Episode Transcript
[00:00:00] Speaker A: Welcome to Money Gurus. I'm Matt Jhadif. We're looking for voices who bring practical insights, real case studies and actionable strategies that help our viewers strengthen profitability, improve financial systems and lead their business with confidence. We want to hear your story and help share it with a national audience. This is Money Gurus on NOW Media Television. Welcome to Money Gurus. I'm Harsh Jadav. On this show we help entrepreneurs use tax savings and increase cash flow and better profitability to build a stronger company. Today. I want to start with a simple question. What can a small business learn from the financial discipline of large companies operating at a billion dollar scale?
Growth creates opportunity but also creates complexity as revenue increases. Owners need to be more than a tax return or year end report. They need reliable information, repeatable processes and clear controls and the ability to understand what the numbers are telling them before the problem becomes expensive.
My guest is Divya Gill, cpa, A second generation accountant and financial strategist who's worked as as an auditor, accounting manager and controller for organizations generating more than $1 billion in annual revenue today through Gil Tax Group. Sure brings that experience to small and mid sized businesses and seeking stronger foundations and better decisions. Divya, welcome to Money Gurus.
[00:01:27] Speaker B: Thank you so much Harsh. It's a pleasure.
[00:01:31] Speaker A: Have an impressive background. You held leadership roles at large companies as an accounting manager and controller. You also hold an MBA in addition to your cpa. What inspired you to serve the small business market?
[00:01:45] Speaker B: You know that's a great question and I get that asked more often than not. My main focus with small businesses or what led me to go that route was the opportunities that exist with small and medium sized businesses that don't necessarily might exist with billion dollar organizations because the bureaucracy that might exist in there at the same time, what goes or what works for the billion dollar organizations is that you do not wait until you are big to start acting like a big company.
Once I registered that particular philosophy, I made it my goal to kind of steer that thinking and help small and medium sized businesses with using the same approach. One of the most important disciplines that I think we help our medium and small size businesses adopt is financial visibility early on and not later in the stage. Something you had said early during the introduction was financial visibility per se should be something you need to aspire for through the whole year and not just at tax time when you are cleaning up your books and getting books ready for taxes for your cpa. So if you contrast that with large larger organizations, we do not make decisions simply by looking at the bank account in larger organizations, we know when revenue is coming in, we know what expenses are bound to be paid that month, what are cash restrictions and requirements are, what obligations are and where the business is heading. So all these factors motivated me to think different and see, okay, there are ways to help these small and medium sized businesses if we were to steer them together. Small businesses should be doing the same thing, just on a smaller scale.
[00:03:34] Speaker A: Said about visibility and do you have any suggestions that you recommend to your clients to, you know, take some of those lessons from the big companies and really enhance that visibility to make better decisions?
[00:03:48] Speaker B: Absolutely. I tell business owners your financial statements should tell you the story of your business before your bank account does. That means having timely bookkeeping, understanding your profit and loss, watching your cash flow. And we'll talk more about cash flow and the profit and loss factor later, reviewing your balance sheet and most importantly, understanding where your numbers are coming from. As an example, you might think one client is your revenue generating client. But when you factor in the margin, which is the cost of keeping that client doing business, direct cost, as well as the overhead that comes with it, you might change your mind and think that this client is not paying what they should and possibly a smaller client might be giving you the margins that you might be desiring.
So this, that's important to have that timely bookkeeping, so have that financial visibility. Another discipline, I would call it, the second point here is forecasting. You know, you can, you don't drive a car looking in the rearview mirror all the time. You got to look up front. Do not look backwards as to what happened last month. You need to ask yourself, based on what I know today, where are we going as a team, as part of the leadership and as a company?
And the third thing I always encourage people to think about is accountability.
Every dollar coming into your business should have a purpose. It should be earmarked. Every major expense should be connected to a business objective. You do not need a billion dollar finance department to have a billion dollar financial discipline. You just need good information, consistency and the willingness to act on it.
[00:05:31] Speaker A: You brought up some really good points about margin, about revenue.
What is the difference between a business that's growing in revenue in a business that is actually becoming financially stronger?
[00:05:43] Speaker B: You know, harsh. I'm sure you've seen it often clients come to you and go, I had a great year. My revenues are going fantastic and this is the best year so far. You get to doing their books and the tax element and then they owe taxes or they go but they don't have enough money to meet the payroll. Revenue growth is something that sounds super exciting. You aspire for that. But revenue alone doesn't tell you what the whole story is, tell you the financial health of the company.
