195 | Why Your Bookkeeper Should Be Doing More Than Reconciling Transactions (with Erika Londono Vargas)

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In this episode, I sat down with Erika Londono Vargas, owner of Inti Financial Advisory Services to talk about what bookkeeping is actually meant to do in your business.

Your numbers aren’t only for taxes. They’re there to help you make decisions. And when your books aren’t accurate or clear, it creates confusion, avoidance, and decisions that don’t fully support you.

We talk about what great bookkeeping should look like, what to pay attention to inside your QuickBooks, and how to know if your numbers are something you can actually trust.

This is the shift from guessing to having clean, usable data that supports how you lead your business.

In this episode, we cover:

• The difference between bookkeeping and decision-making data
• What to look for when hiring a bookkeeper
• Common QuickBooks red flags and reconciliation issues
• The difference between being low on cash and overspending
• Why tax planning should happen throughout the year
• Separating business and personal expenses

Ways to connect with Erika:

Erika's Website: Inti Financial Advisory

Inti Financial Instagram

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Transcript

Welcome And Erika Londono Vargas Introduction

Erin Gray 0:00

Welcome back to Your Money, Your Rules podcast with me, your host, Erin Gray. On today's podcast, I had such a fun conversation with Erika Londono Vargas, who is the founder of Inti Financial Advisory, where she helps business owners, especially women, gain clarity and confidence in their financials. Erika has a background in economics as well as an MBA, and she brings extensive experience in financial operations, including managing global payroll across multiple countries, budgeting, financial reporting, and supporting business owners with key financial insights. Through Inti Financial Advisory, Erika is on a mission to make finances feel simple, transparent, and supportive. And Erika really believes that when business owners have the right financial partner, they can make more informed decisions and build sustainable, profitable businesses without feeling overwhelmed by their numbers. Erika and I are very aligned on multiple things, and I loved having this conversation with her because obviously I love having conversations with people in spaces and their expertise and that they love to do what they, you know, enjoy doing what they love to do, like bookkeeping or, you know, taxes and insurance and all of that. I really want clients and listeners to gain a lot of insight from our conversations as well as be working with people that support you, that are behind your mission, that want to educate you and help you grow and scale along your journey and your path as a business owner. So thank you for listening. Let's dive in. Thanks, Erika, for joining us. I'm so glad you're here.

Money Mindset And Redefining Success

Erika Londono Vargas 1:29

Thank you very much for inviting me. I mean, I am very much appreciative of spaces like this. I have been following your podcast for a few weeks, not that long ago. And I found that it's a very nice space for me to explore myself as a business owner and see myself on many of the topics that you touch on. So I'm very excited. I'm very thankful for being here.

Erin Gray 1:51

I'm glad you're here. I just spoke with someone this morning and they asked, like, what is your podcast about? And I'm like, it's has changed and has so many evolutions, you know, since it started, but it was always about having a voice and saying actually what I wanted to say about money and business and emotional regulation, nervous system regulation, whatever you want to say around that, because I felt like that there was this, for lack of a better word, gap in the market where we're not talking about our actual feelings when it comes to business. And from my understanding and from my feelings, I always felt like there wasn't a space for that. And I definitely would I say turned the body off. And I just operated in my head for 20 plus years. And really bringing that back online and obviously work what I do with clients of really being in touch with our body and making more intuitive decisions than we are with our heads.

Erika Londono Vargas 2:38

So I totally agree with that. Even in my own personal journey as an entrepreneur or business owner, I have found that even being in my head is all about emotion. It's all about self-esteem and the concepts I have about myself, success, how success looks like. The other day I was working with my therapist around what are my concepts about work? How does work look like? And where did I learn that? And I came to realize that to me, being productive, air quote, or being successful was being busy. So I am definitely reshifting or redefining my concept of success and my concept of myself and saying, like, you know what, I do deserve some peace and I do deserve some freedom. And that is only an option, I believe, when we have faith to grow, to learn, to mess up, to know that it's okay to make mistakes as well. And I believe that's the kind of gap that we need to close because we see so many business owners being so successful and so seven figures and so much that we are so afraid of messing up and we're for afraid of making mistakes in business. And I think we should bring that back to the conversation. Making mistakes is okay. I know I've learned that the hard way.

