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Finance Expert Explains How to Ensure Business and Owner Success

Carla Titus is an experienced Chief Financial Officer (CFO) with a strong passion for home care and day servicer based on her experience attaining the best possible care for her aging father-in-law.  One of her specialties with home care entrepreneurs is making sure that they are personally successful.

Some of the key topics covered in the episode are as follows:

  • The importance of bookkeeping
  • How to read your statements to understand the state of your business
  • The difference between revenue and cash flow (in other words how to manage the delay between the time that you earn income and receive payment)
  • Ways to deal with financial shortcomings
  • Goal setting and tracking
  • Leading and Lagging indicators

Carla's company is called Wealth and Worth Within. They offer a newsletter and lots of educational content on Facebook, Instagram and LinkedIn.  Carla also offers free initial consultations for agencies who are looking for a fractional CFO.

Home Care Heroes and Day Service Stars is produced and sponsored by Ankota - If you provide services that enable older or disabled people to continue living at home , Ankota can provide you the software to successfully run your agency.. Visit us at https://www.ankota.com. 

Check out the full episode to learn more:


Home Care Heroes and Day Service Stars is produced and sponsored by Ankota - If you provide services that enable older or disabled people to continue living at home , Ankota can provide you the software to successfully run your agency. Visit us at https://www.ankota.com. 

Please read below for a written transcript of this episode of the podcast:

Carla Titus is an experienced healthcare chief financial officer. On this episode of the podcast, she explains how to make sure your books are done right, and secondly, how to make sure that the owner is getting paid. Enjoy!

 Welcome to the Home Care Heroes and Day Service Stars podcast. If you provide services to keep older or disabled people living at home, then this podcast is for you. Now, here's your host, Ken Accardi.


Hello and welcome to a new episode of Home Care Heroes and Day Service Stars. I have a wonderful guest today. Her name is Carla Titus. She's coming to us from Oregon, but she provides services to home care agencies, healthcare agencies, and even individuals all around the country. And her services are financial services. So she's somebody who knows how to do the money thing.  Carla reached out to me because she has a passion for working with business owners.


especially in home care and as we see the emergence of more day service centers. She really wanted to share with us some great ideas about how to manage our businesses in a way that is good for us. And with that, welcome to the program, Carla. Thanks so much for having me. 

I'm so excited for the conversation. See if people can learn some new things about managing money.


Okay, I love that. And you told me you have a little bit of a personal connection to home care. Could you explain that to the crew? 

Yeah, my father-in-law actually gets some home care currently. And we went through all the options about where we want him to get that care from. And we found that what was best for him is to stay home and have a nurse come to him. That luckily was an option for us. And he's been thriving because of it and improving.


I will continue to have that long-term, but we feel really blessed to be able to have someone that can help support him and that journey he's going through and that we're able to keep him home and comfortable and enjoying the grandkids and the chaos that comes with it too. I love that. That's perfect. Okay. So, hey, let's jump right in. One of the things you find in the home care industry is that we have a pretty...


big range of companies. I mean, there's some huge multi-state companies that are providing services for thousands of people. But what you will also find is that I would say more often than not, there are so many home care agencies and day service centers that are started by somebody who has a passion for care. I've heard this story so many times of I was looking for care for my mom. I didn't like what I found. You know, we...


we may do and then we decided let's do it better. I've heard stories of, I was a caregiver and I have business skills and I wanted to do it and things like that. So a lot of times the folks that we find that are wonderful, kind of caregiving company managers and things like that, they're there because they have that heart for caring and maybe they weren't thinking about all those sort of business things that


that kind of come in. So, I mean, what could you offer as some of the basics for them in terms of really making sure that they're kind of setting goals and making sure that they have the dollars lined up? Yeah. So, a good place to start is making sure that you're not falling behind on your bookkeeping. Tasks around the business finances, that is the foundation for everything. And even if you're not...


passionate about that aspect of the business. It is what will get you out of business the fastest. So making sure that you have a good process in place to keep up with the monthly bookkeeping is gonna be critical just as a starting point, also reviewing those monthly financial statements to see what happened, where did the money go? Where did we spend more than we expected? Or you may be under the amount that we thought we were gonna spend and then are we profitable? Basic questions that...


