Colin Hewitt – Building a cashflow forecasting solution that the business owners can rely on

I’m Colin Hewitt. I’m the CEO and co-founder of Float, which is a cash-flow forecasting piece of software that helps small businesses.

Heather Smith:          Sensational. So we last spoke, it seems like, four years ago on the podcast, when the podcast was new. And you had … Float had been in business I guess a little while there, maybe 18 months, maybe a couple of years. So where is Float now after those four years?

Colin Hewitt:              Yeah. It’s hard to believe that was actually four years ago. I think it’s been a great journey for us since those four years passed. We’ve basically invested a lot of money in the technology and software. We hired a great CTO who’s come in and really help us. When you start off a product that you’re not sure exactly what it needs to be and look like for the customers, you’re not moving very quickly and making lots of decisions, and really … the problem with that is you’re not necessarily thinking as much about scale and it’s really all about getting the right product-market fit. So for us, really looking at the product and taking it right back and going, how is this going to scale to meet the needs of growing customers, making it fast. So we’ve been working a lot on that side of things.

Colin Hewitt:              And then also, just what’s the next step for us in terms of what’s really going to help our customers get what they need to get from Float. Our vision has been to build a cash flow that people can rely on. That’s been a lot of conversations, just looking at lots of different business models, how people work. And so I think we’ve really got a much greater understanding now of the kind of product and tools we need to build to put a reliable forecast into the hands of business owners.

Heather Smith:          It’s interesting that conversation or the dilemma you have between growing the product and the product features and then growing scale. And they seem to almost sometimes fight with one another. Would you agree with that?

Colin Hewitt:              Yeah, absolutely. There’s just always a demand or a desire for new features because you can see the gaps and you can see all the things that you’d love to do. But at the same time, there’s no point in building a house of cards that’s just going to fall down whenever it gets really tested. So as we’ve grown the business and got a bit more cash in through our revenues, we’ve been able to invest in that area. And also, as we’ve grown the company, we’re up to 20 people now, I’m probably taking a little bit more of a step back from that product manager role. We’ve got a full-time product manager in-house, so he’s taken a lot more … whenever it was me it was a lot more intuitive, I think we should do this. And I think now he’s taking more of a measured approach to building the most important things that really matter for the customers. And I think that helps us to go at a certain more steady and realistic pace.

Heather Smith:          Yeah. It does get quite emotional in that people contact you and they say they want this and they want that, they want this, and you do want to please everyone. So when did you know it was right to take on a product manager?

Colin Hewitt:              Yeah, that’s a great question. So we hired … I guess one of our engineers was essentially playing that role. And we decided that really it was better to have a dedicated product manager and not have it being sort of half and half job for an engineer. So we met a guy, actually he’s from New Zealand, and …

Heather Smith:          Where all the good software developers come from.

Colin Hewitt:              Yeah. So we met him and, we got back in touch when we were ready to hire a full-time product manager and he was really excited to come on board. So he joined in December last year, so coming up too, he’ll be a year this December. And it’s been a real help to us just to have that structure and that flow in what we’re doing.

Heather Smith:          So our listeners may have picked up. You’re based in, is it Edinburgh, Scotland?

Colin Hewitt:              That’s right, yeah.

Heather Smith:          Yes, I thought it was. I always get Edinburgh and Glasgow mixed up. So is this new New Zealander, is he based in New Zealand or is he based …

Colin Hewitt:              No. We’re all based in Edinburgh.

Heather Smith:          Edinburgh. Okay. So full team happening in Edinburgh. I believe that you scaled the team up to 20 now.

Colin Hewitt:              Yeah, that’s right. Yeah. So we’re just about to announce two senior hires that we’re making, a new COO and a new CMO. So those hires have really taken a long time, just to get the right people and interview and make sure they were the right fit for the team and the culture and all that kind of stuff. And so we’ve done that. We’ve scaled our engineering. Marketing’s growing, I now have three people in marketing. I think we’re going to be four in sales. So that’s been an area that we’ve been really working on, just the kind of classic customer support, design, that kind of stuff. So, yeah, it feels like it’s a great size actually. Really enjoying being 20 people, it’s a nice … not too big, not too small.

Heather Smith:          That’s excellent. How do you find out … I know we talked about how there was a number of technology companies in Edinburgh last time we spoke. Here in Australia, trying to find talent, it’s just extremely hard. How do you find that in Edinburgh?