Erin Gray 3:57

Yeah, and that's like how we learn, right? Like we're not taught. I have so many thoughts about school. I could do like a whole podcast episode, like a series of school, but that's not how you're taught to be a business owner in school. You're taught to be a good little rule follower and slave follower, you know, with school. It's like follow and they don't encourage. So it starts so young, right? They don't encourage, listen, how you learn is actually you just go do the thing and then you get data and you realize, oh, okay, what I liked, what I didn't like, what am I gonna do differently? It, you know, like being a straight A air quote straight A student is more so about like how do I get it perfect, which actually doesn't help you in entrepreneurship. So I'm so excited. I've got a list of questions. Um, I told Erika before I, you know, hit record. I'm like, nothing I do is fast. I've slowed down so much. So even though I'm gonna say it's rapid fire, it's not really rapid fire. Um, but here is what I you've actually helped me and my husband in our tree company business. And what I have recognized, like I immediately number one felt a connection with you. I also knew you had knowledge that what I have recognized is not all bookkeepers or CPAs are created equally. And one of the things that I recognize in you is like you actually, and I know you're like a little duh, Erin, but like there are bookkeepers that I have, you know, interviewed that don't actually either know what they are doing or they aren't as detailed as I want them to be. So if you're open to it, tell me what do you think? What would you say that a bookkeeper does for them as a business owner that most people maybe misunderstand or don't even know what you do?

What Bookkeeping Is Actually For

Erika Londono Vargas 5:33

Absolutely. Thank you for that answer and for the opportunity to work with you and your business. Uh it is always a pleasure to work with clients that are involved, actually, and the difficulties when they're not. So people tend to believe that bookkeepers just record transactions and have your books ready for tax. And that is maybe 10, 15% of what we do. What we also make sure of is that when you step into your financial records, that you have the capacity to make decisions, giving that clarity for you to know this is my gross profit, my net profit, this is how much I've made in the year, this is how much cash I have in the bank. And I have seen it so many times that you have a feeling that you know how much you made, but when you look at the numbers, it's like, no, I didn't make that much. It's like maybe you did, maybe you didn't. So it's all about transforming economic movements or economic transactions into data that you can use to make decisions. That's how I would put it.

Erin Gray 6:32

Yeah. And do you feel like, because I have seen this in my clients, I've seen it with other people that I like, it's almost this sense of maybe it's a little bit of they don't know. So they don't know the questions to ask, to make sure that who they get paired up with is actually going to take care of them and you know, go into detailed financial reporting. And maybe it is also a little bit of like abdication of responsibility, like that's what my bookkeeper does, versus viewing you as the business owner and you as the bookkeeper as this uh cohesive partnership that you work together back and forth versus it's almost like a hands-off sometimes, is what it has felt like and what I've seen versus that ownership. And like I said, it could be because of all the emotions that we feel around numbers. It could also be because we don't even know what we don't know to ask, but it's also kind of like eh, that's kind of their arena versus like it's my arena, and I'm gonna get somebody to help me in my arena.

Erika Londono Vargas 7:28

Yes, absolutely. I'm gonna give you an example. I am a finance person, and I'm not a marketing person. So I have no idea how to give SEO or like meta ads and Google Ads and what all that is. And what I try to do is that I don't have to know everything, but I need to be curious enough to know the effect that would have on my business. And this is a great time to be alive, to be honest with you. The resources that we have in regard to artificial intelligence, for example, is something that I use a lot. And even if you don't know what to ask your bookkeeper, just send a few questions to your artificial intelligence of your choice. What should I ask? Tell you have to say or be connected with what you want to learn about your business. I always think of it as can you take your books, your profit and loss, your balance sheet, and say, This is the status of my business? Can I start a new venture? Can I should I even seek for funding? Should I get a partner? Should I get funding from a line of credit? Can you actually make those decisions? Are you just feeling low on cash? Oh, I'm low on cash, I'm low on cash, I'm gonna get some credits. I have some businesses where they get like seven lines of credit. I'm not against working capital easiness or flow, but I am against the weight of the debt on your finances to be very high, no? And one of the things that I tend to do is if you're seeking for a bookkeeper that is going to help you make better decisions, make you feel more empowered, make you feel more understanded, not understand it, that's in Spanish, understood, more understood and more capable. All of the partners that you seek in your business leverage you, and that's the ownership part. You should take on or you should hire people. And on a first impression, you have to feel a connection as a human being because we tend to seek for someone who's qualified. There are a lot of people who are very qualified, and that doesn't mean that it's a good fit, you know. I have had clients that are very good, but they are not a good fit. I have learned from my personal experience that it is okay to disagree, it is okay to not be okay, but it's also okay to say no. This is not the kind of client I want, this isn't the kind of bookkeeper I want, this is not the kind of CPA I want, and that's perfectly fine. But before you even know what you don't want, you should be very connected with what you do want. And that is something that has happened in my firm many times. We're not that old, but I have been in finance for many years. I didn't know what at all what I wanted to do. No, I started this business because I had a lot of experience and I saw a market need for it. And when I started the business, I just started growing and growing and growing and growing and growing. And I was like, oh my God, please stop. I had to slow down. And when I came to realize is that not all clients were my clients. Not all the people who seeked for help were good for me or for what I wanted to achieve. And it's just you touched on something very important, which is education versus entrepreneurship. I was a superb employee, if I may say so myself. I went up the corporate ladder in so many years, in so many positions, in so many different companies. And that's because I went above expectations for what they wanted from me. And when you're a business owner, that's not the right path to go. And that's what I ended up being, and a busy employee of my own company, doing so much for my clients, underbilling, putting a lot of pressure on myself. And that made me realize I don't really have to put all this pressure on me. I don't have to, and you as a business owner, all of us, all of you guys, business owners who are listening, so you don't have all the answers. But you have to be humble enough to let other people help you get those answers in the best way they can. Whether that's a marketing person, whether that's a CPA, whether that's an insurance person, you have to allow yourself to get the help you need. Yeah.

