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The Role of a Virtual CFO in the Transportation + Logistics Industry

Published by Summit Marketing Team on Jul 4, 2023 6:00:00 AM

The Modern CPA Success Show: Episode 92

Dan Rutherford, Virtual CFO with Summit CPA Group, A Division of Anders CPAs + Advisors, discusses his experience in the transportation and logistics industry and how he is helping Summit expand its expertise with his new role as the firm’s Transportation + Logistics Industry Expert. In this episode, Dan sits down with Tom Wadelton and Jody Grunden to discuss the need within the industry for a Virtual CFO, covering topics such as company-owned assets, giving drivers access to cash, significant capital investments (trucks and trailers), and securing large loans from banks.




[00:00:18] Tom: Welcome to today's episode. I'm Tom Wadelton. I am a virtual CFO with Summit CPA Group, that’s a division of Anders CPAs and Advisors.

[00:00:25] Jody Grunden is helping me facilitate today's conversation. Jody is a partner at Anders CPAs and Advisors. Jody, welcome today. 

[00:00:34] Jody: Yeah. Thanks, Tom. This has been like one of the first ones I've been with you in a long time.

[00:00:38] Tom: I'm looking forward to it.  

[00:00:38] Jody: So Nice chatting.

[00:00:41] Tom: Our guest today is Dan Rutherford.

[00:00:42] Dan is also one of my peers as a virtual CFO. And Dan has a lot of experience in the transportation logistics industries, and that's kind of the big topic area today. Dan, can you tell us a little bit more about yourself and what brought you to Summit CPA Group? 

[00:00:57] Dan: Yeah. Yeah, for sure. Thanks, Tom. Thanks, Jody.

[00:01:00] Looking forward to talking a little bit about transportation today. So I started my career with the IRS. Oddly enough, I was there for 11 years. I wasn't invited to too many parties Jody.

[00:01:21] I had 11 or 11 and a half years with IRS. But it was a good career. I got a good tax background and I still migrate back to that a little bit. And then ended up in public accounting for about six years as a tax manager. And then, oddly enough, a friend of the family reached out to me. His business was growing and kind of they were getting to the place that we see a lot of our clients getting to, getting that kind of anxious feeling that, “Hey, we got a lot of questions and don't always have the answers.”

[00:01:46] So he thought he needed a little more firepower in the accounting realm. So he reached out to me and, we'd gone to lunch and stuff over times. He's always picking my brain and got to know me, but he brought me into the transportation industry and that was [00:02:00] I dunno, it's been 22, 23 years ago.

[00:02:02] So I started with one company here in the Fort Wayne area, and then kind of did a little bit what Summit does on a very, very small scale. I worked with two, ended up working with two different trucking companies. For the next 20 some years and kind of floated between them as, I guess it was a little virtual CFO and didn't know it at the time, so.

[00:02:23] And oddly enough, they knew each other. They weren't really competitors and it worked for them, you know, on the scale that I was doing and on. We shared ideas and stuff and. Kinda like we do with a lot of our clients. So yeah, I had 20 some years in the industry. The last three or four years I actually jumped from the CFO role into operations, which was kind of a nice break for me.

[00:02:45] I ran a large logistics division for the company and we were 120 some million dollar division. And I had a lot of fun with that and got indoctrinated in a lot of managing the people and growing from it. Kind of got a little break from accounting, which was kind of nice at the time, so.

[00:03:03] Jody: Tons of experience. I mean, the IRS, I never would probably say that ever again, but  

[00:03:09] Tom: I'm envisioning parties where people totally stop and talk as soon as you say that and just run everybody away.

[00:03:19] Tom: Jody, I found it funny when I was talking to, 

[00:03:22] Jody: Public grounding, IRS, and then corporate. So you have experience in all three areas. That's pretty amazing. 

[00:03:27] Dan: I actually came to Summit because my daughter, Jody and Tom  worked for Summit years ago, and I was really intrigued. She was kinda doing and I was intrigued with the company coz that really sounded kind of what I wanted to do years ago.

[00:03:41] A friend of mine and I were planning to kind of do the same thing on a smaller scale. So as I heard conversation with her, I'm like, that's a really cool model. So I reached out to Summit this past summer and ended up here five or six months ago and really enjoyed it. It's been a fun ride.  

[00:03:58] Jody: Definitely fortunate to have you here for sure. You've been a great addition to the team and as we really kind of blow up this vertical transportation industry you being the leader of that is going to be really, really huge. So definitely, welcome to the team. And I obviously have been here for a while, but this is, this will be a great kickoff for you. 

[00:04:51] Tom: Dan, maybe a little bit about transportation logistics for people who aren't familiar. You know, as we talk about lots of companies, there's an awful lot of things that are similar from an accounting and finance perspective, from company to company.

