0182: Increased Profits From Better Books with Judith Defeo

Intro [0:00]

EA Interviews Episode 182. Inspiration, transformation, success stories, and the Imperfect Action Round seven days a week. Join Mario Fachini for today’s Expert Authority Effect Interview. 

Mario Fachini [0:14]

Leads, marketing, generation, going to events, running ads, doing all these different things. It’s all important for business, right? True. But it’s not the whole picture. If you don’t have the insights of your financial, you’re in for a rude awakening the financial aspect of business. I would argue to say, business is predicated on who has the strongest financials, are you profitable? Are you moving forward? Do you have reserves? Are you set up in case of an emergency? There’s so many things that you should be considering when it comes to finances and that’s why I’m excited to have Judith DeFeo here from the JADDE Financial Group. She is a financial expert, advisor. And she is going to be teaching the importance of the finances for your business. I’m going to thank the sponsor and I’m going to bring it right back up. 

SPONSOR Acorns [1:07]

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Mario Fachini [1:24]

Here she is, ladies and gentlemen, Judith DeFeo. Judith, how are you feeling today? 

Judith DeFeo [1:28]

I am great today, Mario. Thanks so much for having me on. 

Mario Fachini [1:31]

Oh, I’m so excited to just jump right in. Because as I was saying earlier, everyone wants to know about leads, everyone wants to know about the marketing, and this ,and that and all these different things. And it’s vitally important. But I’ve learned over the years that if you don’t have a grasp on the financials, it really doesn’t matter what else you’re doing, because you’re either winning or losing, end story. Would you agree? 

Judith DeFeo [1:55]

I would agree. But I need to know all those are the things too, Mario. 

Mario Fachini [2:00]

Well, we’re happy to help. 

Judith DeFeo [2:03]

Thank you. Thank you. 

Mario Fachini [2:05]

Why would you say it’s so vitally important to have the finances in order? 

Judith DeFeo [2:11]

Well, if you don’t know your numbers, how are you going to grow? It’s like driving the airplane without having controls. You have to know your numbers just bottom line. And if you didn’t think you had to know, going through COVID the last few months, most business owners have realized they need to know. And many people think they have – and some do. Some have it in their head. And they think they know it. But when you put it in black and white, it’s powerful. It’s so powerful. And it allows you to make decisions to move the business ahead. If you don’t know it, where are you going? 

Mario Fachini [2:54]

Let’s break this down. What is the most important financial to be looking at no matter what’s going on in the world? You know, no matter what time of year it is, what’s the key metric you should be looking at? 

Judith DeFeo [3:08]

It’s a few key metrics. You’re looking always looking at revenue. Everybody wants to grow revenue, revenue revenue. That’s wonderful. And you know, you should, but what’s the bottom line? What is your net profit? You have to look at revenue, you have to look at gross profit, you have to look at net profit, and you have to look at net worth. So those are four really strong key indicators to look at always. 

Mario Fachini [3:36]

Let’s talk about the differences between them. Why is the profit so important compared to just the revenue? What if you did 5 or 10 million in revenue this year? 

Judith DeFeo [3:46]

That’s wonderful. But if you didn’t bring anything home, how are you going to feed your family? The net profit is the profit of the business. That is the business profit. So you know, you could be generating 30 million in revenue and there’s business owners who can’t even take a paycheck. Because their expenses is so high or the cost of goods is so high that they have little to no net profit. 

Mario Fachini [4:17]

So it’s not how much you make, it’s how much you keep. 

Judith DeFeo [4:19]

It’s how much you keep. Always how much you keep. I mean, typically, the more you make, the high – if you manage your finances correctly, then the greater the revenue, the greater the gross profit will be and the net profit will. But if you mismanaged, it could be all over the place. You know, I was just reviewing some books just before for a client that we’ll be meeting with on Thursday. And you know, things are down. And it happens to be a law firm. And his revenue was about 65,000 for the month of June. His expensive. 64,000. So I didn’t dig into it yet. I will after this call. I just saw the report that my employee gave me. I’m like, “That doesn’t even make sense. Where did all the money go? What happened?” Or were those all his overhead expenses and then just the revenue is down because we’re in such crappy times right now? 