I have seen businesses double their revenues and actually become more financially stressed. Why? Because they are selling more, but they are not necessarily making more money. They are, they are not looking at the profitability.
Like I said before, margins need to improve. Are your margins improving? Are you simply working harder to generate more revenue then the cash flow element?
You have a very profitable business on paper, but does it translate into you being able to cover your monthly expenses? Are you having to leverage borrowing in debt more because enough cash is not there to secure the payroll because money is tied up in receivables, inventory and other assets.
And the third aspect is balance sheet. Are you building cash, reducing unnecessary debt and building real financial strength? So these are some of the questions we ask or we prompt our clients to think in our company at Gil Sachs Group going, you need to understand the difference between the top line and the bottom line and how that bottom line translates into your cash flow by giving you enough cash to pay your current month's expenses and then roll over some, some as a cushion. And of course, don't forget your savings.
[00:07:30] Speaker A: That makes a lot of sense. And you know, to get that visibility, part of it is having really good books. And you know, sometimes, you know, when you talk to business owners, they're trying to save cost and one of the cost cutting they do is to, you know, try to do their own books. Now when you, I know you do bookkeeping within your practice and what are some of the early warning signs that tell you that an owner has actually outgrown some of the informal bookkeeping they may be doing internally or decision making by, you know, by bank balance. Right. What do you, what do you see from the early warning signs?
[00:08:02] Speaker B: So that's another great question. And oftentimes when people come to me and they go, well, it's just QuickBooks or it's just Zoho or it's just Zero. I know how to do it. I go, great. I understand how you understand how to navigate through the system, probably accept transactions. But then when we start asking those questions, those are where some of those obvious warning signs you're referring to start trickling in. The first one is where the owner goes, I'm doing my books every week. I know we are doing well because there's money in the bank. But then I don't know where the money is going. And that's one of my biggest red flags. The bank balance is not going to tell you what you owe, what you haven't collected, what you have collected, what taxes you need to estimate for when the debt payments are coming due, or whether the cash actually does belong to the business.
So that would be one warning sign.
The second warning sign is when the owner cannot answer basic questions like what was a profit? Like last month, what was your grass gross, gross margin, who do you owe money? Who owes you? These are some of the examples of some of the questions we always ask people who are trying to aspire to bookkeeping.
There's nothing wrong with you doing your own bookkeeping. The problem is where you do not understand the elements of bookkeeping. Something we do at Gilt Hatch Group. We came up with this program where you know the people who are not interested in monthly bookkeeping. We offer them training on their own books. We like to understand their business model. We like to customize the books with the chart of accounts tailored, tailor made to their business. And then we go ahead and train them.
We encourage them, we show them how to do one month. We encourage them that, hey, now you do one month and see if this makes a difference.
Often the other step they forget to do is reconcile. Bank reconciliations is something that is incredibly important as one of the very final steps in bookkeeping and that comes before the analysis. What that does is that it verifies whatever you have in the bank is indeed recorded accurately and correctly in QuickBooks. And if there are any differences, you're able to identify them.
Why is that important? You will see often how many times people come in, they'll give us access to their books. Next thing, the reconciliations are not done. And then you realize a lot of transactions are missing. What does that do? That takes your financial visibility element away. So those are some of the other signs we notice when the books are being done. But they don't know all the steps because it's the last. It's the loss of education there.
And then another one is where people are making all these hiring, firing decisions using financial information that's month old, months old. You need to look at your information that's current. You need to have real lifetime data.
And you need to know that numbers will impact your decision making power at some point.
[00:11:12] Speaker A: Very good. And just simply. We got about a minute. How do you simplify sophisticated financial information so an owner can act on it without becoming overwhelmed by the accounting language?
[00:11:25] Speaker B: Absolutely. So our goal is to sit down with the client. And then we like to go over the questions, primary questions in the interest of time. What happened? Why did it happen? And how are we going to go about fixing it? If it needs fixing or if you're in the right direction, how do we model it for your other products and services in your business business? So that is the goal of your cpa to sit down with you and have those conversations.
[00:11:53] Speaker A: Takeaways we learned that large companies build discipline because complexity makes guesswork expensive. And while small business may have fewer layers, the principle is the same. Better visibility leads to better decisions. After the break, we'll move from understanding numbers to using them.
How owners can turn accounting, cash flow, tax planning and financial reporting into forward looking management systems. We'll be right back.