[00:05:04] And then there's things that are unique and some, it currently has one specific digital that we focus on. What would you say are some of those unique things and maybe help us understand sort of transportation versus logistics. When you talk about those terms. 

[00:05:18] Dan: I guess, you know, different people use different terminology a little bit, but when I take transportation, I'm thinking more of the company owning the asset.

[00:05:26] They have the truck, they have the driver, and they're controlling, controlling that asset, the tractor. So I think transportation in those terms, which can be a very complicated accounting model, there's a lot of moving parts. You've got fuel, you've got driver wages, you've got repairs on the road. It's a challenging accounting environment really it is. And a lot of it's kind of an accountant nightmare from the standpoint, in my opinion. You have to give a lot of people access to cash, that in theory as an accountant, you know, you just kind of cringe, I can't give an operations person access to cash.

[00:06:04] Unless you wanna get the call in the middle of the night, “my truck's broke down, I need a check.” You have to relinquish some of those and put in the controls that you can. I commonly refer to logistics more as non-asset base, you know, a brokerage operation.

[00:06:20] Many companies have both. They have the assets, they have a transportation division, and then they have a logistics division. One side dominates more than the other. In my past life, one of the companies was very heavy into the logistics side. Built that up from a seven person operation to, I don't know, I think when I left we were approaching a hundred people.

[00:06:44] And then the other company was kind of the reverse of that. They were more heavy on the asset side and running their own trucks, and then started a logistics side as well. But, obviously the asset side, you've got, one of the challenges for a CFO is, in fact, it was one of the first things that the company that I started with asked me is, you've got so much capital, I mean you a tractor anymore, is, you know, they've gone skyrocket and prices, so you've got $150,000 tractor or more, and you've got a trailer, it can be 35, 40, $50,000. So you've got a lot of equipment tied up and making those decisions on this capital acquisition decisions. You know, very harrowing for a business owner. You know, they can, you get 10, 15 tractors, you can be in a couple million real fast 

[00:07:31] Tom: and you get into big banking relationships, big loans, things like that. I had mentioned you to one of my clients who owns some of his own trucks. This is a trucking firm, Jody, that I'm sure you're familiar with. And then he also does a lot of logistics for other clients, and Dan actually mentioned that the owner of that company was a driver. At his company 20 years ago.

[00:07:50] Yeah. He goes, oh really? Him? He decided to grow up, and do that on his own. Kind of a cool business, right? 

[00:07:56] Dan: Yeah. It's, it's a small world, the industry, I think there's over [00:08:00] 500 trucking companies out there in the United States, and I think 80 some percent of 'em are, you know, six trucks or less.

[00:08:06] You know, a lot of 'em are mom and pop. As big as the industry is, you run in the same people frequently 

[00:08:22] Tom: And significant growth over the last several years. Many of us have moved on to online shopping and I mean the Amazon trucks to our neighborhood are probably the most common vehicle seen more than people's home cars. I would imagine logistics has just exploded in the need in the industry. 

[00:08:29] Dan: For sure. You know, one of the huge challenges obviously is fuel, if you're not on top of monitoring your fuel from a cost standpoint and a pricing standpoint, you can be out of business real fast. So yeah, the last couple years have been very robust for the transportation industry.

[00:08:47] It came out of Covid like a firestorm. They really had a few month lapse and then came out and just ramped up, literally. And companies that were poised to take advantage of that,  really did. I mean, a lot of companies have done really well over the last years.

[00:09:05] Tom: Ss I mentioned, for this particular, so what do you think the outlook is?

[00:09:08] Kinda going forward? The last point's gonna make, just to emphasize what Dan said, this client I had, as I mentioned you, Dan, I think his business dropped by about two-thirds, maybe even a little bit more around like March and April of 2020. and we were really trying to bat down the hatches. And probably by July he was having the best months that continued month after month.

[00:09:26] So completely to your point, he was poised, he had what he thought was excess equipment. And he has had the best couple of years. But if he had not been in a position to take advantage of that, not enough trucks let workers go, things like that would've really been rough. And we did a lot with him sort of around forecasting and planning that helped that. And so he was really in a good place.

[00:09:47] Dan: Absolutely. Yeah. I think forecasting, that's something that I thought I was doing a good job of it when I was in my past life, but, you know, as I've come to Summit, I think this is definitely a strength that Summit [00:10:00] has, is there's so much focus on forecasting, not only from the concept but the tools that Summit brings to the table.

[00:10:07] And it's just such a focus of what we do here, and it's really exciting to get in and see all the tools we have to do a proper forecast. I think forecasting and trucking a lot of times is what's next things look like.  And I think there's a lot of opportunity  for a lot of business owners to really look at forecasting the way Summit does.

