Alan Paley – CFO at Overseas Cargo

Mark Brousseau: Welcome to “The Cash Compass,” brought to you by CMLI. I’m your host, Mark Brousseau. In a world where the finance landscape is constantly evolving, staying ahead can be a challenge. That’s where we come in. Each month, we bring you industry thought leaders and innovators to share their insights, best practices, and proven strategies for improving treasury and cash management. Whether you’re a seasoned professional or just starting out, “The Cash Compass” is your essential guide to staying informed, making smart decisions, and mastering the art of cash optimization. Tune in for insightful discussions and actionable tips designed to elevate your career, your department, and your organization. Let’s navigate the future of cash management together.

00:01:01

Hello, everyone, and welcome to this edition of “The Cash Compass” by CMLI. My name is Mark Brousseau. I’m pleased today to be joined by Alan Paley, CFO of Overseas Cargo. Hey, Alan. Thanks so much for joining us.

Alan Paley: Thank you, Mark. It’s great to be here.

Mark Brousseau: Alan, tell me a little bit about your organization and your role as CFO.

Alan Paley: Well, Overseas Cargo is made up of actually four companies, but the main focus is moving cardo worldwide. So what we do is our customers source basically U.S.-manufactured goods from Kraft General Foods. We primarily move food resale. Our offshore customers will procedure goods here in the U.S., they will call us, they will give us a copy of the purchase order, and we then arrange the transportation from the shipping point, whether it’s the manufacturer or warehouse, directly to our customer’s door.

00:02:01                     

Mark Brousseau: How long have you been in this role, Alan?

Alan Paley: I’ve been the CFO since 2015, but I joined the company in 2009 as the Director of Operations because I wanted to really learn more about the operation of a cargo company. We call them 3PL logistics, which I didn’t have prior to that.

Mark Brousseau: What do you like best about your role as CFO?

Alan Paley: I like getting down into the weeds. As a CFO, I can get into payables, I can get into receivables, I can get into credit, and I also interact with our logistics coordinators when issues come up with a particular shipment. So I’m kind of like all over, and I like that total involvement in the operation of the company.

Mark Brousseau: Since you’re down in the weeds, I’m curious: What do you see as the biggest treasury or cash management challenges that your organization is facing these days?

00:02:58                     

Alan Paley: Well, our organization is extremely small. We employ 17 people, and our sales are roughly $10 million/year. On any given day, I’m managing between $350,000 and $700,000 of cash. So cash management, control of that cash, maximizing what that cash can do for our company, is really the main focus. I just don’t want it to sit in a bank because the banks today are not doing anything with it, so I’m constantly speaking with our bank to see what they can do for me with respect to that free money that I have laying around.

Mark Brousseau: We know that there’s a lot of talk these days about economic uncertainty. I’m going to leave it to the economists to debate whether we’re in for a hard landing or a soft landing or the status quo, but what steps, if any, has Overseas Cargo taken to prepare for the possibility of some economic turbulence?

00:03:53                     

Alan Paley: We haven’t really taken any steps, and the reason is because we deal primarily with food for resale. No matter where our customers are, people need to eat. So the flow of food stuffs in and out of the U.S. is going to continue, regardless of the economy. Even through COVID, we were deemed an essential business because our customers overseas had to fill their supermarkets and had to fill their warehouses with food product that they could sell.

Mark Brousseau: A lot of talk these days about interest rates. What do higher interest rates mean to Overseas Cargo, and what do you see on the horizon as it pertains to interest rates?

Alan Paley: Well, when interest rates go up, if we borrow money – and we do have a credit line and occasionally we will call down that credit line, that’s painful for us because as the interest rates go up, it costs us more in interest. However, as I mentioned before, because I have some available funds every day, the interest rate that I can now gain from the bank using that money overnight is substantially higher than it was.

00:05:00

I’m hoping that that trend continues. I don’t know if it will or if it won’t, but I think we’re in a good position to maximize whatever bang we can get from that buck.

Mark Brousseau: It seems to me, Alan, that one of your challenges is making sure you have complete visibility over your cash and your investments. Talk to me about how you manage that. Do you have some tools or some strategies for making sure you get that complete visibility you need to make sure you’re keeping your money at work, like you said earlier?

Alan Paley: Well, we have a very simple strategy. I simply go online and look at our bank statement every single morning, and I can view what our balance is. I know what outstanding payments we have. I know what’s going to clear, when it’s going to clear, and so I can effectively manage my cash. If I need to push something aside for a reserve, I can do it. But I do it on a daily basis and I think that’s very, very important, especially in a small company, where if something comes in for a $10,000 or $12,000 expense, and I didn’t anticipate, that could harm us if I’m not prepared for that.

00:06:05                     

Mark Brousseau: So talk to me about some of your most successful strategies for optimizing your treasury and your cash management. What have been some things that you’ve implemented in your organization that have worked out especially well?

Alan Paley: Well, one of the things we did very early on was we told our offshore customers they get no credit.

Mark Brousseau: Really?

Alan Paley: So if they want their product, they have to pay prior to us releasing the goods, when it gets to their home port. And that has worked very, very well. The problem that we see, because most of our customers are offshore, is once you release the goods, if the customer hasn’t paid you, it’s very difficult to go collect that money when they’re 1,200, 1,500, 5,000 miles away.

00:06:50

So by instituting a policy where they know if they deal with us they have to pay prior to the arrival of the goods – they don’t have to pay us when the goods are picked up or when they’re shipped, but prior to that ship getting to their home port, we have to have that money in the bank, or we will not release the cargo.

Mark Brousseau: How are you using automation to help optimize your cash management and your treasury?

