Episode 49 - Julia Delin Explains How Cash Flow Timing Fuels Business Growth

Have you ever felt profitable on paper but felt cash-strapped at the same time? We're going to talk about ways to potentially solve for that. Stay tuned. Today, I'm joined by Julia Dellen. She's the CEO and co-founder of Check, a fintech company that's helping small businesses get paid faster on invoices without relying on loans or traditional invoice financing. Julia brings a unique perspective both as a founder and a former investor. She previously raised a $10 million capital venture fund, worked with more than 150 startups, and now she focuses on helping small businesses take more control over their cash flow and liquidity. Today, we're talking about why cash flow matters, how payment timing impacts growth, and what business owners can do to get paid faster while keeping client relationships strong. Julia, welcome.

Thanks, Chrissy.

Welcome to the podcast.

Thank you so much for having me, Chrissy. It's a pleasure to be here.

So I would love to just dive into your entrepreneurial journey. Tell us a bit about your path from startups into founding Chegg.

Yes, I'd love to. So I actually moved from Sweden to the US just a few months ago. And I started my career in actually building my own startup that massively failed and ended up working at the accelerator that helped me at the university that I studied at. And I thought that I thought that was just going to be a short stint and to get back on my feet, but I enjoyed it so much, so I stayed for 7 years. And during that time, we started a venture fund and started to invest in the startups as well. So, I learned a lot about cash flow and how small businesses, especially as they are starting up, need cash to grow and accelerate.

Nice. What did working with so many startups teach you about the difference between, you know, growth and healthy growth?

I would say in the startup world, it's very clear because a lot of these companies are funded by external capital. So they get this infusion of, of money that might look like good money, like revenue, but it's not. It's just to keep them afloat while they're, they're figuring these things out. And for some startups, they, they think that that's what they should focus on. Like, my goal is to raise more money and try to make money that way. While the good companies, I would say, are focusing on just using that cash infusion as a way to actually find what is going to drive revenue for this company and how can I use that cash infusion as just a stepping stone to getting there and maybe in the future also to grow even faster. But there is a clear difference between the startups doing it. And then I would say, if you look beyond that at like the regular businesses in the world, it's very, very different. Because you don't have that extra capital infusion unless it's a credit line or it's a loan of some sort, and very few companies actually utilize those kind of financing methods.

Yeah.

So, most businesses are just growing the way that you would expect, and if they're not growing, they shut down.

Yeah, and I think it's really important because, you know, I think it's an issue that, you know, almost every business owner feels, even if they're not really talking about it clearly. And so, knowing that, you know, it's possible to do really well on paper but to still feel financially tight, you know, why is Why is timing such a big deal for small businesses when it comes to finance?

I think especially for service businesses, the ones that we work mostly with, it's such a difference from the product companies that, you know, if you would go into a website and you would buy products, you would pay for them immediately and you wouldn't get them until after. While in the service business's case, most of the work that they do, they do before they get paid. They create an invoice, they send it out, and then That invoice might be due upon receipt or it might be net 30, and in some cases I've heard of net 90 and net 120, and then suddenly there's this huge gap between where you actually earned money and where you're getting the money in through the bank.

Yeah, I think it's one of those small business realities that can really feel embarrassing for a business owner if they say it out loud. You know, you have clients, you have revenue, you can have work in progress and still feel like you're playing like financial Tetris every week. So, you know, A lot of business owners think about cash flow as a finance issue, but I also think about it as a leadership issue. You know, what changes inside a business when the owner feels more in control of when money comes in? And tell us a little bit more about how you help.

Yeah, I love the in-control aspect because we usually talk about leaders needing to be proactive. So having a sense of not just, uh, you know, uh, taking down fires when they appear, but actually thinking about, okay, what kind of net terms are we offering our clients? What net terms do do we have towards our vendors? And where does that make us end up? Because in the end, most of these cashflow issues affect payroll or affect these vendors, for example, freelancers that work with the business. And that's at its core a leadership issue because that's the people that you have around you that are working for your business. So it becomes very important if for a service business, that's your major cost and that's what you're having trouble paying out. Now, I would say most business leaders are creative in finding solutions. We have this one client that actually borrowed money from his neighbor in his coworking space to run payroll one month. And that's sort of when he realized that this is definitely something that we need to fix. But it seems, at least from the leaders that I speak to, that people at its core is the most important part. And that might also be why you're having trouble with your cash flow, because you want to pay your people. Sooner. Freelancers, you want them on net 10 terms because you want to be nice to them, because you want them to want to work with you. Exactly. While you're not as perhaps harsh on the other end towards your clients.