Erin Gray 11:27

I think also the word I wrote down, which I am working through this too, and I see it in clients. It's like that is that is one of the beautiful things about clients is when you see it in them, it's in you somewhere too. And it's like, oh, this needs to be corrected, right? It's this overgiving, right? And I think as women, we have these just generous men to, right? But like women, I noticed it more of like this overgiving. And I don't want to go down the rabbit hole of like where it comes from and all the things, but like we have to recognize that sometimes what that actually does, even though it comes from a very generous, genuine place, it wears us out, it burns us out, it affects our bottom line. It also doesn't allow our clients to rise to the level that they need to rise to. So being really mindful, and I love that you said it because it's like no matter, I have women in all different industries, and it's like no matter what it is, right? Like we are all over giving and you know, allowing that to recognize it and then to be like, okay, where are my boundaries? What do I need to do? And so speaking of boundaries or like what would you have clients look for if they are dissatisfied with their current bookkeeper? What would you have them look for in a new bookkeeper to, you know, I think also it's like make the transition easy as well as like I'm with you on that. Like you have to hire someone first on your intuition and what do you feel like because you're gonna be working with this person very closely. So who cares if they have all the credentials and all the things and they're very knowledgeable, but the way they talk to you is poor or they don't call you back, or you know, I've heard all the things, right? So, what would you suggest clients look for if they are looking for a new bookkeeper? What are some of the things that you would be like? These are absolutely like some of the, I don't want to say non-negotiables, but let's go there for like, yeah, these are things I would pay attention to.

How To Choose The Right Bookkeeper

Erika Londono Vargas 13:12

I would have an interview checklist just to ask a few questions to get down the knowledge part because there I think accounting and bookkeeping is such a beautiful professional path that has even me, I'm not a chart certified accountant, but I have been an accountant by practice, right? And I do have a degree in economics. But there are many, many bookkeepers that may not have the knowledge or the studies for performing the task and they know the mechanics. But if you don't know the logic behind it, you may get lost in the mechanics. So I would recommend powering empowering yourself with a short checklist on the credentials, just to make sure that who you're interviewing is right fit skills-wise, but also be very mindful of the way that they, like you said, speak to you, how they answer questions, the way they express themselves. And you and one of the things that I love most about your approach is connecting with your body and making sure that in your body you feel safe. Because sometimes you can have you can be interviewing someone who's very knowledgeable, but you may feel a little adrenaline or a little fear. It's like, wow, this person really knows their stuff. But it's like, is that coming from a good place? Or do you are you fearful? Or are you fearful or are you scared of what they're saying? In the end, all of these financial information processes come down to, like you said, emotions and the way that and the concepts that you have around them. So if you're going to hire this very knowledgeable bookkeeper just because you want to check out mentally, that's that's not the right path at all. You have to be willing to engage to a certain level and be available for a few questions every month. If your bookkeeper doesn't ask you any questions, you should be scared.

Erin Gray 15:00

Yes, yes, yes, yes, yes.

Erika Londono Vargas 15:02

Yeah, I mean, if you don't get at least one or two texts or emails from your bookkeeper a month, maybe they're slacking on your books. Maybe you should be more attentive of what they're doing. That's what I would say.