Colin Hewitt:              Yeah, I know, I think it’s a battle, it’s a battle everywhere at the moment. Especially, we’ve put a lot of work into helping Edinburgh, really investing in the tech scene here. And obviously companies that have done very well like Skyscanner and FanDuel and Free Agent. But now there’s a lot more startups coming up as well and they’re all able to raise money and they’re all hiring. But you know, I think the key thing for us has just been focusing, really keeping investing in the culture and the team and try create a place where people want to come and work. So that’s always something that we’re very mindful of.

Colin Hewitt:              We definitely, we’ve lost a few folks in terms of at the interview stages and we’re tightening that up. And we’re trying to think about how we can really communicate the benefits, the country, working at a place like Float when you’ve got other people that are interviewing at five other places at the same time. So that’s a sort of learning curve I think for us. It’s not just actually the interview, the hiring process, the offer, all of that kind of stuff. It’s not something that you’ve got a huge amount of experience in when you’re starting out for the first time.

Heather Smith:          No. Absolutely. It is a bit of a nightmare trying to recruit people. And you recruit someone bad in and then you’ve got to deal with how you’re going to actually deal with that. It’s a common struggle. In 2015, so what was that, three years ago, you launched Float and integrated with Quickbooks Online, is that correct?

Colin Hewitt:              That’s right, yeah. That’s good knowledge. We decided that if we were going to grow into the US, we couldn’t really ignore what Intuit were doing. We kind of looked at it for a while and thought, you know, it was on the desktop and the Cloud version was quite early and then it just felt like, yeah, now is the right time to really accelerate this. We’re glad we did. The product’s been improving and it’s really, I think it’s a really solid product now. So it feels good just to have QuickBooksOnline and Xero integrating with Float.

Heather Smith:          The QuickBooks online or the Float?

Colin Hewitt:              Well, both, yeah. But I mean Quickbooks primarily. They’ve got, I think initially it felt quite beta when it first came out on the online version, and a lot of people said they wouldn’t move to it. Now I think it’s almost not an issue and a lot more people are moving away from the desktop onto to the online version, which is the one we integrate with.

Colin Hewitt:              So that was a big decision to not integrate with the desktop, which would have been a more engineering time – we thought. I think this is the future and hope … there will be some people who won’t want to move, but we decided to just stay cloud-focused.

Heather Smith:          I think that’s smart. How has the reaction to you being in the States and North America from the Quickbooks users?

Colin Hewitt:              It’s been great. There’s definitely a lot more smaller businesses in the U.S. that are on Quickbooks. The thing for us has been trying to find … Float probably works much better when you’re around the five-person business. When payroll becomes a bit of a headache and you’re up at night thinking about whether you’re going to be able to make the payroll. So that’s when we kick in. A lot of Quickbooks users are contractors or small person businesses. The reception from Intuit’s been fantastic and we feel very welcomed into that environment. We’re going to be going over there in November for QBConnect.

Heather Smith:          Oh, San Jose?

Colin Hewitt:              Right, yeah.

Heather Smith:          Fantastic.

Colin Hewitt:              And we actually launched on their Quickbooks online accountant programme as well as one of eight apps. So that was good. I think they really see the value of cash flow for the businesses, they’ve seen what we’ve done, and they wanted to get it out to their customers.

Heather Smith:          Excellent. Have fun in San Jose. I’m sure that will be very exciting for you. I have a big conference here in Australia to go to at the same time, otherwise I was going to go to that one as well.

Heather Smith:          When does the business owner … We started talking then about the business owners and the business owners in the U.S. When does the business owner know that they need to move to Float? What is the ideal business owner for Float? And when do they know they should move to a cash flow solution?

Colin Hewitt:              Yeah, it’s a great question. Interesting story … I was in a similar position in my previous business, which was a web design studio, and I think I got to, once we got past four employees, that’s when it starts to get, feels like it starts to get real. You think about growing the business and you think, “Well, gosh, there’s so many parts to this business that are dependent on me.” And I remember reading a book called The E-Myth. Have you come across that one?

Heather Smith:          Michael Gerber.

Colin Hewitt:              That’s right, yeah. And he talks about trying to build systems into your business, and for me, the cash flow one was always the one that was very much in my head. Nobody else knew, really, what the cash position was. They could obviously see in the bank account, but they didn’t know what’s coming out in the next few weeks, and what we committed to. So I built this very complicated spreadsheet as a way of starting to move towards this. And I thought, “Gosh, it’s so much work to update every time I want to get a real forecast that I can use to make some decisions.”

Colin Hewitt:              So this really was about us. I think there’s a point at which you know, let’s work this out. And it’s tempting to bring somebody in and say, “Right, you deal with it, I don’t want to know.” But actually, I think, if you can … It’s really … We built Float in a way that we want business owners to be able to use and understand. So it’s very simple language. It’s in business language rather than accountancies, so we’re not talking a lot in language that business owners won’t understand.

