452 A New Way to Deliver Financials To Your Clients With AI

It's very rare I see something completely new that is like, this might actually change the way that we deliver our services. It is a unbelievably cool thing that I think that you can offer to clients and some of them will be blown away by it. It's the ability to generate a podcast conversation fully with AI. It's something we've talked about on this podcast before, even demoed. But using that specifically to report on financial results. And I've done some testing, basically I've run a bunch of sets of financial statements through it, tried a bunch of different prompts. I want to give you kind of the best practices that I found and show you two examples to help you get your head around just how good this is. This is such a cool thing. Come on in, let's talk about it. All right. The tool is Google's Notebook lm. And Notebook LM has had this audio overview feature for a while. Maybe a year or so ago, they introduced it and it was a big deal. Like it was kind of one of the biggest headlines Google had last year around. What was just a small feature, but it makes very natural sounding conversation about anything that you want to give it. And uh, so you upload documentation, transcripts, whatever you want, and it'll have this sort of 10 to 15 minute engaging conversation. And people were kind of spooked because they're like, this is weird that, that like everything they're saying and the voices and all that was fully generated by AI sounds pretty compelling, pretty convincing, like, like a human. But I think what people were spooked by was how like eerily engaging it was. Like it was actually kind of interesting and, and kind of a fun way to learn something if you had a big document or something that you were going to put in there. And now this audio overview feature from Google has been introduced in other ways, like to the Google News feed so that you can get sort of this digest of a more sort of customized feed of whatever you want to consume. But today we're talking about putting financial statements in there along with some other information and actually offering commentary on financial results. And this idea came from a firm we talked about on the podcast last week who's actually doing this with their clients. And I'll be totally honest, when I first heard this, I was pretty suspect. I'm like, you mean to tell me you just check like a balance sheet and profit and loss in there and it will actually say interesting things? Like I wasn't super convinced. And even in the first bit of testing I did with this. I wasn't wowed, but eventually I got there by giving it the right combination of things and the right prompt to clarify how you wanted to have that conversation. And, gang, it's. It's really good. And so before I give you too much information or too much context, I just want you to listen to this. The company's financial results that it is talking about is Craig's Design and Landscaping Services. The. The demo company file in QuickBooks. I want you to just hear this is about 10 minutes and form your own opinion of, like, what is this doing? What is this not doing?

The.

Then I'll give you more background on how I put it together, best practices. We'll talk security and distribution. And then I built on this example even further to what I would actually use inside of my accounting firm. But first, check this out. It's pretty wild. A reminder that this is fully generated by AI. Take a listen to this.

Welcome, business owner. Let's get straight into understanding your company's April financial performance.

Absolutely. We're here from Jason's tax and accounting firm. Ready to dive deep.

We want to give you a really clear picture of how things are shaping up based on the numbers.

That's right. We've got your balance sheet here as of April 30, comparing it back to.

March and the profit and loss for April itself.

Yep. Plus the detailed transactions from your general ledger. So the goal today is really to unpack all these numbers, highlight the key.

Changes, connect them to what was actually happening in your business day to day last month.

Exactly. This should give you a much better sense of what drove those financial results.

Okay, let's start with the big picture snapshot. The balance sheet. How's your cash position looking?

Well, overall, looking at your total bank accounts, we see a pretty significant decrease.

Okay.

From $4,452.51 at the end of March down to $2,001 end of April.

Right. Quite a drop. Let's unpack what happened there.

Let's do it. So focusing first on your checking account, that's where the main decrease is. It went from $3,852.51 down to $1,201.

General Ledger tells the story.

It really does. Right at the start of the month, April 1, there's a $2,000 insurance payment out to Brosnahan Insurance Agency.

A big one.

Yeah. And then sprinkled through the month, various accounts, payable payments. You paid books by Bessie, PG E. Tim Philip, Masonry.

Right.

Those totaled about $855, 9.

Okay.

Plus, remember those equipment rentals from Ellis Equipment Rental and the advertising with Lee Advertising? Those were charged to the MasterCard initially.

Ah.

But paying down that MasterCard balance also drew cash from checking, so it all adds up.

Makes sense. It's helpful to see exactly where those funds went. Now, what about savings? I see that actually ticked up a bit.

Yes, a little bit of positive movement there. It went from $600 up to $800.

Okay.

Pretty straightforward. The general ledger just shows a simple $200 transfer from checking over to savings on April 4th.

Good to build that reserve. Now, this is interesting. Undeposited funds that saw a really noticeable increase jumped from $907.15 to $2,062.52. What's going on there?

Yeah, that's quite a jump. This usually points towards strong sales activity, especially towards the end of the month.

Okay.

And the general ledger confirms it. We see a bunch of customer payments received during April that just hadn't physically been deposited by April 30th. The big one in there is a payment of $1,675.52 from Cool Cars that came in on April 4th.

So cash received just waiting to hit the bank. That's actually a positive sign for activity.

It really is. Suggests a healthy inflow right at month end.