Mario Fachini [5:24]

What would you say if someone’s in a situation like that? Because that sounds like a really – the lean, let’s say – 

Judith DeFeo [5:32]

That was very lean. 

Mario Fachini [5:33]

A really lean profit margin. 

Judith DeFeo [5:35]

That was very lean. Yes. 

Mario Fachini [5:38]

What would you say is a good number to aim around 5 percent, 10 percent, 50, 70, 30? 

Judith DeFeo [5:45]

At net profit? 

Mario Fachini [5:46]

Yes. 

Judith DeFeo [5:44]

At least 25 percent. 

Mario Fachini [5:50]

Okay.  So if someone is – let’s use that as the guideline. If someone is less than 25 percent right now, what would you say they should be doing as some first steps to increase it? 

Judith DeFeo [6:02]

We’re going to deep dive into the expenses, because that’s usually the easiest place to look at and find something. Even if you’re going to cut expenses or you’re going to increase your fees to your clients, and a lot of people you know, especially now, they don’t want to go to the clients and ask for money. Everybody’s hurting. But if you look at your expenses, usually you can find something. And just in the past few months, we’ve had clients renegotiate their lease, their rent, get the rent reduced, we’ve had them get it deferred which, okay, you have to pay but not just yet. We’ve had landlords cut the rent in half for the few months until their state gets back on par to whatever the new normal will be. We’ve had clients – you know, just look at some utility bills, look at your credit card bill. If you don’t have them paid off, you’re paying high interest, just call the credit card company. Typically, as long as you pay your credit card bill every month on time, you can get that interest rate reduced on most credit cards. If you don’t look, you don’t know. You may be paying 25 percent because you were late once three years ago. But as long as you’ve kept it and you’re paying, usually, for about six months or maybe nine months on time, they’ll reduce that rate on you so that’s a place. Another place we see savings is how many subscriptions have we all signed up for and forget to cancel? And so if you don’t look at your credit card bill, you’re paying $10, $20, you know, $30 every month for a subscription that you no longer use. You forget about it. 

Mario Fachini [7:56]

Or even hundreds of dollars because some of the subscriptions have stuff – 

Judith DeFeo [7:59]

Or they could be hundreds of dollars. I was being kind. And if you have children who are using your card, you’re going to see iTunes charges, Xbox charges, things like that. And they just keep recurring. You have to stop it. And some of the companies don’t make it easy to stop it. But you know, those are just areas that you could just poke holes in. There’s always something we can find to cut back on expense. 

Mario Fachini [8:27]

And another one I keep an eye on is, I deal with the internet a little bit. And you might have a 12 or 24 month deal, promo, whatever. Well, it’s not that long before 12 months has gone and something may have changed. Or six months into it, there’s a new promo or deal that I’m just shocked that no one ever calls about to say, “Hey, thanks for being with us for like 248 years. Would you like the best deal you can get?” No, it’s up to you. It’s up to you for most companies. And it’s just like I look at stuff at least quarterly, a lot of times monthly, just to keep an eye on it and say, “Hey, what’s going on?” I think it’s absolutely crazy that for someone who’s been with, you know, anyone for 5, 10, 20, 30 plus years, they’re given the best deals to the new people. And it’s like, “Oh, we’re just charging you.” I remember one of my original servers, I was paying six times more than I needed to for my software. 

Judith DeFeo [9:34]

Yeah. Because you bought it at the time when software costs a lot of money. And technology prices have gone down, down down. And yeah, and especially because so many of the – you know, we deal with a lot of software, we work with a lot of different softwares. And you know, it’s becoming more and more frustrating that you can’t get a live person on the phone. So you can’t get that help initially, unless you pay gazillion dollars to help you – 

Mario Fachini [9:59]

Yeah. Or it’s a $300 a month support package. 

Judith DeFeo [10:02]

Exactly. Exactly. And many times, it’s just, you know, you’re just doing a chat or an email. And if they’re not going to have live people to help you enjoy and prosper from their software, you’re not going to have live people to call you and say, “Oh, hey, Mario. I see you’re overpaying. We have a better deal.” They’re not going to do that. They don’t do that. They don’t have the manpower for it. 