We'll be right back with more financial insights, strategy and tools to help build a more profitable business. This is Money Gurus on NOW Media Television. And we're back with more financial insights, strategy and tools to help build a more profitable business. This is Money Gurus on NOW Media Television.
Welcome back to Money Gurus. Stay connected to this show and every NOW Media TV favorite live or on demand anytime you like. Download the free Now Media TV app on Roku or iOS and unlock unstopped bilingual programming in English and Spanish on the move. Catch the podcast version at www.nowmedia tv. From business and news to lifestyle, culture and beyond, Now Media TV streaming around the clock. Ready whenever you are. I'm Harsh Jadav and I'm here with Divya Gill, cpa. Before the break we talked about financial discipline. Divya gained much of our accounting knowledge inside large organizations. Now I want to bring back that discipline to day to day reality of an entrepreneur. Cash moving in and out, margins changing tax obligations approaching hiring decisions and growth opportunities competing for the same dollar. The goal is to move accounting from a record of what happened into a management tool that helps us owners decide what should happen next.
Now Divya, what is the difference between producing accurate statements and using those statements as a management tool?
[00:14:02] Speaker B: I like to emphasize that clients see accurate financial statements as a management tool. Accurate financial statements are the foundation of your business.
So in essence they need to be complete, timely, reliable and of course accurate. If the business owner looks at them once a year at tax time, then you are looking at historical trends and historical lessons and that will not help you shape anything going forward.
As an example, Hirsch I see clients who will show me that the revenue is up 20% year over year, but then the gross margin is down year over year and that's not now an accounting observation. That indeed becomes a management observation. These are the questions you want your leadership team to ask at this point. Why are the margins declining if you're making more revenues?
Did our costs increase? Did we change our pricing? Are we taking on less profitable work? So these are some of the honest conversations you need to have. And this is where I tell clients, your accounting becomes more strategic management strategic, tax strategic. And it's not about just looking at your bottom line and going, yep, we're tax ready. It's about understanding, like I said early on, what happened, when, why did it happen and where from here. The first question I would say is accounting. Right? That's what you're going to ask. And the second and third would be more management based.
My philosophy is simple. Financial statements should not just tell you where you have been. They should help you decide what the next steps are in terms of growth for your business. It could be hiring more people, it could be expansion into a new market, or it might simply mean staying put based on the economy like the times we are in right now.
[00:15:59] Speaker A: Good. And I mean one of the areas that I see many business owners struggle with is cash flow. Right? They may be generating pretty good revenues, being relatively profitable, but then cash flow, the ability to make payroll, the ability to pay a major expense. Now, how should business owners actually use cash flow forecasting when deciding whether to hire, invest, expand, or even just preserve the liquidity?
[00:16:24] Speaker B: Absolutely. And Hershey did point out a very good point that where I see a lot of business owners get into trouble, cash flow forecasting, they will start preparing a budget and a forecast for the rest of the year based on the revenues and profit and loss. And then my question to them will be, where's the cash flow? And their question is, what do you mean the bottom line is my cash flow? I'm like, not necessarily. You also have your balance sheet and your debt payments you might have to factor in. So there's a lot happening in there. Profitability does not necessarily mean you have the cash available today to support whatever decision making you are engaging yourself in before making a major commitment. I want the business owners and the viewers who are watching this show to look forward and not just backwards. We should be asking questions like what cash is coming in, what cash is going out, Are the taxes coming due? If so, how much? Have you had those conversations with your CPA about estimated taxes or what debt payments are coming in and what happens if a customer doesn't pay you in your 30 day period or whatever your period is for them to pay.
So you can always model different scenarios using your cash flow at any given time. I always tell the owners, Hersh, to reserve enough cash as your rainy day fund.
You know, cash reserves are not necessarily money that's sitting around doing nothing. I also tell them put them in an interest bearing account if you have extra cash. That way it's earning something. But when there is that time of need, you have the time to plug and chug that money in without having to depend on outside loans and funding. So before you do all of that, before you go spend that next dollar, go ask can we afford to do it as a business?
[00:18:14] Speaker A: Really good point about cash reserves. And I'm curious, do you have any recommendations for the viewers on how much that cash reserve balance should be?
[00:18:24] Speaker B: You know, it's a tricky question what the balance should be.