Okay, good.

Let's shift gears to the other side of the balance sheet. Liabilities. Some significant changes here too, right?

Yes, definitely. First off, your MasterCard balance came down nicely. Yeah, it went from $448.54 down to $157.72.

That happened.

That reflects a solid payment. You made $900 on April 18th. We can see that leaving the checking account and sitting in the MasterCard account in the general ledger.

Okay, great.

Now, it's worth noting you did still use the card during April. You know, for fuel, car washes, some job materials at Hicks Hardware.

Right. Ongoing expenses.

Exactly. So the balance didn't go to zero, but that $900 payment made a big difference.

Good. And I see a new line item here. Under liabilities, loan payable, $4,000.

Yes, that's new. As of April 30th. Looking at the general ledger, this was actually recorded via a journal entry on April 1 as an opening balance.

Ah, okay. So new financing came in.

Seems so. A new debt obligation for the business.

We also saw a pretty big jump in your board of equalization. Payable went from just under $30 up to about $210.

It's a significant increase. Yeah. And again, the general ledger tells us why.

Sales tax.

Exactly. It's tied directly to the sales invoices you issued in April that had sales tax on them. Specifically invoices to Freeman Sporting Goods, Amy's Bird Sanctuary, Travis Waldron, and Cool Cars.

So more taxable sales generated more sales tax liability. Makes sense.

It's a direct reflection of that increased sales activity we saw hints of earlier.

And one more big item on the liability side. A long term liability note payable for $25,000. Also new.

Yes, also new. And just like the other loan payable, the general ledger shows this was recorded as an opening balance journal entry on April 1st.

Wow. Okay, so two significant Newt liabilities recorded at the start of April.

Correct. Important pieces of the puzzle.

So, with all these shifts, cash down, undeposited funds up, new loans coming on, what did that do to your overall equity?

Looks like it went down significantly from over $18,000 to negative territory around any goal of $11,800.

Yes, that's a dramatic shift. And the primary Drivers are those two new liabilities we just discussed. The $4,000 loan payable and the $25,000 notes payable.

How does adding debt decrease equity initially?

It's an accounting mechanism, really. When you first record a liability like a loan on the books, the balancing entry often hits opening balance equity, reducing it. The idea is the company now owes more over time.

Hopefully, you use that borrowed capital to generate profits, which then increases your retained earnings and builds equity back up. But the initial recording shows up as a decrease.

Got it. That explains the big swing in opening balance equity we see in the general ledger details.

Precisely.

Okay, that gives us a good handle on the balance sheet changes. Now let's pivot to the profit loss for April. How did the business actually perform during the month?

Right, the P and L. So looking at the top line, your total income for April was $2,736.21.

And how does that compare to March?

That's actually up from March's $1,952.81. So an increase in total income, which is good to see.

Definitely a positive sign. Let's break that down, though.

Okay, so design income, that actually went down a bit from $562.50 in March to $300 in April.

Okay.

And landscaping services?

Also a slight decrease in the main service line item from $420 down to $311.30.

But you mentioned earlier that looking deeper shows something else.

Yes, this is where drilling into the general ledger detail within Landscaping services gets interesting if you look at the job materials pass through.

Yeah.

Costs for things like fountains and garden lighting were, you know, relatively stable around 400, 420. But the cost for plants and soil passed through to customers that shot way up from $433.27 in March to $1,309.35 in April.

Wow, that's a huge jump.

It really is. It strongly suggests you took on landscaping projects in April that were much more heavily focused on plants and soil compared to March. Does that ring true?

It does align with some of the larger projects we were working on. Okay, what else?

On the income side, sales of product income also saw a nice little increase from just under $13 to over $31.

Small numbers, but an increase.

Yep. And the general ledger shows that was mainly driven by selling sprinkler heads and pipes to cool cars.

Ah, connected to that big payment we saw earlier? Potential?

Could be. And rounding it out, services income had a healthy jump, too, from about $117 up to $386.40.

What kind of services would that be?

Likely installation services. Perhaps related to those landscaping jobs or the sprinkler parts.

Okay, so mixed results on income streams, but overall up driven largely by passing through more material costs.

That seems to be the story, yes.

Now, I see a new line on the P and L this month. Cost of goods sold. $228.75.

Correct. This is the first time we're seeing this categorized separately.

And the general ledger tells us what's in there?

It does. It's directly linked to purchases from Hicks Hardware. Things like a fountain pump, a rock fountain, sprinkler heads, sprinkler pipes.

Sounds like materials for specific jobs.

Again, almost certainly likely tied to those cool cars sales, and perhaps other landscaping projects that involved installing those features. These are costs directly related to the goods you sold.

Okay, so with income up and this new KGS category, what happened to gross profit?

Gross profit actually improved. After accounting for Kaji, your gross profit for April was $2,507.46.

And how does that compare?

That's up from $1,952.81 March. So despite COD GS, the higher revenue led to a better gross profit margin.

That's a positive step. Now, let's look below that line at expenses.