Mario Fachini [10:27]

Yeah, it’s crazy. When I developed my software about ten years ago, to build WordPress websites automatically. I mean, I was for sure, looking at server cost and bandwidth and all these different things. And I didn’t look at it for the first year or two. And then one day I got a notification and was like, “What the heck is this?” And I was just shocked. And they’re like, “Oh, dooby, dooby, doo.” So I’m glad it was years ago. But I started going through stuff with a fine tooth comb going, how many other companies are doing this where it’s like, “Hey, we have you.” You know, the same thing for relationships, “Hey, I’ve known you my whole life. I’ll get around you. I’m too busy impressing the new people.” Horrible. 

Judith DeFeo [11:06]

I know. And isn’t that amazing that they don’t nurture their current client base. We see that all the time. 

Mario Fachini [11:16]

So do you help people cut the expenses? When you’re doing a deep dive, do you say, “Hey, how often are you using X, Y and Z? I mean, so when you’re looking at the financials, you might not know if this software is worth it. This one’s not worth it. Or staff, I know team members, you know, how often are they doing stuff, partnerships, building, stuff like that? How do you get the insight to say this expense is justified and you’re profiting from it. But this one’s probably a little bit too much. 

Judith DeFeo [11:47]

So we meet monthly with our clients. We’ve been using Zoom for way longer than COVID has been around. We’ve been using Zoom for a number of years because our clients are remote. And we are meet monthly on Zoom with all our clients and we go through – you know, at a basic level, we’re going through their P&L and their balance sheet at a very basic level. And using QuickBooks, we just kind of click right into some of those expense categories and just look at what’s there. And so it’s an opportunity for the client, who just – you know, they’re running around, they’re building sales, and doing the marketing, all that that stuff. And sometimes it’s hard for them to focus on here. But when they’re on the call with us, they’re forced to focus. So they look at, “Oh, geez. What is that?” So you may see a little bit of that. And then, you know, there’s just times, you know, we caught something the other day, a software because it was a desktop software of QuickBooks. And we knew the client was online. Like, “Why are they being charged for this? They don’t use it.” So some thing’s we’re able to catch on our own. We get to know our client’s companies so intimately. So you know, if something pops up that isn’t within the norm or we know they’re not using, we’ll bring it to their attention. But many times it comes out during our monthly meetings with them when we go over line by line with them. And we’ll help – you know, this times we’ll call some company, we’ll ask for a better rate, whatever it is. We want our clients to be successful. So we want them to have a high net profit. That’s the name of the game. 

Mario Fachini [13:27]

Excellent. Well, I appreciate you sharing those Expert Authority Insights. Let me ask you, who are the biggest transformations that you have with your clients? Someone that was, you know, in shambles before they came to you. And then started working with you. And then how long did it take. And what was the, I guess, the ROI and the transformation, the profit, you know, how much of a difference did it make? 

Judith DeFeo [13:51]

Well, I mean, just recently, with COVID, we helped our clients apply for PPP. So this probably isn’t the answer that you’re looking for. We can get to that. But I’m so proud of the fact that we were able to turn around – not in round one. Round one, I was very disappointed. We got one loan. That was it. I was devastated. Round two, we really got to work between round one and round two. We got a great contact. Within 48 hours from the round two opening, we had 26 clients with PPP money in their bank. So that was huge. For some clients it couldn’t go on. Their businesses were shut. That was a huge, huge win and an immediate transformation for them because they were able to stay in business with this money. But aside from COVID – you know, we had a client who came to us and they had owed back taxes not just to the IRS but they owed to the state on sales tax as well. And they had some spending issues. In fact, when we got everything settled, the wife kept saying, “I’m sending you on a trip to Las Vegas.” And like, “That’s your problem.” I’m going to go to Las Vegas and you’re not going to Las Vegas. Because we fixed all this, we’re not going to mess it up again. But we went through – they owed lot of money. The personal spending was infiltrating into the business. He wasn’t collecting on his outstanding AR. So he would send his emails – his invoices to QuickBooks, which we encourage our clients to do with paperless. We don’t put things in envelopes and mail them. So everything is email. But sometimes when that happens, it could go into somebody’s spam or they can open it and really forget about it. Most people are good people out there, but some people really forget about it. And he never followed up. He had so much open receivables he didn’t follow up. We had someone on our team make phone calls, just simple phone calls. Do you know how many people gave us their credit card over the phone? I’m like, in one day, the first day like, we just collected $8,000. You know, just getting the cash in, it’s not good enough to do the business. And getting back to that revenue, that’s great if you have high revenue. But if you don’t bring the cash in, you have no money to take home either. So helping him get the cash in and then going through the expenses, we were able to create a better payment plan with the IRS. We were able to hook him up with someone who was able to do tax resolution for him. So he was in a much – when the tax resolution guy got done with him, he owed lots less than he did. So the payment plan was reduced. And we just keep him on track now. He just has to go out and sell and do the work. And we keep him on on track. He’s thrilled. His wife is thrilled. 