Erin Gray 15:14

You know, I have had this balance, and I'm sure you can speak very um candidly with me because I have done so much detailed stuff in books and taxes. I have, if you want to call it, a concrete way of thinking about how I want my books to be. And I don't think it's a bad thing, but I do think sometimes I could ease up on the I think of a very detailed-oriented person. And I think I don't know if you have clients like that where it's like, what do you suggest of like, okay, what is really important and what is like, okay, we can let this not be, you know, like I think about like how I want a chart of account set up and how I want to be able to look at stuff. And I think that comes from my construction background because we did so much job costing and I wanted to see each job. And so there's that, but I think you kind of have to play with, okay, what is your industry and how detailed do you want the data so that you can, you know, look at things and make decisions and also not be so set in your ways? Because I think sometimes that is a bottleneck for me. And I'm curious if you see that in your clients as well, some of them.

Erika Londono Vargas 16:19

I wish I saw more clients that were as engaged, actually. And in so many meetings that I have, for example, boarding meetings or client assessment meetings. I asked them, do you see profitability by service or product? Do you see, do you know exactly how much is your cost of what's all? Do you have loans? Yes. Have you used the statements of them? No. It's like people should be more involved in their actual books, but it's so difficult to know what you don't know. Back to my example on marketing. I have absolutely no idea what the reputation of a website is, right? But I am willing to learn, and in so many ways, I have had to learn from making really, really bad mistakes. I just know that I have another client who's very much like you in the sense that he's very particular, meticulous, organized, and he gives me very long descriptions of the expenses that he has, and he does his own mileage and he does his own travel expenses, and it's so detailed and it's like music to my ears. I wish everybody was like this. And I don't think that's set on your ways. If you have a bookkeeper that tells you that that's not right, there's offensiveness there because I am very much knowledgeable and I do know what I'm doing. And when I have a client that also knows it, it's beautiful and it's really good because they actually know what they want. It's a very difficult scenario when you have a client that never responds, never sends the statements, and asks you the day in April 14th, like, are my books ready for taxes? Yeah, I don't think it's bad to be set on your ways, air quote, on what you do want and what you do know. I think it's beautiful that you are capable of delivering up service or product to your clients and be as involved in the making of your business. And that only comes from experience. I think that maybe I don't know if experience may come from years of experience or like being older or just being more having business acumen that sometimes people get from families, like when entrepreneurship has been on the family for years. So that knowledge can be passed along to newer generations. But it's definitely something that comes as in my case, as you grow older, you are more open to other people's opinions and other people's perspectives and understand that that has nothing to do with the way you do things, and it's not at all personal in my experience. Yeah.

Erin Gray 18:44

Yeah. What you said is something that I always say with my clients is you have to be willing, right? Like I may not know some things, but I am willing to learn. I'm willing to take the time. And I think here you go back to what you originally said about like your therapist and like we're deserving. It's like there are people, there are business owners who are kind of in that still that hustle mentality and really like you have to be willing to slow down long enough to like build some good foundation so that you can, you know, grow and skill. And that feels uncomfortable in the body. Slowing down feels uncomfortable. It feels unsafe in the body because I think a lot of us have grown up in families where we had to earn love, we had to earn money early on. Like there were things that we had to do to prove. And so that is a nervous system and that is a habit that we have done for many years and we are having to retrain. And in the doing so, what I always tell clients, like when we go, we can make decisions from expansion and we're still going to feel all of those feelings in our body. Like it's not going to be rainbows and daisies. Like, yes, we're going to have the goods and the ups and the whatever, right? And not being attached to either. But like we part of growth is feeling that discomfort in our body and not attaching to it and also knowing like it is part of the process. Like it is your, what do you get on your Disney ride? Like it's your pay to play, it's your, it's your ride, your ticket on your ride, you know? So tell me a little bit about what red flag. That seems really harsh, but like what are some of the things that you notice with clients? Or do you notice themes that you see when you get booked from clients? What are some of those things? Because a couple of things here. One, I I want everyone listening to understand this happens, not just to you. Like I have seen this so many times with clients. So it's not a problem. Here you go back to willingness, and you're not alone. You're not the only one. Yes, we worked with someone. We thought they were taking care of what they were supposed to be taking care of. They're not. Now we're moving our books. So, what are some of the things that you see to illuminate for some of the listeners? Of like, okay, these are the things that I would go into QuickBooks after we get off of this, you know, podcast, and I would take a look and see like, is this stuff getting done?