Colin Hewitt:              The businesses that are successful with Float are the ones that really want to start taking the finances seriously, and thinking about investing in their business, and therefore they want to get a handle on their bookkeeping, regular reporting, and the cash flow. So those are the kind of businesses that we find that are the ones that are wanting to mature and grow up and get past that difficult stage.

Heather Smith:          Past the I’m at a hobby stage, or I’m just doing this as an excuse not to work for someone else stage. I did like how you said they’re ready to get serious, that’s when they need a solution like yours.

Heather Smith:          There are a number of different reporting solutions available in the eco-system that connect with Xero, and Quickbooks, and other online solutions … which is fantastic that there is so much … so many of them out there. How would you say that Float differentiates itself from those solutions?

Colin Hewitt:              Good question. We’ve thought about this a lot, because initially, when you come into the market, you think, “We’ll be the one-stop shop for all forecasting needs.” And then as we’ve got into it, we realised there’s quite a lot of differences and different needs. And different people need different things at different times.

Colin Hewitt:              And really, where Float, where we’ve decided to really focus on at Float is on that short-term, maybe people who want a 13-week cash flow for the next quarter. Something that they really want to rely on. And maybe the next 12 months, they want to get a rough picture, but it’s when they need that granularity down today or down to the week that Float really comes into its own. Because Float’s using a method called the Direct Method of Forecasting, which means that we take into consideration every single invoice and bill that’ll be coming out of your Xero or Quickbooks account, and we look at the expected payment dates on that, and so we can give you a very detailed, to the day cash flow forecast, which there’s not many other solutions out there that do that in the market.

Colin Hewitt:              I think if you’re looking for something once a year that you want to do for the board, or for a bank, it needs to be … it’s a long-term, you’re looking for a three-way solution, then that’s kind of a different remit than where we see us focusing on. Our thing is to be the best short-term forecasting solution in the world and I think we’re just really focusing and stripping everything else away to try and keep that laser focus.

Heather Smith:          Excellent. Can I clarify? You said that going down to the granularity of the forecast … was that for 13 weeks or was that for the 12 months, or was it just-

Colin Hewitt:              It’s really as much as you want. Because we can … because you can set … In Float you can set a budget. You can set when your rent’s going to come out, exactly the day. You can set when you’re making payments, so you might make payments twice in the month to your staff. And you can put, because you can specify exactly the day that these things come out, then you’ve also got the exact, the expected date of all your invoices and bills, you really get that daily level granularity.

Colin Hewitt:              Most people don’t know with any kind of certainty what’s happening beyond 13 weeks in their business. Beyond 3, 6 months, there’s a lot of guesswork involved. But when you’re bringing it in to focus, if you haven’t invoiced and billed customers for 13 weeks, there’s much less of a likelihood that you’re actually going to get paid. So that’s when it becomes real and we think we can give you a very accurate idea of what exactly what the cash flow is going to be, and then you can see any potential gaps or … maybe it’s just five days, if you can get paid by one big client five days sooner, you’re not going to need to get a loan, or you can hold off on making agreement and pay 50 per cent of a bill, then you will be able to make your payroll.

Colin Hewitt:              It’s those kind of decisions, when … some businesses have some seasonality baked in, and it’s just a couple of weeks in the year that are really tight. Even just for that peace of mind, that’s what Float really wants to help with.

Heather Smith:          You did say at the beginning it helps you … it was quite a stressful thing for you and it helps you sleep at night, understanding that. What do your clients tell you they see as the benefits of using a cash flow forecasting solution like Float?

Colin Hewitt:              I had a great podcast with one of our customers called Troy Dean, who’s in Melbourne, last week. And he was saying that Float’s become one of the key planning tools that they use in their business. A lot of people tell us that, that they end up, rather than sitting around a spreadsheet that’s become very difficult to understand, and takes a lot of time to bring up to speed, they can just bring up Float. If they’ve done their Xero or Quickbooks reconciliation, then all the data info will be accurate. They can sit down together, make sure that they’ve all the costs and all the commitments that they’ve made are in the forecast, and then all the bills and invoices will already be there, so there’s no extra data to input.

Colin Hewitt:              It’s just really … let’s sit down and get everybody on the same page so somebody’s not saying, “Oh, I thought you paid that bill last week. I didn’t realise it was still, we still had to factor that in. An extra deposit for the new office, or “… it just stops those kind of uncertainties coming up. ‘Cause when you look at it together you can really see everything clearly. And because it’s a graph, and the main part of Float is a graph of exactly what your bank balance is going to be, it brings it into focus as to, “Is there anything to worry about here? Are there anything we need to consider?” And then you can go in and look at your … the people that owe you money, and why haven’t they paid, and who’s responsible for chasing them.