Mario Fachini [17:18]

Well, it sounds fantastic. Because, you know, we were talking about the revenue and you can have high revenue and you should, but you should also have high profit. And it sounds like the third thing I’m hearing is don’t forget to collect the money also. If it’s not in your account, it’s better than not having it but it’s still owed to you and you should be on top of it. 

Judith DeFeo [17:39]

Yeah. And you have to know that if someone hasn’t paid you in 30 days, that 30 days is going to go into 60 days very, very quickly because either they forgot – if they don’t remember after 30 days, they’re not going to remember. Or their taking advantage, you know, because – 

Mario Fachini [18:00]

Now, what if you have an agreement or it’s like net 30, net 60, net 90, and you have an understanding? 

Judith DeFeo [18:07]

That’s a different thing. We work very closely with our clients on cash flow projections. And one of the things that we show them is, we have this really cool tool that we use, and all we have to do is slide the little bar to show them what happens if these clients pay you in 30 days instead of 60 days. What happens to your cash? Well, it goes up for the month. You’re in a better cash position. And then reverse of that is, what happens if you pay your vendors in 30 days instead of 15 days, and so forth? So you want to pay your vendors a little slower but you want to collect on your cash quicker. And you see the difference of what that means to your cash. And when you have cash, you can purchase merchandise that you need for your business, you know, depending on the business. You may need to buy materials to work on a job. If you don’t have the cash, you can’t do that. 

Mario Fachini [19:09]

And you can also get more favorable rates. 

Judith DeFeo [19:12]

A hundred percent. Yes, you can. Yes, you can if you’re looking to borrow. Yeah. It’s hard to borrow when you have for cash or cash flow – 

Mario Fachini [19:21]

Well, not even necessarily for borrowing. But like, even with the – we’re talking about the internet or software’s or the building or whatever. It’s, “Hey, what if I gave you all 12 months up front?” 

Judith DeFeo [19:33]

Oh, right. Like that. Yeah. 

Mario Fachini [19:34]

You don’t need to borrow it, but once you knock off one, or two, or six of these months? 

Judith DeFeo [19:40]

Exactly. I love that. I love to get free months. We do that all the time. Yeah, it’s true. 

Mario Fachini [19:48]

So I love what you’re sharing. And I just want to ask you, what else is one other thing that’s a big game changer for businesses that they can do that’s an easy win? Because I realized you said talk with a tax resolution, I realized that might be three, six, 12 months but that’s a huge win and good for him. What is something that’s, like, real easy that someone can do in 30 days or less to just make a big difference? 

Judith DeFeo [20:15]

Well, I mean, just at a basic level, if they’re not reconciling their bank accounts, you got to reconcile your accounts. That’s just bookkeeping, accounting 101. And if you don’t reconcile your accounts, you don’t know that your numbers are correct. And there’s a lot of businesses that – you know, because many times clients come to us and their books are a mess. They come to us for cleanup of that first. And they haven’t been reconciled in years, years. So think they – 

Mario Fachini [20:46]

Let me ask you this, what percentage of entrepreneurs come to you and the books are messed up? Is it 50/50, 90/10? 

Judith DeFeo [20:54]

I’m not going to say what percentage of entrepreneurs because I can’t really answer for everyone. But out of – 

Mario Fachini [21:03]

I think – 

Judith DeFeo [21:04]

– the prospects that come to us, at least 50 percent. 

Mario Fachini [21:09]

That seems low. That seems low, honestly. 