[00:10:29]  I've heard Jody talk about how Summit, as a company, looks out at the next 10 years. But at least looking out at next year, next two years. And it's just imperative to do that to analyze equipment purchases, analyze employment, you know, bringing on new employees and so forth.

[00:10:48] What can you afford to bring on and does it make sense to bring new employees on? Can you get more productivity? You know, that we analyze a lot and you get more productivity out of your existing workforce. So having that forecast and having some reality behind is imperative in any industry, but especially one that's as highly capital intensive as the transportation industry.

[00:11:12] Jody: And with the forecast, I think what the beauty of it is, it's not just the revenue side, right? It's not just what we're calculating for tax returns at the end of the year, what your net income is. It's more so on the cash position of the company. What, what does cash look like? Oh, a hundred percent in six months from now, what does it look like a year from now?

[00:11:27] What does it look like three years from now? You know, how much do I wanna take out of the company as a business owner for distributions at the end of the year? How much can I take without hurting the company? You know, can I buy that truck, like you said, or can I give raises to my people? Can I give 'em more per mile stipend? What are the different things that can really modify or impact things?

[00:11:47] That's where I think that's Dan, I think that's right what we're talking about, right? That's what really gives value to the business owner, because now they've got visibility into the future, not just kind of guessing. I know as a business owner myself, guessing it's horrible. You always think you're gonna outrun revenue or you're gonna outrun expenses or that giving an extra day's vacation is not really gonna impact anything. When, in reality, when you look at the numbers and you really dive into the non-financial numbers, non-financial indicator type of stuff, you start to realize the impact that a small decision has. And it could be huge. It could be a positive impact, it could be a negative, but the important part is you'd have to know, right?

[00:12:28] Dan: Yeah. I've heard your analogy a few times, Jody, that you want to go on a trip and you want to go to California, or you go to Florida or somewhere and you kind of know the general direction you want to go.

But you know, you can either get in your car and just start driving and hope you get there and head West. And if you're going to California or head South, you wanna go to Florida. Or you can have an actual roadmap of how you want to get there and kind of playing out. And not only playing it out from ‘how I'm gonna get there,’ but you know, what are the steps; ‘how far am I gonna go today and how far am I gonna go tomorrow?’

[00:12:58] So I love that analogy and I think that's where the CFO can bring so much value to a company. And I think there's so many decisions. They usually have outgrown and usually they start feeling anxious. It's kind of my experience. they're like, okay. It doesn't feel right.

[00:13:14] I don't feel comfortable. I need to bounce this off of someone and I need someone to give me some direction and let me know. I probably know the right decision, but I need someone to echo that. I need someone to confirm that with me and show me in writing, here's what, here's what it does, here's what it looks like.

[00:13:31] Jody: Yeah. And, having the background that you have is huge, right? Because, you can speak the vernacular. You know, the talk, you know exactly what a trucking industry is looking for, what logistics companies are looking for. You can give background that a traditional CFO may not be able to give.

[00:13:47] Or even so if you, if you have got a company with a CFO that's been there forever, they're kind of isolated in their own bubble, right? They only know what they know and they only have the company kinda background. But when you bring in other companies and bring in industry information.

[00:14:02] I think it's huge and valuable, especially for the small and medium size trucking companies out there that would love to be able to afford a $300,000 CFO to be on staff and really can't afford that. So they’re looking for an alternative. 

[00:14:16] Dan: Well, I think one of the things that I've enjoyed most about Summit other than your Hawaiian shirts, I do enjoy those, is that I think one of the things I've enjoyed oddly enough is, we're gonna have to cut this outta the recording because I don't want any evidence of it. I'm not the smartest one here. I'm not the smartest one here. I don't think I, yeah, yeah. I finally had to relinquish that; there's a lot of smart people in the company and, and one of the things I enjoy the most is the collaboration.

[00:14:46] There are very few times that you can't find someone who has seen something either within Summit or with Anders. I've picked so many CFO's brains, I've picked some of our senior advisor's brains and stuff, and I love our Friday meetings where we collaborate on those things and bring those ideas to the table. We've got other people with transportation experience as well 

[00:15:11] Tom: I think that's a huge advantage that many of my clients had mentioned that when they'll say, have you seen other companies doing this? And because we work with multiple companies, we do.

[00:15:20] It's really difficult if you're in a company, right? You can read and you can do conferences and things, but if you're actually working with multiple companies across there, it's surprising how often within the same month each company is kind of dealing with a similar kind of thing as things go through cycles.

[00:15:33] And it's pretty fun to say, okay, I just had to deal with this with someone else and another client is addressing the same thing to already have some kind of a solution. 

[00:15:42] Dan: I brought in another CFO the other day, and she was immediately able to say, because she has a wealth of experience in that industry, ‘was this, right?’