Some people who are a client base will budget 6 months worth. Some people will budget only 3 months worth, some will do 12 months worth. For me, what I think is a healthy point is six to 12 months worth. Three months might be a little too short. But again, if you are very confident all the receivables are coming in and you have really high paying long term clients who have never defaulted it and you want to play with the three months, great.
I always suggest minimum six months because it makes sense where clients know that if nothing were to come in for next two months in terms of collections and ar, to a certain extent they have enough to cover and then they have additional cushion in case they have a better month. But then they don't have enough time to replenish those funds and there might be another downturn. If you remember Hirsch, when Covid happened, so many people, so many of our clients who had that rainy day cushion for about six months did phenomenal. A lot of them who had no cushion, it was really hard and they had to depend on the government bailouts and the PPP loans and the EIDLs. So it's a matter of how you perceive your cash. Do not bring it down to that last penny for sure.
[00:19:44] Speaker A: Absolutely. And I think when it comes to part of that whole process of cash flow management, the big piece is also tax planning. And you mentioned a little bit about estimated tax payments as one of those, you know, productive activities that most clients should do on an annual basis. I mean, when it comes to like proactive tax planning and fitting that into year round financial rhythms of growing a business rather than being treated as a tax filing event, how do you go about doing that and talking to your Clients to convince them that's the right thing to do.
[00:20:20] Speaker B: You know, it's, it's. I'm going to use the real example of Gilt Tax Group. We have three sets of clients. We have that one set of clients that comes in or attacks time with their books. But they'll tell me that next year I'll do a better job. Then there's another set of clients that will come to me in December, year end going, divya, I got this big infusion. How do I now not spend all this money in taxes? And then they have to go buy a car or equipment for section 179 or depreciation purposes.
Then there's that third set of clients which is becoming our norm at Giltax Group. These are the clients who sit with us quarterly. There's a cadence to their process. They look at their books on a monthly basis.
If we have their books, we update them weekly. Otherwise we encourage them to update those books once a month. We like to review their books on a quarterly basis with them. And then we like to not just do estimated tax planning. The goal is not just to give all your hard earned cash away, of course, pay your legal minimum tax due, but at the same time plan for your future. We will look into your retirement options. We'll look into other advanced strategies and not just go tell you to go buy a car. You don't need a new car every year. You have to better handle your money. So it's about being proactive. And this is something that you need to do throughout the year because of the three people, the three segments of people I mentioned to, and we are primarily B2B. We see the guys who come in or the gals who come in and go, I'll do better next year. Somehow some of them are able to break that pattern and some are not. And then they're surprised with really heavy duty tax bills. And then once you ship your perspective, it's all about shifting your approach, right? And you're more proactive rather than reactive. You go into the third segment where you know exactly where you are at come March 15th for your S Corps and new partnerships, or April 15th for your actual taxes or September, October 15th deadlines for extensions. You're not stressed. You know what your liability is indeed, you have now put away the last year and you are now going into proactive planning for this current year. So it's all about being proactive versus reactive and your approach and where do you fall.
[00:22:39] Speaker A: And I think we probably both see this in our practices. Where revenue is rising for the client but the profit is not. What question should an owner ask about margins, pricing, overhead and operating efficiency?
[00:22:54] Speaker B: You know Harsha, I'm sure you feel that way. That's like the toughest conversation to have right where you the client is cheering, hey, my revenues are really up and this is great. We had a phenomenal year and I have to be that bearer of bad news going. Stop celebrating the revenue for a minute and start investigating the economics of your business. First question your margins. Are you making less money or are you making more money?
Did your costs go up? Have you looked at everything?
The second question is pricing. When was the last time you actually reviewed your pricing?
Some people harsh, are so scared to increase their pricing for the fear of losing business that they undervalue your services. What happens is then you become a volume shop. Now your quality has suffered and you are focused more on quantity.
As an example, we have some clients who will make the same million dollars with 50 clients and then we have same people in the same industry who have over 150 or 200 clients and they can barely make that million dollars. So it's that balance you have to strike between the good paying clients and the not so good paying clients. So that's where pricing comes in. So these are some of the operational efficiencies I tell them to look into and work with your cpa, ask them these questions.
[00:24:15] Speaker A: That is so such a good point Divya, because it is absolutely essential to work with your financial professional, you know, your CPA and making sure that they're totally involved with your business, understand kind of your perspective and you know, different events that are happening. And I think you know, through our conversation we learned that financial reports become valuable when they actually change the behavior and that a business owner should not have to wait until year end to discover that margins have slipped, cash has tightened or a decision created an unavoidable tax or operating problem. Next we'll look at systems behind the visibility, internal control, standardized workflows, automation, AI and the point where growing companies need more sophisticated financial functions. We'll be right back.