Judith DeFeo [21:12]

Yeah. It’s got to be more because very rarely – yes, it’s definitely more. It may not be years, but there’s definitely months of cleanup that we have to do. Very rarely do we take somebody on that it’s a seamless transition. The only time that would happen is if they were working with somebody really, really good and either that person is leaving. Or for whatever reason, maybe – I don’t know what the other reasons could be. But for other reasons, they are leaving that firm. And they’re coming to us. Which just happened recently. We just had somebody review the books and, you know, I’m always looking to find something, you know, I want to show them something. And it was a stretch on this one to show them something. But yeah, so they had everything up to date. But it is – 

Mario Fachini [22:06]

Good for them. Yeah. And I know some people are really good about it. But I want to make it abundantly clear for Expert Authority World. If your books are jacked up, straight up, get them fixed, but don’t feel bad about it because it’s not your skill set or temperament. I found with coaching, a lot of people speaking to audiences over the years and everything. It’s like, “Oh, I feel so bad about X, Y, Z.” It’s like, this isn’t what you do. Otherwise, you’d have an accounting business. It’s a different temperament. And it’s vital. It’s why I wanted to feature you because so many people – I don’t want to say so many people. There’s a lot. You know, I have a lot of clients and, you know, there’s a lot of people that have their stuff together. But there’s also a lot of people who don’t. So depending on who you are, how far along in business you are, you know, if you’re in the first couple one, two, three, four, five years versus 10, 20, 30. I mean, if it’s 30 years, and you’re still having them jacked up – I’ve had clients who come to me and I’m asking them about marketing and stuff. And I said, “Hey, could we get a client list?” I just want to look and see how many clients do you have? How many do you – you know, if you say you want to grow them 10 percent and you have 100 clients. Okay. Cool. We need to get you 10 or 20 more new clients and you’re happy. And I go, “Do you have the records?” You know, what about an email blast – or email broadcast, I should say. I actually hate that word blast. No one wants to get blasted with anything. But it’s like, how big is your list? What are we working with for warm traffic versus cold, this, that, the other thing? And they’re like, “Oh, Suzanne has that in a box in the back.” I’m like, “What do you mean in a box in the back?” And I’ll never forget one of them had 34 years of the clientele, thousands. Good for them. 

Judith DeFeo [23:53]

Wow. In a box. 

Mario Fachini [23:53]

I was trying to wrap my head around how they weren’t digitized though. And I go, “Well, this is going to be hook, line, and sinker in 30 to 60 days from now from a marketing standpoint. But your assistant is going to hate me.” And he started laughing. He goes, “Why is that?” I go, “We need all this where we can do something with it. It does you no good or us no good in a box.” And he laughed. I go, ‘”We need these digitized in the next week.” 

Judith DeFeo [24:19]

And did they do it? 

Mario Fachini [24:20]

Yes. But 30 years of records. So here’s the thing, you can still grow and have a profitable business because it’s pretty much who I work with. But it’s just astonishing to see some of the stuff behind. And I’m like, “You have this many post-its for real?” I’m like,”Okay. We need to get you what’s called the CRM. You’ve been around longer than I’ve been alive.” Okay. Cool. So step one. 

Judith DeFeo [24:44]

So you see that sometimes when the business also gets handed down. So you have, you know, the family that didn’t adapt to, you know, electronics and computers and internet and do things like that and wants to hold on to those paper receipt. And then when they hand it down to, you know, their son or their daughter, they try and bring things up to date. 

Mario Fachini [25:09]

Yeah. If it’s not digitized and all that, it’s hard to hook into anything that’s really going to give you a boost. 

Judith DeFeo [25:16]

Right. And I try and tell people that that receipt that you got from the gas station that you’re holding on to an envelope, when the IRS comes to look at it, it’s going to be blind. The ink will not be visible anymore. You must scan it in. They want to hold on to this paper because – 

Mario Fachini [25:31]

I didn’t think about that. Yeah, they do fade. 

Judith DeFeo [25:32]

You know that paper I’m talking about, you usually get them from the gas station. But you get it from some of the stores too. The ink faces. In seven years, it’s not going to be there anymore. 

Mario Fachini [25:42]

Yeah. I remember when fax machines first came out with the thermal paper. 

Judith DeFeo [25:47]

Right. Exactly. The thermal paper. That’s it. Right. The thermal paper. 