Okay. Total operating expenses, they actually decreased overall from $1,844.02 in March down to $1,026.89 in April.

Oh, interesting.

Yeah.

A decrease in expenses.

Yeah, that's a good trend for managing costs.

What drove that decrease? Were there specific areas?

Well, let's look at digging into the general ledger. Automobile expenses went up a bit. Fuel and car washes mainly.

Okay.

Job expenses overall saw a decrease, though there were shifts within it like materials for decks and patios actually increased slightly. Legal and professional fees also ticked up. That reflects the accounting help from books by Vessi and some council fees from Pam sites.

Right.

Rent or lease was steady at $900 and utilities were up just slightly. Gas, electric, phone.

So no huge savings there. Where did the big decrease come from compared to March? Or perhaps was there something else impacting the bottom line?

Ah, good question. While those operating expenses went down, there is that very large entry under other expenses, miscellaneous expense, $2,666 that jumps right out.

What is that?

Yeah, it's significant. Looking at the general ledger details, this isn't really typical miscellaneous. It's primarily made up of those two large payments we identified earlier from the checking account activity.

The insurance and the masonry.

Exactly. The $2,000 insurance payment to Brosnahan Insurance Agency and the 666 teller payment to Tim Philip masonry. They got classified here.

Okay, so less frequent but substantial payments hit this month.

Correct. And these types of large periodic payments, while necessary, can definitely skew the monthly profitability picture.

But putting it all together, higher gross profit, lower regular operating expenses, but this big miscellaneous expense hit. What's the final net income?

The bottom line for April ended up being a net loss of $1,185.43, which.

Is a larger loss than March's $141.21.

That's right. Despite the improvements in gross profit and managing some operating costs, that 2666-06-06 miscellaneous expense was the main reason the net loss increased this month.

And we should probably also keep in mind those new loans.

Absolutely. While we don't see specific interest expense hitting yet in April's P and L, based on these reports, those loans will almost certainly carry interest costs in the future, which will also impact your net income going forward. It's all connected.

Okay, wow. Let's just take a breath and recap. We've really gone through the details here.

We have. We've connected the balance sheet changes, the cash movements, the new loans directly back to transactions in your general ledger.

And seeing how those activities flowed through to your profit and loss statement for.

April and providing this kind of clear, connected insight is exactly what we strive for here at Jason's tax and accounting firm. We want you to truly understand the story behind the numbers.

So key takeaways. That increase in undeposited funds looks like a good sign for recent sales momentum.

Definitely. And the new financing gives you capital to work with, which is great. But you need to be mindful of the flip side. The increased debt on the balance sheet.

And the impact of those big less frequent expenses like the insurance payment hitting the bottom line hard in the monthly occur.

Exactly. And that rise in the board of equalization payable, that's a direct result of more taxable sales, fundamentally a positive indicator of business activity.

So for you, the business owner, this deep dive really underscores the importance of balancing everything, pushing for revenue, especially in those growing areas like landscaping, materials and services, while also keeping a really close eye on all expenses, not just the day to day operating costs, but also planning for those larger periodic hits and now the obligations that come with the new loans.

Managing both sides is key for getting to sustained profitability.

Absolutely. And we're here at Jason's tax and accounting firm to support you with that. Yeah, monitoring these trends, planning ahead, that's what we do. Please don't hesitate to reach out with any questions as you digest this and keep building your business.

Definitely. We're here to help you make sense of it all.

And maybe one final thought to leave you with something to mull over. Oh, with this pickup in sales activity we're seeing and this new capital from the loans, how are you thinking about strategically positioning the business for the next few months? Hmm, good question.

What opportunities does this open up? Maybe pursuing larger landscaping jobs now that you have more working capital, investing in marketing.

And what proactive steps can you take now to make sure these changes, the higher sales, the new financing really translate into long term financial health and success for the business?

Yeah, it's about looking forward, using this financial insight to make those smart strategic decisions. Food for thought.