you as an owner should know about your business finances. And if this is not something that's currently happening, it's a good time to start. Just grab that profit and loss statement, start to look and see, ask some questions like, why is this going up? Or, oh, we're profitable. That's great. Or we're not. What are we going to do about ensuring that that happens going forward? And then this is the piece where the projection of forecasting aspect of goal planning comes in to make the business shift in the direction we want to see


profitability to start to happen if it's not already there or to even improve from where it's currently at understanding what are our margins for each type of service that we provide. You know, we're paying people, there's labor costs, then we're also charging for that service. Is there leftover, what we call it, you know, leftover money after you pay the people for the service or maybe you're not pricing enough high enough or.


you're providing too much service, but not really seeing the benefit of that. So understanding what is the pricing strategy? How are we paying our people? Are we fairly compensating our people? Do we need to make sure that we're including raises going into the next year? And start to kind of create that plan on what are some of the goals we're trying to achieve for the company that could be profitability, growth wise, number of team members we want to have, number of patients we want to impact positively. And also


understanding how does that flow through the profit and loss team and from a revenue goal to a margin goal to understanding what are the operating expenses of the business? What do you as an owner need to get out of the business? And then ultimately some profit left so that we can reinvest back in the business to continue to grow it and help it thrive long-term. Okay, so wonderful. And yes, I mean, that's all of a sudden like finance 101 from my MBA school, like all in about


two minutes as you've explained that. So there's a real lot to that. And I guess it's kind of interesting. I tend to think of, you know, like our financial accounting. So we use QuickBooks and I think a lot of the companies in home care are using, you know, QuickBooks and that type of thing. And we are...


I mean, it's, it is pretty straightforward. I mean, you know, we have our customers and they pay us and then we have our expenses. So we have like in my company, which is a software company, different than a home care company, most of our expenses may be not so dissimilar are for the people, you know, so we're paying for the, the people who are developing the software and then our implementation specialist and our support people. And then a lot of our other expenses come on our


you know, one big credit card bill for month we pay for the servers, we pay for the telephony services and, um, you know, and, and things like that. So that's, you know, so basically, um, you know, profit is, well, I guess, you know, revenue, I guess we'll use that term first. Like revenue is money that's coming in and then expenses, money going out. And, you know, basically when you talk about profit and loss statements, so that's going to look at the money that's coming in.


and the money that's going out. And hopefully there's more money coming in than going out. And as a startup and as an entrepreneur, usually it's not that way on day one. Usually you're starting and there's some expenses to get going and then you get to that point. But yeah, that's that. And that's what a profit and loss statement is all about. And that's what your QuickBooks can do for you, can kind of give you those statements. And...


Yeah, so that's that. So one thing I wanted to ask you about, and I think people get confused about this, is there's two terms, one is gonna be profit, and then the other one's gonna be cashflow. And I think some people think that those are, you know, kind of one and the same, but they're not. And, you know, as somebody with this great expertise in, you know, accounting and healthcare finance, could you kind of explain the difference between those? Yeah, so in some...


month where you might be profitable in your business, you might notice that your bank balance doesn't match what the profit and loss statement is showing you. And then you're wondering, why is that? Isn't it the same thing? And what I tell people and explain to people is that cash flow, when and the timing of when money's coming in and going out, varies to when the profit might show in a monthly statement.


insurance claims that you haven't yet collected on, your profit might say, hey, we made this much in rapid. The cash hasn't land in your bank account yet. And that often in cashflow because they happen at a different point in time, especially when it's insurance based type of businesses. There is always a delay as you all know, between 30, 60, 90 days, you have rejected claims, you have to follow up.


And there's things that are out of your control when it comes to the cash flow of the business or when that money is going to hit the bank account. And so your profit and loss will say one thing, but your bank account will be screaming at you saying, we don't have the money. And when is it coming? I don't know. Like someone go chase it down. Right. And so unless those processes are in place financially, things will fall through the cracks and sometimes we will have a lack of cash, even though our profit and loss statement might say we did really good.


