorite way now about thinking about it is actually they reinvented how you should buy mid market or enterprise software. If we think of, you know, how did you historically buy mid market software? It was like going for a Michelin starred meal. You pay a big price, you're £200 per head or whatever it is, and then you get all 12 courses and you will eat all 12 courses and you will sit there and have all 12 courses. Even if you just wanted something. So you're going to have all 12 courses. And what Rippling realized is yes, this person may want all 12 courses, but let's give it to them as a buffet so they can just buy the bit they want when they need it. Our experience of the market is most people do not want to leave zero, they want to stay. But they have a problem. Now that problem may be forecasting, it may be intercompany automation, it may be prepayments, it may be consolidated reporting, it may be working at AP dupes across the group. It can be all sorts of different things, but normally they are running these multiple zeros, this multi entity setup and they have a burning problem. And what we try to do is to help them with that first problem. Obviously if it's an app we have, then what we find is oh, I now also could be more efficient there, or now three months later, six months, I now have this problem. So what we try to do at Translucent is allow them just to buy the apps or the modules that they need at a very cost effective price so they can solve the problem they have there. And then without having to get bogged down into a uh, project of oh, I've got to migrate my accounting software, I've got to rip up my ecosystem of other apps and users permissions, et cetera that I have, et cetera, et cetera. So that's why we think what Rippling did was incredibly innovative because they basically allowed you to say, well yes, the business has this need, but that doesn't mean you need to rip up everything else you've got just to now scratch that itch, you can keep everything else in place and solve that problem.

Speaker D: Makes a lot of sense. And uh, if Translucent had been around at the time when you know you were making that shift from your current, your setup at Receipt bank, is the product at the stage now where you could have said, hold on, let's use

Speaker C: that one, uh, hundred percent. I think there's three great reasons people move to NetSuite. One is IPO is properly on the agenda and you need NetSuite or a system of that gravitas for credibility. You have a situation where a new CFO comes in and she and her team drive NetSuite. That's how they do. And clearly if you've hired that person and that's her stack, of course you're going to respect that. You're not going to hire a CFO and then tell her to, no, no, no, you've got to do something else. And the third one is an auditor insists on it. They're saying no, no, I don't like your current setup. And there's really good reasons to use NetSuite, but the number of times you see businesses that might be a chain of 10 cafes or recruitment agency that started to do some M and A, so is now four entities or software business that's in three countries, engineering studio and two sales offices or whatever it might be. The idea that Those businesses need NetSuite or something above is just not correct. And I would also argue that the need to make a full migration to intact or something like that, when as I say, normally the situation is just one or two very easily solvable problems is also incorrect.

Speaker D: M thanks for tuning in to another episode of the new F Word. I hope you enjoyed it. Remember, expert financial advice shouldn't be limited to those with just big budgets. You can access the same level of advice for a fraction of the costs thanks to this fractional revolution. I believe that every growing business needs to know how much a game changer this can be. So if you love the episode, please consider subscribing to the show. It'll help us keep doing what we're passionate about. And feel free to share this episode with others who might find it useful. Finally, we'd love to hear your thoughts. Feel free to connect with us on LinkedIn. See you in the next one.