Erika Londono Vargas 20:54

Well, the first thing I would do is go to the reconciliations module and take a look if the reconciliations have been done. But that is only one piece of the puzzle. The next thing I would do is run a balance sheet for the last period for which your reconciliation was done and take your statement, your bank statement. And you take a look at the balance on your bank statement and compare that to the balance of your bank account in your balance sheet. You have absolutely no idea how many times I have seen that wrong, but incredibly wrong. And it's because the bookkeeper knows how to do a reconciliation, but they leave lingering transactions that they don't reconcile because they don't match. For example, we have a bill payment and an expense. I don't want to go too technical here because I could go for hours, but you can have duplicate transactions. And instead of asking the questions, you're just, oh, I need to get this reconciliation done, boom, that reconciliation done, boom, the next one, the next one, the next client, the next client, the next bank. And you'd never get on a resolution mindset. And that's when you have to, as a bookkeeper, you have to be very mindful of what you're doing. If I am reconciling this account and I have transactions that And match my reconciliation. I have to go and into the statement. Is this here? Is this check cashed in this period? No. Okay. I move it to the next period. I ask the client. I see what's going on. I try to find the information and then try to clean it up as much as possible and always make that verification. I think that's the number one quality assurance part that I do in my firm. And then the second thing I see that are red flags is, for example, when undeposited funds is not zero. Yes. Or payments to deposits, however you want to call it. Yep. Undeposited funds, for all of you who may not understand what it is, it's just a bridge account that systems like Tribe or maybe merchant accounts like in Amazon or Shopify, they put balances there until you get the deposit from your client in the bank. So you get it there for a couple of days, max, and then boom, it gets deposited into your bank account. When you run a balance sheet, for example, and you see that that balance is just going up and up and up and up and up, there's something wrong there. And you need to take a further look into it. Because you're overstating your assets. That's the issue. You're overstating your assets and you're overstating your sales. And that comes down to tax liabilities. You're going to have to pay more on taxes. The other thing that I verify is that loans have been amortized correctly. We have split principal and interest for car loans, for working capital, for lines of credit. And this is very, very, very important. And I see it a lot when business owners do it themselves, do the books themselves, which I think is great. You know a little bookkeeping, or you know a lot about bookkeeping and accounting, and you just get into it and you spend a couple hours a month, and that's done. But every task that we do in our business has to be mindful of what we're doing. And if we don't have the acumen in accounting for the nitty-gritty parts of it, it's better to have someone partner with you and help you because you don't have to do everything. You can do so many things and you're great at what you do. Or if you're not, let's talk about it and let's make you great at what you do. But you are here running this business for the bigger picture, not for how you categorize McDonald's or KFC or other AI or something like that. Yeah. So I believe you have to trust your information. Sorry, go ahead. Go ahead. No, no, no. Go ahead. Sorry. I you have to trust your information and you have to make sure that it is done correctly. And if not, then seek for someone who will get you there so that you can be more empowered.

Erin Gray 24:32

Yeah. I think this goes back to you use the word humble, like humility, humble, recognizing where your, for lack of a better word, limits are of like, I'm really good with bookkeeping. And also, like I've said with you, like, okay, let's meet every, you know, month and make sure everything is there. Because some of this is me teaching my husband some of that stuff, but it's that recognition of like, yes, I can do it by myself. And also I value experience and expertise and someone doing it hours and hours and hours a week that you can just kind of check, right? You're able to check. I highly recommend people actually have a bookkeeper if you're in the seven figure range for sure. Because I mean, I just think about depending on what kind of business you have, you may have hundreds of transactions a month. I'm so curious when you said that the bookkeepers may not be reconciling, how are they able to reconcile? Because if you're off, how are they forcing the reconcile? I mean, I know you have that, I know uh this is Erin getting a little deep, but I mean, basically they're pushing a button that says to reconcile, force the reconciliation, and then that puts it into another account, is what you're saying.

Erika Londono Vargas 25:34

Almost. You may have a hundred transactions in your statement. You have 70. So the 30 that are not in the statement, they leave lingering. They just don't check it on the reconciliation. And then when they zero, they hit finish. And when you go to the register, you're gonna see the transactions there, registered, but not reconciled. That's what they do. They don't move it sometimes. They move it to another account, they move the date to another date. That's also something I've seen. But the other thing is that they just leave them lingering, just there, and they just don't take further look into what are they, why are they duplicated? Do they belong to another account? Are they transfers? How do I move this in and make it copacetic? I think it's a word you use a lot, and and I like it very much. I didn't know what it meant before. But to make it copacetic and to make it balanced and accurate. So I think that's what I've seen that happens with reconciliation sometimes.

