Cash Flow & The Future of AI, With Colin Hewitt

entrepreneur.Yeah. You, you've highlighted, um, a lot of the-- You know, it, it's funny, I say this all the time.

People love to talk about how easy it is to start a service-based business.

What they often leave out is how hard it is to scale, and you've touched on a lot of the reasons that that's true, right? It's like, you know, w- we run SaaS companies, and cash flow forecasting is relatively easy for that business model.

I mean, you know exactly when the money's coming in.

You look at your subscriptions, like, it's really not that complicated.

But you look at an agency and it's like, well, we got a retainer over here and we got a, a project over here that has different milestone-based payments.

But if the timeline gets pushed around, then, like, the payments might move around, or if the client decides they don't wanna improve the thing, then we might not get our money.

And then we have this other thing over here that's kind of a time and materials model, and so we don't really know how much we're gonna bill until after we've already done the work, and then we invoice it, and then that has payment terms on it.

And so, like, very, very quickly, just the money coming in side of things can become very, very complex to model all these different edge cases.

And then you have this, um, this nuance of, you know, you're looking at cash, which is critically important.

You gotta make sure you don't run out of cash.

And that could be radically different than the accrual lens on the business, which they might be, you know, also needing to look at it and, and understanding that those things need to be separate and they tell a different story, uh, can also be a little overwhelming or, or be a little over people's heads.

Yeah.

Um, uh, absolutely.

And some people then end up just outsourcing it directly, so they're, um, they don't have-- they feel like that's that other person's job, and they don't, they're not able to engage in it.

And we wanted to make this like a, I guess where we're heading now is that making it like a team sport.

So, you know, I can go in and see, like, when the last budget was updated.

I can comment on an invoice and go, "Hey, maybe we shouldn't pay this until the work's delivered," or, "Maybe we sh- you know, should hold off on-- Maybe we should chase that bill.

Where are we at with that?" And y- it, it becomes like a, a, a m- much more of a team, um, project management rather than just something that sits with one person in the finance department, and then people get a shock, like, at the end of the month when they're like, "Why? Where's all the cash gone?" [chuckles]

Yeah.

Yeah.

Yeah, and I mean, I find, um, to your point, when it's outsourced, there's a couple of issues that arise.

Number one, if it is fairly nuanced and complex, it's rare that the lines of communication are efficient enough that that person is able to get all the context that they need to, like, really accurately and precisely model cash flow.

And so you end up in this dichotomy where it's like you have to communicate so much context all the time that it's like you might as well just be doing it yourself.

Like, you don't get a lot of leverage from having somebody else do it.