Mario Fachini [25:49]

That stuff is crazy. It’s useless. I mean, it’s good for about a day but not record – not archival. And I’ve seen stuff on the financial side. So let me ask you about QuickBooks before we go to the sponsor. So QuickBooks, you were talking about getting that money in. Can you set an invoice after seven days – if it’s due on receipt and it’s not paid, can you set QuickBooks to send a reminder weekly, bi weekly, monthly? 

Judith DeFeo [26:22]

With QuickBooks Online, I don’t think you can set it to do that automatically. You might be able to do it in the desktop, but I’m not sure. Definitely not. That’s still a manual process. And that’s why we rely on looking at the reports. 

Mario Fachini [26:41]

And that’s something to consider because I can say from a marketing standpoint, following up on leads – 

Judith DeFeo [26:45]

It’s a great feature though. 

Mario Fachini [26:47]

– it’s no different. If you reached out to someone and it’s a week later and you haven’t heard back, reach out again. 

Judith DeFeo [26:51]

Reach out again. Right .

Mario Fachini [26:54]

Like, you said that 30 days turns – actually, that ten days turns into 30, and the 30 turns into 60, 90. And it’s like, “Well, I don’t want to bother them.” It’s like you call them one time when they weren’t there. 

Judith DeFeo [27:05]

Exactly. And we get that too. “Oh, no.  Don’t call -” you know, we’ll go through the AR list. And if we’re going to make calls for clients, we’ll go through that AR list. And we’ll sit – you know, go with the business owner. And sometimes they don’t want us to call certain people. They have a special relationship and we respect that, of course. But you know, you need somebody that you have to ask – 

Mario Fachini [27:27]

Someone has to. 

Judith DeFeo [27:28]

– the money. Somebody has to ask them for their money. And now, through COVID, they really don’t want to ask them because their customer may be out of business. So now, how do you go back and ask them? So now, you’re stuck. You’re stuck until who knows when? 

Mario Fachini [27:45]

Yeah. It’s an interesting situation, but you can’t martyr yourself either. And I’ve told clients years ago, since forever – and it’s surreal to think how long it’s been because I’m still young and this much time hasn’t passed. But you can’t martyr yourself. And if you don’t have enough profits to be around in a couple – you know, “Well, I don’t want to overcharge them.” I go, “You’re doing them a disservice. If you’re not around in three or five years, do you really think your competition’s going to care as much as you?” 

Judith DeFeo [28:17]

Right. Right. That’s a good point – 

Mario Fachini [28:19]

Nine times out of ten they’ll thank you and they won’t even care. And if they are going to gripe about it, you have the wrong client. 

Judith DeFeo [28:24]

Yeah. They do. Because you know, that’s another thing, a lot of them are afraid to raise fees on clients. There’s the fear that the clients are going to leave or go elsewhere. But historically, that has not been the truth. You know, they raise rates and if they’re happy with the service, they’re happy to pay for it. 

Mario Fachini [28:45]

Well, I appreciate everything you’ve been sharing. We got one more thing to do before we thank the sponsor, and that is the Wheel of Whatever. I love this thing because it always gives the question I need right when I need it. And it always ends right where I need it to stop, which is right here today. And the question is, what would you do for a company that is on the verge of bankruptcy and failing? How would you turn it around in 30 to 60 days?

Judith DeFeo [29:13]

So again, it goes back to the numbers. So we’re going to look at the expenses. But if they’re on the verge of bankruptcy, we really have to start looking at the revenue and the cost of goods. It depends on what type of industry it is. So if it’s a manufacturer, what are the costs of goods? Because there’s hidden expenses in that. Are you ecommerce? And you have everything on Amazon and you haven’t negotiated with them, there’s hidden fees that you don’t realize. So it’s just about really doing a deep dive. Also, you know, that’s the time to think about as much as we don’t want to lose the client. That’s the time to think about can you get a buyer? Let’s go out. Maybe there’s an acquisition out there. It may not just be in your numbers. We may have to get a buyer to bail you out. 

Mario Fachini [30:01]

I love that. You didn’t hesitate for a second. I love the Expert Authority insight. 

Judith DeFeo [30:05]

We went through that recently. 

Mario Fachini [30:07]

Oh, really? Okay. Well, so it was on the wheel. You saw where it landed. 

Judith DeFeo [30:12]

[Unintelligible] [00:30:12] and they both got acquired, actually. 