[00:15:55] And they're like, well, this is what we do. And she was able to say, okay, but I've never seen anyone else do that. You can do it that way, but you know brought that comfort level and not in a condescending way. Yep. Kind of reassuring, you know, giving them affirmation of, this is a decision I recommend and this is what I've seen with a lot of clients.

[00:16:18] What you're doing. I'm not saying it's wrong, I just haven't seen it before. And I'm not sure what the value is there. So I think having those resources at our fingertips is exactly, yeah.

[00:16:25] Tom: Dan, you mentioned and we talk a lot about key performance indicators for companies and KPIs. I'd love you to talk a little bit about, when you talk about a transportation.

[00:16:35] Logistics company, what those might be. And for people listening, I think as we, it's easy to say, yes, KPIs are important. Sometimes it's difficult to say, okay, if I'm industry specific, what might some of those be? So be a great example. Can you talk a little bit about logistics and transportation? What are KPIs?

[00:16:49] Dan: Yeah, for sure. I'm a huge believer in, in key performance indicators.  I think it's I think it's a crying shame if you shouldn't be surprised what your month looks like. I think if you're watching your key performance indicators daily. I used to watch 'em hourly. Really?

[00:17:05] I mean, literally you've got, oh my goodness. We had a, we had in my past life, we had a, a dashboard and it refreshed every hour. Okay. Wow. And I became obsessed with watching that. And not only did I watch it, we had it out to, for our people to see so they could see how they were doing. They loved it.

[00:17:24] They loved to see, you know, their numbers. They loved to see how the company was doing and. We would spearhead, you know, some competitions with them and stuff, so they would see, you know, where the gross profit was for the month, what their individual activity was and performance was. So I think key performance indicators are just, I think they're a must.

[00:17:43] In fact, I used to tell the owner, I said, you don't even need to look at your financials to see how you had, what kind of month you have. Number one, you can walk out and walk around your yard to see how many empty trucks or how many trucks our island on the road. You know, that's a good indicator right off the bat.

[00:17:58] But we had a lot of key [00:18:00] management reports we'd run. Some of 'em in the trucking industry on the transportation side, you know, are more asset based. You know, what's your, what's your revenue per truck? is probably one of the key indicators. You know, again, you're monitoring utilization.

[00:18:13] You know, the terminology may change from in industry to industry, but it's the same concepts we use for most of our clients. Average revenue per truck, you know, per day, per week, per month. Average revenue per driver. Same thing. How many unseated trucks you have, you know, what's your, you know, your capacity.

[00:18:31] Revenue per mile, obviously is another one. You know, obviously monitoring that. And what's important, and we've seen this with, with some of our clients is as we, as we take over the client, is to get the accounting rate right. So you can say, oh, I thought my revenue was per truck was X amount. But if it's loaded with stuff, it shouldn't be in the actual revenue number.

[00:18:55] You're, you're kidding yourself. Yeah. You know, so I think it, I think. You know, garbage in, garbage out, you know, so it's critical to have the key performance indicator, but it's also critical to have the accounting accurate so that the key performance indicators are accurate. And you're comparing, you know, the right numbers.

[00:19:12] On the logistics side, you know, you're monitoring more performance per employee gross profit per employee per day, per month, per week. You're averaging how many shipments they move. Unfortunately, sometimes you have to move a shipment and you lose money on it. You know, you're, you're servicing the customer.

[00:19:29] Right. You know, it's kind of your loss leader, you know. And in my pa in my childhood, we had a grocery store and you have your, you know, your loss leaders, you know, in your store. And, you know, we've got certain projects at Summit, you know, that are more profitable than others. And same in trucking. So you may have a client and you may, or a customer, you move 50 loads a week, and two or three of 'em, you lose money on.

[00:19:50] monitoring the number of shipments that a person handles, regardless of whether they made profit or not, monitoring the number of losses you take. It's kind of a [00:20:00] trick bag because if you're not taking enough losses, you're probably not taking enough gambles. You know, so you're probably getting true conservative and not servicing the client enough, and you're only cherry picking the loads.

[00:20:10] So, monitoring all those statistics and give you some really key insight to how you're doing. And again, at the end of the month, there really shouldn't be a surprise. You should pretty well determine whether you're profitable or not, how profitable 

[00:20:24] Tom: one of,

[00:20:24] Jody: yeah. I think adding to that, Tom is, or before, excuse me, Tom here, but adding to that, everything that you've mentioned there goes into that forecast.

[00:20:33] You know, that's how we build the forecast, right? So the forecast isn't billed by saying, you know, Hey, what'd you do last month? And I'm gonna increase that by 10% and we're magically gonna get there, you know, let's roll the dice and hope it works. Right. You know, it's everything that Dan just mentioned, you know, we build it into that forecast.