Hey. This episode is sponsored in part by Canopy, one of my top recommended practice management systems. Because Canopy, it does a lot, man. And it doesn't just do. It doesn't just try really hard. It does it nicely. Like it looks like a. A well built product thoughtfully designed. Because man, Cloud practice management Systems, there was a window there like five to seven years where it was. It wasn't that. And Canopy was like one of the only companies to come out of that generation of practice management tools was something that was like really modern, super slick and like somehow it spread itself the needle of being actually one of only two practice management systems I recommend for firms 50 employees and above, but it's still actually one of the very best ones for itty bitty firms too. And to somehow do both of those things in a product is like exceptionally hard. But they've somehow stuck the landing on that canopy. If you're out and about at conferences this year, you're gonna see Canopy there. And that matters a lot to me because if they're rocking up at conferences, they're having a lot of conversations with accountants. Accountants with accountants. They understand your needs like to a level of depth a lot of folks don't that don't make that same investment into like spending time with accountants. I've done some demos of Canopy on my YouTube channel if you want to take a peek at what they look like. You could be impressed. But to learn more about Canopy, check out the link down in the show notes. Today's episode is sponsored in part by Team up, who helps you hire talented accountants directly in the Philippines. You ever wondered how much it would cost to hire a senior accountant? That is what do you pay a senior accountant in the Philippines on an ongoing basis? Senior accountant. Just so we're on the same page, somebody who can like manage the entire end and accounting process. Post all the closing entries. In fact, here's the profile of a senior accountant Team up recently placed into a firm that a bachelor's in accounting. We're a certified public accountant which is a Philippines certification. Bill.com and QuickBooks certified 6 1/2 years experience in accounting over 5 years experience with US firms experience managing, training and reviewing the work of junior team members. Doesn't that sound nice? Proficient with QuickBooks 0 Bill.com rippling gusto expensify a salary 2000 bucks a month. The normal range for a senior accountant in the Philippines between 1700 and 20 $200 USD per month. Buddy Accounting. It's a global language really is doesn't matter if you got butts in the seats in the land of the free or in somebody else's land. Accounting's accounting to learn more actually could swipe Team Up's whole salary guide that they just made. It's really good. I'll link that down in the show notes. Okay, how. How good was that? So initial thoughts? I'm also curious like your thoughts but my initial thoughts. It's good. It's not ultimately as good as me, but that's. That's kind of not the point. I think the point is is it better than nothing? Like is it better than. Than not having an advisory call with me? And I think the very clear answer is yes, because it's also better than the understanding most of my clients would have of their financial results. And whether this would be useful for them probably boils down more to like, are they regular podcast listeners or not? Do they listen to podcasts when they go on a run, when they're sitting on the riding mower? Whatever they do, if they're into podcast stuff, the notion of them having a personalized to them podcast that would give them something useful, gang, I think they will love that, especially if it helps them develop a better understanding of kind of the financial results of their company. But from a razzle dazzle standpoint, how cool is that? From just how intelligent that conversation was. And so to give you some more context on how I pulled that together is I gave it just three financial statements from or three reports from QuickBooks. I gave the balance sheet, the PNL balance sheet, the piano were cash basis comparative April, month end and March. And then I gave it the full general ledger for April. And in some of the testing that I did like it didn't get detailed enough and it act acted confused and the co hosts weren't playing the right role. That was, that was a big thing that required dialing in. So in Notebook lm it's a very, very simple app. It's actually free. You can go out and try it out. All you do is you give it the documents and then there's a button to generate a audio overview. But next to that there's a customize button and so you can give it a prompt to customize how that conversation is generated. And I'll give you the first prompt that I use. The prompt that I used for the one that you just listened to in fact. And I'll put the whole thing in the show notes as well so you can copy these. The prompt is your two world class CFOs breaking down this company's last month's performance. You have a lively and enlightening conversation about the financial results in a supporting tone speaking to the business's owner. You worked for Jason's tax and accounting firm and are creating this resource for the client. The business owner. Be complimentary to my firm and the service we're providing to the client. Then discuss changes to the balance sheet of profit and loss and when you do reference the driving transactions for the change from the general ledger. A problem that I had early on was it would like act confused about stuff that was happening and be like wow, you really need to look into this miscellaneous expense. And it's like well, you have all the details. So if you're going to talk about it, like, go and look up the detail in the GL to clarify exactly why that change happened. So that that prompt is down in the show notes along with the second prompt that I'll tell you more about in a bit if I can nitpick a little bit. It kind of talked about undeposited funds in kind of a weird way and didn't call it out as to be as much of a negative as I would probably frame it. In this second example, I will show you, it absolutely stuck the landing, but it's because we gave it a little bit more context. The, the main questions here of like, is there actually a way to do this? Practically the two big questions are security and distribution. How would the client actually listen to it? So first on security, Google does not train their models on what you put into Notebook lm. But one caveat here is you can submit anything in Notebook LM to Google for not feedback. Is it feedback? Yes, I think they call it feedback. So you can basically submit that thing to Google and give them feedback about anything it did well or didn't do well. And in that scenario, a human at Google will be able to have access to that thing. And if you're actually on a Google workspace plan, which is like kind of the Google business plan, you can't do that. Like, you can't submit something to Google and nobody at Google can then see that data. And I'm really nitpicking here. Like, that's kind of the only way that somebody could potentially get their hands on this information. I otherwise, it's no different than doing any other business stuff inside of Google products. So from a security standpoint, I don't have any big concerns there. And even if you wanted to go workspace, you can get into a workspace plan for like less than $10 a month. If you're a Microsoft and you just want to use this for, say, generating an audio file for the podcast. But I try to think about how can I improve upon this? And I'll. After I show you this next example, I'll. I'll kind of walk through distribution and how we could potentially deliver this to clients in a way that isn't just giving them an audio file that they don't know what to do with. Right. But I thought, how can I improve upon this more? And how does it still differ from a human conversation in the way that I advise my client? And I think the main difference from, from how I would have that conversation with the client. And what you just heard is my conversation with the client would be more contextual to the conversations that I've been having with the client. So I'm probably bringing it back to, well, what are the things that maybe we discussed last time, or when they gave me a phone call the other day? I'm probably putting more of that conversation through the lens of that context that I already know. And so this next test, the purpose of this was to give it a meeting transcript and say, here's a very recent meeting with the client. Now put it through the lens of what's already front of mind for the client along with sort of delivering those financial results. And so I used AI to generate a meeting transcript of me talking with Craig. Craig's a little bit unhinged. He's. He's a conspiracy theorist. But in that transcript, the main things that were discussed were kind of the most problematic things in the financial statements. Like, you got this giant miscellaneous expense. It also called out that undeposited funds is going up in a way that maybe either isn't good or isn't correct. And so this Transcript, I use ChatGPT to generate it, but it's a conversation back and forth with me and Craig. And what I wanted to see is would it pull in things from that conversation and anchor more of the conversation in the things that are front of mind for Craig? And so. So with this, I also changed the prompt, basically the custom instructions that you give it when it generates the podcast. I added this bit at the end. I added anchor the conversation in the talking points from the transcript that the client was most concerned with, while offering a concise overview of results, being sure to get granular and go as far as pulling transaction detail from the ledger. So the information that I gave it was the same balance sheet, PNL and general ledger. Only thing I'm adding is the transcript. So I'll play the second example. It's about 10 minutes or so, and you'll hear the difference of how much more directed the conversation is.