Yeah. And I think that as business owners, when we have some of that cash flow crunch solved, we can make better decisions. We can make better business decisions. You know, it affects our ability to hire, it affects our ability to take on bigger projects. It can change our stress level. I mean, What opportunities do you see businesses missing when they're always waiting to get paid?

I think that this draws back very much to my experience at the accelerator working with startups, where I would also work with startups that were self-funded, and they were growing by their own means. And just comparing that to the companies that got external financing, you could see that they were able to make more experiments, try more things, hire people, and see what that person actually look at the potential of that person and invest in that person and not be as stressed about a new hire or not be as stressed about testing something that you don't know what's going to happen, if it's going to generate more revenue or might not. So to some extent, that timing issue or just having cash to essentially like be able to see if there are ways that I can accelerate my business is such a privilege. And it's so apparent in the startup world, but it's not as apparent in you know, the everyday business that we work with.

Well, and I think that's so important because, you know, cash flow is really, it's not just about survival, it's about optionality. So when cash is tight, we don't always make as good of decisions, and even good opportunities can feel risky when we're feeling really cash-strapped. So I'd like to talk a little bit about, you know, client relationships. And one of the things I find interesting about Check is that it's not just about getting paid faster. It's about keeping those client relationships strong. And so I really appreciated the conversation that we had a couple weeks ago because, you know, a lot of business owners, including me at times, have felt awkward about business terms like, hey, you know, you were supposed to pay your bill like 30 days ago. Where's the money? So what do you think and why do you think payment conversations are so uncomfortable?

I think a lot of the work that we do is in non-financial industries like the creative space or the health space where it's like the service that you're providing or the product that you're offering, it's about the solution that you have to this problem. It's not really about payment terms. Payment terms comes later on in the negotiation, or sometimes it's not even part of the discussion. It's just whatever the client asks for or whatever standard you offer. And I think that We want to so much focus on the actual value that we're giving to our clients. And so we don't really want to talk about price. That's the same thing. Like, it's usually a hard conversation to talk about price too. And we don't want to talk about payment terms. And I think especially if you have a client who is sort of pushing their terms, if you're almost scared to actually get the sale, if you push back, you don't want to take the risk. And I think that that's what also creates these, like, you know, you don't want to rock the boat. You don't want to— like, you sort of count it in as the cost of doing business.

Yes.

While I think that there is so much opportunity beyond that.

We don't want to sound desperate either. Like, I don't want to be like, hey, can you pay your bill? Like, I know it's late, but can you pay it? And then they're like, well, why are you calling me? Do you have a cash flow problem?

Yeah. And it's usually like, if you have a relationship with a person in marketing or a person in HR, But you need to like reach the finance person. It's also a matter of like, who are you calling? Who does the HR person have knowledge of how the finance team is paying out their invoices? So it's also like a knowledge gap, I think, internally within organizations if you're selling to larger clients.

Yeah. And I think, I know for me, when we first started doing invoicing as we were building our business, like the first time I had to actually talk to someone in a finance department, I was like sick to my stomach. I'm like, this person's going to yell at me. I'm not going to do things right. So I mean, where do businesses though— I want to talk a little bit about client payment— where do we unintentionally train clients to pay us late? Is there something that we're doing? How are we doing it wrong?

So a funny thing that we've encountered that I think, uh, we wouldn't encounter coming from Europe is that late fees in Europe is very much like it, it starts the day the— it starts net 31 if the term are— terms are net 30, you know, it's automatically applied. It's the standard interest rate of whatever the European bank or whoever is setting, and it's gonna roll, like this APR is gonna roll until you pay that invoice. While here it's much more about, you know, do I have the leverage enough with this client to add a late fee? Or do I really want to rock the boat with a late fee? Or, and these kinds of things, not actually enforcing some of the things that I actually already put in my contract. I think that damages the company in the end because the client is going to think, oh, this company doesn't mean they're not serious when they're putting late fees in the contract.

Yeah, we do things unintentionally.