[00:20:49] on what we know is going to happen or what we plan on having based on the capacity of what we have available. So if we've got 10 trucks, what are those 10 trucks gonna do at full capacity? Then we back into like the next three months based on what we do have in our pipeline. So we have to maybe bring it down or bring it up a little bit based on what we know is under contract and what we know is, you know, is coming down the road.

[00:21:09] And, that's the beauty of it, right? And so you're always building towards capacity and so you'll. pretty much when you know when you can make those decisions and when they can't be. And it's important to use those non-financial. Yeah. And soI can see right now where Dan's going with, he builds this really cool forecast and then all the KPIs are kind of tied to that forecast.

[00:21:28] And so the, as an owner, we know if we're gonna hit our numbers or not, because before we even get the financials done, like Dan mentioned, because. already know because we didn't have the amount of, you know, trucks come through that we needed to, or the amount of loads or whatever it is. Or we took losses on certain things that we didn't need to take or weren't expecting to take.

[00:21:45] You know, that type of thing. And that's the beauty of it, I guess, is that we can really kind of build that and work along that and do a lot of modeling with it. 

[00:21:53] Dan: Right. I think you know, capacity is what we're talking about, right. You know?So I, the one owner [00:22:00] I worked with, he was a dreamer.

[00:22:01] You know, I wanna be, you know, you know, so big and any, and he, he always had the, his foot on the pedal to do that. I, that was fun. And I used to ask him, okay, we don't have the capacity to do that. You know, we don't have the people, you know, it sounds like a good, a great, and I'm on board, but let's figure out a plan to get to that capacity to do that, to put some numbers behind it.

[00:22:22] You know, and then this is how many people we're gonna need to hire, and this is the productivity we need to expect out of them. And we, we always, I'm a believer in, you know, in my opinion, the four pillars. You talk about your culture. you talk about your people so you can get better people, better trained people.

[00:22:41] You can leverage your technology and you can leverage your processes. So if you focus on those, you can get more, more out of your capacity, you can increase your utilization, you know? And from you know, booking four load, four shipments a day to maybe six shipments a day. So you look at those, all those opportunities, which is what we do with a lot of our clients, say, all right, how do your utilization or your effectiveness is probably not up to industry standards.

[00:23:07] So what can we do to boost you up? It's not what we see with our other clients. Let's focus on those.

[00:23:11] Tom: So, Dan, when you worked in operations, I'm curious, how did that impact or influence your relationship with the non-financial metrics? I would assume now you're, you're not just reporting, but you're living in it.

[00:23:24] Did that, did that make a big impact on you? . 

[00:23:29] Dan: Yeah, I was, I will say I was instrumental in, you know, building out that dashboard. and obviously I had the finance background and I got with some key people within our division and they were a lot smarter than me, which ist saying much. And we, they, I had them build out some really cool dashboards and got them excited about seeing our numbers everyday.

[00:23:53] and turned it into you know, we didn't use it to criticize, we used it to encourage our people. [00:24:00] you know, there's a big difference. And it was amazing cause we went we increased our productivity so much and we set goals. , you know, their average you know, our average gross profit was X when we, when we started and we thought we could really bolster that, and we did.

[00:24:16] We increased it like two and a half times just by you know, just by leveraging our technology, by monitoring it, and by expecting more out of our people. But they saw those numbers every day. They were constantly in front of them, and then we programmed our KPIs. So not only did the whole floor, the ownership was seeing 'em and they knew the ownership was seeing their activity.

[00:24:36] And, you know, we've gauged out over their activity, but their productivity. And usually they're hand in hand. But, you know, sometimes you might have a person who's really struggling and they're putting in the effort. Just  struggling with productivity. So it's important for us, it was important to measure.

[00:24:51] So we can see, well, your productivity's low, but your activity is also low. So what, you know, they go hand in hand. What can we do to bolster your activity? And we think if you do that, your productivity will go up. 

[00:25:02] Tom: Are the measures you were talking about, are those pretty common across the industry that you can then compare to some industry metrics as well?

[00:25:10] They are 

[00:25:10] absolutely. 

[00:25:12] Dan: Yeah. Gross profit per person, as you know, a key metric. In the logistics side, some companies are, they call it crate to cradle. Where one person handles both the customer side and the transportation side, they handle both sides of the model. In a lot of larger industries, they're, they have a split model where you've got one side dealing with a customer and one side dealing with the trucking company on the logistics side.

[00:25:35] But yeah, the metrics are pretty uniform. You know, they're not a lot, not a lot of new stuff in trucking, you know, , there's not a lot of new metrics and everything. Some may dive in and get a little more granular on monitoring CRM activity and stuff like, and get a little more detailed on it.