Welcome. We're putting on our strategic hats today, really taking a close look at your business's financial performance for April 2025.

Exactly. We're part of Jason's tax and accounting firm, as you know, and the idea here is to give you a really clear, insightful analysis, Almost like having, you.

Know, an extra set of experienced CFO eyes helping you see exactly what went down financially last month.

Yeah. Connecting the dots, we'll dig into your balance sheet. The profit and loss Statement and even some details in the general ledger.

Right. And we really want to focus on those areas you mentioned in our chat. The things you had questions about.

Precisely. By examining the numbers, we can pinpoint what's driving things, spot any potential hiccups, and also see where things are really clicking.

Okay, so let's jump right into the balance sheet then. First thing we notice, and you flagged this, too, is the cash position. Your checking account balance, it dropped quite a bit from $3,852.51 end of March down to $1,201 end of April. That's a. Well, a big dip.

Nearly 70%. Yeah.

And you mentioned some possible mystery fees from big bank.

Well, those smaller bank fees can add up. Sure. But when we look at the. The general ledger, the detailed transaction record.

Right.

We see most of that decrease comes from a couple of large vendor payments. Specifically a $2,000 payment to Brosnan Insurance Agency.

Okay.

That was April 1st. And then another one $666 to Tim Phillip Masonry on April 3rd.

And here's where it gets interesting. Both of those pretty big payments were coded to miscellaneous.

Yeah.

Now two grand for insurance, 600 plus for masonry. That's not really miscellaneous, is it? This category makes it tough to track things.

Exactly. When significant costs get lumped into miscellaneous, it just. It clouds the view of your actual business spending.

Right.

We really need to classify these properly. You know, insurance expense, probably subconsc contractor expense. It gives a much, much clearer picture.

Of your cost structure, which is vital for knowing your real profitability and making good decisions later.

Absolutely. On a slightly brighter note, cash wise, your saving account did tick up a bit from $600 to $800.

Okay. Small win there. Now, another balance sheet item you were curious about. Undeposited funds.

Ah, yes.

That balance jumped up noticeably from about 907 end of March to over 2000, $2062.52 end of April.

So, undeposited funds, just to clarify for you, it's essentially cash checks you've received from customers but haven't physically banked yet.

Money collected but sitting, waiting for deposit.

Correct. And a high balance sitting there can sometimes mean delays getting money into the bank, which impacts your real time view of available cash.

Okay.

Looking at the ledger, we can see several payments that hit undeposited funds in April. There's $300 from John Melton, couple from Amy's Bird Sanctuary, totaling $328, $387 from Freeman Sporting Goods, and a bigger one. $1,675.52 from Cool Cars.

Interesting. Though, when we dig into that ledger, we do see deposits hitting your checking account throughout the month.

Right. So it's moving.

It's moving. Yeah. But having over $2,000 still undeposited at month end suggests maybe there's room to tighten up the deposit schedule, get it in the bank quicker.

I think so More frequent deposits, give you that more up to the minute cash flow picture.

Makes sense.

Absolutely. It improves visibility, cuts the risk of, you know, misplacing something, and keeps your books closer to the bank's reality. Now, moving over to liabilities.

Okay.

We see a couple of new things on the April balance sheet. A $25,000 notes payable and a $4,000 loan payable. These weren't there in March.

So new debt taken on.

Correct. We'll need to understand the terms, interest rates, repayment, what the funds were for. Yeah, that's important for your overall planning.

Got it. On the credit card side, the MasterCard balance actually went down from about $448 to $157.