Mario Fachini [30:15]

Wow. Good for them. That’s awesome. All right. We’re going to thank our sponsor – oh, you’re going to like this. We’re going to thank the sponsor and we’ll be back for the Imperfect Action Round. 

SPONSOR Acorns [30:23]

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Mario Fachini [31:37]

And we’re back with the Imperfect Action Round. Judy, are you ready to take imperfect action? 

Judith DeFeo [31:41]

Sure. 

Judith DeFeo [31:43]

All right. First question 0 60 second rapid fire answers – what is the fastest path to the cash? 

Judith DeFeo [31:50]

The fastest path to the cash is – I think I kind of said it before. It’s just getting out there collecting on your outstanding AR, cutting your expenses, looking at your cost of goods. 

Mario Fachini [32:08]

And AR, you’re referring to accounts receivable. 

Judith DeFeo [32:10]

Accounts receivable. Yeah. Collecting your AR? Yeah. 

Mario Fachini [32:13]

That’s a great one. That’s a great one. 

Judith DeFeo [32:14]

Pay your vendors slow and collect your money fast. 

Mario Fachini [32:20]

And let me ask you this, this is a follow up from earlier. You said eight grand in the one day with that one client you mentioned, how much did you collect in total after however much? 

Judith DeFeo [32:31]

He had about 60,000 outstanding. It’s a small business. He shouldn’t have had that. 

Mario Fachini [32:38]

So you could go out and sell 60,000 but if you have that bad habit, you’re going to need to collect 120,000. Or you could just collect the money you already have and you’d have 60 extra thousand. 

Judith DeFeo [32:52]

It’s so simple. And most people when we call them, “Oh, I’m so sorry. I forgot. He owes a credit card.” We left many messages and people call back. Who calls people back these days? 

Mario Fachini [33:06]

How long did it take? Was it like 30, 60, 90 days? 

Judith DeFeo [33:10]

We did it over the course of about maybe 45 days. It wasn’t quite two months that we did it. 

Judith DeFeo [33:15]

Okay. But it wasn’t six months or something. But even if it was, it’s still 10 grand extra month. 

Judith DeFeo [33:20]

Yeah. Oh, yeah. Oh, absolutely. And he’s better now. He’s not perfect, but he’s better. And we’re keeping on top of it closer. So you know, we’re trying not to let it go past that 30 number. 

Mario Fachini [33:31]

Excellent. 

Judith DeFeo [33:32]

We’re trying to get him to collect it up front, actually. But that’s changing habit. You know, talk about path to the cash, collecting money upfront before you do the job. 

Mario Fachini [33:43]

About that ten years ago, maybe a little bit less, but when I was talking about just looking at things, I changed a lot. And one of them was pay 100 percent upfront. And I’ll never forget my first client compared to my 250th some, it’s drastically different. But the first ones, I remember, years ago, someone said, “Can I have, like, a ten on, like, 1,000 bucks?” And now I’m like – someone just wired me ten grand. This is way better. And now that’s not hanging over for the course of whatever is going on. You can enjoy it. And I believe you do have – you’re doing them a disservice by breaking up because it’s on their mind and they can’t put everything into it the way they would. 

Judith DeFeo [34:35]

Yeah. Yeah. And we did a similar thing about – I don’t know – six, seven years ago, we changed and instead of sending our clients monthly invoices with how much time we spent, we went to a fixed fee. And we just ding the account on the first of the month. I don’t have to go and open up envelopes. I’m not in waiting mode. I used to always be in waiting mode waiting for that money to come in. And now, it’s just there. And so I can budget better and my client can budget better. And they were happy. I was free. I was one of those free to tell them we’re changing. But I did. And nobody said – everybody was happy about it. It’s less they have to do. They don’t have to wait – 

Mario Fachini [35:17]

Yeah. Win, win, win. 

Judith DeFeo [35:18]

Totally. Totally. So I encourage my clients who have, like, recurring revenue like that. You know, same amount each month. They have service subscriptions and things like that. Some of them are still sending out invoices to their clients each month. I’m like, “Stop it. Stop the madness and just get them to sign one contract. And that’s what you charge them every single month.” We set it up automatically. And it just happens. It’s less work for you. And it’s less work for them. 

