Debra Robinson, President of Centennial Revenue Management
My passion for educating business owners on the movement of money in and out of their businesses (cash flow) comes from some very hard lessons I learned as a CEO/Business Owner of two very different types of businesses.
As the CEO of a multi-million dollar travel management company, I had trusted advisors that I relied on to watch over the company’s finances. I had a CFO, a COO, and a CPA who were among my trusted advisors. The business was a family owned operation with me being the 2nd generation taking over a well-established 23+ year old business. I learned the operations of the business from the ground up. As the CEO I knew pretty much everything about the business except for the finances. I had “trusted advisors” that I held accountable for that part of the business.
One of the most important lessons I was going to learn as a CEO was from the act of embezzlement. Embezzlement was not on my radar; it was not part of my business plan. It just happened while I was the acting CEO. Pilfering, misappropriation of funds, theft….embezzlement happened by one of my trusted advisors! What do you do when you are a person who holds integrity as one of their highest values and have police suddenly appear in your office asking you questions you cannot answer? How do you respond with integrity when people are flown into your office from airline fraud departments to ask you questions you cannot answer?
The people in my company that were responsible for this act of fraud were identified and I was not held accountable for their actions. What’s not important is why this happened. What was more important is how did this happen? How did I not know that there was fraudulent activity going on while I was reviewing the financials on a regular basis?
The answer was: I didn’t know what “I didn’t know” about my financials. I didn’t understand the movement of money into and out of the business. There was a lot of money moving between a lot of different bank accounts and “sweep accounts” that were being touched by the airlines. I wasn’t asking the right questions to my trusted advisors about the movement of money, how to be accountable and how to hold them accountable. The reports I reviewed on a regular basis were provided by my CFO, my trusted advisor. I was seeing and reviewing what he wanted me to know about the business financials.
From that experience, I made the decision that I was going to know my financials. LESSON ONE: If you are going to own your own business, then you need to understand your financials from an owner’s perspective. Not your CPA’s perspective; not your CFO’s perspective. You need to understand them so you can be accountable and you can hold your trusted advisor(s) accountable. The first lesson – to understand your financials is an important step in learning to understand the cash flow of your business.
Stay tuned for LESSON TWO: What I learned when I brought a business and commercial property and what I didn’t know about cash flow!