because we haven't yet collected on those receivables that were waiting on from insurance to pay us. And this timing is what's critical because you know what happens every single time you have all the bills due, payroll, rent, all the things, but guess what? You still haven't collected on those receivables and those checks that are due are not waiting for you to collect on those receivables to be due. They're just due and you have to pay them. So now if you don't have a cash reserve or a cash runway to


whether those ups and downs or that waiting time game that's happening here, then you get in trouble because now you don't have the money. You have to go borrow, get some debt, put some personal funds in order to cover the deficit that you're seeing from the cash that is coming. It's just not here yet. Right. Okay. And then like, so let's say that I have a business where my expenses are kind of coming sooner than my payments are coming in, right? But-


And that could happen because we have to do our home services and then we have to submit them to our payers. And a lot of our customers are submitting, let's say, to Medicaid. And in some states, Georgia, Kentucky, it's like a weekly cycle. In other states like Missouri, it's usually a two-week cycle.


And then a few times a year, you know, around holidays and things like that, there'll, there'll be like a three week cycle and things like that. So, so now all of a sudden, you know, you're, you're essentially billing for services, you know, three weeks after they happened and, or maybe even more, because if it's that three week cycle and, you know, you might not be able to bill for every visit up through today, you know, maybe you could only bill through everything that you've properly reviewed. So now you have like this four week lag, but you know, you're still, um,


paying caregivers and things like that. So, and if you do have this and there's this engine and you have this proof of it, then you could probably go to your bank and say, okay, I need like a business line of credit. And because I have this gap in cashflow. And I guess, I mean, that sort of ties it together to how having those financial statements really explain things very nicely. And I guess, one thing, and boy, I really don't wanna...


you know, lose our audience, but maybe it is something to explain to them a little bit is that, you know, there's, there's sort of these rules that are, uh, followed by accountants, which is this concept called accrual accounting. And so, you know, I'll, I'll try my stab at explaining it. It's like, basically, you know, you earn money as you perform your services. So if you have a home care caregiver goes today, you've actually earned that money today.


And in your financial statements, that's how you show that, you know, I've earned some revenue, but like in the example I gave a few minutes ago, I'm not gonna get the money for that until a little bit down the road. And also, let's say on our biggest expense side being personnel, you've also, in a sense, you know, you've earned the right or the need to pay that caregiver for today's work that they did.


Um, but you know, that payroll, you're probably on a, let's say a two week payroll cycle, so there's a little bit of a delay there and sometimes you're, you know, your revenue cash coming in and your payment out to your caregivers is a little bit balanced, but you know, sometimes not. And I, so anyway, I just, um, you know, the way that they make, you know, accountants do the work is that you really are supposed to show the revenue coming in and the expenses going out. When that.


either money is earned or when that expense is incurred, even though the cash kind of follows later. And is that something that business owners, I'd imagine that kind of come with a heart for caring into this, they probably don't know about like accrual accounting and things like that. Is that a hard concept to explain?


It's at times if they haven't been exposed to that accounting terminology. And the way you explain it, it's exactly right. You get to record the revenue when the service is provided versus when you actually have the cash hit, but there's also the cash method where you can just recognize revenue when you actually have it physically hit the bank account, which is what we tend to recommend for smaller businesses anyways, because you're not required to be a


down the road when you're making, I think, a minimum of $25 million a year. So that's a long way where you can just record based on cash basis, keep it simple, no accounting expert needed per se, do it in the accrual piece. And also, you need to have strong processes in order to map that out, keep track of it, make sure you're not recording more or less than you should. And if we already recorded that one, you don't want to duplicate it. So there's a lot that goes with going into accrual basis.


Obviously there's reasons why we would want to do that and an expert might recommend that, especially if you're maybe trying to sell the business and you want your valuation to be higher, you can show that on a cruel basis, you perform better than when the cash actually hits. And this is allowed and it's a form of accounting. You just, once you commit to it, you stay on it. So just make sure that it's the right thing for your business long-term. And just know that for the most part, cash basis will do the job. And also I tell clients like,


careful with accrual because you are accruing for revenue haven't yet gotten, but you will pay taxes on that in the year that that is recorded. So at times we've actually had to change clients from accrual to cash just because they were paying on money they haven't received yet. And we didn't want them to be doing that because cash resource and such get tight and then you're trying to make financial decisions based on that.