Yeah. Um, and the same with like following up. I think following up is scary, but if you're thinking like, oh, they might pay their invoice and it's been like 15 days since the invoice expired, they're going to also think that, oh, I have 15 extra days every time before they actually start contacting me. And I think for some companies who use this leverage to pay later, I think it's really damaging to the company.

Yeah, and so part of it is setting the expectations ahead of time. We need to make sure that as business owners, we're having the conversation about what timely payment looks like and here are the parameters around it and not negotiate some of those things. I think sometimes we negotiate ourselves out of good payment terms. So, yeah, let's talk about check. So Check helps businesses invoice clients without that discomfort of early payment instead of using those loans or traditional factoring invoice financing. Can you explain how that works in simple terms for the audience?

Yeah, so essentially if you want to invoice through Check, you can set discounts towards your client for them to essentially have a financial incentive to pay early, but you can also get offers from us to get an immediate payout on your invoice after you've created it. And then we will essentially collect the money from your client. And in the framing of like keeping these client relationships good and well for the customer in this case, it's all about for us being very, very nice to the client, being understanding that the client relationship is very important and not being like a loan shark like many of these other financing options are.

So, how is Cheq different from traditional invoice financing?

So, we actually buy the risk, or we buy, buy the invoice from the vendor on the platform. So, we would essentially take the risk if their client defaults, or they shut down, or they can't pay the invoice in the end.

And I like this because, I mean, I feel like it's It's different because I think owners immediately jump to like, do I need a line of credit? Do I need a credit card? Do I just wait it out? Do I have these awkward conversations? And you're providing another way to solve a problem. So I have another like follow-up question about early payment discount. Like what should an owner think about before they offer that early payment discount? Because I know that you kind of walk your clients through this process.

Yeah, I would say that it depends a lot on the type of client and their willingness to pay. I would suggest to every, every company out there to try to understand why their clients are paying late if they do, because there might be many different reasons and some reasons are fixable, some reasons are not. And for the ones that are fixable, usually the discounts, they work as an incentive for these clients to actually push their invoices through their AP processes faster. And this is a very well-known concept. It's been around for many, many years. I was talking to one of our clients and he was like, yeah, my dad used to offer this in his shoe store like 40 years ago.

Wow.

And so, it's like a very, very old concept and large enterprises use it all the time. So, if you send an invoice to a large company's AP department, finance department, and you say there's a discount available if you pay it right away, they will know exactly what to do, at what rate that makes sense for them, and they will accept it if it's above that rate. So, I think small businesses usually don't know about this concept, and that's sort of where we started. We wanted to educate businesses about this being like such a value for them and for the client. The client gets a discount, you get paid right away, like what's not to like? And now we've sort of, we've had this like middleman in between that sort of helps you so you don't only have to— add discounts to your invoices to get paid, but we can actually offer you to pay it right away from, from ourselves, and then we go collect from the client. Wow.

So let's talk about growth again and kind of what can happen with cash chaos. So, you know, you've worked with a lot of startups and those growth stage companies. What do you see as the biggest cash flow mistake that businesses make when they're trying to grow?

So I think that cash infusion and like faster cash always have to result in something. And that both for startups and other businesses, you need to understand the investments that you're making and understand what, where that is going to take you. Is that going to give you extra revenue? What's going to, you know, what's going to happen thanks to you having this extra cash and actually thinking that through and making those calculations. after you've done this investment and you've done this trial. For example, making a new hire, maybe it's not a sales hire, so they're not going to sell, but maybe it's someone who takes the load off of some of your work and you can do more sales versus just hiring a new project manager or whatever it could be. Like we do, we make these calculations all the time, but very like ambiguously. And I would say like, not thinking that we're making like ROI calculations because we're probably thinking like, oh, I should hire someone like this to take some load off, or I should do this so I can take on a bigger project, but actually also evaluating afterwards so that you're not just taking this cash infusion and you're saying, oh, I have extra cash, like let's try something and not evaluating what happens.

Well, and I think that's one of the core foundational questions for the entrepreneur, right? It's, we get excited about the opportunities that we have and the projects that are coming coming and the people that we're adding to our team, and we really forget to ask whether the business can carry the work until the money comes in.

Yeah.

And so, again, it's another way that some of the things that you do can help solve for some of those challenges and opportunities that entrepreneurs have. So, I'd like to talk a little bit about your investor and founder lens because, you know, Julia, you've seen businesses from the investor side, and now you're building as a founder. And so, how has that changed the way you think about financial discipline?

