"Managing Cash is a Struggle for All of Us": Dorothy Kolb on Controlling & Managing Cash Flow

dk east associates founder and CEO, “Thriving in the Chaos” podcast host and Centime Early Access program participant Dorothy Kolb talks about why controlling and managing cash flow is critical for businesses, and how to make the process more efficient and accessible

Dorothy Kolb knows her financials, and is committed to helping creative entrepreneurs understand theirs. As CEO of the fractional CFO firm she founded, dk east associates, she provides strategy planning, forecasting and scenario planning to small and mid-sized businesses on a part-time basis. She tends to work with several clients at a time as they scale and grow, until they reach about $10 million in annual revenue. At that point, they generally bring on a full-time CFO and she finds new creative agencies, podcast production companies and social impact firms to help define and meet their goals.

“Ideally I make myself obsolete, if I build them enough. Because then they can bring someone in-house — and that has happened,” Kolb said in an interview. “That's a great thing for me, because I feel good about it. And typically those clients will refer other clients to me.”

Kolb sees her own passion for building businesses reflected in the leaders with whom she works. Like herself, they are bright, energized and bursting with ideas. The difference is that their energies often are channeled toward other priorities, areas where they might have more knowledge, skill and experience, and which are equally core to their mission.

“The creative agencies and social impact firms are very creative, very non-financial thinkers. And it really frustrated me when I first started working with them that their accountants or CPAs wouldn't explain things to them,” Kolb elaborated. Those business leaders would “get a financial package, monthly, sometimes quarterly. And they just toss that into the ‘from the accountant’ folder on their computer. And they don't read it because they don't understand it, or it doesn't make sense, or they're just afraid of it because they think: ‘I can't quite get it, and I don't want to ask stupid questions.’”

Meanwhile, their minimal engagement with cash management was harming their operations and limiting their aspirations. Kolb described companies that laid out large sums of cash to vendors in order to produce an event, but billed much later — forcing them to make look at cash flow as a “super day-to-day, immediate” problem ridden with pressured decision-making on payables that risked disrupting relationships with suppliers. She said she has told clients frankly that their customers ”are using you like a bank; they're using your money to finance their business.”

Kolb wants to tweak their mindset to think of cash less as pure currency, and remind themselves: “It's my money. And I have to be in control of it.” On the flip side, even when they do have $100,000 in the bank, she continued, it doesn’t mean they can spend $100,000, further stressing the importance of cash flow forecasting and scenario planning. Throwing a vivid metaphor into the mix, she said of cash flow: “The currency flows in and it flows out and it's supposed to, like tides and waves. But it can't flow back out to make a drought or an empty lake bed.”

“I've worked with a couple of companies who have $25,000 in the bank and they're like they think, ‘Woo! Let me go buy this big piece of software that costs $15k. And they just go ahead and do it on a Monday. And they forget that on Thursday, they've got payroll drawing and it's $12.5k. Well, you’ve only got $10k in the bank. Shoot,” Kolb said, clarifying that the scenario unfolded before she began working with the company in question.

It’s a lapse in planning many can relate to. So how does Kolb go about changing mindsets and explaining how the levers of accounts payable, accounts receivable, cash flow forecasting and accessing credit relate to one another? ”I started doing more graphs and charts and just talking with clients or writing it out as a narrative — whatever way they would understand. That made them a better founder. They could figure out where they want to go with their company more easily,” Kolb said.

On her podcast, “Thriving in the Chaos,” Kolb takes a similarly straightforward and accessible approach. “Business talk is so boring normally,” she said. “So I figured because each episode is under 10 minutes, you get enough info without sitting there going thinking, ‘I don't have 30 minutes to listen to this.’ It's just a nice little chunk and then you move on with your day.”

Kolb’s own story, which crops up in “Thriving in the Chaos,” helps explain her high level of engagement and commitment to others’ success. After pursuing and thriving in a corporate career at major television networks and Deloitte in New York, her personal circumstances changed and she needed to be more available to her family.

“I didn't expect to be an entrepreneur,” Kolb said. Sharing that she wanted to be present for her four sons, she said, “I literally took a couple of bookkeeping jobs because they're everywhere,” even though they didn’t pay particularly well. Quickly, however, those clients recognized her broader abilities and vision and “started using me for my actual controller-level skills. And then they started referring me. And all of a sudden it built.”

“I was just on a panel with the Women's Entrepreneur Institute at Northeastern University, and we were talking about community,” Kolb continued, noting that in the early days she was “trying to do it all on my own.” But by finding communities, and others with complementary expertise — and vice versa — she was able to build her own business and support others as they built theirs. ”It was that positive energy thing, where you're a resource for somebody, and they're a resource for you. And all of a sudden, as a group, you lift up. Everybody gets lifted.”

Now, when it comes to managing her own cash flow, Kolb herself has been surprised at times by her own missteps. In her case, fortunately, she was keeping too much cash on her books.

“Managing cash is a struggle for all of us. I'll throw myself in that boat, you know, especially early on in my business. You see cash come in and you think, ‘Oh yeah, I've got cash and I want to push it right back out the door because there are so many things that I wanted to get or buy.’ Especially as a start-up, you forego a lot of things, you bootstrap stuff. And then you get cash in the door and you think, ‘I'm going to buy all that stuff that I was putting off.’”

Now that dk east associates is firmer on its feet, Kolb admitted to catching herself out again — by failing to put her excess cash to work for her.

“I just hired a new wealth advisor. And she came in and she was like asked, ‘Why do you have all this cash sitting around?’ I thought, "I don't even know,” she said, adding that she had to see her financials in a transparent format to think clearly about how to invest it. “Otherwise, it's no better than sitting on my desk.”

The same messages came up again and again in a wide-ranging, highly informative and fun conversation. Kolb urged the importance of cash flow control, including visibility over financials and an understanding of how each aspect of cash flow affects the others. And she emphasized that businesses need not struggle alone.

“Any founder goes into it initially thinking I've got to do it all. This is my business and I’ve got to do it all. And then you start realizing things that you're not good at. And that gets kind of scary, but I think on the cash management part of it, being able to allow yourself to say, ‘I need a tool for this,’ or ‘I need someone to help me with this tool’ is huge.’”

Kolb will be participating in Centime’s joint webinar with strategic partner First National Bank of Omaha on Friday, Nov. 5 at 12 pm Eastern time. Universal Information Services CEO and fellow Centime Early Access client Todd Murphy also will share real stories of cash flow mishaps from his career. Centime founder and CEO BC Krisha will moderate with Matthew Meyer and David Cota of FNBO. Register for the webinar here.

Tune into her podcast, “Thriving in the Chaos,” here. Her new podcast, "Oh Sh*t, What Now", in which she and her co-host (who has 5 sons herself) interview guests about being moms and entrepreneurs and all that it entails, is slated to launch November 15 on Apple, Google, Spotify or wherever you get your podcasts.

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**Deposit placement through ICS is subject to the terms, conditions, and disclosures in the applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network bank

'Managing Cash is a Struggle for All of Us'

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