We'll be right back with more financial insights, strategy and tools to help build a more profitable business. This is Money Gurus on now MediaTali.
And we're back with more financial insights, strategy and tools to help build a more profitable business. This is Money Gurus on NOW Media Television.
Welcome back to Money Gurus. We have been talking about financial information and using it proactively.
But reliable decisions depend on reliable systems. As companies grow informal processes that worked when the owner started the business maybe may not even work today. There's a, there's a source of errors, delays, weak controls, unnecessary risks. Divya has worked across auditing, accounting, management, controllership and business advisory. In this segment, I want to ask how entrepreneurs can build a finance function that is strong enough for the company they are becoming and how modern tools can increase speed without weakening judgment or accountability.
Divya, from your auditing and controllership experience, which internal controls became most important as the business grows and more people touch money, data and approvals?
[00:26:20] Speaker B: You know, that's a really good question, but before I dive into, I would like to educate our client base a little the people who are watching the show.
At Gilt Hatch Group, we offer multiple aspects that cover the business services as a full year long term, you know, full on CPA firm throughout running throughout the year. We don't have busy seasons, we have crazier seasons and we have some not so crazy time periods. What we do is we offer tax preparation, we offer bookkeeping and accounting services. At the same time, we do a lot of tax strategy. In addition to all that, we do auditing. A lot of people don't understand what auditing entails unless they are in the process of getting a loan or they need some grants from the government or there are any defense contracts out there that need to certify. They don't understand the concept of internal controls. Indeed, we have some internal control audits in progress for some of our clients right now and that's where we come in and we look at your overall internal control structure, you know, as an example and that this will take Answer the very first thing you asked me. Harsh segregation of duties being one of the internal controls, which is first and foremost, the person approving a payment ideally should not be the person preparing it, recording it, and then reconciling the bank account for. So if a person is doing that now as an owner you have no visibility and you don't know if there was an error, if there was any kind of fraud or embezzlement and there are concerns with that, then the other piece we look at during internal control audit testing is clear approval authority who can spend the money that you have been working really hard for. What are the amount thresholds as to the level they can approve for, who approves payroll, who approves vendor and vendor setups and who can issue refunds. The third is bank and bank balance sheet reconciliations. This sounds very basic to some of our viewers. However, it's an incredibly important function. Someone independent should be reviewing these reconciliations, be it your manager. Now I am not talking about building a huge internal control department or hiring more people just to satisfy by this. What I'm trying to do is as you touch the different accounting systems, payroll, banking, customer information, people who need to have access should be the only ones who have access to do their job. One thing I've learned from building these auditing and controllership aspects is that internal controls are not about assuming people are dishonest.
It's about recognizing that good people can make mistakes. And good things systems need to be in place to catch those mistakes before they become expensive problems.
[00:29:07] Speaker A: Very good. And it's like let's say I'm a sole proprietor or you know, single member llc. Do I still need to think about internal controls or is this only when I start having staff and other people that are involved with my business?
[00:29:21] Speaker B: You know, that's a great question. It's very hard to do the internal controls piece when you are sole proprietor.
Nine times out of 10 you are just busy enough delivering on the business. But as you start hiring you need to start thinking of these decisions and the decision making authority.
It's important to delegate if you want to grow as a leader. But how much delegation is enough delegation? So it's important to ask those questions even as a small business owner. As a sole proprietor there can be challenges. But then in those particular scenarios, harsh. You can use Systems, you have QuickBooks kind of systems who can which can be plugged into your overall functionality and they can help you with automating certain pieces so that that room for mistakes goes down. So at Gilt Hacks Group we go ahead and we educate you based on your model. We are not telling you to go hire more people. Like I said before, the goal is to protect your assets, safeguard your interests. Here
[00:30:24] Speaker A: said about automation and like what accounting or finance workflows are probably good candidates for automation. And where do you see the greatest potential for AI enabled tools to save time and improve visibility?
