Larry Lundgren – CFO at Boveda, Inc.

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.

00:00:59

Hello, everyone, and welcome to this edition of “The Cash Compass” by CMLI. My name’s Mark Brousseau, President of Brousseau & Associates. Joining me today is Larry Lundgren, CFO of Boveda. Hey, Larry. Welcome aboard.

Larry Lundgren: Thank you, Mark. It’s great to be here.

Mark Brousseau: So, Larry, tell me a little bit about Boveda and your role.

Larry Lundgren: Well, Boveda, you know, Mark, we help people enjoy their passions. When you think about that, you go, “Wow, what’s my passion?” And we focus on a few. If you’re a cigar smoker, what is the most important thing about that experience, when you’re ready to light up that cigar? It’s that that cigar is fresh and it’s exactly moisturized, exactly the way you’d want it. So we provide a product called a two-way humidity control packet that goes inside a humidor and allows that cigars to be exactly the proper humidity, so when you want to enjoy them, they’ll be perfect.

00:01:55                     

Mark Brousseau: How long have you been in your role, Larry, and what do you enjoy most about it?

Larry Lundgren: Well, prior to being a CFO with Boveda, I was a fractional CFO and loved that role. So Boveda became one of my clients, and I started working there five hours, ten hours, fifteen hours. And pretty soon it was like, you know, we should go full-time. So about five years ago, I was hired on full-time. I love it. It’s fantastic. To me, I have passion about the whole idea of helping organizations become successful, make money, and really achieve the goals that they want to achieve.

Mark Brousseau: Talk to me about your biggest cash management or treasury challenges in your role of a CFO.

Larry Lundgren: Well, Mark, we actually have a really unique challenge, and the reason why is that we participate in the cannabis space. We sell to cannabis companies. So banks view that very unfavorably. The federal illegal portion of cannabis as a whole makes banking really difficult, and so they perceive us, as a supplier to cannabis companies, as part of that problem.

00:02:59

And so federal banks will not banks with us, which becomes problematic, so we had to go through a number of different, challenging avenues in order to find banking relations that would be willing to work with us. It becomes even more challenging internationally. So those are the biggest challenges.

Mark Brousseau: Talk to me about the economy. There’s a lot of talk about economic uncertainty these days. I’ll leave it to the economists to debate whether we’re in for a hard landing or a soft landing, but what steps, if any, has Boveda taken to prepare for the possibility of economic uncertainty?

Larry Lundgren: Well, Mark, I think the biggest challenge in the economic uncertainty really is the rise of interest rates. We know that, again, the cause of that – who knows. We can debate that, but we’ll talk about the fact that the impact is significant to everyone. We sell to consumers. We all know that when consumers feel like there’s the pressure on their finances, they’re going to probably have less discretionary income, which means less opportunity for enjoying their passions.

00:04:02

Again, that rise of interest rates, to me, is the biggest problem. As far as on the company itself, we have the good fortune of being in a really, really healthy financial position, and so therefore it’s less of an issue in terms of the impact on the company, as long as, again, we continue to see our revenue stream be maintained.

Mark Brousseau: Talk to me about the possibility of declining interest rates. There’s a lot of talk these days that the Fed will begin to have a series of interest rate cuts. How does that factor into your cash management strategies these days?

Larry Lundgren: Well, Mark, one thing is we’re a small company, so it’s not like we have mountains of money that we’re dealing with and so forth, like certain organizations have. Again, it’s operational based. We’re transaction based. We’re a manufacturer. We’re a CPD-type company, and so we have to earn it. But the portion we do earn – if we have, certain, extra cash, we certainly are looking for ways to invest it.

00:05:01

Again, just good stewardship of resources. We certainly, again, look at our working capital and evaluate that and do a lot of work in order to maintain a good, healthy working capital position as well.

Mark Brousseau: Let’s drill down into that a little bit. Talk to me about some of the most successful cash management strategies that you’ve implemented at Boveda.

Larry Lundgren: To me, one of the most important things we’ve done with our organization is teach our people that everyone in the organization impacts cash – everyone. And if you don’t understand your role and how it impacts cash, learn about it, or come talk to me. I take on the role of teaching and training and making sure people are aware: “Hey, well, how does my role impact cash?” There’s seven levers in the wonderful world of cash management, right, in terms of generating cash. How you impact those seven levers is really important.

00:05:50

Everyone in the organization needs to understand that. I don’t care what role you’re in. And if everyone does, then everyone’s making good decisions, hopefully to move us closer to optimizing our cash position.

Mark Brousseau: So you’re building a cash culture. How long does that take to build in an organization?