Oh, I mean, so much. I think that investors are very optimistic about making a cash infusion into a company, and they're taking a lot of risk in doing that. So as an investor, I usually had the lens of like, is this a team that I believe in? And is this an idea that I believe in? And can we put money to work in this company? And then you would put quite a large sum into that company, and you would wait around for 1.5 to 2 years and see what happened here. And then maybe you would make a new investment, right? And I think that as I'm a founder, and I speak to more business owners, and I'm like in the deep myself, it's so much about those daily decisions, weekly decisions, being really adamant with like the details around my business and trying to understand where Where can I play around? And I mean, you can probably hear that I'm interested in these kinds of things. So, I love to play around with the money that we have in our bank and try to figure out what can I actually do here and where can I leverage and where can I perhaps extend our runway to be able to try more things and where can I speed up some things because I actually have money in the bank to invest here and see that revenue is going to come faster.

Yeah, and I think those, you make a really good point that it's coming down and having more of those daily decisions, those weekly decisions. So it gives you more perspective and confidence really knowing what the business can and cannot support in the moment. So for small business owners that are listening or who are thinking, okay, I know cash flow is an issue in my business, but I don't know where to start, what should they look at first?

I would say start by just making a budget. Probably you already have a profit and loss budget. And if you don't, you can probably export one from QuickBooks or whatever program you're using and try to see what happens if we go on the way that we do. But then also secondly, looking at the cash flow and not specifically that, you know, that you're going to get paid by a client for a big project, actually putting that money spread out in the way that you believe that they will pay. Even if it's a net 30 invoice, but you know, they always pay 30 days late, like that should be in the next month, then that money coming in and seeing what sort of happens with your cash flow and when you're low, when you're high, what you can do about it. And then look at your business and see if there's any opportunity to accelerate. Because I think that that's the cool part about what we are doing is like allowing business owners to actually get creative about, okay, if I had extra money that just came to me without using any debt, what can I actually do with that money to accelerate my business? Which is very exciting because then you actually get to look at like, where, where do I want to invest? Do I want to take on bigger projects? Do I want to hire someone? Do I want to offload myself with something? And I think that those moments are also the most exciting parts of, at least for me, being a business owner.

Well, Julia, thank you for your time and talking about cash flow and talking about check. We always close out with our signature question, which I'd love to ask you right now, and that is, if someone listening today just wants to get 1% better in their business this week, what would you tell them?

I would go look at my client list and I would see who's paying late, and then I would call the ones who are paying late and I would ask as a very just curious question, I'm just wondering, uh, What's, uh, what do you think is the reason why this payment always comes late? I'm just gonna— I just wanna see what I can do and like plan with my business. I'm trying to expand and grow and just wanted to understand. Uh, and then after they've told you that, ask, is there anything that we can do to move the needle here? Um, because I think that just these like human conversations also help a lot in just establishing the foundation for Our, our own relationships with our clients and, and payments in the end, because that's what it's all about when, when it comes down to.

Yeah, Julia, I love that. It's just, it's having that simple conversation. It's okay. It doesn't need to be scary. You know, I want to thank you for your time today, and I'll be back to wrap up the episode. Stay tuned. Here's what I hope business owners take away from the podcast today. Revenue, sales, and growth matter. But cash flow is what gives a business breathing room. And if you are constantly waiting for money to come in, it really affects everything. It affects your decisions, it affects your stress level, it affects your ability to hire, and really whether or not you can take on the next opportunity. And what Julia reminded us of today is that getting paid faster is not just a finance issue, it's really a leadership issue, and it's an operations issue, and it can also be a communications issue. So because, you know, Yeah. Leaders must build businesses that are not just busy, but they're healthy. So if you're listening today, I'd like to tell you to start small. You know, do what Julia said. Look at your receivables, look at your payment terms and how quickly people are paying you in your business and how quickly your invoices go out. Look at whether your business is quietly carrying those clients longer than you should be. And then ask, what's one change that we can make to improve cash flow? Because getting 1% better in cash flow can create a lot more than just 1% of financial relief. It can create capacity and breathing room to be able to pursue your next big opportunity. So if this episode helped you think differently about cash flow or getting paid faster, share it with another business owner who needs to hear it. And as always, let's keep getting 1% better in our businesses every day.