[00:30:37] Speaker B: You know, I was at the AICP Engage conference in June where they deep dived into AI so much. They also said that AI is in the year 1998 of the Internet era. That's what they're comparing it to. And it has not even grown to the extent that our brains cannot comprehend. Okay, there is tremendous opportunity for automation and AI now being factored in is next step up. Particularly when we are talking about repetitive rules based processes. I'm not sure if people know, but you can go into QuickBooks, you can establish rules as an example and every time you go back, login there towards the end of the week, you, the system is now robust enough to accept all those rules for you. A lot of people don't know about this. Bank feeds to reconciliations, dashboard creations. Everything is now where technology can save you time.
And with AI being factored in, it's becoming particularly interesting because it can help identify and analyze your statements and the patterns and any exceptions that exist. Instead of someone looking manually. And this is, is more for the, not just the sole proprietors we were referring to, this is where AI can really help them. But even for the small and medium sized business owners, they can look at all the data, look at what the technology is telling them, trust but verify. You know, you want to review the numbers, but if, if it points out this expense category has changed significantly or your receivables are not moving the right direction, that's incredibly valuable information that you have on your hand.
So it's moving from people who are doing data entry to analysis, taking that approach. And that's where technology is really evolving and that's where technology creates value. I also want to emphasize that AI should be implemented with appropriate internal controls. Appropriate controls overall. The fact that a system can produce an answer quickly does not necessarily mean the answer is correct. And I have tried and tested that too.
So my philosophy is automate the process but don't automate the accountability.
[00:32:46] Speaker A: Makes a lot of sense. And that leads me to my next question, like, you know, where must humans review? Professional judgment being central even when the software can do all the transaction analysis, produce dashboards and even generate forecasts quickly.
[00:33:01] Speaker B: That's a great question. And I'll give you a live example. I had a client come in and asked us to do scenario analysis as part of a tax strategy where he wanted to involve his, his client base. Well, he wanted to grow, he wanted to hire a couple more people, but at the same time he wanted to also look at a scenario where he wanted to spend more money on equipment and financing. We had a help us generate some of the law and rules and guess what? Some of the rules were correct, but some of the rules that AI picked up were referencing to some of the older rules that were prior to the big beautiful bill, okay, that was generated. So a software might categorize a transaction correctly 95% of the time. However, the other 5%, that's where human intervention, human review is incredibly important. Is that payment really an ordinary expense? Is that law really giving you the right detail? Do you only get those this much when you make an investment? Equipment financing, have you relied on that data?
We could have falsely told the client, hey, even if you invest in equipment financing, your depreciation might be capped. But no, that wasn't true. We reviewed whatever guidelines we were provided and we were able to save the client even more money based on the new laws under the one big beautiful bill. So it's more about the judgment questions. Don't assume what you're getting is correct. Professionals bring context, skepticism, accountability and experience that I just don't see how AI can replace it. AI can replace the data entry piece and be a good accountant for you, but the accounting management brain and the leadership personality that comes with it is not something AI can bring for you. I see AI making very valuable contributions because it allows you to free up your time. But you can turn around and move that time into analysis, interpreting that information to your advantage and grow, growing your business.
[00:35:06] Speaker A: You know, Divya, I like, you know, you offer a suite of services along with what you do for internal controls. And you also offer some strategic advisory type services as well.
When should a business owner think about taking it to the next level and really seeking some of these strategic type of advice you might be able to provide?
[00:35:28] Speaker B: You know, that's another great question I get asked clients will be like you offer a full service CPA firm, do I need everything? And my question is it depends, what problem are you trying to solve? You know, if the primary problem is you need to record transactions, you want to learn your books and get the direction of your company and understanding of the numbers. You just need a bookkeeper. We might, you know, refer you to one or we might take you on depending on what your business needs are. Or we might train you. If you're dealing with tax complex filings. And we have several clients who have complex structures. They have holding companies and they have have all these foreign entity ownerships and consolidations. That's where you need to bring a CPA in. You need to bring that true advisor with you. Where people like you and I Hirsch would partner with our clients and go, okay, you are at the point where the complexity is enough and you need somebody who needs to look at different aspects of your business. Financial reporting, budgeting, cash flow, internal controls, your savings, your business savings, your personal savings, your retirement. It also benefits to look into a trust attorney as well as a financial planner. I always tell people, if you want to be successful, think about a trio CPA financial planner and a trust attorney to help you build the right strategy.
[00:36:52] Speaker A: I really love what you have to say about that team approach because you know, we can't all be experts in everything, but if we have a team of experts, brings a lot more value. Divya we learned that technology can make finance function faster, but speed is only useful when the underlying data, process and controls and review are actually trustworthy. Scalability comes from designing the system before complexity forces the issue. After the break, we'll close with the leadership side of financial management.