Larry Lundgren: Well, it’s like any culture. There’s never a finish line, per se. But I think, since I’ve been there for five years, has it moved in the right direction? Absolutely. I think part of that is really the culture of kind of that “be an entrepreneur” kind of thinking, that entrepreneurial spirits of saying, “Hey, if were to own this, how would I manage this resource in terms of optimizing its use?” We talk a lot about cashflow. We talk a lot about ROI, saying, “Hey, how are you spending our resources? And are you getting the return we expect?” And if we can measure that in terms of dollars and cents, that’s really the ideal outcome.

00:06:47                     

Mark Brousseau: Very impressive. Talk to me about how you’re using automation at Boveda to help you improve your cash and treasury management.

Larry Lundgren: Well, we have the good fortune of having a system called NetSuite, which is, obviously, again, being transaction-based, we’re very transaction-intensive, meaning that, on average, our transactions are $20, $30, $40. So you multiply that by thousands and millions and get to our average annual revenue position. One of the things we do is everything’s got to be automated, the flow of transactions from various platforms. We use a number of marketplaces, for example, that are transacting business on our behalf, and that information has to come across seamlessly into our NetSuite system so that, again, all transactions are identified.

Obviously, we have a number of really, really important automated monitoring tools that we use, just to make sure, from an [actual] position that we’re secure and that there’s no fraud happening in terms of our organization within our transactions, and those types of things. So automation and, effectively, the ability to scale our business, because we don’t want to continue just hiring people to have to scale a business; we want to use tools and automation to really scale our business, and I think we’ve been able to move in that direction very nicely.

00:07:58                     

Mark Brousseau: Talk to me about how the role of the CFO has changed in your time in the finance industry. What have been positive changes? And what are some of the changes that you’re less excited about?

Larry Lundgren: Well, the part I love is the fact that the CFO role has really become much more strategic. Let’s face it: Counting beans is the old saying, right? It’s great, but the idea says we’re really a partner in driving strategy, because, sooner or later, everything comes down to money. An organization’s goal – at least our organization – is to make money. So as we understand how that plays out in all our decisions that we make, or certainly impacts those decisions, we have an influence on that. To me, part of it is – again, accounting tends to have this kind of backward look of “How did we do?” Kind of lagging indicators.

00:08:49

To me, finance is moving much closer to looking forward: What are the leading indicators of how we’re doing, or how we are going to move the organization in a forward direction? To me, the role is much more forward-thinking, much more strategic in terms of that. Frankly, I love it, Mark.

Mark Brousseau: With that said, what advice would you give to younger finance professionals who are just starting their career as a CFO, or who have designs on becoming a CFO? What tips would you give them to help them succeed in the role?

Larry Lundgren: Well, with every role in the accounting or finance track, there’s a lot of detailed work in terms of starting out. But, to me, the key is that you’ve got to continue to be curious and you’ve got to understand how everything works together. My involvement in various parts of the business included things like getting involved in the sales and marketing part of the business, understanding operations and supply chain and inventory movement. If all you understand is the finance aspect, you have a very narrow lens on the business. You need to understand everything about the business.

00:09:54

That takes curiosity and asking questions and learning and seeing how things connect. Eventually, you see how they connect to, obviously, the organization’s ability to make money. So, to me, curiosity is the key.

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

Larry Lundgren: Wow, so you’re looking int the future now. That’s a tough one, Mark. “Excite” is an interesting word. I mean, I think there are certainly challenges, although with challenges come opportunities, right? There are so many of those. Certainly, the whole question of AI is one of those interesting conversational pieces. Being at a conference this week, it seemed like everybody was talking about it. I think so many of us don’t even understand what it is in terms of exactly how it could impact our models and our business and our organization. I think it’s like any other tool. Hopefully, after the hype, it becomes a really effective tool to help us think about how we can use those tools to become better, faster and cheaper.

Mark Brousseau: What function in finance do you believe lends itself best to AI? Which one do you think would be the use case for AI?

00:11:03                     

Larry Lundgren: I think one of the things that we feel would really be helpful with an AI application, at least initially, is we do a lot of month-end close kind of processes. Part of that is: What is month-end close? Well, you do some analytics, you do some journal entries, and you reconcile, and then you analyze. Well, wouldn’t it be nice to not have to reconcile? That’s one of those things. Wouldn’t AI be better off to be that tool that could reconcile? Not only reconcile that activity but then be able to tell us if there’s some patterns or things happening in there that are certainly of concern.

00:11:42

Again, allowing us, as the human resource, to be able to get that information and take that feedback about monitoring, about things they see in the data that we don’t necessarily see that could really help us see if there’s an issue or a problem or some correction that needs to happen.

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

Larry Lundgren: You bet, Mark. Thanks. Take care. Have a good rest of the day yourself.

Mark Brousseau: 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.

00:12:52

More information and updates can be found at cashmanagement.org\event. I’m Mark 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.