Colin Hewitt:              I think it’s all that kind of stuff that businesses just use to bring them onto the same page. If you’re just looking at your Quickbooks or your Xero, it’s hard to rally around and get that same picture, and it’s also hard to do what-ifs, so you might … some businesses use it with … one of the big features of Float is there’s scenarios. One of the things that a lot of businesses will say is, “Hey, what if we were to invest another 20 thousand this year in marketing? Or what if we were to take a trip to this exhibition, or what if we were to take on another member of staff?” And so, being able to go in and just, “Well, let’s just see.” Put it into the forecast and you see the line and it might move dramatically or it might move not that much, and then you can just be like, “Okay, that’s what we’re going to do, and we’re agreed, and we’re going to run on that scenario.”

Colin Hewitt:              That’s the kind of stuff that we think, we hear from our customers that they just love, to have that certainty.

Heather Smith:          Excellent. Thank you for sharing that.

Colin Hewitt:              If you’re an accountant or a bookkeeper, what we’re seeing is a real opportunity for bookkeepers especially, but accountants as well, to offer this short-term forecasting as a service. We’ve spoken to accountants in the past and they’ve thought, “Well, it’s not really something we can do because we don’t know all the expected dates on the invoices. We don’t know what the businesses are thinking over the short term.”

Colin Hewitt:              But actually, we see short-term forecasting as a real benefit, additional service you can add that’s going to delight your customers, because if they haven’t seen this level of accuracy before, it’s such a great insight for them. And I think to be able to ask us what we can do to help you get set up, and what you need to bring as the accountant, things like when the PAYG goes out, and making sure that provisions are in from all the accountant-related stuff, and then working with them to make sure they’ve done their part, and it’s a nice way of bringing what the business knows about the business and what the accountant knows about the business together, maybe do a monthly check-in on the cash flow.

Colin Hewitt:              I’d love for us to be able to show how we can do that and some of the new stuff we brought out recently in the form of multi-budgets, which is one of our big new features that we just brought in.

Heather Smith:          Oh, okay. Multi-budgets. That sounds interesting. And I think one of the things, and this is something that I repeatedly say, but there still seems to be a incorrect understanding out there, is that here in Australia, bookkeepers and the BAS agents legally can get in and help businesses with cash flow forecasting. ‘Cause sometimes they think it’s a restricted task that they’re not allowed to touch. It’s absolutely not the … they absolutely can do that. Their insurance, if they’ve got proper BAS agent insurance, can cover them. Sorry for people listening across the world cause again, I would imagine, and I don’t have all the legal understandings of across the world. Everyone can assist with the cash flow forecasting because it’s not around paying taxes. Taxes is a separate assessment. It’s very much something that a bookkeeper can get involved with and actually charge a higher rate for, which should be their goal.

Colin Hewitt:              Absolutely. The bookkeepers are in a really good position to do it because if they … The thing that we find with Float is that, because we want to have that live cash update, it forces us to be more disciplined with our reconciliation and our bookkeeping. Our bookkeeper comes in now once a week at least to be able to reconcile and get that all up to date. So Float’s up to date.

Colin Hewitt:              Working with Float will actually make businesses want to take their bookkeeping more seriously. A real reason for it and there’s a real desire if you know what you’re going to get out the other end’s going to be really worth something to you. The bookkeepers are in a great position to do the bank rec, then go in and have a look at Float, maybe jump on the phone with the business owner and have a look and see if there’s any issues coming up, and when things maybe should or shouldn’t get paid.

Colin Hewitt:              It’s a great opportunity and something we’d love to talk to more of them about.

Heather Smith:          Absolutely. Thank you so much for sharing that. Thank you so much for speaking with me today, Colin. I really appreciate it. How can our listeners get in touch with you, and how can they find out more about Float?

Colin Hewitt:              You can go to float.app and have a look at the website. We’ve got live chat on there, so we’d love to jump on and chat with you. We’ve really revamped our partner offering in the last year. We got some great new introductory pricing on that if you want to just kick the tyres. We’re really open for business. There’s a lot more to come, as well.

Heather Smith:          Sensational. And you’re on Twitter at Floatapp, and Facebook at Float Cashflow Forecasting

Colin Hewitt:              I think so.

Heather Smith:          I’ll drop them in the show notes for people who want to connect with you that way, as well. Thank you so much, Colin.

Colin Hewitt:              Really good to be here. Thank you.

2018-10-10T06:16:08+00:00October 10th, 2018|0 Comments

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