A short coaching conversation (YouTube) where Jenny explains financial clarity: owners must distinguish sales vs. earned revenue (revenue is recognized when work is completed), and the need for systems to track cash flow. They also discuss commission payout policies for employees who separate mid-job, recommending a staged ("one-third") approach tied to completed work so payouts are clear and legally defensible.
So Jenny, I'm pretty new to this industry, but one of the things that I hear a lot about is in regarding finance, this whole issue of cash flow. Can you talk a little bit about people understanding what money is actually theirs and how that all works in this industry?
Absolutely. So again, I'm a big believer. You need a strategy, you need a system to get that insight. So often we see owners go off of that gut feeling that usually leads them one way or the other. That's not accurate. You may think you're doing a lot better than you are.
And really you have a lot of.
Your customers money that is a liability to you, that is something you owe, you owe services out. So, you know, I really just get people into a way of understanding it from the job production completion point of view. You don't earn that money. Your sales. A lot of owners love to look at sales. Sales is a great number. I love sales. But really from a financial perspective, it's when it turns to completed is when you earn your revenue right. You earn that profit, you've made that money.
That's so interesting. It makes me think about too from an HR standpoint when it comes to letting our employees who maybe they're leaving or they've decided to separate from the organization, when it comes to commission payouts, I get a lot of questions about commission payout and how does that work if my employee's in the middle of a job? So typically we recommend a process of a third. A third, A third. Jenny, can you explain what that means a little bit? Yeah, well, we like to look at.
It as what has, what have they earned? Right. What has that sales rep done as a part of their job? Break it out into those stages of what have they completed and that's what they've earned. And so when they then they separate, there's no gray areas. They know from the initial agreement as an employee or a 1099 contractor, they know what their expectation is for their role. So when they terminate, it's an easy process to execute fair back and forth. It really sets you up to avoid a lot of heartache, a lot of potential lawsuits, a lot of just issues involved. When you don't have that structure laid out up front.
Yeah, absolutely, Jenny. And I love that piece that you said. It's about making sure that your employees know beforehand, not upon termination, not upon separation, but really being intentional about having a clear plan for them ahead of time so that they know what to expect. Yes.