Alan Paley: Well, that’s a great question, Mark. I attribute all of the automation that we have done to my attending all of these annual seminars. Prior to IOFM, there was IAPP, and I’ve been coming to these since probably the early ’90s. Every time I go around and I speak with the exhibitors that are here and I see what’s new on the horizon, I take that information back to our internal IT group and we implement it.

00:07:46

So I’ve been able to take all of the best practices that have been exposed here at the annual sessions and take it back and implement it into our own proprietary logistics software. So I have an AP modular, an AR module, a cash management module, and everything is paperless. That has worked very, very well in helping us to manage our cash flow.

Mark Brousseau: A lot of talk these days about the rising risk of cyberattacks and fraud. Have you experienced attempted or actual payment fraud at Overseas Cargo? What steps have you taken to mitigate your risks of cyberattacks and payment fraud?

Alan Paley: Yes, we had an incident last year where an email came to me from the owner of the company, which is not unusual, asking me to prepare a payment to go to X vendor. This happens every day with the owner of our company. What I didn’t look at was the actual email address, which had one letter different than the owner. I went ahead and I got everything prepared, but I went back to the owner before I did anything and said, “Okay, I’m ready to send this. I just want to make sure it’s okay.” And he said, “What are you talking about?”

00:08:56

So we discovered – that has happened several times since, not only to me but to other people within our organization, where you’ll get an email that looks like it’s internal, but there may be a one-letter difference, and that’s fraud.

Mark Brousseau: Alan, one of the most exciting and potentially nerve-wracking advancements in technology has been around this idea of artificial intelligence for treasury. What, if anything, has Overseas Cargo done with AI in its operations, and what is it about AI that potentially excites you or scares you when it comes to managing your treasury operations?

Alan Paley: Well, since I consider myself a dinosaur in the industry, AI really scares me, and it also scares the owner of the company. So at the moment, we don’t have any plans to bring in AI to enhance anything that we’re doing. However, we did ask our IT group, which is offshore, to look at AI and to come back to us with suggestions and recommendations on where they feel we could use it.

00:10:04

But again, both myself and the owner of the company are very leery today about using AI.

Mark Brousseau: You’ve been at this for a while. Talk to me about some of the changes you’ve seen in finance over the years, and what have been some of the more significant changes you’ve seen?

Alan Paley:  Well, I started in finance in 1972, before most everybody who’s listening to this was born, so I come from the age of the green ledger sheets, where everything was written with a sharp pencil and an eraser. But over the years, I think the invention and implementation of automatic spreadsheets, like Excel – before Excel, we used Lotus – have really enhanced my ability to manage the cash in a very easy way. I simply can download the information from my bank, put it into an Excel spreadsheet, do a few things with it, and I have all the numbers that I need to sit with the owner.

00:11:08

So I just think that the use of computers – again, when I started, there were no computers. I think the first computer we had in a company that I worked for was 1980. They brought a computer in with a large – I think it was an eight-inch disc that we had to insert. So I’ve seen that progression from a pencil with an eraser all the way to what we’re doing today. It’s much easier today to use what’s available out there, at least for our work in accounting and finance.

Mark Brousseau: What excites you most about the future of finance?

00:11:47                     

Alan Paley: Well, I don’t know what’s on the horizon. That’s one of the reasons why I come every year to the IOFM conference, because I want to see what’s new, what’s out there, and if it’s something that we can implement into our own internal organizations to make it easier. So I’m always open to what’s new and developing.

Mark Brousseau: What advice would you give to your younger peers who are just starting out in their finance careers?

Alan Paley: Well, I think the way to start is in accounts payable. I love accounts payable. You get to learn the flow of the paper, not only before it gets to you – where does it start? When you have it, what you have to do, and after it leaves your hand, the impact of that payable on the company, and when that payable is going to be released. So I think accounts payable, and now accounts receivable, is really the place to start to get your experience. And then, from there, you could go higher. You could become an assistant controller, a controller, a CFO. But knowing how each step of the process works will make you a better, well-rounded individual.

00:12:58                     

Mark Brousseau: That’s really one of the biggest changes we’ve seen in finance is that CFOs like yourself these days are becoming more and more strategists, right? You’re becoming a partner to the business owner, helping to ensure the success of the business. Talk to me about that. How have you seen the role of the CFO changing, and how do you expect it to continue to change over the next couple years?

Alan Paley: Well, I don’t know if it’s changed that much. I think the role of the CFO has always been the advisor, not only to the owners or the stockholders, but if anyone else is looking at the company – perhaps to make an offer to buy it or to partner with it – the first people they come to is the CFO because they’re looking for financial information. So we are in a very good position because we know where the numbers come from. We know at the end of the month or the end of the quarter what the numbers look like, so we are the source that everyone has to go to, including the owners or the board of directors, to say: “Okay, is this something we should consider? What do our numbers look like?”

00:14:01                     

Mark Brousseau: Alan, thanks so much for joining us today.

Alan Paley: Thank you, Mark. My pleasure.

Mark Brousseau: That was Alan Paley, CFO of Overseas Cargo. This is Mark Brousseau. Hope to speak with you all again soon.

Thank you for tuning into this episode of “The Cash Compass.” We hope you’ve found our discussion insightful and full of actionable tips to improve your treasury and cash management strategies. If you enjoyed the show, be sure to subscribe and to leave us a review. Stay connected with us on LinkedIn at the Cash Management Leadership Institute, and visit our parent website, cashmanagement.org, for a library of resources tailor-made for cash and treasury management professionals. In addition, be sure to save the date March 18-19, 2025 for the Cash Management Forum, the first event exclusively for cash management and treasury leaders.

00:15:01

More information and updates can be found at cashmanagement.org/events. I’m March Brousseau, and it’s been a pleasure guiding you today. Remember, with “The Cash Compass,” you’re always headed in the right direction. Until next time.