How owners build confidence with the numbers, know when to seek higher level advice and scale without losing control of the business they work so hard to build. We'll be right back.
We'll be right back with more financial insights, strategy and tools to help build a more profitable business. This is Money Gurus on NOW Media Television. And we're back with more financial insights, strategy and tools to help build a more profitable business. This is Money Gurus on NOW Media Television.
Welcome back to Money Gurus. Stay connected to this show and every NOW Media TV favorite live or on demand anytime you like. Download the free Now Media TV app on Roku or iOS and unlock non stop bilingual program in English and in Spanish on the move. Catch the podcast version at www.nowmediatv.
from business and news to lifestyle, culture and beyond, now EDTV is streaming around the clock. Ready whenever you are now. Welcome back to Money Gurus. I'm Harsh Jada and we are closing with Divya Gill, cpa. We have discussed enterprise level discipline, cash flow, profitability, reporting controls, automation and the systems that support better decision making.
Now I want to bring everything back to the owner. Divya emphasized transparency and financial literacy because a business owner does not need to become an accountant, but they do need to know enough understanding and ask better questions, evaluate trade offs and know when the company has outgrown the way it used to manage money.
Divya, why is financial literacy a leadership skill for an owner even when the company has a CPA or accounting team handling the technical work?
[00:39:13] Speaker B: You know, that's a great question and it all comes down to financial literacy, right? Financial literacy is an absolute leadership skill and you cannot delegate the accountability aspect of your things. A business owner doesn't need to know, like you said, how to be an accountant. You don't need to know how to do a journal entry. But what you need to understand and know is the financial story of your business because numbers do tell that story.
If as a CPI sit down with you and tell you that your profit margin is declining, you need to then ask me why you know, if the cash flow is tightening, you need to understand as a business owner why it's that, why that has helped a lot of our clients get out of really tricky situations or avoid them altogether. If you're considering hiring five people, it would be helpful before you make that decision and post the job or indeed do the hiring, you need to understand do you have enough cash to sustain the business, not just profitability.
So that is all part of being a leadership and that's leadership. I often tell business owners, you do not need to become an accountant. We just need to make sure you're financially fluent. Think about it this way. If you're the CEO of the company, you will not be happy saying, I do not understand sales, so I'll let someone else decide.
So you still need to understand what's happening with that aspect, right? Finance is no different. Your CPA will give you the numbers, but then explaining those numbers and then having a path forward with those numbers, those are two different things. Explaining the numbers is a CPS job, but what you do with that information is absolutely in your hand as a leader
[00:40:59] Speaker A: that you offer, that you mentioned earlier too is you do offer some training. So people want to learn their software. They probably are like more do it yourselfers. You offer that training to help them get up the skills. At least they have the basic understanding what accounting is, what they should be looking for. You know how they can use that number, those numbers for better business intelligence. So that that's a terrific option that you provide Now, Divya, how do you help business owners become even more confident asking questions when they feel intimidated, embarrassed, or simply unfamiliar with the numbers?
[00:41:32] Speaker B: Oftentimes people walk into our office or hop on a zoom and say, I'm embarrassed to say I'm behind on taxes. I don't know how the company is doing. I was busy bringing the company up from a startup level to like a baby level, toddler level, where it can survive now. And I'm confident, but now I don't know what to wear from here. First of all, I always tell them, conquer your fear. There's absolutely no embarrassment, no judgment here.
I have met incredibly successful entrepreneurs who can build a company and they'll negotiate a multimillion dollar deal, hire 50 people. But then they look at the balance sheet and say, I have no idea what I'm looking at. That's not lack of intelligence or that's no judgment on your own knowledge. It's just that you have not been given the financial tools to empower you to understand how Your business works. So my approaches, I start with the business.
I would like to understand them as an individual, what their leadership approaches, where, what their goals are personally and professionally and then where from here is important for me, you know, you're working hard enough for your money, you are not seeing the fruits of that money. Let's ask those whys, the asking the questions, having those questions is more of a business conversation. And the goal is not to make it an accounting class. So we sit down with you, we try understanding you, your business and everything that goes around it. So then we are able to make more meaningful decisions. And that's our role to partner with you at Giltax Group and be able to help you navigate through the good and the bad, be it whatever phase you're in.