That's good.

Yeah. The ledger shows a $900 payment was made April 18th. Helps manage interest. But we do see a bunch of smaller charges on there, too.

Like what?

Call Telephone, Ellis Equipment Rental, Lee Advertising. Oh, and several charges from Squeaky Clean Car Wash.

Right. It's good to keep an eye on those recurring charges, even small ones. They. They add up. Also on liabilities, the board of equalization payable, that's likely sales tax you've collected, it went up from about $30 to almost $210.

Okay.

And the general ledger shows how that built up from sales to customers. Like, for instance, sporting goods, Amy's Bird Sanctuary, Travis Waldron. Cool cars. Need to stay on top of that.

Definitely don't want issues with sales tax. Okay. Lastly, on the balance sheet, just briefly touching on equity. Big swing in opening balance equity.

Yeah.

Quite a shift from positive 19k to negative $9.9k. And your net income for April was negative $1,604.12, worse than March's negative $418.

So that leads us nicely into the profit and loss statement. Right. To see what's driving those equity changes in the net income figure.

Exactly. And starting with revenue, there's actually some good news here. Your total income went up by 40%. That's a solid increase from a 1,952 DOL March to $2,736 in April.

That's a really Positive sign shows good business activity. Income came from various streams. Design, $300. Landscaping services, just over $2,000. If we bundle the sub accounts. Yeah. A bit from product sales, $31.11 services, $386.40. And there's also that small discounts given of $88.75. Looks like it was tied to a pest control sale.

Right. And we see a cost of goods sold in April to $228.75, which wasn't there in March. Probably linked to those product sales you mentioned.

Almost certainly. So when you factor that cogs in, your growth, profit for April was $2,507.46.

Which is also up from March's $1,952.

Exactly. So fundamentally, your core operations are generating a healthy gross profit. But then we get to expenses.

Yeah. And particularly those areas we already flagged. Let's circle back to that miscellaneous expense line.

Okay.

It shot up to $2,666 in April. Huge jump from just $250 in March.

And like we saw from the balance sheet in GL, it's those two big payments driving it. The $2,000 to Brosnahan Insurance and the $666 to Tim Philip Masonry.

Getting those recategorized is. Well, it's essential for a clear picture.

Absolutely. Essentially, putting the insurance under insurance expense and the masonry under subcontractor expense gives a totally different and much more accurate view of your operational costs. Allows for proper analysis.

Makes sense.

We also saw some action in automobile and fuel expenses totaled about $210 for April, $94 for auto, $116 for fuel.

And you mentioned the car washes.

Yeah. Looking at the MasterCard details in the GL, there are a few charges there from squeaky clean.

Okay. Keeping vehicles clean is important, obviously, but maybe just worth a quick look at the frequency, see if there's a small saving to be had.

Possibly every little bit helps. We also noted $74.86 for advertising with Lee advertising.

Right.

Utilities went up to about $245. Telephone was $131. Gas and electric, $114. And that $112 equipment rental charge from Ellis Equipment Rental showed up on the MasterCard, too.

So when you put all those expenses.

Together, the P and L shows that net income of negative $1,185.43 for April. And it's really, really clear that those big misclassified miscellaneous items heavily impacted that bottom line.

Yeah. If they were categorized. Right. The net income would look quite different.

Hugely different.

Let's just hammer that point home by looking at the general ledger entries again. That Brosnahan insurance payment, April 1 bill payment, check number one for $2,000. The memo even mentions accounts payable initially, but boom, ends up in miscellaneous.

And then just two days later, April 3rd bill payment, check number 45. Tim Phillip Masonry, $666. Same story. Looks like it went through accounts payable first, then coded to miscellaneous.

That pattern does suggest maybe a step in the bookkeeping process. Needs a tweak, doesn't it? To catch these before they land in the wrong bucket.

Could be something to look into.

Okay, now back to undeposited funds in the gl. As we said, customer payments come in, right. Then we see the transfers out of undeposited funds and into checking. You can see those payments we listed earlier. Melton Amy's, Freeman Cool Cars. Deposited on different dates, sometimes bundled.

Typical deposit process.

Yeah, and we also see that Pies Cake's sales receipt for $78.75. And the NATO $8.75 discount applied right there in the transaction.

Good detail. Reviewing the MasterCard activity in the GL. Yeah, it lays out all those charges clearly. The Cal Telephone ones on different dates. The $112 for Ellis equipment, the $74.86 Lee advertising, those squeaky clean charges. Bob's burger joint for $18.97. Hicks Hardware, $42.40. And confirming that $900 payment credit back on the 18th.

Okay. And finally, that Board of Equalization Payable increase. The GL shows exactly which customer invoices added to that sales tax liability. Freeman Amy's, Travis Waldron, Cool cars again.

Good. So, pulling it all together, what do we see? We see a month with really strong revenue growth. That's fantastic. News shows your core business is active and bringing in money.

Definitely a positive.