Erin Gray 26:26

The word that comes to mind, and I'm typically not this way, but like that just feels lazy to me. It's not asking the questions that need to be asked. And I think, you know, as here you go back to hiring a bookkeeper, asking some of those questions and paying for, like, because I don't expect the bookkeeper to do my books and then to just ask me all my questions for free, right? Like that needs to be part of the process, part of the value and the investment that I pay. And also it's the bookkeeper's responsibility as well of like, hey, I'm in your books. I don't see this, or this isn't matching up. Where is this going? Because I have seen like what you're talking about, bookkeepers just like, oh, and it's almost kind of like, let me just get it done, let me just check the box, right? Versus, no, this takes care and consideration and this needs to be corrected. How often do you talk to other CPAs for the clients as well? Like, have you also seen a thread of like, I've had several clients where I'm like, okay, so tell me what your CPA asked you about, you know, or asked your bookkeeper. And she's like, oh, they don't talk at all. And I'm just like, sorry, go ahead, go ahead. I'm just wide-eyed because how I mean, I've always believed and tell me if I'm off, but like data in, if data is great in, it's great out. If data is garbage in, you're gonna get crappy garbage out, which then when you give it to your CPA, they're not getting good data either. So, what are your thoughts or your comments to recommend to make sure that your bookkeeper is talking to your CPA?

Erika Londono Vargas 27:58

I don't necessarily agree with the argument of them speaking with each other, but I do believe in accountability for each role. Okay. So, for example, I've worked with a company, this was a few years ago, and the CPA never questioned any of my transactions. I just did my thing and they filed the taxes, and that was it. Then they hired another CPA. And this gentleman called me and he asked me, What is this account? What is this account? What are you putting there? What are you putting here? And we had like two-hour conversation, and I had at least two pages of things that I needed to fix. And that took a lot of work, but it was great. It made me a better professional, it made me better at doing job, I was doing job costing for the client. It made me better at doing job costing at quality assurance at making sure that things happen. And the sad part of it is that CPAs are not asking questions, they are receiving the statements and they're filing the taxes, no questions asked. And I see that an insane amount of times. I have this client that I'm supporting. They have multi-entity, multi-location. They have one in Puerto Rico and one in the US. And it's like, have you asked this to your CPA? And it's like, no. Has your CPA asked you about this part? No. What? It's really, really surprising how unfortunately some CPAs are just also checking a box, also just getting it done. And like you said, it's just a matter of accountability rather than the conversation among them. I think they should definitely have a station when things are not doing good or when things are not categorized correctly. But if everyone knows what they need to be doing, if a CPA has a checklist of what they need to verify when they run the taxes, for example, that the W-2s, the amounts that you have filed for the payroll wages, like that's basic stuff. So if everyone knows what they have to do and the expectations are set for what each person needs to do in the machine of your of the amazing business that you're running, then everything would go smooth smoothly. Yeah.

Erin Gray 30:01

I think that's one of the things I also encourage with clients is having, and I do see this with some tax people, is they are doing more tax planning than tax preparing. You know, like I think all of us in society are like, okay, we're done with the hustle, we're done with the volume. We want, you know, to go slower, help people at a deeper level. And I think for if you have a CPA that is not doing quarterly reviews with you is not like that, might be something that you also want to look into because, like you said, April 14th or January is not the time to start start thinking about taxes. Um and doing more of planning and holistic looking at everything versus, you know, like you're saying, just taking the numbers, going with it, checking the box, moving on to the next client.

Cash Flow, KPIs, And Debt Decisions

Erika Londono Vargas 30:47

Absolutely. Let me give you an example of this. For many businesses in many various industries, they have key performance indicators that are great for that type of industry. And you may have seen those, I don't know, articles online saying, oh, KPI is also great. Okay, you should implement KPS. You have absolutely no idea what a KPI really is. And that's the thing about what I was saying earlier about you may be spending a lot on meals out, for example, on outings with your clients or not even with your clients, which is bad. You're putting it on the credit card of the company, but you may be spending too much and you're thinking, oh, I'm low on cash. I need to get a line of credit. Are you really low on cash or are you actually spending too much? And we have key performance indicators that allow us to see, okay, what is my overhead ratio? How much am I spending on my fixed cost against the revenue I'm generating every month? That's the clarity that the books give you. If your books are not done correctly, then you have absolutely no idea how much are you spending on payroll taxes, which in many of the companies I work for, it is almost half or over half the percentage of what they're spending in total for expenses, right? So if you have the right data, you can say, okay, maybe I have to dive deeper into the role definition. Do I have too many people? Do I have too little people? When can I actually hire someone new? What level of revenue? Not just in your head, oh, I need help. Can you afford the help? Or are you just going to get a line of credit, for example, just to get more money to not think of things, you know, to just slack off on making decisions? And in many occasions, we use money to not make decisions, to not dive deeper, to not think about what we need to do. So if we have clear understanding of our expenses, for example, can we cut off some lines and free up cash? Can we understand better how we're spending on the payroll? Are we doing a good job tracking all the payroll abilities and all the things that we need to pay? So that's when the CPA slash bookkeeper slash fractional CFO, however you want to call it, is your partner, is your hand-on-hand person for with whom you can make these decisions.