[00:43:09] Speaker A: Very good. And you mentioned earlier that, you know, you work with startups and then you help them maybe get to the growth stage, then maybe looking at exit planning eventually, you know, as companies become more complex, how should the owner decide which financial decisions stay with them and which responsibilities need to be shifted off to maybe a stronger system of advisors?
[00:43:31] Speaker B: You know, it's important. And that's where a lot of confusion happens, Hirsch, where as a company grows, you want to move from I control everything. And that's a problem I faced when I was growing my CPA practice to I have controls and over everything. There's a distinction there. The owner should absolutely remain involved in the big picture financial decisions, things like strategy, major investments, acquisitions, expansions, financing. But then the owner does not need to sit there personally and approve every invoice, every pay per process that goes through, every payroll run, approve every bank account related reconciliation or every transaction that relates to account something. That's an important distinction because you have to channel your energy in the areas your business needs you instead you need to work on processes. You need to have that visibility by automating using tools like AI, like we talked about using QuickBooks. If you can go in and generate reports, as long as your bookkeepers are doing the job and accepting the transactions, you now have visibility. You need to define who has the authority. You need to define who's doing the work. And if you see the work is not getting done, you need to take corrective action fairly quickly and not wait till the damage is done. So important point I'm making here is you need to focus on decisions that actually require your owner's judgment and not something that can be handled by an accounting person
[00:45:07] Speaker A: like what you're saying. And I see also like many business owners struggling with delegation, right. They, they're used to doing the business themselves. They started the company. Right. And they're not used to handing off like into the day to day or maybe the non tactical decisions or non strategic decisions to others. Do you have any suggestions for these folks to really be able to think about that clearly? Because I don't think a business is sustainable or sellable if you don't have, you know, people in place to do what you were going to do. Because you're not going to be in the business forever.
[00:45:40] Speaker B: Right. And that's where succession planning, exit planning, something you refer to really kicks in.
That's where working with a trust attorney might be something you need to discuss with a trust attorney in conjunction with your cpa. You also need to think about what can the business spend a day without you. You know, an important question I ask people is can you go for two weeks for a vacation and not having to worry about sales or finance or any aspect of your business? Majority of the people will say no. Okay. Some of them will say yes, but those will be one offs. These are some of the lessons we have learned that you need to be able to delegate just enough without losing that financial visibility.
A 5 million dollar company does not need a 50 finance department, but what it can absolutely benefit from is timely financial statements, cash flow forecasting, budgeting, internal controls, tax planning and regular financial reviews. At this point, numbers should drive your conversations. You, those should help you understand what you can delegate and then find that comfort level in delegation and get away from the micromanagement.
So these are some of the aspects that I like entrepreneurs to explore. I just don't want to tell them that hey, this is what happened. But the goal is to help them understand what that means and what they need to do next and what controls need to be in place to help them with those delegation efforts.
[00:47:08] Speaker A: That is wonderful, Divya. This has been a great segment here. Great interview. Overall. The goal is not to make every entrepreneur their own CFO is what I'm hearing. It is to give owners enough clarity, discipline and trusted support to make decisions before the numbers make the decisions for them. Now Divya, for viewers who want to learn more about Giltax Group or connect with your team, where should they go?
[00:47:33] Speaker B: Business owners can follow our work through our website, GilTaxGroup.com and we have our social media platforms listed there within our website. We share ongoing information across all these social media platforms about educating our client base and the people watching this show about tax strategy, entity structuring, audits a test proactive tax planning for growing businesses. And that's where you also see a team in action. You'll get to meet our team members in different videos and beyond social media. I regularly speak on podcasts at conferences. I also host the show Guilty of Savings that you can catch us on.
We publish a lot of content across different magazines, so my goal is always the same here. Hirsch to help businesses move and the business owners move from the reactive stage to that strategic, more proactive stage. So your businesses aren't just profitable, they're protected.
Because your business is our business and your success is our success.
[00:48:30] Speaker A: Divya, thank you. It was a pleasure having you on the show. You gave us some really good information on financial discipline and how it can be translated from large organizations into practical systems that help entrepreneurs lead with greater clarity and confidence.
For everyone watching profitability is not created by one spreadsheet, one tax strategy, or one piece of software. It comes from understanding the numbers, building reliable systems, reviewing them consistently, and using that information to make better decisions. The earlier you build that discipline, the more options your business can create. I am harsh. Jada, thank you for watching Money Gurus on NOW Media tv.
[00:49:09] Speaker B: It.