Mario Fachini [35:48]

Yeah. And I’m constantly praying to get everything off my plate so I can focus on others. And when you’re not thinking or weighed down in any way, whether it’s financial, business, team, relationships, whatever, you know, and the client is not weighed down, now you have everyone on board focusing on the client and you get spectacular results. 

Judith DeFeo [36:12]

Exactly. Right. Right. Yeah. Because you know what also, from a business owner’s standpoint, you’re not angry because you’re not getting paid. So you’re happier and it’s easier to service them. Not that you shouldn’t service them because they didn’t pay you right away. But you know, you get – 

Mario Fachini [36:29]

That’s one less thing to worry about for sure. 

Judith DeFeo [36:30]

Exactly. [Unintelligible] [00:36:30]. 

Mario Fachini [36:32]

Yeah. So let me ask you number two, what is the biggest problem you see your prospect making and the fastest way for them to fix it? 

Judith DeFeo [36:41]

My prospects? Well, like I said, they come with messy books. Just get them cleaned up. Reconcile the accounts. You find your errors. It’s your checks and balance. Somebody must reconcile those books and you find things when you reconcile You find things that you put in QuickBooks that does not belong. You can find something that was never entered into QuickBooks. So your register is wrong. Things that were not posted to the correct account. So, you know, you look at your P&L, you have negative amounts on there, just reconcile. 

Mario Fachini [37:18]

Excellent. Number three, what is the best way to maximize customer lifetime value? 

Judith DeFeo [37:27]

That’s a marketing question. Just nurture the relationship. Always be – don’t take them for granted. Always nurture. Pick up a phone, just check in. I mean, we Zoom with our clients, as I said, every month. But I’m not on all of those calls because I have a staff. So I try and make it my business to check in every now and then. And sometimes that’s a call, sometimes it’s a card. Sometimes we don’t wait for holidays to send them something. If we know that they had a baby or bought a house or something like that, or took a really cool trip, you know, we make those calls and send a little something. You just got to nurture the relationship and let them know you’re there. Also, they forget about you. 

Mario Fachini [38:12]

Excellent. What are some books you could recommend to Expert Authority World that have helped you? 

Judith DeFeo [38:20]

I love Good to Great. That was one of my favorite books. The Rockefeller Habits. Those are all books. The E-Myth book I love the E-Myth books. There’s a few of them. They’re industry specific. I like those. But I do a lot of reading. I do a lot of business reading from different groups that I belong to. They may not necessarily be books but more, you know, white pages or documents of things that different organizations have put out. 

Mario Fachini [38:55]

Excellent. And that’s a great tip right there to not only focus on self-growth and business growth but industry specific. 

Judith DeFeo [39:04]

Yeah. Yeah. I’ve done a lot of industry specific reading. That’s helped me a lot. 

Mario Fachini [39:10]

I do a lot of both myself. And I can say some of some of the industry specific stuff. And that might be timely. It might be outdated in six months. But it might give you a three month advantage now. 

Judith DeFeo [39:21]

Oh, yeah. Absolutely. And just a lot of collaboration with other colleagues. 

Mario Fachini [39:26]

But on the flip side, that’s why I like the books that are – I look for books that are 100 years old or older, because it’s like, if it worked, then it’s going to work now. 

Judith DeFeo [39:36]

Yes. In theory. In theory. Except for the paper that’s sitting in the drawer. You have to translate it. 

Mario Fachini [39:46]

All right. Well, you’ve shared so much and I thank you for it. Where can we find more about you and your company? 

Judith DeFeo [39:52]

Best thing is my website, www.J-A-D-D-E-F-S.com. And if you contact me – if someone contacts me through the website and they mentioned that they’ve heard me on here, I can give them a free analysis. I promise. 

Mario Fachini [40:13]

Excellent. Well, thank you for making that available. 

Judith DeFeo [40:16]

My pleasure. 

Mario Fachini [40:17]

Judith, it’s been a pleasure. I want to say thank you again. And I know Expert Authority World thanks you. 

Judith DeFeo [40:23]

Thanks for having me, Mario. It’s been fun. 

Mario Fachini [40:26]

All right. Expert Authority World, we have another great episode here today. I’ll see you tomorrow. Have a great day and God bless. 

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SPONSOR Acorns [40:48]

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