[00:25:54] But the basic metrics, 

[00:25:55] Tom: I found real power in that industry metric. And you know, one of, in our niche, [00:26:00] one of them is average bill rate, but there's so many of my clients that they are not charging enough. And when you can say, when they tell you I can't charge more, it's too competitive. All these things, you're like, the average is like $30 an hour more than you're charging

[00:26:11] And that really influences him. And I had one reason I had said it for a long time, and then luckily he went to a conference and came back and said, we're not charging enough. And I said, I've been telling you that, but luckily he heard it from someone else and now he wants to charge more. But just the power when they realize someone else can do something better than what they're seeing really motivates.

[00:26:30] Dan: Well, for sure, 

[00:26:31] Jody: Can we take a quick break here, Tom, real quick. And I, I'd like to get an idea. I'm a real book reader. I like to read books and I've got favorite books. I was wondering, Tom, if we could each share our favorite book and why? Real quick here for our listeners.

[00:26:46] Go ahead Tom.

[00:26:47] Dan: I'll, I'll go first. Okay, go ahead Tom.

[00:26:49] Tom: Okay. One I'll have, in fact, let me grab it so you can see it. It's one that I just reread again and so I'll hold it up so people can see it. This Getting Things Done by David Allen is one that people can see and it's a really good one for sort of keeping track of what you're supposed to be doing, putting it in a place so that, you know, you'll take action on it.

[00:27:10] And it's made a huge impact on me feeling like I can get control. of what things are doing. 

[00:27:14] Dan: I like that book, Tom. I think mine, and we had a lot of our managers read it at the One Company is Good to Great. Oh, sure. Jim, 

[00:27:26] Tom: you're doing great.

[00:27:26] Jody: Y'all I've got here too.

[00:27:27] Dan: Yeah. , yeah. [00:27:30] that's that was kind of our Bible and we referenced that a lot in our values and stuff. And you know, I think a big focus on that, two big focuses on that were, you know, getting the right people on the bus. And the wrong people off the bus. you know, I think both are equally as important and then the hedgehog concept.

[00:27:47] You know, do what you do well, you know, and focus on that and say, ah, this is probably not us. You know, that's a great, great opportunity for someone, probably not us. So I really enjoy that book and I think it's and probably a third concept [00:28:00] is, which I think we can relate to as accountants is facing the brutal facts.

[00:28:04] Sure. And I think sometimes that's something that I think we should preach to our clients is, you know, we gotta get a solution for, you know, the next you know, 12 weeks of your cash flow and so forth. Here's where you are. And bearing your head in sand is not going to get you out of that. So I think facing the brutal facts is probably my third concept in That's excellent.

[00:28:24] In the book that I really take two. What about you, Jody? 

[00:28:28] Jody: Yeah. You know, I, you know, good to great. Yes. One of my favorite books I probably list, I have multiple medias of that book. I've got it on CD, I've got on, you know, media, and on tape. I've got that book in hard copy. It's like Jesus crap. I read everything on that book and read it many times.

[00:28:42] So that was something that we really kind of formed our business really. really helped us really kinda get through the tough stuff. EMyth was another one Yes. That we used, you know, cause it's all about process, right? because you wanna make a repeatable process. That's the only way you can really grow and give everybodythat same level.

[00:28:59] Because we, when we like with with our CFOs, we want Tom, when he's meeting with clients, we want him, we want that client getting that same experience with Tom then that they're with Dan. . It's really hard to do that if you don't have processes in place. And so course, huge, huge, huge on processes. 

[00:29:13] Which kind of leads me to book I recently read, which is I've read that as well, and it's a great book. Called The Five Principles That Take Your Business To The Top Of The Mountain by Steve Prada and Greg Clear. I know Greg, really, really well. And this is an operations book, so it's really, you know, what do we have to do to kind of get through it?

[00:29:31] It really focus on people kinda like the pillars that you'd mentioned, purpose, playbook, performance, and then profits, you know, and we're the profit part of that, you know, so, which is kind of cool. So it gives all four of the different areas that you know, as a business owner, no matter if you're in the trucking industry or if you're.

[00:29:47] The cannabis industry or whatever, you really have to have that solid foundation. And that's kind of what that book is really focusing on is that. And so I'm glad to hear what all three of yours, I mean, getting things done, you know, super great book on how to manage your [00:30:00] time. You know, that that's the, that's a big thing that we find that you know, the success or our failure of our CFOs really comes down to managing time.

[00:30:08] It, it does. Oh can you imagine if, you know, can you imagine letting your time manage you as a cfo and how would you handle 15 different clients if your time was meeting? That would be,

[00:30:20] Tom: I'm thinking of our CPAs who listen, right? I mean, how often do CPAs say there's no longer a busy time of the year?