And what you said around, you know, lines of credits and access to other cash forms always helps alleviate the ups and downs of business, knowing especially that you have the money coming as just a matter of timing. Yeah, perfect. Well, thank you for explaining all that. And actually, you said people would learn things and I learned that myself here listening to you. I was always, you know, I went to business school and they have this, you know, thing that says you have to do what's called GAP, you know, good accounting practices and.


And GAP was based on this accrual basis. So I always thought that you had to do it, but you taught me that if you're under 25 million, which I would say that most of our listeners and most of our home care owners are under 25 million, that they can account on a cash basis. And then that has the benefit for them that they're not paying taxes in advance. So, I guess on the accrual basis, they might be paying taxes on all that. December.


revenue that they're not gonna get paid for until January or is it they do it on a cash basis. So that's a great trick and a great clue. And I guess if you're working with an accounting person then they said, oh, you have to do accrual. You might approach them and say, well, what if we did it on a cash basis that might actually help with our tax bill. All right, so I wanna hit like the biggest thing that I think we could kind of come out of this on is that.


A lot of times, we have care companies are run by caregivers with caring hearts. And sometimes what I see is they're not really balancing their need, the business owner's need with the needs of the business. So they're not paying themselves. They're not taking care of those things. So they're doing all this work. They're probably working harder than anybody in the business and then they're not coming away with the reward.


So how, you know, with your expertise in this, like, how do you help, you know, agency owners and that kind of thing to deal with that kind of situation? Yeah, we absolutely want to prioritize that. It's like one of our number one things is raw and profits, having cash in the bank and paying the owner well, because they deserve to be paid well for the risk they've taken to create this company. And they should be building their personal wealth because of the business that they're able to generate even.


more profits to be able to benefit from that long term. What I see often is all these companies get created, again, like you said, because they have a passion for care. They don't necessarily love the business side maybe. But what is happening is they create the jobs, they pay everyone else, and then at the end of the day, there's nothing left for the owner. If you're making good money revenue-wise, there should be room in the profitable statement for an owner compensation.


This hasn't been prioritized before. We always come in with the approach on, you know, what is the owner need to take away from the business in order to satisfy their financial needs at home and whatever amounts that they need to be, you know, taking home for their own benefit. And I would say it has to be better than a job just because if you could just go work a job and get a paycheck, that might be a lot easier than running a business. Like, I don't know about you guys, but that tends to be the case. And you know, I know not everybody's cut out for being an employee either, but.


in the sense that we should aim to replicate a paycheck in our business, just like we did when we had a day job, and that is consistent, and that is maybe over time even growing for the benefit of the owner, while still balancing investing back in the business. So if I'm looking at the profit and loss statement, and we have all these expenses, I'm re-evaluating, what are expenses that are actually bringing benefit to the business that return on investment ROI and checking on those quarterly?


Are we still using this 10 softwares that we sign up for? Are we still getting the benefit from the positions that we hire? Has things changed? Do we need to reevaluate? Are we spending too much on rent? What is it that's driving costs up that we can maybe shift, pause, cancel, delay, or completely eliminate in order for us to fit in a compensation for the owner?


Just like you fit the composition for your employees, you're no exception. Because if you get burned down and you're never getting any benefit out of this, I know one day maybe you can sell this for a lot of money, but what if that one day never comes? You should just be compensated every year for all the effort you put into the business, no matter what, and the hours and the passion and the hard work that goes into growing a business. And I see this often, so I just don't want you to think you're the only one. We have had seven figure businesses come to us and say, we are not getting paid.


out of the business, what do we do? And it's really evaluating what are the expenses, creating a roadmap for how when we grow, we start to make room for that owner pay if we're not gonna change anything else from the structure of cost today. And then making sure that we start to prioritize the conversation on our owners' compensation and profit because it's mostly just not happening. And once we put that emphasis in understanding that that needs to fit in the budget, we start to prioritize it. And then other things fall off because we're like, well, what's more important?


that subscription, that big office, or the owner gets paid and we maybe have a smaller office and we make do with that. So it's just intentionally managing money and making intentional decisions around the finances to make sure that the right people are being prioritized in that equation. Right, I love that. So I guess going in a new direction, we do provide software for managing home care businesses and for daycare centers. And one of the things