However, that overall net loss for April, it was clearly primarily driven by those two large expenses incorrectly coded as miscellaneous.

Yeah, that's the big takeaway.

On the profit side, getting those classified properly is job number to Yen for getting an accurate picture.

Absolutely. So the key things for you to take away from this deep dive, I think, are, first, that revenue growth. Excellent sign. Keep doing what you're doing there.

Agreed.

Second, the net loss was heavily skewed by those misclassified expenses. Accurate expense categorization is just crucial. You need it for true performance insight and good decision making.

Third, that large chunk of cash sitting in undeposited funds, it suggests a chance to really streamline your deposit process, get that cash into the bank faster for better cash flow management.

Right. Better visibility.

And fourth, those new loans, the 25K note oat and the Ford LK loan, we need to get the details on those, understand their terms, see how they fit your overall financial picture.

We also flagged a few expenses that maybe seem a bit high, like the car washes, utilities. Worth a quick review just to see if anything needs adjusting.

Minor points, but worth checking.

And that opening balance equity shift will need to address that to get a clear view of retained earnings once prior periods are fully finalized. Not today's main focus, but it's on the list.

And importantly, let's not forget the upcoming sales tax return. We need to discuss that potential exemption claim you mentioned. Make sure everything's compliant there, right? Overall though, this April analysis gives us and you a much clearer picture of what happened and highlights some very specific areas to focus on going forward.

So as we wrap up this deep dive into your April financials, we really hope this gives you the clarity and the actionable insights you were looking for.

Yeah, hopefully it's helpful.

Please, absolutely reach out with any questions, anything at all, or let's schedule a follow up chat to strategize together for the next few months.

Definitely understanding these details now really does empower you to make even smarter decisions for your business moving forward.