[00:30:26] It's always busy, all these clients calling, and it only takes one or two dropped messages or phone calls from someone till you're really dealing with something that's falling apart. And I agree with you Jody. 

[00:30:38] Dan: Right. . Yeah. I forgot to mention Jody. Digital dollars and cents is probably my peak book.

[00:30:43] Jody: Oh, well I got that one.

[00:30:48] I got that right here. Actually.

[00:30:48] Tom: It's, is it groomed? 

[00:30:52] Jody: Yes. 

[00:30:53] Dan: Yeah. A lot misspellings. But once you got past the misspellings, it was pretty good. 

[00:31:00] Tom: That has been an X-ray.

[00:31:01] Dan: No, that was No, seriously. All kidding aside, there's a lot of pragmatic advice in there andI think it's one of the things I enjoy about Summit is it's one I enjoy the cadence, which is

[00:31:13] I think is, we've got a, you kind of what you're talking about processes. We have a deliberate cadence of delivering information to clients and I think we rarely veer from that, and I think that's really critical. and clients really in my experience here. They really enjoy that. They enjoy, yeah, I'm busy, but I gotta have my meeting, you know, with Summit this week just to keep on track.

[00:31:37] Yep. And just to know that we're looking over your, your receivables, your payables, your processes and stuff. So, you know, I think the cadence and the process of doing that is critical. And I agree.I love Summit’s model of 80% of what we do is scaled. Right. You know, this is the way we do it, and then you got 20%, you got, you know, you gotta allow that individual CFO or [00:32:00] advisor to come in and

[00:32:01] Share your experience and give a little twist on it. But the overall delivery of the service is, you know, uniform. So if Tom jumped in on one of my clients or I jumped in, I would pretty well be able to pick up and. I know where Tom is on this. There's no real big surprises. And I think same with all of us.

[00:32:21] We're pretty interchange.

[00:32:21] Tom: You mentioned the cadence stand for people listening who kind of wonder what we do with clients. And you also talked about the importance of forecasting. Do you wanna talk a little bit about what a cadence maybe for a month looks like for your typical client? 

[00:32:35] Dan: Yeah. We just stuck on a new client one after I started.

[00:32:37] They've really been fun to work with. It's a Quasi new business, but they're assuming a large book of business that they've been handling. So we have a cadence with them. We meet every week. We walk through their cash flow every week. And during that cash flow meeting, we're not only talking about where their cash is currently, we're looking out for the next 12 weeks or so at what their cash is gonna look like.

[00:33:03] So there's no surprises that gives, they can sleep at night, that little 10 minute conversation with them. Like, okay, we know where we are. They can put that off their plate and they can focus on running their business instead of, you know, getting caught with a surprise. Kind of what you were alluding to, Tom.

[00:33:19] of surprise, like, oh, we don't have cash for payroll or something like that. And then we deliver depending on the client you know, forecasting meetings every week, pipeline meetings. We're reviewing what they've got, you know, coming. And sales and so forth. And then their financial, financial meeting as well, going over their financials and reviewing those in detail and answering any questions and comparing them to their, you know, looking at their KPIs and saying, here's how you did and here's probably why.

[00:33:46] And again, you know, they're act and. You know, some industries, you know, their average bill rate was down, or was up or whatever, or their utilization was down or was up. So again, shouldn't be any surprises from that if they're monitoring those pretty carefully.

[00:33:59] Tom: Everything. Yeah. That's [00:34:00] great.

[00:34:00] I know a commoning, so, 

[00:34:01] Jody: so it sounds, I didn't hear accounting in there. What's the deal? Yeah. Really. 

[00:34:06] Dan: Yeah, and I think that's it's fun to stay on track with the client that way. it's like you're, we're programmed, you know? That you've got those meetings set out for, you know, months in advance.

[00:34:21] The client knows it. You know, not that we don't change occasionally, but we pretty well stick to that recurring meeting. And again, I, my experience with those clients is, okay, they had their meeting, now they can hook up duress and they know what they need to focus on. Yeah. Versus, and they know they've got good clean financials to look at.

[00:34:40] You know, they got forecast laid out. They know where they're going, you know, they know the roadmap, and now they need to execute the client.

[00:34:46] Tom: That sounds like a great, and I know many of our new clients coming in know that they should be doing things like reviewing financial statements, talking about forecast, and they don't have that.

[00:34:56] So just putting that in place, they at least know there's a way when they're thinking, forecast and thinking, you know, I've had in my mind that I probably should be hiring two more people in the office to do something. Forecast is a perfect part of that conversation. Right. Say, let's show you what that looks like.

[00:35:08] If that's what you're doing. You're doing exactly. . And then once they've got that in place, there can be some kind of, they can relax for those kind of things. Or when things really look like they're taking an ugly turn, that you're in there saying, well, let's build two or three different models. What if it does get as bad as you're thinking and what if it doesn't?