Erin Gray 33:00

Yeah, totally. I think it's easy to, like you said, it's easy to not look at things because here you go back to it creates feelings. The money never creates the feeling in your body, but you already have those feelings there. And looking at the money amplifies those feelings, brings those feelings up. And those are feelings we're either not used to feeling, not practiced in feeling, we don't want to feel it, feels a little, we're not used to it. And so we choose a lesser path of res uh like the path of least resistance so that we don't actually have to make some of those, you know, you said about hiring, and I just did an episode on hiring, because first and foremost, you got to start with yourself, right? Like where are you at? Like, is everything clear with you? If you're just thinking I want to hire someone just to hire because I feel so overwhelmed and this person needs to be in da-da-da-da-da. It's like, okay, first you got to clean up all your stuff first. And then here you go back to, okay, and then do you have the correct systems in place? Because somebody's got to train that person. Somebody's gonna, and then all of the money mindset and then the increased payroll. And so it's like, it's not just uh, this goes back to instead of being reactionary, be more responsive, going back to nervous system regulation, sitting down, looking at your numbers, being with your numbers and having people in your corner to help you gain more clarity so that you can make more grounded decisions. When I say intuitive decision making, I don't mean emotional decision making. I mean tapping into your body and being a yes or a no. And from my point of view, intuition is just very calm. It's not this high presence, it's not this low, it's just like do this, don't do that, go here, you know. Like, and I think we sometimes in the business world look at intuition and think it's this fluffy emotional thing, when in actuality it's very calm, it's very grounded. There's not typically explanations for it, but it is a very grounded thing versus an emotional high or emotional low. And I think that's where a lot of us tend to make our decisions versus giving ourselves time, riding our wave, allowing ourselves to be in something and then making that decision.

Cash Buffers And A Better Tax Mindset

Erika Londono Vargas 35:07

So I think 100% agree with that. And I believe I've heard this somewhere. I believe it's in the Bible. I'm not very sure. But God whispers, God does not yell, and you have to create the space to have those moments of silence when you can hear yourself because you in yourself have an immense amount of wisdom that you can connect to, and it's not emotional at all. Just because you have the feeling you have to hire somebody doesn't mean that you actually have to if you don't have the structure for it. Like you've said, there are so many things that you can, yes, make the decision with your intuition, but with information as well. Something that feels more calm, more natural, more intuitive, more in tune with your mission, in tune with your vision of what you might want to make of your business. And another thing that I see a lot, an incredible amount of times, is that people tend to take a look at their finances or their books when it's already too late. Or when they actually are in a crisis, there is a bankruptcy coming up, perhaps, and that's when they put on their big girl, big boy pants and then start looking into it. There was this firm I worked at, and they, the CFO, he was very, very knowledgeable. He predicted we were going to run out of cash six months before or 10 months before we did. And that was amazing because 10 months before we were able to plan our cash for the next year or so and be aware of what was coming our way, and then prevent that from turning a $10 million company into a bankruptcy, right? So I think that when you have the space to make these decisions, you can create also the space to be secure to maybe bad moments in the market or a lower demand uh period in your company. And that's one of the things I always encourage my clients. We have to create an OPEX coverage, operations and expenses coverage um buffer. We have to create our tax buffer. So I think it's lovely to pay tax. I actually adore paying taxes because the more taxes you pay means the more money you're generating. I read this in a book, and this author was very, very much knowledgeable. We have to stop being averse to paying taxes. No, I love paying my taxes. I love paying my bills because that means the money is circulating. And if I'm paying the IRS this amount of money, it's because I've generated X amount of money, and that's wonderful. And we have to associate that with positivity, with positive concepts before because it means that we are sharing that prosperity. However, that is handled, that is up to other realms of understanding, which is politics and involvement as a citizen, et cetera. But at least the norms that we have in societies that if we make X amount, we pay Y amount. And that's wonderful to do. The more you taxes you pay means the more money you're generating.