When we first built the software, I'll be very candid. I mean, we were all about transactions. We're about, okay, I hired a caregiver, I brought on a client, I put in their tasks, I scheduled their visit, I made sure the caregiver arrived, I made sure the caregiver finished. But now we've really been trying to say, okay, those are the things we need to do, but the things we want to do are to help the agency owner understand their business metrics. So we've put together,


fancy word, we call them the business intelligence dashboards. And what we do is, we have weekly views and monthly views, but usually we feel that home care agencies are usually managed week by week, right? Because it's like, okay, well, how many clients do I have? How many caregivers do I have? How many hours do I have? How many hours did I fill? And all of that. So we've now built into our software, we built dashboards and one of them,


really shows, okay, well, this is how much, how many clients I had, how many hours I have, how many hours I delivered, how many I billed for, how many I paid my caregivers for, how much I paid, what the difference is, and that sort of thing. And we give them those numbers on a weekly basis. So that's kind of one of the main dashboards we put together and things like that. But I guess my question in all this is, is part of what you do helping


business owners understand what are the key metrics that they should track to know if they're trending in the right direction or if they're not. Yes, absolutely. And those weekly checkpoints on the numbers and where we're at, what capacity didn't get utilized. That's a big one because that's where profits sometimes hide or don't materialize because we didn't fill the hours that we had the capacity for. And then we just had this gap to how much more profitable it could have been if we did fill those up.


So managing the day-to-day of operations and having those leading indicators is what we call them because ultimately that converts to revenue. So we need to know that that's being managed well. You know, if we're not filling that capacity then we understand what are the drivers, why is that not happening? How do we interpret the data to then take action? It's really key in then driving both revenue and profit and utilizing the software to tell us the information so that we can then make decisions and they just then decide.


What is our action plan going forward? Next week, do we need to schedule differently? Do we need to maybe double book a few times because we know people will cancel? Whatever it is that we can do to kind of shift the conversation and shift the hours and make sure we have enough that are filled is gonna be important. And I know it's a drug-gulling act. I know it can be perfect. You have a lot of clients, a lot of needs. Things happen. People get sick. And sometimes you just can't have the provider provide services that week. And so...


being able to manage to those numbers and understanding how those leading indicators then convert to your lagging indicators like revenue and profit are gonna be a key way to drive both growth and profitability in the business. So monitoring and watching that on a week to week basis from an operational perspective will lead to also financial help down the road if done well. Incredible. Well, it's kind of, you know, it's always on the podcast. It's always time flies when you're having fun.


And I feel like, I mean, we've covered on a lot of really interesting points, but, um, you know, like, let's say that somebody is like, Oh my gosh, you know, like they really, you know, like this idea of the leading indicators and the, and the trailing indicators are this idea of, you know, like maybe there is a way that I can look at my expenses and, you know, find a way that I could actually bring some more money home for myself as the business owner and things like that. If they wanted to, uh, to work with you, Carla, or your, you know, your, your group.


Like how can people get in touch with you? Yeah, they can reach out to us on our website at weal There is a contact page where you can book a free discovery call. Let's talk about your needs, how we might be able to meet them, what the best service might be for your needs currently and in the future. And then if you're not ready to hire a CFO, but you still want to get better at managing your finances in your business, we encourage


your listeners to join our newsletter. It's free and I share a lot of the actionable things we're doing with clients to help them drive financial profitability and topics such as, how do we prioritize ourselves as business owners to get the pay that we need out of our business, and practical tips and advice they can implement. Last but not least, if you're looking for educational content and want to follow along, we put a lot of that out on social media at Wealth Worth Within that's on LinkedIn, Facebook, and Instagram, we're very active.


We just love to hear from you if you find that valuable and what else we can share that will help you on your journey to improving your finances. Okay, I love it. So let me just make sure to say that very slowly. So it's three words that are all put together. So it's wealth worth within and the website is weal or like you said, it would be like at wealth worth within on Instagram or Facebook and that kind of thing.


All right. So with that, I think we're going to call it a day here. And so thank you very much, Carla Titus for being on the Home Care Heroes and Day Service Stars podcast. Thank you for all that you've shared with our group and we wish you a wonderful day. Thanks for having me.


Thanks for joining us today on the Home Care Heroes and Days Service Stars podcast, produced by Ankota. You can listen to back episodes by visiting 4homecareheroes.com. That's the number four, then the words, HomeCareHeroes.com.

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