[00:35:22] And just how, how would we get through that? And that's so much easier to do on paper before just jumping in and saying, let me just wing it and figure out kind of what's gonna happen. So I'm glad you do that. 

[00:35:31] Dan: Yeah. And then figure it out after the fact. Right. And Well, 

[00:35:34] Jody: I think about even the, when going through the pandemic, you know, it was such a, you know, when you hear the industry, cause I speak to a lot of folks in the accounting industry, and it was like, yeah, it was like, it was like basically everybody's, you know, basically emergency right now.

[00:35:49] Everybody's, you know, changing what they're doing. They're meeting with clients more often and they're really kinda working through it. And a lot of the accounting firms did a phenomenal job with it. With us. It was like, [00:36:00] Business as usual. . You know, we met with clients maybe one more time. You know, they, the clients already had a really good understanding of their position anyways, and it was just more modeling.

[00:36:09] You know, hey, here's what we do. If this client leaves, what if this client leaves? What, what if, what's the worst case scenario? You know, if we have to lay off all these people, you know, what do I have to do cash wise? You know, all of that was already in place and so it was just a con, it was just more of.

[00:36:23] Check in. Hey, let's see. I just wanna check in real quick. It wasn't a, a mad dash and scramble. Everybody in the firm and all the clients, you know, all hysteric. It was more of a, Hey, now, now how does this impact things? And it was just a different conversation. . 

[00:36:37] Dan: Well, the way we coach I love Summit's process of coaching clients through having a cash reserve, you know?

[00:36:44] That's exactly what that's for. Having a tax reserve account, you know, so there aren't surprises and you need a plan for those, you know, those events economy's gonna change, you know, things are going to happen. and being prepared for those and talking about, and you hit it right on the head Jody, you know, talking about that ahead of time.

[00:37:01] Versus, oh, it happened. No, no one could have prepared for a pandemic like we went through. Right. But at least we were, you know, you prepare clients for moderately what they're looking at, and you have a game plan and you're definitely ahead of the game. You're definitely not scrambling as much.

[00:37:18] You know, I have no loose cash reserve. We've never talked about this before. Right? And having that laid out for a client just. You know, we have conversations with clients. What would happen if you didn't have any billable revenue for the next three months, six months? You know, what would that look like for you?

[00:37:32] And clients wanna know that. I think Bill, tell 'em that can.

[00:37:35] Jody: Yeah, that's a great point. Well, even worse, what, when's the best time to get a line ACC credit? It's when things are going well, not during a exactly question, you know? So for those folks that think there's a recession coming up, you better have that line of CRA already in.

[00:37:48] Because you're not gonna get it. You're not gonna get it when it happens.

[00:37:50] Dan: And so the one client I worked with you know, that was one of the first things we talked about when we took 'em over is, you know, is line of credit and a thousand percent agree [00:38:00] is the most effective time to do that.

[00:38:02] So when you don't need it. Yep. And they kept, you know, we don't, we're not gonna need a line of credit, we're not gonna lean, need a line of credit and. Okay. And finally, finally, about a month before they needed it, they're like, yeah, we need a line of credit. Can you get that up? And there was a large, large line of credit we had to get established.

[00:38:17] And fortunately, I'd already had conversations with bank, a few banks and stuff, and the client felt really comfortable, said, go with your people, you know them get the ball rolling. And the process went really smoothly because we had already had those conversations. I had already started the ground.

[00:38:34] Already and, you know, I knew what the bank was gonna require. I knew what the bank was gonna lend them and so forth, and was able to start putting together a forecast for them. , you know, to show them what their cash was going to look like. And it would not have been pretty, if they didn't have a line of credit

[00:38:49] So 

[00:38:49] Tom: what you've described is, so I think telling around about 80% of what we do is very common across businesses and what everyone needs. And you've emphasized a 20% as we've talked more about specific to logistics and transportation, the value that you can bring knowing the industry. I think it's just a great kind of place to wrap up and say, just knowing those two things is so good and I hope anyone listening says that 80% I could do, maybe I'm not in logistics, but I can at least hear how Dan's helped me think through what would some of those key performance indicators and why they're important to be in there.

[00:39:19] So I really appreciate you, you sharing that knowledge with us. 

[00:39:22] Dan: Yeah. Thank you. 

[00:39:23] Tom: Thank you guys. Talk to you guys soon. 

[00:39:29] Enjoy this podcast. Visit our website@summitcpa.net to get more tips and strategies for achieving modern CPA firm success. We are here to be a resource in this ever changing industry.


The Role of a Virtual CFO in the Transportation + Logistics Industry


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Episode 92 - The Role of a Virtual CFO in the Transportation + Logistics Industry w/ Dan Rutherford



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