Today's episode is sponsored in part by Cloud accountant staffing. Their backstory they were actually an accounting firm that started hiring accountants in the Philippines. They just started doing it for some of their friends and now, now they will do it for you, comma friend. They help you hire talented accountants in the Philippines because they've got recruiters on the ground there pulling from what is actually an increasingly powerful finance workforce in the Philippines. All of the big four offices have like huge offices over there. Any type of talent you can hire in the US you can hire in the Philippines as well. But when you start out you're going to have all these ignorant questions and the stuff you're even afraid to ask, like how do I even get them a computer to work on? Do they work on their own and VPN into mine? Do I send them a computer? What about like power outages, Internet outages, like team building? How does any of that stuff work? I can tell you the mistake that I made is I got stuck on those things for like two or three years and try to think through all these solutions. How am I going to do my disclosures and all that? Gang, that's like half of the value of these services is they've walked so many accounting firms through this. Stop trying to guess what the right way is to do it. Let them tell you what has actually worked and not worked for other firms. They will hold your hand through it like it's the reason that these services exist. So if you're considering it, like just hop on a call with them to learn. You got nothing to lose. At the very least you'll come away with like some new ideas and thoughts on how this stuff actually works. Highly recommend having a chat with them. To learn more about cloud account staffing, check out the link down in the show notes. Hey, quick word from one of today's sponsors. Me. Me. Yes, I run a community. Realize that is for accounting firm owners. And realize is kind of the secret behind how I've done all of my content and been able to like financially turn thought leadership into into a business. About 100 firm owners in there realize is a systematic way to build connections with other peer firm owners. It's not a framework for how to run a firm. It's a way to introduce you to other super cool firm owners. Right now we're putting together small groups so you can have a group of like 5, 6, 7 other firm owners just like you that you meet with every single month run very similar firms. Having this for me, totally transformed firm firm running my North Star. Like, my goal for you coming into this group is to make a new best friend, somebody that runs a firm because that was what I needed in my journey. The whole community is built around that. It's called realize. Link down in the show notes if you want to learn more. Honestly, I'm like very impressed with that. And I think that's actually going to feel even more novel when you apply it to actual human conversations that you've had and a client's very specific context that that podcast generation. A huge part of the conversation, right, was about miscellaneous expense. It was about undeposited funds. It skewed much more heavily to the things that I had had been discussing with the client in that meeting transcript. So the generated conversation was way more relevant to the things that were front of mind for the client. It wasn't just a stale, you know, walkthrough of financial results, although it did include kind of a general walk, walk through too. That was, I thought was also helpful. It pulled out recurring charges. It was like, hey, look out for this. We saw this. Always keep an eye on recurring charges. That that was very interesting. I think the commentary would have been a little bit better if the books themselves weren't kind of broken, isn't it odd that the QuickBooks demo file has all sorts of bookkeeping issues? I mean, if there was ever an accounting file that should be like the gleaming beacon of what's possible in a perfect accounting file, shouldn't it be the demo file that's in everyone's account? Maybe not. Maybe it's just like representative of the median quality of Books and QuickBooks. It also called up like a very specific exemption that Craig brought up in the meeting transcript that was kind of this made up thing, or at least this like conspiracy theory sort of thing that Craig was talking about. All in all, very good. Now from a practical standpoint, actually delivering this to your clients, it still requires manual generation. So it requires going in, uploading the required documents, generating it. Generating it takes maybe 30 seconds and then doing something with the file. That being said, that's a, that's a process that could be 100% administrative. But then how do you handle playback, right? Like where do you put that? Where only the right people can get their hands on it? Because it could be talking about sensitive financial results. Well, the easiest thing to do but kind of sucks for your client is putting that audio file into the portal kind of sort of works. But the playback experience for your clients going to suck, right? So in a perfect world that would be piped through their podcast player, they could add your firm as another podcast and you know, these financial results and honestly, like, if this works, you may even build on it to use it other ways. But then these financial results just come through their podcast player as basically podcast episodes. And this is possible with tools that will handle private podcast feeds. So we're all used to public podcast feeds where you go out, you find Jason on firms and you add it to your player and it shows up when you, you know, you search podcasts and it's an Apple itunes and all that stuff, or Apple Podcasts, whatever they call it now with tools like one of them that'll do this is hello Audio. Hello Audio lets you do any number of private podcast feeds. And then all of your listeners have their own link. And so you could push episodes that go to certain tagged people. You can push episodes that only go to a single person, but they just then go to their podcast player. They paste their own private podcast link in there once, and now it shows up just like any other podcast they can listen to. From a security standpoint, it's all right, but probably not good enough because podcasts work on RSS and there isn't a way to really secure rss. For anybody else to get access, it would mean having to have the link because that link isn't public anywhere. So someone else would have to have that link to be able to hear the contents. And I mean like these big, long, unique links, like they're impossible to even guess. But the risk with them is, let's say I sent the client an email and it has the link with it and then somebody gets access to the client's email, then they have the link. Transistor actually, and transistor is a, like a podcast platform. They actually put it really well. They say treat private podcasts like internal email. People shouldn't share it, but there's nothing stopping them. And so I don't accidentally want that link getting into the wrong hands. Hello, audio would be the easiest way to do it. But that for me, that's probably not quite secure enough. But an alternative here is called Podbean, all one word, podbean. And this is like a podcast player for business. So in this case, my understanding is the client would have to download the podbean app and log into an account. So yet another portal for your clients. There you go. Not really a portal, it's just a podcast player. And then when you publish stuff directly to them, it only goes through Podbean. It's not rss, nobody else can get into that. It's only accessible by their logging into Podbean. But it's a podcast player, so at that point they're getting like a much more streamlined playback experience. And anything that you put through that feed, be it monthly financial results or anything else, that would be a secure way to do it. And the, the business plan on Podbean that probably makes the most sense, it'll let you do unlimited private podcasts. It's a hundred bucks a month. So between Podbean, between Notebook LM what it would realistically cost to generate a high volume of these things, you're into this less than $150 a month total. And to me this is probably part of like a more premium offering for my client. Whether my clients use this or not. To me, this is a good example of like a fancier form of service delivery that people can upgrade to. Where the people who are going to be really into this, they're going to see that on the feature comparison when you put your three tier proposal in front of them. For the people like me who are big podcast listeners, who would be very into that, like they're going to pay for that. Like that's going to have a big impact on what plan they would get excited about. And it could be the thing that pushes them over the top to that package that's, you know, 40% more now long term. Is there other platforms that could, that could do this? Our practice management systems absolutely could. Mobile apps for our practice management systems have gotten better. Like the client experience side and being able to hop into a modern app and see anything that you're waiting on them for, you know, getting notifications if you need something from them or want to send them a message, that stuff's getting better. If you had a sense slick version of that, that could do sort of a podcast player thing built in, that would be cool. If you consider all of the things we would love our practice management systems to build, that seems pretty low on the list. But as far as like a way of differentiating yourself from other accounting firms, I just get really excited about stuff like this where like people go and they shop website to website to be like, and I want to work with this accounting firm or not. And you're always looking for what's that standout thing that might connect with a very specific type of person. If somebody sees that that's a razzle dazzle enough thing where for the right person, they may literally pick your firm because that's on a landing page. Now, not everybody's going to be excited about podcasts because not everybody's a podcast junkie. But for a lot of people that'll be like, dang, that's actually pretty cool. I've never seen that before. And that may put them over the top to be like, you are the one that I want to work with. And when they come in and that's what they're excited about, that's taking them straight to a more premium end of the spectrum where they're going to be a more profitable client. Very cool stuff. If you've played with this at all yet, I would love to hear what you've learned. Anything you've done with prompts or additional context that you give it that makes that conversation even more interesting. I feel like we're still kind of just scratching the surface of how cool that could potentially be. But also thinking beyond month end close, is there anything else you could pump through this podcast feed that may not even be AI generated? Like it may actually be you sending information to them. Like, this is an asynchronous way to get information to your client. If they're actually listening to the things that are coming through that podcast feed. Pretty interesting. Got any thoughts? Pop that stuff down in the comments. Thanks for coming and hanging today. I'll see you next one.