Erin Gray 38:00

I love that you brought that up because I've actually had that conversation with a couple of clients and it's actually blocked them from generating more revenue because it's this like I asked one client, like, what do you feel about taxes? And she's like, uh. And I was like, okay, that just tells me we laugh a lot on my calls, but like that just tells me everything, right? Like tells me where you aren't really going to grow. Because if you have that visceral emotional response to paying taxes, your body is going to be like, nope, we're good. We're not going to, you know, grow. And so here you go back to like everything is energy, everything is emotion. You've got to take it back to, okay, how do I actually think about, regardless if we can, you know, put the what you believe about politics and how the IRS doesn't take care of what they need to do. Like that is like another story. It's another story, but it's also like it's not helpful in like what you said, like believing and being like, I love to pay taxes because it means I've made X amount of money. That is a very empowering thing versus, oh, I don't want to pay my taxes because I don't want them because they heck they can't even figure out, you know, their finances, which is all factual and true. And also it's here you go back to, yeah, but how do you want to feel about paying taxes, regardless of whatever the government does or does not do with the money, coming back to you and taking care of your finances, your business and and things of that sort, you know? And like you say, circulating the money, you know, like you pay taxes on your employees and, you know, the work comp and the general liability and like all of these people get to receive prosperity through paying all of this money that circulates. And so really having a very different relationship with money and the way that we think about what we pay versus most people look at paying bills or paying taxes or, you know, payroll taxes and all that kind of stuff as like, ugh, versus no, this is I get to do this. Like this is a privilege of a business owner that we get to do.

Clean Books And Financial Foundations

Erika Londono Vargas 39:47

Yes, absolutely. I used to, I don't know if this is lame, but I used to dream of driving, you know, when I was younger. I thought it was so lovely to drive. And then when I started working, I was like, it's so lovely to see my big girl paycheck, what it says, oh, all these things, something, oh, so interesting. And I always saw it as something that allowed me to step up to another level, right? And like you said, it's such a privilege to get to know what all of the things that you have to pay. Okay, yes, it's a lot of taxes. Yes, it's a lot of things that we need to pay, but that's wonderful. That's wonderful. We I get to share this prosperity with so many entities, with so many different parts. I think that's something we see a lot in economics. It's I laugh because it's so repeated in our classes, it's the invisible hand in the market, the way that money moves in the market and and in our society. It's so wonderful to see instead of hoarding the money and it's like this is my money, like golem from the Lord of the Rings. It's you have to let it flow. It's so true.

Erin Gray 40:47

Anything else that you want to share that maybe I haven't asked you that you want to share with the listeners?

Erika Londono Vargas 40:51

Yes. I want to say, please, business owner listening to us, do not mix your personal expenses with the company expenses. Thank you.

Erin Gray 41:02

I have had you see that a lot.

Erika Londono Vargas 41:04

Yes, I still see that a lot. Yeah, unfortunately, owners mix their credit cards and they use the company card as their own personal credit card. And just because you have an LLC or a subproprietor does not mean that you get to spend everything from yourself on yourself from the from the business. You have to be very mindful of the ways that you're spending. And um, I have seen cleanups of years and years and years of transactions where there was another thing is don't let this accumulate for so many years. Because I have had to prepare uh information for 2022 taxes last year, you know, in 2025, 2021, 2022, 2023. So it's a lot of information. And when you're having to go two years back into your statements and try to figure out what this check was for, that's just gonna take a lot more space for you from generating revenue and generating wealth. So those are the two things I would say. Don't mix up personal and business expenses and do not allow this to take so long to get done. Even if it's daunting, even if it's scary, even if you don't really know the answers, you have to trust the higher energy that will allow you to find the people that will help you.

Erin Gray 42:18

Yes. And they won't be the first person that I have seen that has not filed their taxes, you know, for a year or two. And if you bring everything back to energy, how are you not in that cleanest, highest energy when you still have that in the little back of your head, right? Like I need to file that. Or, you know, if you want to be able to get a line of credit, not that you're going to use it, but you just want to have it, it's open, like that, just stuff like that. That when you were talking about crisis, we don't want to get to that place. And it's like, and when you want to be able to do some of the things that work that your personal taxes might require you to do, the time to do that isn't when you're asking for the line of credit or, you know, the bonding, depending on if you're a construction company, you know, with bonding and things of that sort. And it's just here you go back to, I think at the basis, it's like be the client that you want your business, right? Like how you want to receive clients for you and your business, be that client to your bookkeeper, to your tax preparer, to, you know, all of your advisors that you work with, because it goes, I mean, we attract what we are, you know. So if we're if we are delaying, if we are slow to pay, we're probably gonna have clients that are slow to pay. If we, you know, aren't if we aren't getting what we need to get done, depending on what kind of business you're in. If you're in a consulting business and you have people not giving you the information, it's probably gonna show up there too, right? So everything is a mirror. So just I I love what you said about the personal and the business and also the like it's the emotionally responsible adult thing to do, right? And here you go back to it, may not feel good in the body. There are people that can help you, and also like it just feels good to to be on the up and up. Yes, absolutely. I agree with you. You okay. Thank you for joining us. It's been such a pleasure. Thank you for sharing your wisdom with us. And I'll see everyone in the next episode. Thank you.